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KALLIANIOTIS: Greece should leave the eurozone
Accepting common currency led to loose spending habits
Question of the Day
I grew up in a different Greece, where saving, not debt, was a virtue. Everyone I knew had a savings account, and we all felt it was wrong to borrow money.
Now Greece is agreeing to more austerity measures in exchange for a 130 billion euro loan to avoid default. Unfortunately for the citizens of my native country, I believe this strategy will send Greece back to where it was in 1949, a country destroyed during World War II by German occupation and a subsequent communist war.
I hope I am wrong, but this is why I think I am right: Greece should have never joined the eurozone. Had there been a referendum in 2000, we never would have joined in 2001. But there wasn’t.
Unequal and different nations should not share a common currency. Greece abandoned the fixed exchange rate in 1973 and this began the slippery slope toward the common currency trap. The social cost of this decision would prove to be infinitely negative.
With the Socialist Party gaining power in 1981, Greece changed drastically. We accepted European subsidies that were ostensibly meant to improve competitiveness. Who knows where that money went, but it certainly was not used to bolster technology or the once-strong agricultural, shipping, tourism, textile and manufacturing sectors.
This 30-year history of government waste was the prelude to its decision to join the EU. If only we had taken our time, put our financial house in order, a gradual entry might have worked.
The Greek people during these decades were influenced by the rest of Europe and the West, turning their savings over to risky investments recommended by politicians. They lost everything. Now they are in debt and out of work. Young people are moving to Australia and other places where opportunities beckon.
The recent deal signed by Greece is, in my opinion, a disastrous anti-growth plan. My hope is that the Parliament will vote against it. If we allow the troika from the International Monetary Fund, the European Union and the European Central Bank to impose this plan on Greece, we will soon learn that a country cannot grow with high taxes and draconian reductions in salaries. We need exactly the opposite public policies.
Back in 1974, I was an undergraduate studying economics. I watched as politicians essentially threw my fellow citizens into the EU in 1981 and into the common currency waters in 2001, telling them they must learn to swim. We still haven’t learned, and that’s why things will only get worse under today’s effort to avoid default.
I believe that unless Greece leaves the eurozone, refuses the loan and stops its debt payments, it will be impossible for the country to recover.
Again, I hope I’m wrong, but history tells me I’m correct.
John N. Kallianiotis, a native of Greece, is professor of economics and finance at the University of Scranton.
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