Understanding Varoufakis

Yanis Varoufakis, the ‘minister with a blog’ is “minister no more”. This is regrettable, because contrary to what conservative politicians in Europe (including social democrats) want to make believe, he is a consequential economic thinker and proponent of a more humane approach to solve the ongoing European crisis. Pace Schäuble and company, Yanis Varoufakis is not at all an unreliable negotiator, since he had outlined his proposals long before he took office, and sticked to it.

Here is a short outline of his very plausible proposals in two parts from an interview with nachdenkseiten.de:

  1. a more general introduction,
  2. more specific part about Greece’s duty to negotiate with Berlin.

Several things are noteworthy: This interview dates back to a time when Yanis Varoufakis hoped not to become minister. It also becomes evident that the “modest proposal” had existed independently of Syriza’s electoral success in 2015. The proposal could have been brought into discussion earlier by another European government. It also shows that this proposal lays out a masterplan that the Greek government is following, independently of Yanis Varoufakis being its member.

I find the idea of “Europeanizing” failed banks particularly convincing, instead of lending money to the states that pass it on to banks to pay their debts to other banks, thereby increasing the state’s deficit. This “Europeanization” would have been an excellent solution for Bankia in Spain and possibly in Cyprus and Greece as well. Financial restructuring with direct investments by the European Investment Bank is another very plausible idea which would have stimulated the economy in the member states threatened by economic collapse.

For those of you who do not want to read long texts, here is a video where Yanis Varoufakis answers questions about his analysis of European economy and the modest proposal. It is by the way the famous stick-the-finger video and a very digestible presentation of his thoughts. Independently of the European crisis, I liked his Confessions of an erratic Marxist very much for the insights into economics as a scientific discipline.