Yanis Varoufakis on Talking to My Daughter About the Economy | The New School

good evening everyone I'm will Milberg I'm the Dean of the New School for Social Research and we'll get started in a minute we're going to begin by offering the mic to the new school cafeteria occupation group and the Communist student [Applause] thank you so much guests workers students faculty we are here on the former land of the Lenni Lenape people and so first I would like to acknowledge that in addition to the occupation which is attempting to prefigure a different world we are also on occupied territory and we are going to attempt in this space to honor the people who still live here and whose legacy we hope to continue in a different manner Thank You Dean Milberg Thank You mr. varoufakis for inviting us to say a few words my name is Eli I'm a PhD student in politics at the new school and a worker and I have been for seven years it's a privilege to be a worker here and we would like very much to get back to work in order for us to do that in order for the cafeteria workers to do that it is essential that we have contracts that honor our existence that allow us to continue with our existence that give fair wages that give health care that give provisions for child care that in fact give provisions for people who work here and who have given themselves to this school for multiple years for decades in some cases to have tuition remission in the same way that other people who are employed here full-time do so we are just here to say thank you so much for being part of this thank you very much for this space and please help us maintain this occupation of the cafeteria as a way to prefigure a different way of being it is under capitalist on freedom that we are here it is for that reason that we love our jobs it's not the jobs we love it's not the wage dependency it is our connection with each other that this occupation of the cafeteria makes possible in a better way thank you all very much so basically the situation is that the new school has been contracting out their cafeteria to a company called Chartwells they the contract with Chartwells is ending at the end of July July it ends July 1st and the new school is deciding not to rehire all of the workers who currently work with Chartwell they're making them they're essentially firing them and making them reapply for their jobs so we have decided to occupy the cafeteria and demand that every single worker be rehired that they don't have to reapply for their jobs we want to save every single job we want higher wages than they had before and we want them to have the same benefits some of these workers have worked here for 16 years they'll be losing their pensions their health care and their livelihood some of these workers were one third of the workers are over the age of 50 they were planning on retiring from these jobs so this is really very serious essentially I belong to a group called Communist student group that called for the occupation because we felt that the union was not providing adequate leadership the Union was acting purely retro actively the Union wanted to allow them to get fired and then help them reapply on an individual basis and so we initiated a collective struggle that was proactive not retroactive the union has been obstructive throughout this entire process and this morning we received a joint statement between UNITE HERE Local 100 the cafeteria workers Union and the president of the school calling off the occupation saying that they've reached a deal to extend the contract with Chartwells the problem is we have no reason to believe that after that contract ends in six months or a year that the school won't try to do this exact same thing another problem is we called some workers and they had no idea that this was happening the Union has issued this joint statement with the school explicitly asking the occupiers to leave the cafeteria and allow service to resume as usual without consulting the workers who have been very clear with us that they do not want us to leave this cafeteria until they the contract has been signed by every single worker and all of them are on board with what's happening so we feel that the union is truly just representing the interests of the boss not of the workers and we will continue this occupation until every single worker is in agreement that they want us to leave just just to clarify if workers choose to unite and to declare their power through a union we will honor that declaration just as the student employees that the new school have declared that we will unite under a union in order to win a fair contract we will honor this request of the cafeteria workers as soon as we are assured that it is their choice that this declaration is good we want these workers unionized we we have no problem with them continuing this union contract but what we think is important is for the workers to organize themselves outside of the legal framework of the trade union as an autonomous worker power thank you both yeah and welcome everyone to a conversation with Yanis varoufakis and and particularly a discussion of his new book talking to my daughter about the economy or how capitalism works and how it fails and it's great pleasure for me to be sitting here with with Yanis who's really just enormous figure both in the economics profession in the political profession in the finance profession and we're very lucky at the new school to to have him visit us he is an economist and I have known him for decades as really a great economist a mathematical economist a game theorist who published such great works I noticed as econometric methods on Minitab a manual but he did write a book game theory a critical introduction which is actually a classic in game theory so Yanis just has a kind of remarkable span of accomplishments and skills as all of you know he is an academic and politician who served as the Greek Minister of Finance from January to July of 2015 when he resigned he was a syriza member of the Hellenic Parliament for Athens B from January to September 2015 he did his PhD at Essex and economics where he also studied I'm sorry studied mathematics and began his career there he then went on following Thatcher's victory in 87 he moved to Australia out of the UK where he taught at University Sydney University of Sydney for really a considerable amount of time and really established himself as a premier critical thinker on microeconomics he returned to Greece that year to teach at University of Athens and he currently still has an appointment at Athens he was interestingly economists and residents for Valve Corporation in Seattle before moving to teach at the University of Texas Austin and of course his publications go way beyond game theory and include you know very important interventions into the eurozone crisis debate the Greek debt crisis problem and now a series of books on capitalism globalization automation and democracy which I think will largely be our focus tonight in January of 2015 he was appointed Minister of Finance and led the negotiations with Greece's creditors during the Greek government debt crisis they failed to reach an agreement with creditors leading to the 2015 bailout referendum and the day following the referendum on 6th of July 2015 Yanis resigned as Minister of Finance and was replaced by euclid tsakalotos so on August 20 fourth verification against the third bailout package and an ensuing September election did not stand for re-election he has since appeared in many debates many lectures many interviews I was just hearing about one you had with Noam Chomsky in February 2016 very importantly he launched the democracy in Europe movement 2025 and subsequently backed a remain vote in the UK's parliamentary union membership referendum in 2016 and I look forward very much to discussing his current activities in relation to EU politics and democratization of the of the euro zone so welcome please give a warm welcome to UNESCO Farkas thank you yes thank you so this is a very wide-ranging book and of course we're not restricted to talking about the book tonight because there's some pretty important issues to debate both in this building and in the world today which Yanis is very involved in but I wanted to start just to hear where this came from because it's a talking to my daughter book and it is ridded it's written in the second person you talking to his daughter and I just wanted to I just to here before we forget about that motivation how you came up with that as the way to explain capitalism talking to your young daughter we economists have a tendency