With a flurry of exclamation points and curt rebuttals, Thomas Piketty, who rocketed to stardom last year with his treatise on inequality, told a German newspaper that the Germans are being hypocritical in the way they’re treating Greece.
A number of prominent economists have raised concerns about Germany’s approach to the Greek debt crisis, which Germans say reflects a need to force changes in Greece’s economy so that it never again has such a crisis.
But in the interview with Die Zeit, Thomas Piketty went even farther, saying that the Germans are only in the strong economic position they are today because they benefited from the forgiveness of their neighbors after World War II.
It was in the 1950s, he notes, that Germany benefited from a massive — and, in those days, surprisingly common — round of debt forgiveness that catapulted its rise into a peaceful economic power. Greece was one of the nations forgiving Germany’s debts. In other words, Piketty suggested, when it comes to how to handle Greece in 2015, the best argument against Germany might be … Germany, circa 1953.
“When I hear the Germans say that they maintain a very moral stance about debt and strongly believe that debts must be repaid, then I think: What a huge joke!” Piketty said in the interview, translated by the site Medium.com (though later taken down due to copyright concerns). “Germany is the country that has never repaid its debts. It has no standing to lecture other nations.”
We cannot demand that new generations must pay for decades for the mistakes of their parents. 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.
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Piketty works at the Paris School of Economics and last year published the English version of his 700-page book, “Capital in the Twenty-First Century,” which sold millions of copies and documents the growth of wealth inequality in the developed world over many generations. In the interview with Die Zeit, Piketty makes the argument that decisions about whether to forgive or not forgive can have generational implications.
While Greece’s debt has already been trimmed, those relief efforts have been essentially cancelled out by Greece’s shrinking economy — and its shrinking tax revenue. Greece lately has failed to hit budget surplus targets, and the International Monetary Fund last month said that the country’s debt burden appeared unsustainable without further relief measures. And such measures are exactly what Greece is asking for.