John Weeks is a professor emeritus of the University of London's School of Oriental and African Studies and author of Economics of the 1%: How Mainstream Economics Serves the Rich, Obscures Reality and Distorts Policy. His recent policy work includes a supplemental unemployment program for the European Union and advising the central banks of Argentina and Zambia.
transcriptSHARMINI PERIES, EXEC. PRODUCER, TRNN: Welcome to The Real News Network. I'm Sharmini Peries, coming to you from Baltimore. Leading up to the Greek elections that will take place on January 25, opinion polls are showing that the left SYRIZA Party, headed by Alexis Tsipras, is leading. It is a small but a steady lead. This is the party that has clearly articulated an anti-austerity policy on their platform. To talk about this and what it means to Grecians, from Houston, Texas, is John Weeks. John is professor emeritus of the University of London and author of the book The Economics of the 1%. Thank you so much for joining us, John.JOHN WEEKS, PROF. EMERITUS, UNIV. OF LONDON: Thank you for having me again.PERIES: So, John, last week in an interview that I did with Bill Black, we talked about how The New York Times and The Wall Street Journal has been covering austerity and the economics of Greece in their paper. Now, it seems a bit skewered when you put the numbers in place. Tell me about how the European press has been covering the austerity policies and how it is affecting Grecians.WEEKS: Well, the general approach for the European media--let me say that I only know the French and the English language media, because I don't read Greek--but is that this is a very dangerous situation for financial capital [incompr.] I should say there's one important exception. That's Financial Times of London. I mean, the capitalists read that, so they have to get the real story. The Financial Times, interestingly enough, has a more realistic approach, which I'll mention in a moment. But the general approach is to say that there is this far-left radical populist party in Greece that threatens to renounce the debt and refuse to follow E.U. austerity rules. And as a result of that, if they win the election, it will be an absolute disaster for the economy and for the people, and that something must be done to try to demonstrate to Greeks how terrible this choice would be. The Financial Times is a little bit more realistic. Not that it gives, I think, a lot of concern to the Greek people, but it says financiers, speculators, are now recognizing that the Greeks will not be able to pay their debt, no matter who the government is, and they're beginning to talk about alternatives of what the Greek government might do. Now, the main alternative that they talk about is actually a very extremely mild one that is issuing new bonds with a slightly lower interest rate on a longer maturity rate. So the idea is that the Greeks will still pay off. You just give them more time for it. But the mainstream press, other than The Financial Times, says, oh, they have to pay or it'll be an absolute disaster.PERIES: Now, in actuality, SYRIZA Party is saying that one of the first things they will do is renegotiate the debt. What do they mean by that?WEEKS: First thing that people ought to realize is there's been a lot of misrepresentation about SYRIZA. I think--I very much hope they win the election, because they have a sensible policy. They are not a radical party. They are not a populist party. They are a standard social democratic party that has centrist elements and left-wing elements. But what the party's position is, its realistic position is: Greece can't pay the debt, will never pay the debt, so why keep the Greek population suffering on the pretense that we can pay the debt? So if we come to power, we are going to renegotiate the debt. What I suspect that means is that there would be a negotiation with the European Union--maybe I'll have time to say who actually holds the debt. But I suspect what SYRIZA would want would be that part of the debt would be completely canceled, and what remains would be refinanced with a lower interest rate and longer terms. But I think they would not accept the position that the entire debt would be refinanced. I think that they would demand that part of it be declared nonoperative. Whether that would be--half of it would be renounced or negotiated to zero or what, I couldn't exactly say. That we wouldn't know until the new government comes to power and states what its opening negotiation will be, position will be.PERIES: Now, let's get back to the austerity measures in place. Now, Greek people have been experiencing horrible conditions in terms of living their normal lives, in terms of jobs, the rate of unemployment, the cost of things, and so on. So what would being anti-austerity actually meet for ordinary Greek citizens?WEEKS: I should just say, I mean, there's a lot out about the statistics, but I'll point out one that the--for the lower half of the income distribution, that is, the lower 50 percent of the population, their incomes have fallen about 30 percent since 2010 and about 50 percent since 2008. I think that probably most of--I can't even imagine that income cut in half. I think probably most of the viewers can't. And added to that is a drastic decline in public services. So people now would, if they could, they would be paying for health or they'd be paying for aspects of education. So the disaster is very, very serious. What would the end of austerity mean? Well, I think the first and most important thing is that the very large portion of government expenditure going to service the debt would drop dramatically if the current SYRIZA position were maintained--I say if because, should they be elected, they will come under tremendous pressure, of course, and buckle under the demands of the European Union and the financial interests. So the first thing is they would be able to take their money, which goes to interest payments and principal payments, and use that for social purposes. Second of all, I think that they would begin to allow wages to rise. That would have, I would say, no impact on employment. Employment is falling because demand is falling, not in response to wages. Wages are going down. So wages would be allowed to rise. I think government expenditure would increase. That's a more complicated question, because the government would have to borrow to be able to do that in excess of what they have gained from reduced debt service payments. But in general it would mean more government spending, letting wages rise, and generally stop the antigrowth policies which are--continue to devastate and stagnate the Greek economy.PERIES: John, that sounds like a very reasonable policy for Grecians. Let's continue this discussion in our next segment, where we will look at some of the numbers backing up your case, John.WEEKS: Okay. I would be very pleased to do that.PERIES: And thank you for joining us on The Real News Network.
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