EU-Views: Michalis Psalidopoulos
Name: Michalis Psalidopoulos
Nationality: Greek
Occupation(s): Visiting Professor at the The Fletcher School of Law and Diplomacy, Tufts University; Professor of the History of Economic Thought at the Department of Economics, University of Athens.
Connection to Europe: European citizen; Research focuses on national traditions in the History of Economics and the relation between economic thought, economic policy, and good governance in Southeastern Europe.
Date of interview: March 25, 2016
This episode is a conversation with Michalis Psalidopoulos, Professor of the History of Economic Thought at the Department of Economics at the University of Athens, about the Greek experience handling the challenges facing the EU. Psalidopoulos discusses the situation in Greece since the economic crisis began in 2008, and its impact on both citizens and the current migration crisis. Psalidopoulos also shares his opinions on the future development of a federal Europe and his hope for continued European experimentation through solving problems based on the ideals of free citizenship, democracy, and prosperity.
Transcription of Interview:
MP: Michalis Psalidopolous
TR: Toria Rainey
OY: Olya Yordanyan
TR: If you could just introduce yourself, explain your relationship to Europe, what you’re doing at the moment, where you’re from, and where you’re currently living in a few words?
MP: My name is Michalis Psalidopoulos, I come from Greece, I am a professor of the History of Economic Thought at the University of Athens, and I was a Karamanlis Professor at the Fletcher School Tufts University from 2010-2014. Currently, I am on a leave of absence, and I am an alternate executive director at the International Monetary Fund representing Greece and other Southern European countries. I have taught about Europe in the course of my academic career with courses about European integration, and I did the same thing at the Fletcher School. And, overall, I am an optimist and a convinced European.
TR: So, jumping right in, what future do you see emerging in the European Union—given the socioeconomic and political transformations that it’s currently undergoing?
MP: Well, I think that the European project is strong and moving forward. Politics is about solving problems, and currently, of course, there are many problems to be solved. But the European Union, as a whole, takes stock of what’s been achieved and moves forward in small steps. These small steps may give to an outside person the view that Europe is stalling or going backward, but I don’t think that is the case.
TR: Going off that, some of the problems that have plagued Europe in confronting the economic crisis seem to result in thinking egocentrically. So, in what ways do you think that we can shift that thinking to a broader ecocentric inclusive worldview?
MP: Well, it is true that the European Union was not ready to face the financial storm that started back in 2007-2008 with the Lehman collapse. So, it was taken kind of by surprise, when certain—mostly Southern European—countries, faced problems: Greece, Spain, Portugal, and Ireland. In the meantime, Europe has moved forward. It started with the Greek loan facility to help assist Greece, back in 2010, and it moved toward the creation of the European Stability Mechanism, and other institutions, that can now assist countries in economic stress. So, despite having been alerted after the events, the European Union responded, and it offered solutions to problems. The situation in Greece remains a cause of concern, but this doesn’t mean that problem cannot be solved in the Greek case as well.
OY: How do you see the Greek problem being solved within the current structure of the European Union?
MP: Well, the Greek crisis was due to over borrowing by the government and by private households, and after the Lehman collapse interest rates rose and the country found itself in dire straits. In the meantime, it signed three memorandum of understanding, it was offered money to deal with its debts. And to this money, there is a conditionality involved. Greece has to introduce, and still needs to introduce, some reforms in the whole administrative system, social security benefits, government expenditure in general, and the labor market. So, the memorandum had a certain shape and they created some side effects—some negative side effects. For example, the structure of the economy was severely hurt by the fact that Greece tried to achieve too much too soon. It went down from a 15% deficit in its budget to 3% within a very short period. This created social and economic effects that were not perceived at the beginning. So, a second memorandum, and now a third deal, have been passed to address these issues, and it is to be hoped that we are currently in a situation where the Greek economy can move forward in the near future.
TR: Shifting that focus from the major players being the government, in what way would you assess citizen’s participation in this crisis?
MP: Well, citizens should be aware that economic life is a circle. There is growth and periods of prosperity, then there is economic decline, recession, and, sometimes, crisis. In times of crisis, in general, public opinion becomes more pessimistic, and in Europe we have witnessed a European pessimism that has articulated itself in certain electoral results. In certain countries, Eurosceptic parties want to turn their back to Europe, they don’t want the European project to continue. They want to possibly return to the nation-state, and these views have to be confronted by Europeans. These people are not our enemies, we simply don’t agree with them. We have to convince the electorate all over Europe that they have to stand on their feet, find the courage, and support pro-European forces, so that we move Europe forward.