to say that which everybody understands in an incomprehensible language because the only one economic concept that we grasp is that of monopoly so if we manage to monopolize economics we get a very nice tidy little profit for ourselves so the only way to break this down at least in my head the only way of organizing my thoughts in a manner that would allow me to write in a way that would be comprehensible I thought was to try to address it to my twelve although it were to 12 year old daughter and try to imagine that I am trying to explain things to her in a manner that would not him immediately elicit stop it dad you are becoming exceptionally boring yet again so it was a device so that I would organize my thoughts about what I think in the end really matters because you know the deeper motivation here is that there are no experts in economics economics is not a science without a conviction that the average man woman even you know old older child can grasp the basics of economics democracy simply doesn't work because if we defer to the experts and the experts are the mainstream of the economics profession we might as well just down the shutters on democracy which is effectively what has happened a very long time ago before we get to democracy and capitalism thank you for that about your daughter I want to also talk about the book and the writing of the book because I got to page 116 and and I started writing notes about all the references to literature to film to Greek mythology foul goethe's faust dickens hard time Steinbeck grapes grapes of wrath' Rousseau Shelley's Frankenstein The Matrix Blade Runner Sophocles and then I on one page 116 I just want you to comment those who write well about the economy borrow their best ideas from artists novelists scientists can you make a comment and well from the very very beginning if you look at Adam Smith Adams Adam Smith's conceptualization is just a philosophical one and even a religious literary secular version of a religious so if you look at the you know the the the great paradox in Smith's thinking that the best way to serve the public good the public interest is is if no one tries to serve it yeah that's that's pure Sophocles that's pure Sophocles and then you add to this the invisible hand which is of course overstated in the neoliberal tradition but the this is an allusion to a kind of providential process of happens behind the the people's backs not because there is a God who is moving it's the secular providential process there's the whole story about unintended consequences which is the stuff of Shakespeare as well as philosophy so that's just yeah yeah beginning with Adam Smith we go to Marx okay then then you have the whole gamut of you know German and Greek drama from Gator to Euripides to with a bit of epicurean philosophy lots of doses of Hegel and then everything you know then the concept of commodity of capital accumulation schemas our production is a derivative of this kind of cultural Miller that Marx brings to economics you want to speak about gain same thing it's only the the libertarians who seem to be lacking in in a cultural depth so let's jump to the present that will come back we'll come back to the big picture of debt and capitalism and automation and if you could kind of give us let's jump right in to where you are today where we're how the Greek economy is faring under under this this austerity regime how how your efforts are going in terms of the euro politics and kind of take take us through where you've been in the last couple years and where this movement that you're now engaged with really hopes to go okay let's start with Greece it would be a very short statement every day's worse than the previous one know while at the same time we have an insult that completes the injury with the monster celebrations of the end of the crisis recovery Greek success story and all that they tried it in 2014 they're bringing it up they talk about the end of the bailout in August which is it would be hilarious if it was not so tragic the situation is really very simple in 2010 the Greek state went bankrupt as a result of the systemic euro crisis we were the first domino to fall and since then we have fraudulent bankruptcy concealment by the institutions of Europe and the IMF and the only way you can conceal a bankruptcy is by throwing new loans of the bankrupt pretending that the old loans are being repaid by the unions and the new loans are provided with conditions that shrink of income that was not enough to repay the old loans and now this shrinking income we supposedly a 10 year old can tell you that this is not a rational process and it can end well and it's not ending well and Greece's is the process of death certification as a result we are losing something between 15 and 20 thousand young people every month for a small country that is calamitous especially if not criminal especially in view of the fact that these are the best educated ones so the whole country's investment into the young people which is huge because Greeks pay a very significant proportion of wealth of income to educate the young and this investment is scattered in the winds so yeah yeah that's it and and all the stories about improvement and recovery and also just the insulting part of the injury but going back to the European scene yeah actually moving from Greece to the European scene what I keep insisting upon is that the fact that eight years after that crime against logic the Greek bailout yes which I just described the fact that the European Union is maintaining its denial and it's continue to impose exactly the same recipe upon the faltering Greek social economy can be only one of two things either orchestrated misanthropy a conspiracy against the Greeks which I don't believe right or something else and it's that's something else which is my theory and I'm sticking to it Berlin and Paris have not decided what to do with the Europe the euro is unsustainable as it is the European Union is fragmenting as a result of the unsustainability of the single currency which is now the infrastructure of the whole European Union project even countries that are not using the euro Berlin and and Paris are engaged in a kind of relationship let's call euphemistically which and I'm going to use the words the very words Emmanuel macron the president of France I related to me personally when he was describing these meetings that was just before he became president who said every time I meet with my German colleagues and remember he is supposed to be the most prominent of French politicians the most Pro European French politician he's not glib lepen and he certainly not mélenchon right right he's a avid neo liberal or not so much new liberal some kind of Scandinavian social democrat misplaced by 15 years so he sounds neoliberal anyway he he said to me every time I speak to my to my German colleagues the 100 year war comes to mind between Calvinists and Catholics because it's exactly the same conflict of the Deaf so that is the my explanation about the fact that they are allowing Greece to continue like this is that they're not going to solve the Greek problem if they have not worked out a modus vivendi that makes the eurozone sustainable France is not sustainable within the year the way the euro is structured McCrone knows that he has confessed this to me he would actually tell you as well if you ever happen to be in this row can you elaborate on that just I don't quite get well it's really very simple you have France native German you diffused by means of the same currency so there's no possibility of devaluation right and you have a Germany that has almost twice the concentration ratio of France it has an excess capacity which is much greater than the excess capacity of France in other words price cost margins that are much greater than the ones that on average French industry has especially if you take it the fact that a lot a large section of the French economy still agrarian compared to the German mmm-hmm so when you you know when you have such differing degrees of oligopoly power in two countries that are fused together it is natural that since don't have the capacity of the French currency to slide that what's going to happen is that France will need increasing doses of austerity in order to be maintained within this stranglehold of the common currency with Germany and the result of this is discontent at the result of this is that the political center in France is completely totally gone and you have whole regions of the country right that are totally anti European as a result of this structural slide