Chicago is, among many other things, the home of what is, for better or worse, arguably the most influential school of economics of the past half-century, the eponymous Chicago school, which takes its name from the University of Chicago, where the likes of Milton Friedman, Friedrich von Hayek, Eugene Fama, Myron Scholes, and scores of other luminaries of laissez-faire theory hung their hats at one time or another.
So it came as something of a surprise whe, on Friday night, the former finance minister of Greece, the avowedly leftist Yanis Varoufakis, received an enthusiastic welcome from a large gathering in the heart of Chicago’s financial district, where he was promoting his new book, And The Weak Suffer What They Must? (Nation Books). The title comes, of course, from Thucydides, and is a ringing denunciation of the harm neoliberal austerity measures have had on poor and working-class people since the start of the Eurozone crisis.
Varoufakis is something of a folk hero among the growing ranks of anti-austerians in Europe and the United States, who rightly believe that the eurozone’s (or, more to the point, Germany’s) obsession with balancing budgets by slashing rates of government expenditure has only served to deepen the debt crisis that has roiled global markets, impoverished millions, and strained intra-European relations since 2009.
To appreciate Varoufakis’s role in the fight against austerity measures, some history of the Greek debt crisis is in order. Between 2001, when Greece adopted the euro, and the 2009 debt crisis, successive Greek governments recklessly borrowed $430 billion from European banks, who recklessly lent it. In what in reality was an effort to shore up European banks, a “troika” consisting of the European Commission, the International Monetary Fund, and the European Central Bank agreed to “bail out” Greece. In 2010 the troika lent Greece $146 billion; in 2012 it lent a further $173 billion. These loans came loaded with requirements that Greece cut public expenditures; the 2012 bailout went so far as to demand Greece reach a 4.5 percent budget surplus.
The results were all too predictable. Between 2010 and 2015 unemployment hit 25 percent; Greek GDP fell by one-quarter; the rates of homelessness and suicide have soared; while youth unemployment now approaches 60 percent. The economic collapse paved the way for the victory of the left anti-austerity party Syriza, which assumed power in January 2015. The largest vote-getter in that election became the country’s new finance minister: Yanis Varoufakis.
He resigned five months later. In Chicago, he recounted his turbulent tenure, during which he attempted, unsuccessfully, to renegotiate the terms of the prior bailouts. The villain of the piece, as told by Varoufakis, is German Finance Minister Wolfgang Schäuble, who informed his Greek counterpart at their first meeting that “elections change nothing.”