by FOR THE PUBLISHED VERSION IN SPANISH, CLICK HERE. For the original Q&A (in English)… -Has Europe become a new bureaucracy? Are we governed by technocrats? As you describe them in the book, European Union and the European Central Bank have turned into completely inefficient organizations. Have they? The Commission was, from the beginning, devised as the bureaucracy to run the affairs of a heavy industry central European cartel. This is not new. What is newer is the ECB that was devised to graft a form of depoliticised money on top of that cartel. The combination of a cartel’s bureaucracy and a central bank that pretends to run a-politically the most political of commodities (i.e. money) fared reasonably well during the boom times, while Ponzi growth was raging (i.e. 1998 to 2008). But when the recession began, this combination was ill-designed to deal with the crisis and to implement policies that addressed it. The result is more authoritarianism and a recapilulation of failed policies. -You talk about “Ponzi austerity”. Greek case is exemplar, but in the Spanish case there is something similar happening: deficit and debt and growing year after year despite the cuts and austerity. Why? If these measures aren’t working, why aren’ modified? Greece was just the beginning.
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Yanis Varoufakis considers the following as important: DiEM, European Crisis, Politics and Economics
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FOR THE PUBLISHED VERSION IN SPANISH, CLICK HERE. For the original Q&A (in English)…
-Has Europe become a new bureaucracy? Are we governed by technocrats? As you describe them in the book, European Union and the European Central Bank have turned into completely inefficient organizations. Have they?
The Commission was, from the beginning, devised as the bureaucracy to run the affairs of a heavy industry central European cartel. This is not new. What is newer is the ECB that was devised to graft a form of depoliticised money on top of that cartel. The combination of a cartel’s bureaucracy and a central bank that pretends to run a-politically the most political of commodities (i.e. money) fared reasonably well during the boom times, while Ponzi growth was raging (i.e. 1998 to 2008). But when the recession began, this combination was ill-designed to deal with the crisis and to implement policies that addressed it. The result is more authoritarianism and a recapilulation of failed policies.
-You talk about “Ponzi austerity”. Greek case is exemplar, but in the Spanish case there is something similar happening: deficit and debt and growing year after year despite the cuts and austerity. Why? If these measures aren’t working, why aren’ modified?
Greece was just the beginning. All the deficit countries shifted, after the collapse of the banking sector, from Ponzi growth to Ponzi austerity – from a period of unsustainable debt-fuelled growth to unsustainable debt-fuelled austerity. The reason this dead-end policy is maintained is very, very simple: The alternative is to ditch the denial that the current Eurozone architecture needs to be altered fundamentally. Berlin, in particular, is not interested in ditching the denial.
-In your meeting with the Eurogroup during negotiations, I was surprised that you said that you couldn’t talk about economical thesis, because they said you were a professor that just wanted to teach them. Wasn’t there any chance to discuss rationally? Do you mean it was just a purely ideology affair?
You should have seen how surprised I was! No, there was never a single opportunity to have a sensible, rational economic discussion on the economic issues we were facing. It was all about the ‘rules’ and the deficit nations’ ‘obligations’ to the troika.
-In that sense, you state that Greece wasn’t rescued. What was approved were rescue packages for the German and French banks. Are we in Spain paying much more taxes and suffering austerity in order to make German and French banks accounts positive?
You only have to look at one statistic to know that Greece was not rescued: We lost 26.7% of our national income. If this is a rescue I have no idea what damnation is! The bailouts of Greece, Portugal, Ireland and Spain were a rescue packages for the German and French banks, and to a lesser extent the local banks. Have no doubt about this (the bankers freely admit to it). More generally, during the Ponzi growth period, a tsunami of capital (that originated primarily in Germany’s trade surplus) rushed to the periphery as loans. These loans were not sustainable and so when the world’s financial sector crashed, they were transferred onto the shoulders of our taxpayers – who, as you say, as now paying for them through taxes and cutbacks that are preventing recovery and spreading misery throughout Europe.
-Why has Trichet being the worst central banker of the world and why is Draghi so clever?
On Trichet, you only have to recall that he increased interest rates two months before Lehman’s collapsed, at a time the other central banks were preparing for the calamity by reducing interest rates. And as if that were not enough, he learned nothing as can be proven by the fact that he did it again (increase interest rates) in 2011, killing off any chances of recovery. Draghi, on the other hand, did all he could (within the constraints placed upon him by the ECB’s charter and internal politics) to do the opposite: to refloat the moribund Eurozone.
Why are these people depolitising politics and technocrasing money?
It is not “these people” who depoliticise politics and technocratise money. This is the whole foundation of the EU, from the very beginning. To put it briefly, the only alternative to depoliticising politics and technocratising money is a democratic European federation. But our elites despise the idea of democracy at the heart of Europe!
-There has been a lot of discussion about Panama Papers this week. Are tax havens a way of redistribution wealth from the poor to the rich?
Evidently!
-Is there any real change of a plan B (or C or D)? If we are governed by extrademocractic powers, as you suggest, real problem is not what to do, but how to change that situations. And if your thesis is true, resistance to change will be strong enough, in a globalized environment, to stop transformations.
Nothing good has happened in politics that did not elicit great resistance. So? We need to steam ahead and confront those who are putting the EU into disrepute and accelerating its disintegration. For this we need a Plan A. This is precisely what we are doing with DiEM25: forging a Democratic European Agenda. Naturally, in pursuing our agenda, we need fall back plans B,C,D etc.
-Should Europe be protectionist? There are European politic forces that encourage this option.
Of course it should not. Our vision of shared prosperity should not rely on beggaring our neighbours beyond the borders of the EU. But this does not mean that we should succumb to predator trade deals, like TTiP and TISA, either.
-What is the role of the left? Except Greece, that has surrendered, and Spain, where Podemos is just the third political force, it doesn’t seem that the left has the enough social force to make changes in the Eurozone…
The role of the Left is constantly to reinvent itself, develop up-to-date criticisms of really-existing capitalism, proposing alternative politics that destroy TINA (the dogma that ‘There Is No Alternative’) and create alliances with social and liberal democrats.