into great into effectively a deflationary dynamic that it is also localized it's class-based and geography based in in in France so while the so reading newspaper The Wall Street Journal the Financial Times they celebrated the election of Akron and understandably because if lepen had won you don't you wouldn't want to live in France and also the European Union have gone Merkel would have been fired the next day by her own party because she would have been accused of having lost France so he saved Merkel yeah and what does Merkel do what does she do she stinks him like a bee or bites him like a snake because remember he got elected he did he gave that so born speech very moderate eurozone reform proposals a small common budget which would be macro economically insignificant but his view is you know you bite your foot in the door and then later on you open the door that kind of gradualism which is for me it's too little too late but nevertheless that's him right a little bit of a common unemployment insurance turning the the the illusion of a banking union into something more of a banking Union by having common Deposit Insurance basic things things that everybody knows are absolutely essential so he puts on out there what happens they go shot down today those proposals have utterly they've been blown out of the water by medical yeah not because medical doesn't give a damn about what happens to all these things but she is a player she recognizes what the balance of power is between her own party and she realizes that her own party would not like to say yes to micron so she shoots them down one by one by one so going back to Greece while France and Germany are locked in this dysfunctional relationship whereby the political dialogue is not leading to reforms of the common currency that would make France sustainable within Germany within Germany within the eurozone well it was a slip of the tank wasn't it they're not going to bother with Greece all they're asking of great governments or making League of Institute's go to the corner there lie down and die quietly and you know unfortunately Greek Prime Minister's including my calm comrade and colleague are doing it the lover of having the prime ministerial limousine must be very great listen at risk of getting too far in the weeds here to tell us about Germany and and you hint at Merkel biting macron and obviously she's being pushed politically in the coalition formation it said are very vulnerable politically but they're still running their big surplus they're still kind of earning the all the benefits that you attacked them for for a decade without showing the kind of political will towards Greece for example that you know the that you've been talking about for years so how is that sustained itself that had edge' money well there's no such thing as germany there is a variety of Germany's let us not forget that the bottom 50% of the population are far worse off now than they were 15 years ago and the bottom 35 percent are in a desperate situation compared to where they were 15 years ago their so-called reforms the hard sphere reform rate of the 1990s have bitten very very strongly and that bottom 35% now is in a state of upheaval the hatred that you have of the establishment including the establishment in Brussels I I go to Germany often because our movement had I'm very proud of that most of the number the largest percentage of members of our movement are German really yeah you know this is where we are trying to prove that another Europe is not just possible but it's here at listen so let's jump in arrow and move tell us about your movement but let me answer the ok about Germany because Germany today when I visit reminds me of Britain 15 years ago the creeping Euro skepticism and the Europeans entrant which was in Britain coming from two opposite sides of the political economic spectrum you would have it from the discard that working-class mm-hm who didn't give a damn about the European Union they just hated anything that the establishment in London likes and including the European Union and parts of the ruling class which were not happy to share power over the riffraff in their own country with Brussels right that was the situation 10-15 years in Britain and in the end this embrace was completed in 2016 with the brexit referendum and Greece had something to do with it because the way that our government was crushed by the European Union brought many good British people onto the side of brexit they were saying to me I was campaigning in Britain against Bergson they were saying to me look we like you but we're not going to do as you're saying we're going to vote for breakfast because hum if we vote for remained it would be another tour in the same Tory we're now have is going to be celebrating 10 Downing Street we don't like that and secondly the way that you were being treated by the you this act of dictatorial income groups it does not warm us to it so that the spirit and now I see in Germany as well huh from a macroeconomic point of view if you think of the fact that in Germany now you have this a unique phenomenon in capitalist history and maybe I'm hearing you school there are better economic historians and I am maybe I'm wrong maybe it has happened before but I am not familiar with any such situation where you've got a government in surplus budget surplus corporations sitting on a huge pile of cash doing nothing so they they're in surplus and families that are in surplus so everybody's in surplus well they have to be deficit somewhere so they have to export them now the this new Social Democratic Minister of Finance who replaced my good friend Vulcan Salem confirmed what I had written in this book that are very much fear that the Social Democratic Party would be far worse than the Christian Democratic Party and they are he's pushing the surplus further up than Scheidler sure Blake was more of a Keynesian than this social democrat okay so what are you doing this in a eurozone where effectively your surpluses become deflationary forces for the deficit redress of the eurozone and you've got an internal devaluation process in the rest of the eurozone which on the one hand of course is squeezing prices and wages down but because of oligopolistic tendencies prices are knots cost as far down as wages so you have a diminution of aggregate demand from the monopolistic oligopolistic structure of the deficit economies and at the same time you have debts that of course are not divided private and public debts that are not divided then you end up with a central bank Mario Draghi having to continue doing QE in order to keep Italy and Spain in in the eurozone QE which is keeping interest rates below zero when in Germany that is destroying the banking system the the smaller banks where most people have their averse and particularly the pension funds so you end up having the middle class seeing their egg nests shrink while their children find it difficult to find jobs that are good quality as opposed to many jobs and that simply feeds into racism it feeds into the alternative route Deutschland and this is why Merkel has effectively lost control of her own party and if the two parties together the two or the liberal party which is the Christian Demarest and now the Social Democrats together from having 84% of the vote now they have 51% of the vote and if they there was an election today they would go even below that so Germany's in deep crisis as a result so it's not Greece vs. Germany this is a class war against the weaker members of German society and the weaker members of Greek society you have effectively an abandonment of any attempt to manage the macroeconomy of the eurozone by anyone so so here we are in a kind of great deflation yeah so tell us about the movement so and how do you do when you are causation when you're faced with the situation like this there are only two things you can do either adopt a disintegration stance let's wrap this European Union is not working let's do away with or you create you got exactly the opposite direction creating a pan-european movement a progressive fine European movement the purpose of which is to arrest this slide into a postmodern 1930s at the pan-european death I have to say that there is a big clash now amongst progressives and especially the left in Europe between those two schools of thought so these cool - these two schools of thought exist both in the right on the right and on the left and there are forces on the progressive side of politics that are saying this EU project was always a neoliberal project and it needs to be dissolved now I find