End the European Blame Game! Keynote at the British Foreign Press Association's 2011 Awards Night

The Foreign Press Association, London, paid me the compliment of inviting me to deliver a keynote speech at its 2011 Annual Awards Night. Here is the text of my talk (kindly transcribed by a journalist that wishes to remain anonymous).

Ladies and Gentlemen,

You can tell from my wide smile that it is a distinct honour and a great pleasure to be part of this celebration of fine journalism – even if  my role tonight is to serve as a living reminder of our world’s steady descent into generalised austerity.

I knew that this would be my sad role the moment I read the list of recent after-dinner speakers:

The Prince of Asturias

The Prince of Wales

The Mayor of London

A Greek economist!!!

A sharp drop of standards that a cynic would interpret as the Foreign Press Association’s fall from grace. However, I am quite convinced, that my invitation to be a keynote speaker tonight is a deliberate ploy by the Foreign Press Association to educate the public to, and to remind its members of, the sad and deteriorating state of our world.

Until two years ago, ladies and gentlemen, I was just a second rate economist. Now, I am considered a first rate Greek economist. A most dubious promotion, allow me to say.

Nevertheless, I must tell you that I do not mind at all appearing in front of you as the personification of failure. After all yours is a country that knows how to appreciate grand failure – a nation that has cherished Eddie the Eagle, developed a soft spot for Paul Gascoigne, even tolerated Nick Clegg was always quite likely to lend me an ear.

Truth be told, I would not be here now if my country, Greece, had not imploded and if Europe had not indulged in its current reverse alchemy, turning gold into lead – daily.

The curious thing about Crises, especially when afflicting foreigners, is that they can be a great boon for those in need of self-confirmation.

·         When the City of London imploded, along with Wall Street, we on the continent smiled smugly: The anglo-celts had gotten their comeuppance, we thought.

·         When Greece went belly up, soon to be followed by the popping corn kernels of Ireland, Portugal and then Italy and Spain, you Brits congratulated yourselves for having kept the Queen on your banknotes, rather than trade her for the non-existent bridges and gates of our euro notes.

·         Leftie economists saw the whole debacle as confirmation that free market capitalism cannot be civilised and, indeed, that it does not work.

·         Based on precisely the same facts, free marketeers concluded that it was all the fault of government getting in the markets’ otherwise brilliant ways.

In short, Crises confirm everyone’s prejudices, locking us ever more firmly into the same mindset that produced them in the first place.

Meanwhile, the human cost is piling up.

The result is that in my native Athens, in Dublin and in Cork, in Oporto and in Valencia, in mighty Germany and lovely Italy, countless people will go to bed tonight anxious, terrified – worried about how they will make ends meet in the morning. Speaking about Greece, the earthquake’s epicentre, I shall not bother you with standard macro statistics. Suffice to mention in passing the 50% increase in suicides, the quadrupling of the number of babies left at orphanages by despairing parents, the stories of young men who try to infect themselves with HIV in order to qualify for a small social security benefit, the old age pensioners who flock to the Electricity Company not in order to pay their bills but to request that their electricity supply be terminated, unable to pay for it.

In short, ladies and gentlemen, the lights are literally going out in our cities.

And those who initially thought this was a Greek problem are realising now that it is no such thing. That we are all embroiled in a systemic crisis that began in 2008 and which has been mutating and migrating ever since, picking out the weak links first before proceeding to the stronger.

This is of course not the time to dwell into causes and remedies. I am so relieved that, tonight, I can take a break from outlining proposals for dealing with the Crisis. And to be able to relate my experience with the countless journalists with whom I have spoken over the past two years – visitors in Greece trying to make sense, on behalf of their audience, of the mess that used to be a proud country.

To begin with, let me say that the quality of most foreign journalists I encountered surpassed my, admittedly, low expectations. In sharp contrast to Greek journalists, you were thoughtful, sensitive and had a keen eye trained on the reality on the ground. We Greeks may deserve our politicians but, at the same time, we do not deserve our appalling journalism.

Having praised you, I would like to present you with two pieces of advice, if I may. When trying to make sense of this Crisis, especially when abroad, you must avoid the fallacy of aggregation and the error of generalisation:

·         First, the fallacy of aggregation: Things rarely add up! What may work for one household, one firm, one sector, usually does not work for a large economy. If I tighten my belt during hard times, I shall overcome. If we all do likewise, throughout Europe, we shall all descend into greater debt and deeper misery.

