Acropolis-on-Hudson

acropolis

As a snowy late winter continues to settle over the Hudson Valley, distant destinations seem more than a world away. For a region experiencing a deep freeze at the slowest time of year for commercial activity, the tribulations of the European economy seem more distant than the almost 5000 miles separating the Hudson Valley (population three million) and Greece (population eleven million). The only Athens most of us think about is the Greene County town (population four thousand) of that name.

For a bunch of economists settled in an elegant refurbished mansion on the Hudson River side of the Bard College campus in Annandale-on-Hudson, however, the Athens in Greece is frequently on their minds. These scholars at the Levy Economics Institute of Bard College are more than supporters of Syriza, an acronym for the Coalition of the Radical Left, which won the recent Greek national election with 36 per cent of the popular vote. The Bard contingent constitutes an important part of the new governing party’s economic brain trust.

Dimitri Papadimitriou, president of the Levy Institute, is the long-time chief assistant to Bard College president Leon Botstein. He is a consultant to the Syriza government and husband of Rania Antonopoulos, a senior scholar recently appointed deputy minister of labor and social solidarity in the new government. Her hope is to implement a wide-ranging program of public employment in Greece, which has in recent years consistently suffered the highest rate of unemployment in the European Union.

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Antonopolous and Papadimitriou were among the five co-authors of a 2014 Levy Institute policy brief advocating a mid-range program creating 300,000 additional jobs in Greece. That turned out to be exactly the number called for by Syriza during the election campaign.

Several other scholars of Greek extraction do research for the Levy Institute: Giorgios Argitis, Philip Arestis, C.J. Polychroniou and Michalis Nikiforos. Greek is the only language other than English with its own section on the Levy Institute website.

 

 

Keynes plus Minsky

A recent piece about the Levy Institute in The Nation magazine was titled “The Workers’ Think Tank.” Written by Sasha Abramsky, the article was extremely sympathetic to the Annandale institute’s support for Syriza’s anti-austerity position. The Levy scholars had led the way to warning about the Great Recession of 2008 and had been critical of what they characterized as the previous Greek government’s half-hearted and short-lived attempt to create jobs. Now these scholars, well regarded in their professional community, have developed proposals to achieve full employment in Greece — and in other economies as well. “It would be a shame, for everyone invested in true economic recovery and long-term stability, to ignore them [the Levy scholars] again,” Abramsky wrote.

The new leftist Greek government members desperately want to end the relentless and so far futile austerity regime imposed as a condition of the country’s rescue funding. No matter how profligate Greece’s previous spending has been, they argue, no country should be consigned to a hole so deep that it can’t climb out. The austerity required to service Greece’s sovereign debt can only ensure the continuation of the crisis.

“Greece must move beyond austerity,” Papadimitriou wrote in his preface to that 2014 policy brief, “and when it does, direct job creation offers a promising path to recovering from the policy mistakes of the last four years.”

The Greek government is seeking time — and money — to prove that a more pro-growth approach will be successful. It presented its less-than-completely-specific proposals to the European Union this Tuesday, and the EU finance ministers promptly accepted them. On Wednesday, The New York Times reporter Jim Yardley described the fuzzy new agreement as “a Kumbaya pause.”

It’s a complex business. Some European governments are focused on austerity, some on repayment, others on structural reforms of the Greek tax system and the labor market, and still others on accommodation to the Greek position.

Syriza and its supporters believe that the correct route to revival consists of stimulating expenditure by creating large number of public-sector jobs in the style of Franklin Roosevelt’s New Deal of the 1930s. The Levy Institute likes to describe its beliefs as “post-Keynesian,” adding to the pioneering work of John Maynard Keynes in the 1930s the insights of the economist Hyman Minsky, who believed in government stimulus not just by spending in any form but specifically through job guarantees for all through last-resort public employment programs.

 

Change in direction

“The issue is five years of suffering,” said Papadimitriou said in a telephone conversation last week. “It’s very hard to say what will be in the agreement, but it will be a change in direction.”

He seemed optimistic but very cautious. “There are always winners and losers,” he said.

Syriza would like to see more support from the United States. “You can’t afford to have Greece outside of Europe,” said Papadimitriou.

“You cannot keep on squeezing countries that are in the midst of depression,” U.S. president Barack Obama had told CNN on February 2 about the Greek crisis. “At some point there has to be a growth strategy in order for them to pay off their debts…” Obama also said reforms “should be made but not with austerity conditions, with development.”

Paradimitriou found Obama’s statement on the subject “better than nothing,” but seemed less than enthusiastic. Obama had also made reference to “dramatically tragic tax collections in Greece” and said he hoped the country would stay in the euro zone.

Douglas Elliott of the Brookings Institution recently presented a common-sense summary of the Greek situation based on four premises that made sense to me: First, the political and conceptual gap is too wide for negotiators to bridge now. Second, there are potential agreements that should ultimately be acceptable to all. Third, a real breakdown of negotiations would trigger substantial harm. And fourth, the dangers from a breakdown exceed the political pain of an eventual agreement.

 

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