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Tuesday, March 10, 2015

Thomas Piketty on the Euro Zone: 'We Have Created a Monster'

A small part of a much longer interview:

Thomas Piketty on the Euro Zone: 'We Have Created a Monster', Interview by Julia Amalia Heyer and Christoph Pauly: ... SPIEGEL: ... What do mean when you refer to impenetrable political instruments?
Piketty: We may have a common currency for 19 countries, but each of these countries has a different tax system, and fiscal policy was never harmonized in Europe. It can't work. In creating the euro zone, we have created a monster. Before there was a common currency, the countries could simply devalue their currencies to become more competitive. As a member of the euro zone, Greece was barred from using this established and effective concept.
SPIEGEL: You're sounding a little like Alexis Tsipras, who argues that because others are at fault, Greece doesn't have to pay back its own debts.
Piketty: I am neither a member of Syriza nor do I support the party. I am merely trying to analyze the situation in which we find ourselves. And it has become clear that countries cannot reduce their deficits unless the economy grows. It simply doesn't work. We mustn't forget that neither Germany nor France, which were both deeply in debt in 1945, ever fully repaid those debts. Yet precisely these two countries are now telling the Southern Europeans that they have to repay their debts down to the euro. It's historic amnesia! But with dire consequences.
SPIEGEL: So others should now pay for the decades of mismanagement by governments in Athens?
Piketty: It's time for us to think about the young generation of Europeans. For many of them, it is extremely difficult to find work at all. Should we tell them: "Sorry, but your parents and grandparents are the reason you can't find a job?" Do we really want a European model of cross-generational collective punishment? It is this egotism motivated by nationalism that disconcerts me more than anything else today. ...

    Posted by on Tuesday, March 10, 2015 at 08:47 AM in Economics | Permalink  Comments (41)


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