·         Secondly, the error of generalisation: There is, ladies and gentlemen, no such thing as The Greeks or The Germans or, for that matter, The Brits. We are all individuals, as Brian famously struggled to convince his self appointed disciples. And we have more diversity among our people than we have differences across our nations.

1929 should have taught us two things:

·         First, that unless governments coordinate action effectively and create new institutions for integrating their societies further, a banking-cum-debt-cum-real economy crisis destroys the common currency of the era. The Gold Standard then, the euro today.

·         Secondly, that such a deep crisis engenders a Hobbesian war of all against all that starts when we utter sentences beginning with “The Greeks do this” or “The Germans think that”.

Our very own crisis, that started in 2008 and is continuing with a vengeance, must teach us a fresh lesson:

Rather than play the blame-game, we might as well accept that everyone is to blame. If you want, it is time to acknowledge that We Are All Greeks Now. Including the Germans!

This is not to say that some do not bear a larger share of the responsibility than others. We Greeks paid ourselves more than we could afford. Tried to avoid paying taxes. Over-borrowed. And produced little to account for our life-style. A whole nation tried to behave like the City of London’s bankers! Only the Greek state could not give its citizens knighthoods and could not stop many of them from actually moving to the greatest tax haven there is: London.

Seriously now, the blame-game is the worst legacy of this crisis. It dulls our reason and does to us that which hyper-activity inflicts upon those caught in quicksand.

Lastly, I note with satisfaction that the organisers invited tonight a Greek and a German. I submit to you that if we manage to drop the penchant for the blame-game, and instead shine the bright light of reason on the true causes of our crisis, we shall soon see that the problematic euro coin has two sides that are equally problematic. A Greek side but also a German one. For in the same way that Greece cannot seriously expect to be perpetually in deficit, Germany cannot seriously believe that it can escape the global crisis by expanding its surpluses vis-á-vis the deficit countries while insisting that the deficit countries eliminate cut their deficits.

It is time, ladies and gentlemen, to do something that Europeans have never done before – and I include you Brits in this. To look into each others’ eyes in the midst of a continental, a global crisis, and stop searching for someone to blame, to belittle, to despise. To look into each others’ eyes and, suddenly, recognise a partner with whom to plot a course out of our collective mess.

Hopefully, you will be around when this happens to report it in full technicolour and with words that warm the heart and inspire the mind.

Thank you.

45 Comments

  • Ahh, that was beautiful. Never thought that economists could have fans. And now I am one 🙂 On the other hand, I never knew sane economists even existed before I read Keen and Varoufakis.

    Greetings from Finland!

  • Confidence is the con in con game.

    The solution is income equality. The parasitic rich can give or have it taken.

    • Winners and defeated are continuously pronounced in every part of the world at al times regardless of the system priorities; free market, communism, etc. What might one hope -and probably the best for a civilised society to achieve- is not for elimination of inequality, but for a human management of the defeated. Noone should be born defeated, noone should receive a lifeteme conviction to a defeat, defeat should not be equal to death. Undoubteldy, this version of capitalism have failed on this.

  • Congratulations on an excellent speech. Most economists tend to get caught up in figures, accountancy style, and models, which as you have so rightly pointed out, mean nothing other than exciting mind games, like chess. At last a human voice from an economist. If this is from ‘a second rate economist’ or, worse (!) from a first rate Greek economist, perhaps we should have more of these all over the world! The plight of the people, particularly here in Greece, is totally unacceptable. Do we have to wait for life to get even worse throughout Europe before a sea change in policy occurs, despite our dogmatic free market economics ‘leaders’? And anyway, as Joan Robinson said so many long years ago (and I paraphrase of course) what is economics for? Profit maximization or the greater benefit of the people? Dismantling the whole welfare structure of Europe will only lead to a dangerous and sorry end. Perhaps particularly for those perpetrating this destruction with a vengeance.

  • I really am impressed by your speech and what you say in it, with its subtle sense of irony and of humor, saying a lot about the predicament we are in with so few words.
    But if I have to remark something that are the words “Crises confirm everyone’s prejudices, locking us ever more firmly into the same mindset that produced them in the first place”. Not so many times I have seen saying so much with so few words, with that level of clarity and and so straightforward. Thank you!

  • Herr Professor Doktor or simply Mr Varoufakis,
    This is brilliant and so spot on, Your command of solutions and venues is masterly.