myself I speak personally now in a difficult position because I campaigned as a young man against Greece's entry into the you the European Common Market as it was called for I believe very good reasons like Jeremy Corbyn job in Corbin Tony Benn rest in 1975 campaigned against Britain's entry rather European Economic Community I campaigned against Greece getting into the euro in the late 99 99 this as a Greek economic professor I was considered to be eccentric not to recognize the beauty the glory and the stealth of the eurozone but that Greece because once you're in not joining none would 90 would that have saved Greece over the world not joining in 98 absolutely if Greece had not joined in 1998-99 2000 what would have happened is between 2000 and 2008 we would have had tepid growth simply because we would not have the capital influx that we had because of the eurozone so Greece would be just as corrupt and inefficient as always yeah but it will be growing a little bit and then in 2008 we would have a currency devaluation we would have yeah a year 18 months of something like a Bulgaria level of recession small okay we would continue to be corrupt and problematic the Sun will be shining we would be singing and dancing on the beach will be the same thing but you do not we would not have a humanitarian crisis and you know that really matters because all that matters in the end is humans so yeah absolutely but this is where my the roads part but yeah the disintegration ists and us right it is one to say a thing to say we should not have entered and it's quite another thing to say you should leave because if you leave you don't necessarily end up where you would have been had you not entered it's a difference between statics and dynamics so I was never supporter of grexit even though I was preparing for it because it was better than what we have now which is you know debt bondage forever and the certification and losing you know labor and capital to the rest of the world so effectively now on the left in progressive politics in in Europe there are two main forces the disintegration ist's and I shall mention some name some names in case you know something about European politics so you you have jean-luc mélenchon who was the presidential cabin candidate supported by the left or part of the left last year against McCrone and lepen in the rest you have half of the Left Party of Germany of the linka they're hopelessly divided between the oscar and sarah group and the katia group on the other half of them want our disintegrations the other half are with us mm-hmm you have very strange situation in Spain where podemos have a very considered policy on Europe not to have a policy in Europe but they've gone into bed with Mel and Shawn recently and then you have us diem25 we in the last few months we announced we actually are going to create a political party that runs in the elections in May 2000 nineteen the European Parliament elections across Europe we have her name actually that we did the way we came up with two weeks ago in Lisbon we can be gone we are going to be called the European Spring I'm very very proud of this name I like it very much and you know we have created different parties because you know we need to simulate upon European election because you know when it comes to the European Union my answer when people ask me what do I think about it is the same one as that which Mahatma Gandhi gave when he was asked about British civilisation he said it would be a good idea so there is no such thing as the European you have to register national parties and run separately so we're doing that we now have a Greek part it's called Mara 25 which is the madam in Greek means they as Indian the umbrella file in France we're going to run together with Benoit mom who was the Socialist Party candidate as a new movement controversy on hopefully with the French communists we're in negotiations with part of the Greens in Italy we are forming a new party headed by the mayor of Napoli which the magistrate's in Portugal we have a particle delivery which means freedom I believe headed by a relative Irish we have the Danish party the alternative which is the third largest party in Denmark they're fantastic totally totally mad wonderful bunch of people and and we are also very very pleased that we have a small feminist Progressive Party in Poland of all places called Rasim no country needs a feminist progressive party as much as Poland does these days and we're very very chuffed to have them in our midst and we are now gathering other parties as well it's building up apart its what's amazing about the EU is crisis huge great recession Greek crisis existential crisis and the democratization has has not really gone forward other than then this kind of movement I mean it hasn't happened but black the way that one might have predicted well so this remind you of anything remember the 1930s yes that crisis fragmentation and democratization didn't do very well yeah that's that's a scary we you know we better do better than they did I wanted to I want to talk about capitalism and I want to talk in this context of you're talking about wage austerity in particular and in the book you have a brilliant discussion of political money so I want to talk about wages and money and I you know obviously we're seeing the same cut we're down to three point nine percent unemployment in the US with continued wage stagnation right and so somehow we're not seeing wage movement even with relatively robust growth here and so obviously in Greece and the rest of Europe you're you're seeing lower growth and higher unemployment and I imagine the same kind of wage stagnation so kind of I wanted to ask you about wage austerity as a norm within within capitalism and how you see particularly from the Greek perspective how that the function that that that that play is and then we'll talk to talk about money after that well if you need any argument that the standard neoclassical neoliberal argument that a reduction in wages increases competitiveness and rebalances the current account surplus or the current account right in a way that the place is aggregate demand that comes from wages with aggregate demand that comes from experts well this is a very good example to debunk this rubbish because Greece is the wet dream of every libertarian that was ever born the wet dream think about 40 percent forty percent reduction in wages forty eight percent reduction in pensions in state pensions you can't you can't make up these numbers right amazing wait for it of all the unemployed and we have a lot of them in Greece do you know how what percentage has ever received 1 euro one just one euro of unemployment benefit come on someone how what percentage of the Greek unemployed have received a single euro of unemployment benefit ever nine nine percent yeah libertarian wet dream yeah something else that I think every libertarian I know would go crazy over we've banned trade unions ban trade well I mean they are allowed to exist but then there's no collective bargaining yep so there are no collective bargaining processes or agreements and finished finito forty percent of the action the minimum wage effectively there is no minimum wage as we speak now the latest figures I saw from the Bureau of Greek labor statistics show that in a country which is not cheap by the way you will find that in its more expensive than many parts of the United States and not in purchasing power parity in actual exchange rates one third of those who work work for three hundred and eighty four dollars a month grows before tax cut before tax yeah one third three hundred and eighty four dollars hmm and what happens of course their registers being part-time but they are forced to work all hours so effectively we have the same kind of Labor production that Bangladesh has in the middle of Europe and we went from a situation where the worst protection now you would have imagined if you are in nearly but if you're in everybody you don't give a damn you say okay that's very good because this Greece deserved it these people are we're lazy and they were profligate and they deserve what they got fine let's not get into this argument but the question I would put to them is yeah but wouldn't you expect after that magnificent internal devaluation and complete abandonment of any protection for workers and so on the you know we have the most flexible labor market areas I mean the next step is slavery wouldn't you expect experts to increase some kind of RIBA nothing nothing it's statistically insignificant increases in experts why what the reason of course