Unknown knowns: The lack of clarity on Grexit and eurozone policy

The language of common sense is not about whether you speak English or French. This is the only conclusion to draw from French economics professor Thomas Piketty’s plainspeak on the Greek economic crisis. His precise and pointed opinions are laid bare in a recent Forbes piece.

Professor Piketty, whose bestselling ‘Capital in the 21st Century’ was the flavor of the year in 2014, is possibly the only person – politician or economist – to have spoken bluntly (and more importantly, clearly) about the past four months of negotiations with Athens.

Those negotiations, between Greece’s Syriza party-led government and the European Central Bank, Eurozone finance ministers and the International Monetary Fund, have ground on behind closed doors. “That’s four months that we don’t know really what they are doing,” he complains. Other than making up “stupid policy”, he says. “Greece should be required to maintain a small surplus, paying back more than it receives in public funds”.

This, he says, is the only common sense solution to returning Greece to some sort of economic health and, crucially, keeping it in the Eurozone.

Unlike most politicians and pundits, Professor Piketty is also blunt about the Eurozone’s need to keep Greece on the team. “It would be a catastrophe for the Eurozone if Greece were pushed out. It would be the beginning of the end of the single currency.”

That’s not because of any hidden economic clout wielded by Greece, but as the professor says, because of perception: “People every morning would be asking ‘who will be the next to leave?’ That would be the beginning of the end. And the governments of France and Germany have not prepared public opinion for such an eventuality; they would have to do that very quickly.”

This is why the professor’s prescription for Greece and the other troubling southern European members of the Eurozone (the PIGS – Portugal, Italy, Greece, Spain) is the language of common sense: “You need a Eurozone Parliamentary mechanism to decide on interest rates to be paid and on the speed with which to pay down the debt” for Greece and others.

“By using stale metaphors, similes and idioms, you save much mental effort, at the cost of leaving your meaning vague, not only for your reader but for yourself.”
– George Orwell