Observer
May 13, 2012
Unemployment in Greece stands at a record 21.7%. More than one in two young people aged between 18 and 24 is out of work. The economy will be 20% smaller at the end of 2012 than it was five years ago and shows little sign of pulling out of its tailspin.
So when the cry goes up that departure from the eurozone would be a calamity for Greece, the obvious riposte is: how much worse can it get? Greeks fully understand that life outside the single currency would be tough. They know that defaulting on debts and currency devaluation will have costs, including a likely plunge in output, a fresh squeeze on living standards and the risk of much higher inflation. But the alternative – year after year of economic depression as Greece tries to make itself more competitive – does not sound like a bed of roses either.
Ideally, Greece would like to stay in the euro without the current level of austerity, but if these objectives prove incompatible it will eventually have to choose between the two. The argument for exit rests on four pillars: it makes economic sense, the pain would be over more quickly, the costs are exaggerated, and it would be better for Europe.
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