is because the whole place has gone to the dogs and you have even profitable companies i I know a business person in Volos this earlier who inherited a factory from his parents and so on and it was a factory that made plastic containers for export and it was always profitable even during the worst of the crisis 95 96 percent of output went overseas so he should not have been affected by the low aggregate demand internally right now wages down huh all everything down all the costs down and he called me the other day said that he's going bankrupt how come he said well because you know I'm getting all the imports from abroad and my suppliers do not accept Greek bank letters of credit so the bankruptcy of the Greek banking system kills off even our exporters you know the the most efficient of exporters so wage austerity and flexibility of labor markets is is a theory that is purely used for propaganda purposes in order to cover up either for failures of macroeconomic policy making or for what is outright class war and the reversal would work what's the now we're in 2018 not 15 what's the Vera fucus plan on the other side of that well for Greece or generally because generally the problem that we have in in at a global level even if you take China into consideration at the global capitalist level we have a major incongruity between a savings and investment they disparity between aggregate savings and aggregate investment in non-financial goods I mean investment actual investment not paper money infrared data Kagura T that has never been as great as it is now ever since perhaps 1930 and it's therefore it's not the great wonder that you have a general stagnation as we speak even Larry Summers understands this you know you have here in the in the United States you have a massive boost through unethical tax cuts you have a massive boost through years of unconventional monetary policies you have you know ten trillion that has been created of wealth so every single lever has been pulled that you would have expected from you know a kind of supply-side perspective to have created growth of seven eight percent and you don't you have much more Tibet growth and especially if you look at growth in industries that actually create good quality jobs there isn't any even in the United States in Europe you have negative interest rates still to this day you have QE that keeps pumping money into the system but all that does it it makes the the imbalance between savings and investment grow further only because the money that is being produced generated by the system in order to supposedly to rebalance and austerity prone world it's being used in order to to buy back shares right and that creates greater inequality does not create more investment so that the whole thing so they look but you know what's brilliant about this book I have to tell you it is deep in Marxist analysis Palani is very prominent Minsky terms of debt endogenous debt cycles Keynes as you've just elaborated and those words are almost never uttered it's so beautifully told and the question is I made the point of not mentioning an economist or any ism or any theory it I mean its beauty it's beautiful in that respect that you tell these stories so compellingly without without invoking the the old theoretical canon and i just wonder what's wrong with capitalism that s- i is so great say that capitalism is doing so wonderfully interest rates are so low and all the things you mentioned and the investment is not taking place what's wrong with companies it's in a national system so elaborate to explain this in the new school for god sakes do I have reached the stage look Marx's critique of capitalism was a capitalist was not the problem Capital is not that it is unjust Marx had no time for the concept of justice for the concept of equality remember what he said he did to poor citizen Weston say it again remember what he did how he just destroyed citizen Western yes in the beginning of wages prices and profit the little pamphlet his critique was that it is an irrational system that it makes really bad use of the technologies that it creates that at the same time that as it is producing immense wealth it must produce gigantic and unprecedented forms of depravity deprivation in poverty the to this is not an accident it's part of the system that the crisis are an essential regulating device so having you know correct The Grapes of Wrath periodically is the only way that the system can sustain itself in other words it's a system which is designed to take whole generations and put them in the dustbin and this is where I learned at the age of 12 or 13 my economics just yeah yeah and I have to say that I was indelibly marked by that view yeah you got into game theory no no game thank you theory came much later by a complete historical accident I came across a paper in the American Economic Review by some MIT professor and I was so incensed by it that I dedicated a large chunk of my life trying to bring it down or explain to myself why and was incensed with it but that's another story so the irrationality of capitalism I you know we I want to open it up for question questions for Yanis I had I want but to count two other questions I had first first of all about debt and political money yeah which is also very brilliantly rendered in the book simply I had the Irish Finance Minister a right-winger who hated to my guts he actually said so in the review that he hated my guts but at the same time he actually said that this chapter is the best chapter has ever had on money so exactly explain to us what you mean explain to us what itical money is is a phrase I wasn't familiar with so I was really intrigued well I made it up in the response to Bitcoin and to you know to the gold standard and generally to the quantity theory of money the you know the bitcoiners in there interesting attempt to make a break to escape the politicization of money through you know the central banks have created this myth that you can yes leave it to an algorithm which effectively simulates the gold standard but it does so in a way that does not put the government right at the commanding heights right of the self-activated so yeah this is the fantasy of putting a political money you can have money that serves all of us that it is not a subject of democracy it's not a subject of collective decision-making it's a technological solution which but it's also political money that has gotten us into such difficult that is correct but politics is like all instruments of humanity they can be used for good or for ill so how do you do the molybdenum making is that you can not be politicized money even an attempt to depoliticize money which is what the ECB did the European Central Bank the whole point about setting up the European Central Bank in Europe going back to the original discussion about here think about what we did in Europe we did something quite remarkable never has it been done before and I hope that it will never be done again we created the central bank without a state and we have 19 states without a central bank they're all pointing that you know just like Bitcoin instead of having an algorithm you have building in the Frankfurt they have it like something something like like an algorithm working in there producing a quantity of money that politicians cannot meddle with therefore Parliament's cannot meddle bit therefore it's outside the realm of democratic politics or politics at all and then of course when you do that privateers private banking critic rates as much as they want during the good times and during the bad times it all disappears and you have a massive recession and then they have to create all the shenanigans that Mario Draghi had to go through in order to justify QE as if it is not QE so they understood that money must be political in the sense that a quantity of money and the type of money must constantly be adjusted and the adjustments that you make will always have political and class determined and related effects in other words it can it must be politicized and it better be democratized if it is going to be political so on the democratized money point just to come back to your your movement your European movement is democratization of central bank and money a central piece of the platform yes it is but we're being very careful you see Europeans are smart people all people are smart people but I'm talking about Europe so I sound very Eurocentric for the moment didn't mean to sorry okay let me start again [Laughter] every time a European voter however exasperated see he may be with the developments near here's a