1. Modern Monetary Theory Meets Greece and Chicago
- Author:
- George S. Tavlas
- Publication Date:
- 01-2021
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- During the fall of 2009, George Papandreou headed the ticket of the Panhellenic Socialist Movement, known by its acronym PASOK, against the then‐governing conservative party, New Democracy, in the Greek national elections. Papandreou ran on a platform that featured highly expansive fiscal spending. During a press conference on September 13, 2009, he was asked where he would find the money to fund his party’s spending proposals. His answer was that given in the above quotation, by which he meant that Greece had abundant fiscal space to increase government spending; he believed that tax revenues could be sharply raised through stricter enforcement of laws against tax evasion. On October 4, PASOK won a landslide electoral victory, garnering 43.9 percent of the popular vote, compared with 33.5 percent for the second‐place, incumbent New Democracy party, with the result that Papandreou became Greece’s prime minister. In the following months, a sovereign‐debt crisis erupted in Greece that, within a year, engulfed much of the euro area through contagion. In November 2011, Papandreou resigned the premiership, becoming the first Greek prime minister in almost 50 years to be forced out of office by his own cabinet. An article in the Financial Times, reporting on his ouster, stated: “George Papandreou will be remembered by Greeks with more than a trace of bitterness as the man who smilingly declared ‘the money’s there’ ” (Hope 2011). In the next Greek elections, held in June 2012, PASOK won only 12.3 percent of the vote.
- Topic:
- Monetary Policy, Conservatism, Political Parties, and Socialism
- Political Geography:
- Europe and Greece