Thursday, January 22, 2015

Unemployment in Greece

The graph below shows the unemployment rate in Greece from 2005 to 2014 (the data for 2005–2013 can be seen here, and the rate for October 2014 here).

While it is true that unemployment was already moderately high in 2007, the consequences of remaining in the Eurozone and the austerity imposed on Greece have been devastating. The unemployment rate is worse than America’s in 1933 in the last year of the contractionary phase of the Great Depression (which was 24.9% as calculated in official BLS data). The social ills driven by the economic collapse are horrific, and include a huge surge in prostitution, drug use, and HIV and cuts in basic programs for health care and social services.

With an election due in Greece on 25 January, it now seems that the anti-austerity left “Syriza” coalition might win government.

It is unclear, however, what they will do if they win government. They do not even wish to leave the Eurozone, but have pledged to remain inside it. It seems unlikely they could possibly do anything substantive for Greece without leaving the Eurozone.

But the broader implications of a Syriza win in Greece could be devastating for the future of the Eurozone, as noted here. It may well signal the beginning of electoral wins for parties that wish to leave the Eurozone completely such as the French Front National.

In Britain, the UK Independence Party (UKIP) might do very well in the approaching election and split the Tory party. If a Tory-UKIP coalition formed government, the price would be taking the UK out of the EU.

All in all, 2015 might well see another devastating crisis for the Eurozone.


  1. "Devastating" for whom? If Greece stops using the euro and goes back to its own sovereign fiat currency, according MMT people this should make its economic problems manageable again.

    1. Well, even the MMTers admit that a withdrawal from the Euro will cause some short term pain too. But in the long run it should be better for Greece.

  2. The best long run solution would be a fiscal european union that ends austerity. The comparison with the 1930s is striking. Back then we saw a disintegration of the world economy and now we might see the same on a european scale. Politically not wise at all.

    1. Yes, a central fiscal authority in Europe and large-scale EU-wide stimulus would be -- but it is just grossly unrealistic under the present system.

      What should countries in the EU do now? Wait 10-30 years before some hypothetical reform might happen but let their countries be destroyed? Or leave now?

      A totally reformed EU with central fiscal authority can be built later -- when this one has been dismantled.

  3. Yanis Varoufakis, author of The Global Minotaur is a Syriza candidate for Greek parliament

  4. The whole Euro crisis has been stunning to watch unfold. I never thought it could go on as long as it has. The social disaster in the PIIGS has been unbelievably appalling. It's absolutely stunning that no mainstream political parties have hit upon the idea that the Euro is the problem. It's enough to have me wondering whether democratic societies can cope with such problems without some kind of wrenching institutional change.

    Thinking further, I am reminded of the fact that the State of Michigan was in a recession continually from 2001 until 2009. There was no real recognition of a crisis there.