politician say elect me and I will change the charter of the European Central Bank I will introduce I will bring on a new treaty I will change the constitutional setting and institutional setting of Europe and then everything will be fantastic we're all going to be told blonde blue-eyed and Swedish they panic because they know that for the charter of the ECB to change you need 19 Parliament's to agree and in some cases of Parliament's but referenda so that would never ever happen in the mind of the electorate so of course we should change the charter of the ECB it was written by cretins who wanted to be particularly sadistic towards a whole continent but if this is your political program if people you know if generalist and you know how genocide shove a microphone in your mouth and say okay why should we vote for you the correct question you say are because we are going to change the chart of ACB that's it the public hasn't made immediately switched off you they think okay go away this will never happen you're wasting our time so what we are trying to do as diem25 what actually what we have done we spent two years and I'm personally very proud of this because it's actually quite good work we created a document which we call the European New Deal and I think by the name you understand what it is it is an attempt to reconfigure existing institutions within the existing rules mm-hmm in a manner that would make an appreciable difference when it comes to the four sub crisis afflicting Europe public debt private banking low levels of investment especially the things that we need like good in transition and poverty yeah now we think that it is absolutely perfectly possible within the existing charter of ACB with the European Stability Mechanism not awful institution as it is using the only good institution that we have in here in Europe that we should be proud of the European Investment Bank and its offshoot the European Investment fine fine so we we we set up a kind of new deal along the lines of Roosevelt's New Deal for today using the existing institutions in order to effectively press into the service of the things that need to be done in Europe today they're around two trillion euros which is idling around doing nothing gathering dust and bidding up acid prices in Europe without contributing to investment and that can happen tomorrow morning and it can happen on the basis of a single press conference where you have the president of the European Investment Bank the president of European Central Bank the president of the European Union Council the president of the European Stability Mechanism making one announcement it takes half an hour and suddenly the environment is complete of course you need political will to do it we need to win elections in order to make the Rayleigh's people do it but you don't need new rules you don't need nutrition so in a sense two steps first step stabilise New Deal not something extremely radical but something that in the end is ready to go not because of the because you blow anything up and you change the institutions but because you do radical things with the existing boring institutions and then or simultaneously embark upon what we call a constitutional assembly process leading to within and that's why the m25 is it has this twenty five at the end by the year twenty two thousand twenty five to a constitutional assembly at the pan-european level to discuss what kind of democratic constitution we want as Europeans for Europe because this is one thing we lack in you you know people say to me all the Americans are together because they have the same language because they're a homogenous name that's not true this country's not homogeneous at all about what plays a very important role at the level of the imaginary in this country is the Constitution of the United States will not be great if we even if we didn't get to having a democratic constitution of the European Union to have a constitutional assembly process where we actually discuss what it might be can we imagine our twenty pages of a constitution of Europe that would actually yeah this is an exercise that would bring us together and if the economic background has been stabilized through the New Deal process the European Green University then this I can think of nothing else no other process that I want to bring hope I want to ask you my last question about kind of the the uphill battle you fight because what we what we see and read a lot about is the liberal turn and the turn away from the kind of democratic politics that you're describing partly in response to the same issues that you're identifying stagnation fear etc and I just wonder how your pro-europe Democratic agenda kind of confronts that that right wing liberal move you know orbán etc that that you know could potentially feed into your movement these are people who are also disgruntled by the lack of European democracy yes the 1930s is and we have a similar we have a similar problem here in the nineteen thirties should be our point of reference because think about it there was a spectacular failure of the establishment whether it was a very public or France that I'm or Holland for that matter the sticking sticking to the to the gold standard until the last very moment along you know 1937 and what did that bear Nazism fascism racism galore and so the our failure to create a new deal for Europe is simply going to become the greatest gift to the xenophobes and the races that once again are showing a remarkable capacity to divide multiply grow and then unite amongst themselves look at the Solidarity between all those misanthropes salvini the if' de lepen they all love each other and they have no the only people who actually show series internationalism in europe today are the bankers and the fascists we of the left have our work cut out for us and we better you know shape up Thank You Jana I want to open it up why don't we give a hand so this is a guy I could talk to you for three hours but I should cede the floor to people here who also may have questions we have I was going to ask people to to write their questions on index cards but I think we should just open it up yeah it's too complicated so I can see most of you with your hands up but I'll start just calling on you if you could keep your comments to a minute maximum so that Yanis can can comment it will allow everyone to speak okay go ahead can people in the back here we we don't have microphone assistance because we didn't think we were gonna use them well that'll be a very good one to answer repeat very quickly and then please give it okay on we have a monetary theory if my book is written along that those lines more or less you mentioned Jamie Galbraith is not only a great friend but he's also one of the office of the European you deal of the year of diem25 so you know you're talking to the same gang job guarantee it's also part of our program for Europe and we estimate that in the end it's going to be cheaper than the welfare system that we now have in Europe which is so inefficient in the sense that especially in places like Britain where something like thirty five percent of the cost of the welfare state is aimed at humiliating the applicants if you if you've seen I'd Ken Loach's movie I forgot the title I Daniel what I keep saying Daniel day-lewis but it's not true anyway so the the what is a job guarantee system effectively you are allowing people to stay in their communities and do things that they already do but support them to do them things that the communities require so that there is no internal migration or external migration so if you look at the externalities the positive externality will come out of it and you take away the human you know the whole mechanics of humiliation you have a much more efficient program where I would disagree with some others but you haven't mentioned that is with the universal basic income we are proposing what we call European University of ASIC dividend which is the same idea of dividing amongst everyone a certain amount of money but not money raised through taxation money that that that comes through dividends that accumulate in an equity fund a public ed we equate a fund where corporations are forced to deposit a significant percentage of their shares especially after IPOs and and reissues let's take a few comments in a row please in the back can you shout a bit more you have to shout I'm sorry deaf in my old age yeah the first question related to this is how come so many people think otherwise second question is since it's not so difficult in anybody have convictions of their ways right haha