"If we start kicking states out, then the crisis of confidence in which
the Eurozone finds itself today will only worsen. Financial markets will
immediately turn on the next country. This would be the beginning of a
long, drawn-out period of agony, in whose grasp we risk sacrificing
Europe’s social model, its democracy, indeed its civilization on the
altar of a conservative, irrational austerity policy." - Thomas Piketty
This momentous interview with Piketty, the author of hugely acclaimed book 'Capital in the 21st century' was translated from the original German (in Die Zeit) by Gavin Schalliol and was published in English by The Wire. Excerpts:
This momentous interview with Piketty, the author of hugely acclaimed book 'Capital in the 21st century' was translated from the original German (in Die Zeit) by Gavin Schalliol and was published in English by The Wire. Excerpts:
ZEIT:
So you’re telling us that the German Wirtschaftswunder [“economic
miracle”] was based on the same kind of debt relief that we deny Greece
today?
Piketty:
Exactly. After the war ended in 1945, Germany’s debt amounted to over
200% of its GDP. Ten years later, little of that remained: public debt
was less than 20% of GDP. Around the same time, France managed a
similarly artful turnaround. We never would have managed this
unbelievably fast reduction in debt through the fiscal discipline that
we today recommend to Greece. Instead, both of our states employed the
second method with the three components that I mentioned, including debt
relief. Think about the London Debt Agreement of 1953, where 60% of
German foreign debt was cancelled and its internal debts were
restructured.
ZEIT:
That happened because people recognised that the high reparations
demanded of Germany after World War I were one of the causes of the
Second World War. People wanted to forgive Germany’s sins this time!
Piketty:
Nonsense! This had nothing to do with moral clarity; it was a rational
political and economic decision. They correctly recognized that, after
large crises that created huge debt loads, at some point people need to
look toward the future. We cannot demand that new generations must pay
for decades for the mistakes of their parents. The Greeks have, without a
doubt, made big mistakes. Until 2009, the government in Athens forged
its books. But despite this, the younger generation of Greeks carries no
more responsibility for the mistakes of its elders than the younger
generation of Germans did in the 1950s and 1960s. We need to look ahead.
Europe was founded on debt forgiveness and investment in the future.
Not on the idea of endless penance. We need to remember this.
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