by Kemal Derviş
Project Syndicate
February 16, 2015
Over the last five years, the eurozone has, without explicit popular consent, maintained a strict policy focus on fiscal austerity and structural reforms – despite serious social repercussions, not only in the Mediterranean periphery and Ireland, but even in a “core" European Union country like France. Unless eurozone leaders rethink their approach, the radical Syriza party's success in Greece's recent general election could turn out to be just one more step toward a future of social fragmentation and political instability in Europe. Or it could mark the beginning of a realistic and beneficial re-orientation of Europe's economic strategy.
Of course, fiscal sustainability is vital to prevent a disruptive debt refinancing and inspire confidence among investors and consumers. But there is no denying that it is much easier to support fiscal austerity when one is wealthy enough not to rely on public services or be at serious risk of becoming mired in long-term unemployment. (The wealthy also remain largely in control of the media, the public discourse, and cross-border capital flows.)
For the millions of workers – and especially young people – with no job prospects, fiscal sustainability simply cannot be the only priority. When unemployment benefits are slashed, they are the ones who suffer. And when budget cuts extend to education, it is their children who are unable to gain the skills they need to reach their future potential.
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