Thomas Piketty isn’t mincing words when it comes to the Greek debt crisis.
In an interview with German newspaper Die Zeit last month (and translated recently by business analyst Gavin Schalliol), the leading French economist pummeled Germany for its hypocrisy in demanding debt repayment from Greece.
Greece on Sunday voted a resounding “no” on a bailout plan proposed by its creditors, making its continued membership in the eurozone more tenuous. German Chancellor Angela Merkel and French President Francois Hollande will hold an emergency summit on Tuesday to discuss the crisis.
But Piketty, who penned the blockbuster 2013 book on income inequality Capital in the Twenty-First Century, slammed conservatives who favor the economic austerity measures Germany and France are demanding of Greece, saying they demonstrate a “shocking ignorance” of European history.
“Look at the history of national debt: Great Britain, Germany, and France were all once in the situation of today’s Greece, and in fact had been far more indebted,” Piketty said. “The first lesson that we can take from the history of government debt is that we are not facing a brand new problem.”
“However, it has frequently made other nations pay up, such as after the Franco-Prussian War of 1870, when it demanded massive reparations from France and indeed received them,” Piketty said. “The French state suffered for decades under this debt. The history of public debt is full of irony. It rarely follows our ideas of order and justice.”
Piketty criticized the “infantile” moral uprightness of Germany, whose economic success upon reunification has led it to rebuke nations like Greece for being in similarly weakened financial states as Germany itself was in decades ago.
Piketty argued that the same debt relief accorded to Germany after World War II should be granted to Greece today.
“After large crises that created huge debt loads, at some point people need to look toward the future. We cannot demand that new generations must pay for decades for the mistakes of their parents,” Piketty said. “The Greeks have, without a doubt, made big mistakes. Until 2009, the government in Athens forged its books. But despite this, the younger generation of Greeks carries no more responsibility for the mistakes of its elders than the younger generation of Germans did in the 1950s and 1960s. We need to look ahead. Europe was founded on debt forgiveness and investment in the future. Not on the idea of endless penance. We need to remember this.”
Booting Greece out of the eurozone would splinter European unity and push markets to “turn on” the next struggling nation, he added. Instead, Piketty called for a conference to restructure all European debt. A committee in the European Parliament, for example, could be created to set a maximum budget deficit that would prevent debt from ballooning.
“Those who want to chase Greece out of the Eurozone today will end up on the trash heap of history,” Piketty said.