You are the greek prime minister. If you print money, Greeks will blame you for their misery. If you don’t, Greeks will blame Germany. What would you do? Why Greece will stay in the eurozone:
Collective wisdom has it that Greece might be forced to leave the Eurozone soon. That assessment seems to be particularly true if the radical left party Syriza is to take power on Sunday. All that collective wisdom rests on economic premises, a collection of necessities that drove us into this quagmire.
But it’s the politics, stupid. I believe that once you’re doing pretty well or incredibly bad, economics lose their primacy. Machiavelli rises with a simple premise: Any politician who is in power will want to stay in power.
Imagine Alexis Tsipras (Syriza) wins in a landslide victory and imagine he stops all austerity measures imposed on Greece as he has promised. What would happen? The troika would certainly stop giving money. Consequently, Tsipras would have to stop paying civil servants, banks will collapse, and a number of bad things will happen.
Now there are two possibilities: Either he has to print paper to pay them (And call it Drachme) or he doesn’t.
If he prints, even more terrifying things will happen to Greece. Economic collapse, bankruns and social unrest will follow. More details at ft.com, but in a nutshell: Greece will be pretty much fucked.
If he doesn’t print (and doesn’t get new loans from Europe) the greek economy will collapse, bank runs will occur and social unrest will follow. Greece will be pretty much fucked.
Since he faces two incredible evils, neither of which he can measure, this situation requires a political decision. The important difference between the two evils is: If he prints money, Greeks will blame him. If he doesn’t, Greeks will blame Germany. Democratic Machiavelli would say “Step one of staying in power: Avoid blame.”
It’s a little like that joke told by Slavoj Zizek at a recent press conference: A man walks into a bar. He orders a coffee without cream. The bartender says: “Sorry, we don’t have any cream, but we have milk. Would you like a coffee without milk instead?”
The greek coffee will be black anyway – and any political leader with an instinct for power will blame others of withholding cream before admitting that he has no milk.
Willkommen zurück, Griechenland!