WTO: Austerity Enforcement or Hold

By: The Economist 

Greece has been previously recognized as a country with an exquisite history where individuals all over the world would dream to visit. Although the astounding coasts such as the Mikonos beach and the historic sites of the long lasting Greek empire are as vibrant as ever, public outlook of this country has shifted for the worse. It is now known for the economic quagmire it finds itself in. Deplorable employment levels, horrendous levels of productive growth, and calamitous falls in aggregate household income are just the tip of the iceberg as the inner workings of the economy are in a dreadful state. The lack of confidence in the banks and the deficiency of government monetary strength only make the situation worse.

Historically, the worst economic downfalls were recovered from using expansionary economic policies and in using the Keynesian school of economics. The latest and most recent WTO (World Trade Organization) meeting saw a clash of beliefs in terms of viable solutions to the Greek economy. Countries such as Albania, Slovakia, the UK, and Israel are all proponents of Austerity measures to enforce more taxation and cut Greek government spending.

 The economy is a rather complex and intertwined phenomenon but austerity does not benefit the Greek economy. Instead, it would marginally allow the IMF and other EU creditors to collect their loans. We see the IMF time and time again loaning huge sums of money to countries with a lot of risks and force austerity measures and their corporatist agenda when things do not go as planned. 

Austerity measures are meant to stabilize and moderate the possibility of recessionary periods by implementing increased taxation and decreased government expenditure in the expansionary and inflationary phase of the economy. It decreases consumer purchasing power and cuts public works and stimulus packages.

It is rather evident that Greece is in no way in a state of growth. Consumer monetary strength is at an all-time low and government public works are laying off workers and excruciatingly inefficient. A prudent fiscal policy would suggest that expansionary policies such as decreased taxation and increased government expenditure should be adopted, but Greece has spent and spent, and there is no recovery in sight.

Countries that were proponents of expansionary policies include Argentina, the USA, Indonesia, Guatemala, Mexico, and the Netherlands. Their resolution that passed included clauses which would suspend all austerity measures for five years and expansionary policies with sufficient oversight be implemented. This amendment also encouraged the investment strategies with the highest economic potential. The delegate from Argentina stated, “It’s important that we do not allow global superpowers to exploit the helpless Greek people, and their political sovereignty should not be compromised.”  Despite this, there was opposition from the Albanian delegate, who was adamant austerity was the way to go. “Austerity is important because it ensures our long term success and it’s crucial we do not overspend in Greece”. Regardless of this clash of ideas, the resolution of the austerity was passed with a large majority.  This means that not only assertive policies are adopted but their execution is being monitored to ensure effectiveness. Removal of Greece from the Eurozone is also included in the resolution which will allow for more foreign investment and improve production as a result of cheaper labor, consumer products, and other tangible and intangible goods.

Moreover, the sovereignty of the Greek people should also be taken into account when discussing their economic status as they have the autonomy over the decisions their government makes. A referendum in 2015 revealed that the Greek people do not want their government to be a puppet of the International Monetary Fund, European Central Bank, and European economic superpowers. This is why this amendment is perhaps the best solution as it proposes a viable solution without putting the Greek political sovereignty into question.

Ultimately, although Greece is a cataclysm of economic insufficiencies, with expansionary policies executed properly, a devalued currency after amendments to removal of the Eurozone, and oversight of economic arrangements there is in fact a possibility of a resurgence of Greece and a bright future. It will take a very long period of time for this historic country to recover, but this recovery is something that all and every country ought to promote and aid.