Saturday , January 16 2021
Home / Project Syndicate / The COVID Class War

The COVID Class War

Summary:
The European Union's proposed recovery fund to counter the pandemic's economic fallout seems destined to leave the majority in every member state worse off. Finance will again be protected, if badly, while workers are left to foot the bill through new rounds of austerity. ATHENS – The euro crisis that erupted a decade ago has long been portrayed as a clash between Europe’s frugal North and profligate South. In fact, at its heart was a fierce class war that left Europe, including its capitalists, much weakened relative to the United States and China. Worse still, the European Union’s response to the pandemic, including the EU recovery fund currently under deliberation, is bound to intensify this class war, and deal

Topics:
Yanis Varoufakis considers the following as important:

This could be interesting, too:

Eric Crampton writes Mom’s Time

Tyler Cowen writes Insurrections are contagious

FT Alphaville writes Crypto finally becomes bigger than . . .  the world

Tyler Cowen writes Thursday assorted links

The European Union's proposed recovery fund to counter the pandemic's economic fallout seems destined to leave the majority in every member state worse off. Finance will again be protected, if badly, while workers are left to foot the bill through new rounds of austerity.

ATHENS – The euro crisis that erupted a decade ago has long been portrayed as a clash between Europe’s frugal North and profligate South. In fact, at its heart was a fierce class war that left Europe, including its capitalists, much weakened relative to the United States and China. Worse still, the European Union’s response to the pandemic, including the EU recovery fund currently under deliberation, is bound to intensify this class war, and deal another blow to Europe’s socioeconomic model.

If we have learned anything in recent decades, it is the pointlessness of focusing on any country’s economy in isolation. Once upon a time, when money moved between countries mostly to finance trade, and most consumption spending benefited domestic producers, the strengths and weaknesses of a national economy could be separately assessed. Not anymore. Today, the weaknesses of, say, China and Germany are intertwined with those of countries like the US and Greece.

The unshackling of finance in the early 1980s, following the elimination of capital controls left over from the Bretton Woods system, enabled enormous trade imbalances to be funded by rivers of money created privately via financial engineering. As the US shifted from a trade surplus to a massive deficit, its hegemony grew. Its imports maintain global demand and are financed by the inflows of foreigners’ profits that pour into Wall Street.

This strange recycling process is managed by the world’s de facto central bank, the US Federal Reserve. And maintaining such an impressive creation – a permanently imbalanced global system – necessitates the constant intensification of...

Yanis Varoufakis
Economics professor, quietly writing obscure academic texts for years, until thrust onto the public scene by Europe's inane handling of an inevitable crisis

Leave a Reply

Your email address will not be published. Required fields are marked *