EURO ECONOMICS: The increasingly odd visions of Mr Varoufakis

varoufimageThere exists an old adage, “familiarity breeds contempt”. While my own view is that it can also be a stimulant for compassion, I think the adage can be applied to almost every profession today – politicians, lawyers, bankers, accountants, police officers and so on.

But for me – in both a professional and news-watching sense – the profession of which I have become most contemptuous is without doubt that of the economist. It says a great deal about the practice of economics that – of the last four shocks the capitalist system has undergone, and the collapse of the USSR – not a single ‘respected’ economist saw them coming. As an adman, I worked alongside client economists, all but two of whom seemed expert at explaining the past, but never had less than eight alternative views on the future. The two that were usually right about what was coming formed their own companies – going on to work on a hugely successful multiple retailer transformation in one case, and developing a brand-leading product innovation on the other.

While at University, I was obliged to take Economics as a subsid to my joint honours for the first year. The subject was taught by a likeable Canadian whose syntax was nevertheless so strangulated, I had not a clue what he was on about. His favourite theme (this was 1966) involved explaining why, by 1980, nobody would own a car, and investment efficiencies would ensure that few people would bother having a job after the age of 45. The future, he asserted, would be one in which the major challenge would be everyone on Earth being too rich and self-satisfied: manufacturers would be starved of both labour and markets via which to produce their goods.

The starting point of the course in the Fresher Term was Marxism. At this point in the Sixties, everyone was waving Mao’s Little Red Book, then the following year waving joss-sticks, and the year after that chucking pavés at the Paris cops. It was all very eclectically radical – or, to put it another way – a muddled series of intellectual crazes.

From day one, it was hard to take Marxism seriously. At its heart lay the idea of dialectical materialism, an invented piece of bunk which insisted that economic history consisted of a thesis, an antithesis, and then a synthesis. So we’d gone from agrarianism to capitalism, and now had arrived at the perfect system, communism. Soon, Marxists insisted, there would be a “consensus for socialism”, and then the organs of the State would “wither away”. All this stuff was being spouted just ten years after the Soviet subjugation of Hungary, and two years before the USSR invaded Czechoslovakia to displace Aleksander Dubcek, a brave man who had tried to give socialism ‘A Human Face’. As Orwell had predicted, the Kremlin stamped on his face, and he died two decades later in abject poverty.

The problem with dialectical materialism (dm) is that you can apply it endlessly to history…but everything changes depending on where you start the clock ticking. Thus I can assert that Britain’s dm political process has been one of tribal chiefs, Divine Right Monarchy, and now the synthesis – which is, natch, liberal democracy. Or – if I press the stopwatch at 1215 – it is one of declining Divine Right Monarchy, Parliamentary sovereignty and then Mammonesque Oligarchy. I prefer the second version, but only because it’s what I think. And I didn’t get through that thought process using dm: I got there by a combo of empirical observation, and then interpreting that in the context of what Homo sapiens is about.

The trouble with most economists (and politicians) is that they know diddly-squat about social anthropology. And nowhere is this more true than economists who emanate from acadaemia.

I’m indebted – as so often – to Athenian friends who pointed me at a speech made yesterday at the Ambrosetti Conference by Greek finance minister Yanis Varoufakis. I’ve followed this bloke’s blog for some time, and on the whole found him both sound and creative. But there’s something about Yanis since he became famous that’s turned him into what one can best describe as a chap trying to be Le Rockstar on many different levels.

In the weeks leading up to the Greek elections, he was the radical stylist, hell-bent on destroying the Greek oligarchy. Immediately after his appointment as finance minister, he became whistle-stop casual diplomat and proletarian style-magazine icon. After a few weeks of dealing with Troika2, he was Game Theory Star, rationalising his weekly routs as tactical Chinese General retreats. Of late, the retreats have turned into retweets as Varoufakis tries desperately to suggest he’d love to have Schauble’s babies, and finds Dijesselboomerang a nice person really no seriously, he does.

In yesterday’s speech, however, there are signs that Yanis Varoufakis is grasping for the comfort zone of academic, oxymoronic theory. This paragraph in particular leapt off the page at me; on the subject of ‘a new deal for Europe’, he had this to say:

‘Allow me to foreshadow what that ‘something’ might be. I call it a process of Decentralised Europeanisation. The long and the short of it is simple: We need to simulate a federal euro governance without federation, without further loss of national sovereignty, and under the existing Treaties.’