  • I wish our politicians could give such an inspiring speech! Thank you for being there and represented us in such a way! Keep going…keep strong

  • “And in Cork” – never heard a international speaker refer to Dublin & Cork in quite that way in this context.
    Perhaps we are close to Breakup of European nation states also ?
    I for one welcome my new Overlords in ………………
    Anyhow Europe did try to exaggerate the difference between European provinces for a while in the early 90s so that they could smash the nation state.
    If we are going all medival we might as well go all the way anyhow.
    Troika attache to Munster sounds like a plummy easy job with the right security.
    Although I remember the French governor of Corsica or whatever getting taken out 10 or more years ago – perhaps not.

    Thats what happens when you try to teach a bunch of Genoise & netholitics the French language I guess.

  • Excellent speech.

    The ”we have more diversity among our people than we have differences across our nations” is an oasis of clear thinking in the muddy road of creeping nationalism we experience both in Greece and abroad right now.

    This point needs to be stressed further in order to avoid a sterile nationalistic attitude which masks the true causes of our predicament.

  • Professor Varoufakis,

    Fine speech.

    I watched your interview with Henry Farrell on CT today – equally excellent (Prof. Farrell was also an exemplary interviewer – he let you talk!). Many people, both Greeks and non-Greeks, are gradually becoming conversant with the “Modest Proposal” and thus, coming to better understand what is really being enacted (“going down”) in the EMU.

    Finally: bravo for identifying the dangerous – frightening, really, to those living in Greece – “rehabilitation” of the far right. This, imho, deserves to be stressed, and stressed frequently (say, daily) by all Greek liberal commenters/liberal blogs.

  • Related to Varoufakis tirade against LAOS and some of the comments above, the reality is that the most Fascistic elements of Greek society since 1981 have come from the extreme Left i.e. smashing parts of Athens and Thessaloniki, stifling intellectual debate, burning bookshops, political assassinations, threatening academics, shutting down schools and so on. Extreme elements of the Right are dangerous; however, it is mostly the extreme Left which has terrorised Greece over the last 30 years. Of course, Varoufakis fails to mention this because he is a very political partisan commentator.

    Also, the rise of nationalistic parties does not necessarily lead to Fascism. This is a logical fallacy. The FN in France has been existence for over 30 years, and precursors for longer, and it has not lurched into anything faintly resembling Fascism. In fact, FN has probably become moderated by being involved in the political process. To some extent, although LAOS is not nationalistic but just a bunch of clowns, has also moderated since becoming more prominent.

    Ratherthan simply dismiss the so called resurrection of the Right, perhaps people should try and understand what is motivating people to vote for these parties and take some of their mostly legimitae concerns into consieration.

    • Hermes, you are off topic. I, and probably many other readers, would respond to your skewed complains if you had posted them in the right place. And if you had been following this blog hoping to find justification for some ill conceived patriotic (indignado) sentiment of yours, well tough luck, this was not the place.

  • @Hermes You either have a very short memory or you moved to Greece after 1974. Any other explanation would fall in the jurisdiction of fiction movie script writers. Because the extreme and not-so-extreme Right has been terrorising Greece since the establishment of the Greek state. Even alleged anti-state actions of the Left have been organized and carried out by fascist provocators and their political patrons.
    You must have known our great leader Ioannis Metaxas (fascist dictator and Mussolini fan) who established Greek islands as “resorts” for “non-patriots” and alleged communists.
    Even if you lived abroad you might have heard or read about the “social beliefs certificates” issued by the police that allowed anyone to work for the State, the exiles, the imprisonement of “non-patriots” etc.
    You might have heard of Grigoris Lambrakis, Spyros Moustaklis, Alekos Panagoulis and many others. They were all “kindly” treated by the Left regimes and leftist terrorists haven’t they?
    But when the State in any form terrorises its people, it’s not terrorism it is law and order, as some of your LAOS friends might say. So keep up the good services to anti-terrorism actions and don’t lose your admiration for FN (unless you are Arab or African).
    Then maybe in your deep sleep you might see a dream of how people vote for parties that have been given political absolutions by views like yours. Sweet dreams!

  • Excellent speech. I can only hope you prove to be prophetic in what you propose to avoid the Eurozone meltdown, because until now, you have proven chillingly prophetic in your prediction of the Eurozone downhill. You were one of the very few to point out the systemic nature of the eurocrisis, in an era where Greeks were the personification of the Antichrist for the whole world.

