If Greece Stays in the Eurozone, It Has No Future

About John Kallianiotis:

John Kallianiotis is a professor of finance at the University of Scranton and a native of Greece.

The European Union tried to equalize 27 heterogeneous countries, with different value systems, work ethics, factor endowments, dogmas, languages, and objectives in life. Of course, nothing of this has happened, and the cost of integration has exceeded the benefits for the Europeans. Citizens have lost their jobs due to competition from the other country-members and from other foreign nations with which the European Union has signed free-trade agreements. Prices have increased because of the common market, goods are moving to markets with higher income and prices—to attract them you have to pay the same high prices, which is impossible for Greece because income there is lower compared to the wealthy manufacturing EU members of the North.

[See a collection of political cartoons on the European debt crisis.]

Also, an overvalued common currency, the euro, has destroyed exports, foreign investments, tourism, shipping, and many other activities. The current trends—increase in taxes. rise of the value-added tax, reduction in wages, salaries, and pensions, weakening of the power of labor unions, reduction of subsidies, increasing the number of years for work, privatization of state-owned enterprises, and layoffs of public workers—the tremendous austerity, and many other measures that are coming soon are against the poor Greek (and the other European) citizens.

It seems that all the big political parties in Greece became neo-liberals (market oriented and acting against the social interest of the country and its citizens) and some of them, very corrupted. The worst for Greece were the two inhumane memoranda that Troika imposed on Greeks. The country has no independent public policy to stimulate its economy and improve growth through an expansionary monetary and fiscal policy and through devaluation of her currency.

If Greek politicians had taken some measures earlier, there would be no need for the current austerity measures and the anti-social reforms or the sale of Greece's public wealth by putting it up as collateral to foreign lenders. This is the reason that citizens voted against the big parties during the elections on May 6, and now it is difficult for them to have a democratic elected government in their country. Politicians have to anticipate and prevent crises, not correct them, because it is too late, and the disaster has been accomplished to the current and future generations of the country.

[See pictures of the EU in crisis.]

Unfortunately, the measures imposed by Troika will deteriorate the economy further; the deficit will increase, the unemployment will go up, the recession will become deeper, and the country will face other external safety and security issues. Troika forces Greece to privatize the entire public sector; now that the prices have fallen so much, it is selling it for free. The sale of the national wealth is a crime against the nation and its citizens, and Greek politicians have to say "no" or go home. These austerity measures are absolutely wrong, and the Greek politicians are responsible for signing the referenda. Greece has to leave the eurozone; stop payment on any loans until it recovers and pay only a moderate interest rate on loans, similar to that of other sovereign nations; go back to the drachma (at an initial exchange rate 1 Dr/€); and to use its public policies to exit from the recession. If Greece makes the mistake of staying in the eurozone, it will have no future. Greek citizens cannot undertake the cost of adopting the euro and should not be liable for their governments' debts and mistakes. Greece has to leave the eurozone for the benefit of its own citizens.

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Tags:

global economy,

European Union,

euro,

Greece