Auf Wiedersehen to Austerity?

With the January 25th elections in Greece approaching, Dimitri Papadimitriou writes about the future of Greek policy and the discussions that took place at a recent Levy Institute conference in Athens:

At the Athens economics conference, Europe At The Crossroads, the participants were a diverse collection of policymakers, overflowing with disagreements on the very best route to growth. Nonetheless, with one notable exception (the leader of Ireland’s central bank, endorsing European Central Bank policy), the overwhelming majority united on a single principle:

The bailout and its related austerity programs have failed miserably. […]

The home base of some of the conference’s strongest austerity critics may come as a surprise. Peter Bofinger of Germany, the only Keynesian in Chancellor Angela Merkel’s council of economic advisers, described the risks the current approach poses for Greece, France, and Italy, and outlined why a continuation also threatens to destroy the rest of Europe.

That includes Germany. Pointing to serious weaknesses in its economic foundations, Bofinger particularly singled out the FRG’s problematic physical infrastructure, an issue echoed by Elga Bartsch, Chief European economist at Morgan Stanley. And Bofinger raised the widely ignored fact that — despite endless German bellyaching about the so-called EU drain on its wealth — Germany’s contribution to other members of the European Union has been exactly zero euros.

Read the rest: “Hello 2015. Goodbye Austerity?”

You can listen to the Bofinger presentation here.

The rest of the presentations from the Athens conference, including that of Syriza MP Yannis Dragasakis, can be found here; slides are posted here. Video of the presentations will be posted shortly on the Institute’s YouTube page.