    Thank you for educating me in economics in a very simple manner, with simple words, instead of arrogantly withholding information like a priest of some sort of Financial Cult, as most of your Greek colleagues seem to be doing at the moment.

  • In your speech the Greek people is presented as poverty stricken from the austerity measures.

    But apparently you missed to mention that there is great tax evasion.

    You also missed to mention that salaries of civil servants are too high in relation to their productivity.

    However the suggestions that you made in your speech for eliminating the effects of the austerity measures are groundbreaking…..

    • Apparently, you have not read my text carefully enough! E.g. the passage where I said: “We Greeks paid ourselves more than we could afford. Tried to avoid paying taxes. Over-borrowed. And produced little to account for our life-style.”

    • Why didn’t the Troika set targets to reduce tax evasion and improve worker productivity in the public sector? They could easily have done so as a condition for the bailout.

      Yet they chose to focus on reducing the deficit through austerity and privatisations instead, an ideologically motivated decision likely to benefit not the common good but the private pockets of a small elite. These are the so-called ‘structural reforms’, demanded by Mrs Merkel, sadly.

      It seems to me that no matter what you say, Yanis, some people can never hear it repeated often enough that the Greeks have only themselves to blame for the crisis. To some ears, this is a soothing mantra because this way they never have to question themselves about what really went wrong. The reason the European blame game is proving so tenacious and so addictive is that many people just find it very comforting!

  • Professor,
    You succeed to shed light to simple long-hidden and forgotten principles and values – significant elements also necessary for the solid foundation towards the solution.
    Thank you.

  • Mister Varoufakis…..sorry for my bad english…..i follow your opinions quite a long time now and i found my self agreeing with you(even though i don’t necessary understand all of you saying)….the only problem i have is that even if i understand the nature and physiology of the systemic problem of the eurozone as it is,seems to me that a war was going on between european polititians and economologists…..or let me say a conflict between political systems and global finance system.This “fight” was in cryonic state for several years because of the growth of the european economy.The chaos theory in physics tell us that,in simple words,you can’t maintain stability for a long period of time,somehow the balance it self will produce an anomaly,which in the end will deconstruct the structure of the system.This problem gets bigger and comes earlier if the foundations of the system are made out of clay.How much time can we buy if we reform our economical structures??Maybe the time has come to the polititians and economologists give themselves a break and instead of looking up and trying to keep a bankrupted banking web,to look down to the people.I feel ungry when i hear “you have those that you deserve”.Unfortunatelly there is no “shut down” button….i see only a “restart” one and restarts eventually will lead sooner to the same results.I find my self confused and i can’t be optimistic about our future.

  • Excellent speech. Thank you very much proffesor for something inspiring in these bleak and dreadfull times!

  • Dear Mr. Varoufakis,

    i would like to congratulate you for your speech and the excellent line of arguments. Unfortunatelly, most of journalists here in Greece promote ideas and arguments based on the interests of their bosses (‘megala’ kai ‘ourania’ channels) and because of them, people have turned against other social groups in Greek society and Europe. We miss the vision and methodology how people altogether can try and minimise the effects of the crisis in their personal life and country as well. But, i want to express one complain….Mr Varoufakis instead of promoting your ideas as an individual, why not put forward a movement where people who share your thoughts will join and take some actions and initiatives? it is time for people with ideas and not stupid political old fashioned concepts to come forward!

  • “Now, I am considered a first rate Greek economist…” …By whom???Is there any official validation for this statement??…It’s intriguing to present oneself “top” before a crowd that is not in a position to really judge if this is half way true..

  • Definitely, it is an excellent speech. Professor Varoufakis saves the day for us abroad.
    However, we must control our excitement about the impact of the speech on the British audience, and beyond. To us it is an excellent expression of our feelings. To them it might sound as a self-serving approach (by us the Greeks; Prof. Varoufakis being seen as our mouthpiece) who first acted as irresponsible teenagers living lavishly on borrowed money and now that we found ourselves short of cash we act as modern clergy on paid TV preaching love and compassion,….. and money donations from the faithful (counting on the fact that there are many fouls around!!!!)

  • Professor Varoufakis, dear Yanis if you will,

    Being a follower of your general stance and ideas on Crisis for some time now, although nothing new came out from your speech, no fresh rabbit came out of your hat, your words have once more hit the bulls-eye and were definitely inspiring.

