Last night, the University's Nanovic Institute of European Studies organized a panel at the Hesburgh Center Auditorium titled "The Greek Crisis and the Future of Europe," which presented information about the economic crisis in Greece.
The panel consisted of professor of economics Rüdiger Bachmann from Notre Dame, professor of political science George Tsebelis from Michigan, Dr. Christopher Waller, the senior vice president and doctor of research at the Federal Reserve Bank of St. Louis, and professor of comparative politics Jim McAdams from the Notre Dame.
“What makes [the Greek financial crisis] so fascinating is that it’s multiple crises,” McAdams said. “It was a crisis for the Greek economy, it was a crisis for the Greek welfare system, it was a crisis for southern Europe in different ways ... not just the Eurozone but also what Europe was since World War II.”
Waller said Greece’s financial issues started long before the 2010s as Greece initially failed to meet all of monetary criteria needed to adopt the Euro, though they were allowed in the following year. What Waller said happened years later were investigations revealing large deficits in the Greek GDP which led to to tumultuous default and recovery.
“Their unemployment went from 5 percent to 25 percent. Their GDP fell 25 percent," he said. “If you’re not aware, that’s [similar figures to] the U.S. Great Depression. They started doing better on tax collections, cutting spending, laying off civil service workers — if I remember correctly about 50 percent of the labor force. ... The economic conditions and the austerity were going to lead to social revolt.”
Tsebelis said the revolt manifested in Greece’s near-adamant refusal to agree to the conditions of the bailout, which the European Union (EU) refuses to alter and Greece’s own parliament split on whether they should even stay with the EU. With elections coming soon and polling data unclear, Tsebelis said the political future of Greece seems very unclear.
“So it’s going to be a very difficult outcome to predict," he said. “What will these organizations produce after the elections? With respect to the euro now, the EU has not budged throughout the seven months of negotiations ... and they continue to not give Greece money except on a conditional basis.
“Another thing the Greeks don’t understand is the decision-making in the EU is through unanimity which means ... it’s another 28 people you have to persuade,” Tsebelis said. "Even if they were able to make reasonable arguments — which the Greek government was not able to do — they could only persuade one, two or five.”
Bachmann said there are better measures Greece could take than tax hikes and privatization and finding the best way to get Greece out of this crisis will take smarter policies with public investments. He said they could invest in growth, green energy and foreign investment tax credits.
“We need to think differently, and I’m trying to advertise some sort of standard demand-side and standard supply-side policies.” Bachmann said. “ ... I think we’ll need an intelligent mix between ‘carrots’ and ‘sticks.’ We need to find the right amount of micromanagement and that is hard.
“This is a question for European democracies that I unfortunately don’t know the answer, and I hope we’ll get closer in this debate.”
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