I really do need someone to tell me WTF decentralised europeanisation is. Has Yanis, I wonder, failed to notice that this has been the very thing splitting Parties of both Left and Right from the early 1970s onwards? Perhaps he has, for the proposal he offers us ‘a federal euro governance without federation’. Does he really think that Wolfie’s Fiskalunion is going to be a light-touch version of this ethereal unfederated federation he envisages?

The second half of the para follows a route heavily trodden by the UK Conservative Party…a route that would be found unacceptable by Eurosceptic Parties across the continent. And consistently, the Eunatics have made it clear: this “we’re in but also a bit out” is not acceptable to them either.

When he first exploded onto the scene in January, Mr Varoufakis seemed to me – and millions of others – like a breath of fresh air. With every week that passes, he looks more like a froth of hot air.

Connected at The Slog: Was it the iceberg or the shipowners that killed 1500 passengers?

28 thoughts on “EURO ECONOMICS: The increasingly odd visions of Mr Varoufakis

  1. If you have indeed followed his blog John then you know that Varoufakis is, in his own words, a fully signed up acolyte of The Federated States of Europe, which is essentially the same now as when first envisaged 100 years ago.

    As to the problem of economics, the majority, including governments, see it as being a science, with laws, theorems and hypotheses that can be used to predict, direct and regulate outcomes. The reality is that it is a social science, something that has pretty broad-brush generalities, black-box theories and vague hypotheses all superimposed on chaotic human behaviour that rarely predicts correctly, directs very erratically and is prone to exploding violently at the slightest touch on one hand while remaining completely unaffected when slammed with a sledge hammer on the other.


  2. Yes I read his blog where his speech is summarised and must admit I could not understand the rhetoric but he did ask for the EIB to be used to spend 8% of EU states GDP as a growth stimulus, somewhat along the Marshall Plan. This would lead ” to endogenise investment risk while reducing it “. This would become the Merkel Plan.
    The man’s mad and oblivious to the simple need for a lender to repay loan capital.
    In my business life, if I couldn’t understand what someone was saying and had this coupled with schoolboy naievity, I would talk bollocks to them until they got fed up and pissed off. But YV can’t be kicked out of the club so he is clearly trying to drive them all mad, or should I say madder.
    A bit like the mad preacher surrounded by Indians in the John Wayne movies., who usually ends up with the last mad laugh.


  3. For now, as the euro weakens, the pound looks strong. While that’s bad news for UK exporters, it does make your holiday pounds go further. Consider, though, that while sterling is soaring now, we’re facing in May the most uncertain general election for decades. A minority Labour government, propped up by an increasingly Left-wing Scottish National Party – a distinct possibility, even if the Tories win the most votes and even the most seats – could see sterling plunge.
    Liam Halligan in today’s ST.

    Even more likely if the FED actual raise interest rates in June.


  4. “While that’s bad news for UK exporters,” – conversely any imported raw materials that go into the production of good for export become relatively cheaper. (As germany found with the strong Deutschmark -relatively low import raw material costs facilitated the production of high quality finished products)…..


  5. Economics, having neither testable theories, nor predictive power is NOT a science. Newton and Einstein would scoff, as should we.

    Varoufakis has a book to sell, available wherever such items are sold. Jeffrey Archer is similarly encumbered.


  6. Well said. Must say I’m rather disappointed in Varoufakis though; I suppose it’s never wise to expect more of someone than they are able to give.

    Incidentally, old Uncle Isaac was a fan of astrology, believed in the existence of the philosopher’s stone, and was convinced that the Bible held secret messages ref. the coming apocalypse. That having been said, I’m sure he would still have given economists short shrift – there is a limit after all :-)


  7. As a mother, advising her daughter never to marry an economist said, “Once you get him into the bedroom, he’ll just stand at the bottom of the bed and spend all the time telling you how wonderful it’s going to be”.


  8. Have we all forgotten that this man is a master of game theory? Who amongst us has the vision to see what he sees? Lady Di modelled herself on him.


  9. ” ….like a breath of fresh air. With every week that passes, he looks more like a froth of hot air.”

    Wolfie tells me that, in compsny with his own shiny bald pate VariousForceps shares with Wolfgang the dire need of a breaDth of fresh Hair.
    ( yes even we Germans have been known to descend to making the occasional token gesture towards levity……. especially after twelve too many Schnapps to round off the weekend of a Sunday evening)


  10. Mein Gott im Himmel this man is a magician! in one bound he seems to have developed a full and fertile head of hair and rejuvenated himself by some 25 years. Also he has becone a conservative….
    This should make negotiations with him a whole lot easier . If nothing else he can give Wolfie the formula for his hair restorative….