    And i really wonder how long will it take for all implicating parties, aka entire global economy in my viewpoint, or almost entire at least, to realize that one link cannot cope alone with its weakness when it’s part of a large chain…

    Left-wingers vs right-wingers, Eurozoners vs non-Eurozoners, Central Europe vs peripheral countries, public vs private sector, debtors vs creditors how long will they still argue (or pretend to do so!) while keeping on the escalation in a “blame-game” that, despite the seemingly conflicting interests, in the end we all lose…?

    Similarly, in my micro-world, with an unemployment rate going higher and higher as we speak and as a 35 y.o. finance director of a medium/large-sized Greek firm how utopist should I be to even think that, no matter if my trade creditors, customers, banking system are gradually falling apart, it just takes a few intra-company austerity measures to come up with the “magic potion” against the recession, instead of a massive business model redesign??

    With a bit of exaggeration, yet with no intention certainly to undervalue your ideas, it seems to me that your suggestions are based on three pillar-courses, a young student attends during his or her college studies:

    1. Introduction to Economics & Finance
    2. Introduction to Strategic Thinking
    and most importantly, a course rarely found in the academic programs
    3. Introduction to Common Sense!

    Now…since i find it rather difficult for the decision-makers to have failed the above courses, the question, naturally, is the following:

    Is it a game of ignorant, egopathic, hence dangerous politicians or a game of devious, well-planned, inter-dependent hence (again!) dangerous politicians, where in the end “the winner-takes-it-all”?

    In the first case we ALL have to stand up, shout out, overthrow them and bring logical reasoning back where it deserves to be!

    In the second case, however, shouldn’t we better just save our breath, sit back and watch the contemporary “Burning of Rome”?

    As the famous Serenity prayer suggests “God, grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.”

    Yet…Is anyone wise enough to know the difference in this case? Assuming not, one should do whatever his or her Conscious dictates: Accept or Change!

    So for what is worth, on behalf of my personal Conscious please accept the compliments for not accepting things and trying to change them!

    Alexandros

    • I go for option Two, Government Sachs and the rest of them crooks on the axle Washington-Wall Street. The handmaidens (another beautiful finding from YV) took over ship, as they did during the good old days of piracy. No matter what, high finance is so high it seems stemminmg from another universe, interstellar, whatever: It has made them untouchable, that is. HFT, black boxes, lobby, six trillion worth of PCLF for three Amercan banks alone,

      Laws nor treaties nor crises will get them staightened out, jailed, sentenced, whatever, simply because they do’t intend to.

      They have perfectioned their speculative scams, proven time and again being able finding niches everywhere and while the stakes are getting bigger, so do the bailouts. Simply unbeatable, devilish in the true meaning of the word.

  • Good speak !!!
    but I would like to be less spirituel and more constructive
    i thing this is the critical point now for all as …(euro-peans)

    because the danger of our spirit is this one …in our real life and economie…

  • Excellent speech !
    there is, however, a point missing or rather, vaguely referred to, in your line of arguments, Yiannis: in every crime, no one can get prosecuted unless a solid, serious motive can be established. In the handling of the present crisis by the Mercozy Directorate, the blame attributed usually goes along with a flavor of ailing mental faculties of the persons in charge ranging form narrow-mindedness to inaptitude or even reference to Inquisition-type rigid Lutheran Ethics dictating purging fires for the deviants. Yet, in your previous post “Abandoning a sinking ship” you mention Warren Mosler putting the blame on “political rather than economic reasons”. Could you please elaborate on the politics aspect? Up to now you have given us a most fine account on the “how” our lives are being destroyed, I would be very much interested on knowing some of the why’s!

    thanks again for being so lucid in your ideas

  • congratulations prof.varoufakis! you made us proud greeks.we certainly needed it for quiet a long time.Im been watching your speeches and i follow your ideas. Thanks for inlighting me.

  • Dear Yannis,

    Several months ago I would fully embrace your point of view. Mainly, that we can actually constitute a more or less compact EUROPEAN FAMILY.

    however, I recently had a chit chat with a prominent English journalist, editor in ne of the most known serious English papers.

    And he very simply hit the spot; really, what do Greeks have in commn with Germans?

    What to Dutch have in common with Catalans? What to Brits have in common with Portoguese?

    At least the cold blooded English knew all along how different they are, and that they could never accept a rulling Germany EU.

    Sooner or later it happen my dear Yannis. Now, or in ten years, it will happen.

    My best

    Try to get yourself out of the picture for a while, αποστασιοποιηση το λενε στο θεατρο…

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