Wow have you ever heard of something called religion how can people become so convinced that they're either they kill other people yeah and why do people believe that say look we we would all love for economics to be science I would want economics besides with meat splendid if it was like physics and was if we had a proper lab where we could rerun the Great Depression to see if we did things differently in 1929 1930 what would come out I'll be fantastic except that it is not possible yeah keep going yes let me just add one more yeah that's why it's not possible right it's not possible for a very simple reason anybody who studied philosophy understands that because nature is very different as a species to society when it comes to natural science we are blessed with a splendid independence between the phenomenon and our theories about a phenomenon yeah the phenomena give a damn about our theories about it so a meteorologist does not have to worry that if she predicts wrongly that there's going to be a twister you know in Union Square tomorrow that there might be one just because she predicted it yeah but in economics the phenomenon and the theory are one our theory of the were of the society motivates us to create the society the way we created so our theory of society is part of that which we are trying to explain this infinite regress as Hegel would say makes it impossible for economics to be a science full stop please okay let me let me upset you I think Trump is going to be reelected you know why because of the state of the Democratic Party every time I hear them you know tell them demonize those who voted for Trump and explain Trump's victory on the basis of Facebook Cambridge analytical and Putin I think these people are determined not to win another election ever again Wow that's the applause line Katrina yes look I think it's Stephanie in the rest here my colleagues would live in this country are better suited to answer this question they just a couple of comments on the American situation we have it is clear to me that we have equity to earnings ratio which is worse than it was in 2000 67 we have private debt that is ballooning at a time when you have very tepid growth and a world economy which simply cannot be sustained the way it is the Chinese credit bubble is be deflated very smartly by the Chinese but I don't know to what extent they can continue to do that Europe is a cesspool of deflationary forces that it exports to the rest of the world and in the middle of that those tax cuts that Trump pushed through that are not only ethically appalling but at the same time boost the deficit the budget deficit in a way that does not have a substantial multiplier accelerator effect while at the same time antagonizing those who we'll actually buy the Treasuries to support it okay put all this together not looking good so if you get a recession a Minsky recession yeah how does Trump get reelected yeah well I think that you don't have to get it after he gets reelected I see it comes after god he was yes a plank of platform issues on which all Europeans screen candidates will run on different Oh No okay so first how is the European spring governed structured secondly about a common agenda to what extent is it common and third thirdly the question of war and peace and how do we address it okay I'm very glad you asked me this question because we are very excited by this we're doing something that has never been been done before so what we have agreed to do is create a single Governing Council of European Spring where every single movement from across Europe that is represented has one representative and everybody has an equal vote and we have a sub Council with effectively our technicians who do all the nitty-gritty before the council meetings the this council is a provisional one it's going to be elected in June 2019 now immediately after the may 2019 elections we're going to have an election for it and we're but we are very excited about this election or the appointment there they are going to be elected by all the members of all our organisations as a one constituency across Europe number one number two 25% of the seats will be selected by sortition amongst all our members lottery like jury systems and the that will be the you know the official decision making body regarding our agenda already we're working towards presenting our agenda in our manifesto the European ideal the our policies on women our policies on refugees and migration on issues of what we call Europe's place in the world not like we can't stand the word defense offense foreign you know we're all foreigners anyway so we don't believe in foreign policy Europe place in the world so it is an experiment that has never been tried before at least level of trans nationality to give you another example within diem25 the movement that brought this all together we when we decide what the agenda the economic policy will be for Greece of our Greek party everybody votes that agenda that passed in on 26 month march a greek economic policy agenda was voted by the germans but the polls by everyone and everybody's going to vote on German is on our policies in Germany and so on so this is what what I meant before when I said that another Europe is here we are already trying to demonstrate by example that it is here and now I come to the last point war in peace this is difficult this will be the hardest part we can agree on a job guarantee system amongst ourselves were all progressives who can agree on what to do with you know investment and so on but we have a bag a lot of baggage when it comes to foreign defense policy enola so let me give you an example she weeks ago Donald Trump in his infinite humanity in wisdom bombed Syria and along with him of course yet the reason may and Manuel McCrone one of our partners in France supported the bombings that was like poison to the rest of us so what we did we met in Lisbon and we spent about eight hours together hammered out a common position that in the end covered for this but okay they were very ready to compromise it will be difficult but it is absolutely essential to have a policy that is in favor of open borders when it comes to migrants when it comes to refugees against military militarism and against the new tendency in Europe to create under the guise of a common army which of course who can't have it we shouldn't have how can you ever have common army when you don't have a common government good Hoarders them to war who but it's part of the attempt to build the military-industrial complex in in Europe and we're against that our partners in France have a certain problem because a lot of that trade unions members supported like in Britain for you have trade union supporting that stupid nuclear deterrent but you know it's working progress we'll get there I'm looking Abraham I heard you had your hand up here you took it down [Music] [Music] I wouldn't become an economist I have to tell you in this environment I would not become an economist simply because there are no economics departments today except this one thank you for the plug and my little old department in Sydney universe that still has a little political economy depart okay and a tiny bit of political economy left in Athens which is now dying a terrible death as a result of the crisis you know when I was when I was a an undergraduate graduate student and then a postgraduate student they were still space in economics departments for serious intellectual endeavor I don't see it now so I have no idea look at there's no way I'm going to give you advice go out there and fight you've reached the stage where you're finishing a PhD subvert the dominant economic paradigm the way we're doing but I have to say that what I usually as you can see you know I'm my wife is the artist in the family I'm the artist yeah I don't have a problem speaking but when students say to me especially good students from my University in Athens professor what should I do should I do a master's in economics or a page in economics that's when I have a major moral internal crisis because I can't really bring myself to say to them do it to what go into a deeper standard department and spend you know lose your soul for four or five years doing rubbish modelling and then in order to do what the best you can you can do is either then work for a bank which is going to use your expertise in order to cover up the very convoluted forms of debt they create in order to defraud their customers yeah or to do what work for the OECD you go to the you take the oil osed the organisation in Paris which is which is a relic of the