It seems this has been a battle heavily influenced by politics and philosophy, and very little by economic data. Greece was able to get into this position in the first place due to the same kind of decision-making. It was clear that Greece couldn't survive a EU recession, and from what I understand, they didn't meet the eurozone qualifications to begin with. The rationale at the time was that the EU powered by Germany's economic engine was good for Greece's exposure. This was an easy philosophy at the time, but it didn't make sense. When the bubble burst, it was just as easy to blame Greece's fiscal policies for their situation, and it made just as little sense. Greece was never a model for the eurozone, and pretending that it was before the recession was a fallacy, pretending that it was after the recession meant doubling down on the same fallacy. You can't resolve shared success and individual blame under the same currency.
Greece's problems are not so much caused by some political or economic trait particular to Greece, but rather by the structural trade imbalances within the Eurozone, and the Eurozone's restrictions placed on member states that prevent them from compensating for those trade imbalances. Spain, Italy, Ireland, and others are subject to this same effect, which is also inversely responsible for the capital accumulation in countries like Germany.
I agree, and sadly that phenomena is the case here in the US as well. I'd say our economic policy debates our 90% ideological and 10% data driven. Each side has its favorite economists and schools of thought it trots out with the requisite one or two examples of the philosophy "succeeding in the wild" or more likely, a couple examples of the other's philosophy failing in the wild.
As inflexible ideological policy initiatives are advanced, everybody just reaches into their quiver and pulls out an economic cult of personality and fires as they charge forward without even looking at the weapons in their hand. That's what it feels like anyway...It seems this has been a battle heavily influenced by politics and philosophy,
Everything you say is true but it has nothing to do with the linked article. This wasn't an article about Greece's place in the EU but about how the IMF viewed austerity in trying to save Greek economy. Also I find it ironic that you are talking about how Greece shouldn't be in the EU when the IMF claims that uncertainties like that pushed the Greek economy further down. Also, economic data from the article:But having agreed that there were exceptional circumstances that warranted the biggest bailout in the Fund's history, officials were taken aback by the much bigger than expected slump in the Greek economy. The country is now in its fifth year of recession and the economy has contracted by 17%. The IMF thought it would contract by just 5.5%.
What I am arguing is that the two are inextricably linked: the notion that Greek austerity was a rational remedy was seeded in the same fallacy, that Greece was a nation fiscally sound enough to participate in the Eurozone before the downturn. If you don't buy into the notion that Greece was qualified to get into the Eurozone to begin with (much less deserve the financing leverage that came with it), then you aren't apt to believe that they can handle the fallout by restructuring. I'm not sure I follow you here. I'm not saying Greece shouldn't be in the EU. I'm saying that they didn't qualify for the eurozone. They didn't maintain the fiscal discipline that eurozone countries are ostensibly required to.This wasn't an article about Greece's place in the EU but about how the IMF viewed austerity in trying to save Greek economy.
Also I find it ironic that you are talking about how Greece shouldn't be in the EU when the IMF claims that uncertainties like that pushed the Greek economy further down.
I don't see this as an economic problem but as a moral problem. If they had applied a stimulus program in Greece instead of austerity, maybe the economic contraction wouldn't be too big, but there would still be some. In corrupted countries neither austerity or stimulus are the solution. The solution is not an economic one, but a moral one. Iceland solution, which is so much used as an example in these discussions, wasn't an economic one of defaulting on their debt, but of jailing corrupt bankers, putting the blame in the right places, taking out the defective cogs out of the great system and adding mechanisms to prevent new defective cogs from appearing. The defaulting is a consequence of that, not the reason. A stimulus program in Greece wouldn't do much neither, because most of the money would be concentrated in a few corrupted pockets instead of trickling down to a large amount of the population.