After five years at the center of the eurozone's debt crisis, voters in Greece on Sunday bucked the austerity agenda backed by international officials and Greece's political and businesses elite, instead handing the reins of power to Syriza, a left-wing anti-austerity party helmed by the youthful, charismatic Alexis Tsipras.
Unlike Greece's Golden Dawn Movement or France's National Front, Syriza did not gain a constituency through the unsavory tactics of xenophobia, jingoism, bigotry, and hooliganism. Instead, Syriza rose from fringe faction to governing party in response to a horrendous set of economic conditions, fostered by the domestic and international elites.
Nobel Prize-winning economist Paul Krugman examines those conditions in his New York Times column today. Krugman explains that in May 2010, the severely indebted Greece entered a "standby arrangement" with the so-called troika of the International Monetary Fund, the European Central Bank, and the European Commission. The troika projected wildly unrealistic growth figures if Greece adhered to the policymaking elite's standard regimen of deep spending cuts paired with some tax increases; the sorry results speak for themselves.
Contrary to projections that unemployment would gradually decline, Krugman notes, joblessness now stands at depression levels: by 2014, an astonishing 60 percent of young Greeks couldn't find work, with overall joblessness mired at 28 percent.
As Greece slashed public services and cut back on wages and social benefits, Krugman observes, the government proved penny-wise and pound-foolish. These moves kept euros from the pockets of Greeks who would otherwise gone out and spent them in the real economy; instead, Greece confronted plunging revenues and continued indebtedness.
Even the austerians' supposed success stories collapse upon scrutiny; yes, the government is taking in a greater share of GDP in taxes, but that's because GDP has plummeted in the austerity years, Krugman points out.
So when voters headed to the polls Sunday, they opted for a different direction. Under Tsipras, Syriza promises to renegotiate the terms of Greece's international bailout and temper the austerity mania that has defined Greek policy for half a decade. And while Syriza's victory has the international ruling class clutching its pearls, Krugman writes that Tsipras are hardly wild-eyed radicals:
If anything, the problem with Syriza’s plans may be that they’re not radical enough. Debt relief and an easing of austerity would reduce the economic pain, but it’s doubtful whether they are sufficient to produce a strong recovery. On the other hand, it’s not clear what more any Greek government can do unless it’s prepared to abandon the euro, and the Greek public isn’t ready for that.
Still, in calling for a major change, Mr. Tsipras is being far more realistic than officials who want the beatings to continue until morale improves. The rest of Europe should give him a chance to end his country’s nightmare.