Marshall Plan you even have I mentioned in the OECD because unlike the IMF which we know what the IMF is the OECD has secretary-general langoria before my Finance Minister of Mexico was a visionary smell actually is quite progressive and he would fit in much more than at the new school that MIT yeah and you go to the Economics Department and at the worst of the worst and he you know the Secretary General of the area city comes to used to come to me because we've known each other for why I say can you furnish me with some arguments against my economists I don't know go ahead please [Music] well my advice would be and I think they understand it they don't need me to tell them that it is absolutely important to do in the global South what we are trying to do in Europe to create transnational movements take for instance Latin America now I not in America is in desperate need of democracy in the americas movement and you'll be wonderful if our progressive comrades here on this side of the us-mexican border joined up with them yeah this is one of my criticism of Bernie Sanders he's not looking beyond the borders of America he must I mean he is spiritually and so on but not organizationally it's important to extend our organizations across borders because as I was saying before the bankers are very good at that we're the only ones were not good enough and so it's essential to do this to create to move away from an antagonistic relationship let's say between India and China between you have to understand there is no such thing as India there is no such thing as China there are many China's there many in this progressives must bring together the progressive movements from the different countries and economic bloc's of the global South and create a new movement which puts the interests of the ones that effectively are being liquidated as economic units whether they are workers or small businesspeople in your countries in the yeah in the back you I think happening and to keep it up today because by tying it together so it's interesting to see the upheaval head destroy that Germany is really so I didn't find it interesting that we do have any comment on that or is that something to my great-uncle's really oh you're great Angus work we were correct but did did the average German felt that even more than the average Dutch I have when I want to be humoral about the euro I tell a story as to why it was put together let me tell you what this silly story it's not true analytically doesn't hold water but it's fun anyway and it does have some some insights the euro was created because the French feared the Germans the Spanish wanted to be like the French the Portuguese did not want to be Spanish the Greeks did not want to be Turkish the North Italians wanted to be German the southern Italians it was the only way of not be kicked out of Italy and so on and so forth in the end okay Holland had already become German part of Belgium wanted to be French and the other wanted to be Dutch but they both want both parts wanted the deutsche mark and so on and so forth and my story finishes and because the Germans feared the Germans yeah is it element of truth areas please and maybe we might have to make this the last one Abell don't want to I'm a fellow Greek I fall under in the demographic of the young people who left the country so Minister have two questions really quickly I did in America so the first question has to do with what do you think about capital controls they are still there they are still present and they still have the worst effect on people's life there and my second question has to do with what do you think about the containment policy that our government has instituted with regards to the refugees lesbos here's I'd start on the second I will read the question the first the second question was what we think about the containment policy of the Greek government visa vie the refugees on the islands of lesbos hears and so on it's complete and out of this grace I'm ashamed to be a Greek and I'm ashamed to be a European mind you it's not a policy that was put together by the Greek government there is no such thing as a Greek government there are people occupying the ministries but the government of Greece is effectively orchestrated from Brussels this policy that you mentioned is just one example not I mean every single bill that goes through a Greek parliament is written in Brussels and sometimes it's translated through Google Translate that's why members of parliament don't even understand what it says yeah and vote for them no seriously seriously when I was in Parliament I received a 1000 page bill that was Google translated 15 - focused 2015 remarkable Google Translate has gotten better in the last but let me say just a few words so that the rest of you understand what has happened with the refugees in less person here the European Union has chosen to bribe an increasingly dictatorial Turkish president mr. Dewan to the tune of six billion euros about seven billion dollars so that everyone would allow your European Union to violate international law on refugees so if you are a political refugee from sea from Afghanistan from Pakistan and you land in lesbos after an inhuman track where you know the chances of being killed in a variety of ways are gigantic you end up there and you don't have the right to a hearing that will determine whether you're a political refugee or not this is the greatest violation so that's what I think of the second the second part was that the first question I was asked was about capital controls what do I think about them and what else okay capital controls in the European Union firstly in the eurozone are a contradiction in terms to have a monetary union with capital controls imagine if you can't take your your your dollars from here to Boston imagine that yeah you can take a certain quantity of them but no more than that well what kind of a dollar union do you have there is no economic rationale for them whatsoever they're used in the euro zone as an instrument of discipline of disciplining wayward governments so the only reason why they were introduced in Greece in 2015 was because a government was elected that wanted to renegotiate the debt so they slapped them on and they will continue to slap them on and as long as they think that it is possible that this governor of the next government will again raise the issue the the the excuse for the capital controls was a capital flight capital flight a bank run and there was a background but why was there a bank run because a month before we were elected the governor of the Bank of Greece of our Fed came out and made a fantastic statement which i think is a unique statement the history of central banking predicting a liquidity crisis what it's like the firefighters starting a fire it's very easy to do yeah you know the standard joke there are too rich people on the golf course you know that seven don't you it's my favorite one regarding they see this and one of them says how you know you know how am i how I made money I had a factory and I burnt it down and I got the insurance money and the other guy said yes me me too similarly there was a flood and I got the insurance money how did you start the flood so yeah the way they started the flood was to say it's going to be liquidity crisis then money starts coming out and then saying ah if this continues we will have to slap capital controls really so of course the cap the the bank ironic in accelerate and then they slap capital controls all they had to do is to say we guarantee the deposits that there will be no liquidity no liquidity shortage then there will be no capital flight and then there would be no capital controls it was a pure instrument of exercising authority over a democratically elected government I just want to let you know there's a signing table over there which I presume means the Yanis is going to sit down and sign books talking to my daughter about the economy or how capitalism works and how it fails and then new in paperback adults in the room my battle with the European and American deep establishment incredible area edition analytics and thank you so much for being here [Applause]

Channel: The New School

Views: 183,393

Keywords: The New School, Colleges in New York, NYC, Economics, International Affairs and Development, Politics, Cities and Urbanism, Humanity, Society, Social Justice, International and Global, Policy and Government, Bitcoin, Yanis Varoufakis, Capitalism

Id: UwWRSIXbpIQ

Length: 86min 22sec (5182 seconds)

Published: Fri May 11 2018

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