Wednesday, October 7, 2015

Yanis Varoufakis Sees Potential Game Changers For Greece (positive ones!)

In this article in ProjectSyndicate, Yanis Varoufakis makes some very powerful statements. First, he describes the recent election as "the costliest minor government reshuffle in Greece's history." Well, Varoufakis has a point there, for sure!

Varoufakis then goes on to deride the latest Agreement which he predicts will fail: "The new Tsipras administration knows this. Tsipras understands that his government is skating on the thin ice of a fiscal program that cannot succeed and a reform agenda that his ministers loathe. While voters wisely prefer that he and his cabinet, rather than the conservative opposition, implement a program that an overwhelming majority of Greeks detest, the reality of the austerity agenda will test public patience."

None of this would be considered as newsworthy because Varoufakis has been making these points all along. But now he comes with a new twist to his predictions for Greece's future:

"This leaves Tsipras with only his second line of defense: the “parallel” program. The idea here is to demonstrate to the electorate that the government can combine capitulation to the troika with its own agenda of reforms, comprising efficiency gains and an assault on the oligarchy that may liberate funds for the purpose of lessening austerity’s impact on weaker Greeks. This is a worthy project. If the government can pull it off, it is a potential game changer. 

To succeed, however, the government will have to slay two dragons at once: The incompetence of Greece’s public administration and the inexhaustible resourcefulness of an oligarchy that knows how to defend itself – including by forging strong alliances with the troika."

Did I read this correctly? Varoufakis now says that there could be potential game changers? That the current government could indeed succeed? 

The two measures which Varoufakis considers as potential game changers are: make the public sector efficient and slay the dragon a.k.a. Greek oligarchy. Well, that sounds simple enough! And I am sure if the government really wanted to do that, it would get quite a bit of support from abroad. And every Greek would benefit from it.

I hadn't realized that everything was going to be so simple but if Varoufakis says so, it must be right.


  1. I stumbled across a comment by a Greek expat apparently living close to me in Bonn, who picked out the tax issue he comments on and then adds, its all to push the Greek out of the Euro only, the whole program but mostly the tax issue. Initially I agreed, then I reflected. Over here we pay some type of advance quarterly tax as self-employed too based on the preceding income level. Which then is correctly with the tax declaration. So, maybe they can modify that. Employees do anyway monthly. I don't understand the issues around farmers, no doubt. And I am not sure about EU regulations in the field either.

    I found the last part the most interesting too. And yes, I agree that the impact on weaker people should be softened. But that's the usual scenario.

    Basically I am open to the "oligarchy" argument, but it seems that some argue that its Greek variant does not control the economy. Aristos Doxiadis, hat tip Erik de Sonville, who linked to it on his blog.

    Oligarchs do not control the economy, and they are not the main economic barrier to growth.
    They do exist, and they are a problem for democracy, which is a different issue.

    Thus maybe for the more investment minded like his follower and former strong supporter Dean Plassaras, he should slightly elaborate on inexhaustible resourcefulness of an oligarchy. After all they occasionally invest too. No? "Inexhaustible resourcefulness" is a bit vague after all. ;)

  2. YV should know, he has been the costliest FinMin of Greece ever.