  11. Pingback: John Ward – Euro Economics : The Increasingly Odd Visions Of Mr Varoufakis – 15 March 2015 | Lucas 2012 Infos

  12. quite irritating….
    and here is yet another example of euro citizen’s vote for a manifesto that is completely worthless.
    These people are con artists . Wake up people!!


  13. Isn’t it strange how a combination of press conferences, fame, mixing with elites and temporary power brings out the very worst integrity in the human race. I always think that it could never happen to me….I would give them all a stream of piece of my mind from dawn til dusk…..but I could easily be wrong.


  14. “Familiarity breeds contempt and children.”
    ― Mark Twain

    Put ten economists in a room and you’ll have twelve different opinions

    “Give a man a fire and he’s warm for a day, but set fire to him and he’s warm for the rest of his life.”
    ― Terry Pratchett



  15. what we are seeing here in the BIG PICTURE is a collective bullying exercise engineered by the german elites who have cascaded the fear factor down through the other european elites.
    The wonder is why the thinking citizens of these countries put up with this UTTER BULLSHIT – especially the youngster who have been robbed of their lives.


  16. Hi John, Once again as I previously said the job of a politician os to justify those behind the political decision making. Don’t feel surprised as it is to be expected (no matter if you think said politician is right or not). It is all a profitable game. See you on the other side….


  17. The failure in your edconomics teacher is mistakenly believing that all could be equal when humanity has masters and slaves and that position is defined by wealth.

    Anyway chuckled tonight as Osborne is going for this lump sum pension taking. Speaking to a relative who kind of missed a consequence and said don’t say anything because I am laughing my socks off, but hey let Osborne carry on.


    Chasing the dragons tail of spending today to keep the economy afloat is like playing Jenga where you remove from one point in an unstable structure to then place it on top. Hooorah you made itg who’s next? To reinvest is dangerous where everything you would invest in is a central banker manipulated world that bestg leave where is because the alternative is to lose everything.


  18. ” the pound looks strong.”
    Over here in the US, it is plummeting for no obvious reason, apart from the US fake economic data regularly released.


  19. There is no need to be surprised the events of the last 2 months had an effect on Mr. Varoufakis’ behaviour and positions. We can’t expect him to be an seasoned politician overnight. Naturally he is struggling to find his way, as anybody would be. It’s easy to negotiate from a strong position, but the negotiating position of a FM of Greece is not strong these days. At least he IS negotiating and bringing proposals to the table that go beyond national interest. How many Eurogroup members did that during this crisis?
    Criticising proposals is so much easier than making them. Fair critics properly consider the proposal, then they suggest where and how the proposal should be improved, and only if they can’t find any way to help make it work they may reject it. There are not many fair critics in this world. The main reason why we are stuck with austerity. Or maybe it is because many resent economists soooo much, that they prefer FM’s that don’t understand economics.

    Back to the subject now. Everybody understands the German reunification would have failed if West- and East Germany had kept separate national budgets, regardless if the East Mark were replaced by the Deutsch Mark. Unified Germany became strong enough to survive the subprime crisis and the Eurocrisis, because the two parts became one politically, economically, and monetary. The same logic would apply for the Eurozone.
    Nicholas Kaldor was right that monetary and economic union can’t precede political union (I would add TRUE economic union there also). Varoufakis’ view that a political union will be impossible for quite a number of years also makes sense.
    Yet, the monetary union is there and if the objective is to prevent it from collapsing, then implementing at least those aspects of political and TRUE economical union necessary to get out of the current situation, is a lot smarter than what was done the last five years. If nothing else, this will forces European leaders to show their true colours, if they are after national interests, or the European interest.


  20. It is important to remember one thing about Syriza, that they based their popularity on staying in the EU and staying in the euro. That is why they won enough votes to become a weak minority coalition government.


  21. Pray tell how does one federalize with less federalization. The man has gone round the bend. And the Krauts( those who have their money in Euros) have just took a thirty percent hit on their net worth. Some how I don’t think they are singing Ode to Joy in Frankfurt these days. Maybe that’s the Syriza plan B just go nuts do nothing but spout nonsense and let the Krauts contemplate the ruins of the Eurozone untill they jump ship and restart the Mark.


  22. Pingback: John Ward – Crash2: After Six Years Of Roulette And Brag, The Banks Begin A Game Of Dominoes – 17 March 2015 | Lucas 2012 Infos

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