French economist Thomas Piketty, who became renowned last year for his scathing critique of global inequality, has stirred up another debate -- this time on the Greek crisis.
Greece’s financial future is increasingly uncertain after voters rejected proposed austerity measures, raising the specter of Greece possibly leaving the eurozone. The International Monetary Fund and several other prominent critics have called for Germany to write off some of Greece’s debt, but German Chancellor Angela Merkel has refused to budge.
In a June interview with German newspaper Die Ziet, translated on Monday, Piketty criticized Germany’s handling of the Greek debt crisis, calling the nation’s hard-line stance on Greek debt hypocritical and a “shocking ignorance of history."
Piketty said that Germany never repaid its massive debts that it incurred after both world wars. After the defeat of the Third Reich in 1945, Germany’s debt was over twice the country’s GDP, but a majority of it was forgiven, including a 60 percent foreign debt forgiveness at the London Debt Agreement of 1953. In April, during talks with its creditors, Athens had demanded repayment of $303 billion in reparations for the Nazi occupation of Greece, which was termed “dumb” by the German economy minister.
"Europe was founded on debt forgiveness and investment in the future," he said, according to the Huffington Post.
He added that he considers Germany’s insistence on Greece accepting austerity reforms and paying back its debts "infantile.”
"When I hear the Germans say that they maintain a very moral stance about debt and strongly believe that debts must be repaid, then I think: what a huge joke!" he said, according to Business Insider.
Piketty condemned Germany’s moralistic stance and called for an economically pragmatic solution. “The Greeks have, without a doubt, made big mistakes. Until 2009, the government in Athens forged its books. But despite this, the younger generation of Greeks carries no more responsibility for the mistakes of its elders than the younger generation of Germans did in the 1950s and 1960s.”
Piketty called for Greece to be extended the same debt relief that was afforded to Germany. He also pointed out there should be measures to increase inflation, a tax on private wealth and debt relief for the troubled country. He added that a conference should be held to restructure all European debt that could, for example, create a maximum budget deficit to prevent debt from spiraling as it did in Greece.
He condemned those calling for Greece's exit from the eurozone, warning that it would only encourage the markets to “turn on” to the next struggling nation, and imperil Europe’s unity. “Those who want to chase Greece out of the Euro zone today will end up on the trash heap of history,” he said.