So it turns out voters kind of hate living through an economic depression. Shocker, right?
As was expected, the anti-austerity leftists of Syriza triumphed in Sunday’s Greek elections, winning 36.3 percent of the vote and coming just a nose hair shy of winning an outright majority in the country’s parliament. They’ve already formed a government after striking a deal with the Independent Greeks, a far-right populist party with a charming habit of dropping anti-Semitic conspiracy theories that won a small chunk of the vote because it too really, really dislikes the austerity measures that European authorities demanded in return for a bailout.
Meanwhile, the good folks of Golden Dawn—a bona fide neo-Nazi party whose leaders are sitting in jail accused of murder, among other charges—managed a third-place showing. To be fair, the BBC points out that their platform was more “anti-establishment” than “anti-austerity.” Same theme, though. People are angry, and they’ve tossed out the mainstream pols whom they feel failed to protect them.
It is hard to say exactly what comes next for Greece. Syriza leader Alexis Tsipras, who was sworn in as prime minister today, has pledged to renegotiate the terms of Greece’s sizable government debt with European Union officials. His party wants half of the loans forgiven so it can use the money that would be spent paying lenders on stimulus instead. All-important Germany has more or less said “fat chance” to a mass write-off, but it may be open to negotiating smaller changes. And personally, I think it’s unlikely that the confrontation will escalate so terribly that Greece will finally exit the euro, as some fear. The country’s economy is still in the gutter, sure. Its gross domestic product is 26 percent smaller than in 2008. Unemployment is still an ungodly 25.8 percent. Youth unemployment is a barely comprehensible 50.8 percent. But last year, Greece finally returned, however meekly, to growth. Joblessness has been declining, albeit slowly. The European Central Bank is finally loosening up its monetary policy. Abandoning the euro and defaulting on its debts would undo that minor progress and send the economy deeper into oblivion.
To put it another way, children may be starving in Athens, but with a Grexit, even more would go hungry. That doesn’t seem like a path anybody would want to travel down. But then again, what do I know about Europe’s future? After all these years of twists, what does anybody know?
So maybe it’s best to think a little bit about the past. Greece’s tragedy was caused by more than just austerity. (Its enormous debt load was a crisis in the making, and Europe’s stingy monetary policy has compounded its pain.) But the tax hikes and spending cuts it agreed to in return for its bailout loans have made it worse than even the country’s lenders expected. The International Monetary Fund has admitted that it, along with the European Central Bank and European Commission, likely underestimated the damage that belt-tightening would do to Greece’s economy. And where they projected that unemployment would hit 15 percent in 2012, it instead hit 25 percent. Point being, lenders knew they were about to subject Greece to years of suffering. They just couldn’t fathom how much—which is the sort of mistake you risk when you try to prescribe budget cuts like some sort of wonder drug. The downside risk of stimulus spending is a bit more debt. The downside risk of austerity is you further crater the economy, and maybe convince some angry voters to start casting ballots for, you know, Nazis.