OY: Greece now is facing this severe flow of refugees and asylum seekers in the midst of the given given the economic situation in Greece, and it is a very large burden for the country. What do you think of the European efforts to help Greece to overcome this situation, are they sufficient or you would like to see more?
MP: Well, it is true that, under the current fiscal constraints, Greece is really facing a very serious problem. But the European Union has responded to that. Of course, the agreement that was reached some weeks ago has been criticized because it foresees certain things that NGOs and academics think are not in line with the principles that govern the European Union. However, this is the way Europe works. It creates a framework to solve the problem, and in the course of time, there are corrections to this procedure. And in this sense, I think that the agreement was the first step in the right direction. It’s a complicated sort of agreement, so we have to see that it’s implemented. We have to see shadows or negative sides to that, and in the future change the approach to a more comprehensive kind of solving the refugee issue.
OY: You mean the agreement signed with Turkey?
MP: Yes. That agreement.
TR: So, harkening back to the idea proposed about this European pessimism, in what ways do you think can inspire these European citizens to break that cycle of pessimism? One thing that we talked about in putting together the project was democracy, and how an incredibly important aspect of that is choice, so, I guess my question is, in what ways do you find you can inspire European citizens to make choices that come from a place of optimism rather than pessimism?
MP: I think that involvement of citizens in things European has to be expanded. Here we went forward when the European Parliament was giving a competence that it didn’t have in past decades, and we should move toward more transparency, more democracy. We should envisage a Commission elected by European citizens. There is also the agreement to move forward with the reform of the Eurozone after the refugee crisis is solved. So, I see quite a movement in the right direction to engage European citizens so that they don’t think that Brussels is ‘far away from where I live’ and ‘I don’t know anything about what they do so let them do what they do, and I stick to my plans’. This is not the way to move forward.
TR: I guess going off of that, in a broader sense, what is your vision for Europe? What is the vision—if you could change anything—what would you change and how would you create a European Union that is holistic?
MP: Well, this is a very interesting question, and I’ve given it a lot of consideration. Because, as I was growing up and doing my studies and starting my academic career, Europe was still a European Economic Community, but it moved toward becoming the European Union. At one point, federalism seemed the right option. However, with the breakdown of communism in 1989, many countries joined the European Union in a very short time. We moved away from a federal Europe toward a federation of European countries. So, perhaps, in the future we should, considering that we have to be realists, create the vision of a federal Europe as a substitute to sticking with what we have, which may be insufficient. This is my utopia, if you want.
OY: Connecting two of your thoughts, one was about election of a Commission and now, moving forward, federal Europe. Do you see this election of a European Commission leading toward a more federal Europe, or at least the idea?
MP: I do, because I think that today we don’t simply have a framework for a common agricultural policy, for regional development, for social security, for many, many things that European citizens appreciate. We have to move in order to minimize the negative sides of the monetary union as it was conceived. And, as we all know, the absence of fiscal federalism—for example, the inability of the European Central Bank to issue Eurobonds, and other issues that are criticized mostly by American economists are things that are on the table and the European Union has to work toward finding solutions. And I think, as we move forward, and we do things in that direction, that the future of Europe will become more bright and citizens will become more involved. And because the nation-state still exists, it needs to stay that way, exist, but globalization has brought results for everyone, and we have to evaluate the situation at any given moment and move forward with solving problems. That’s what Europe is about.
TR: I think this last one is just kind of a fun question. If you were given the opportunity to reach out to the common members of the European Union or the European community, or even the global community as a whole, what would you say to invite this kind of out of the box thinking? What would be your call to arms to the people of Europe to take things into their own hands and create this utopia?
MP: Well, I would urge for more experimentation in things European. Any bureaucracy needs standards in its procedures to move forward, and we need to take this into account, we cannot escape the current way that Europe has to make decisions. But here and there, and wherever we can, we have to really exploit our imagination and find ways to improve European policies, and thus creating thus a better framework for solving problems in the future. This is what I would recommend.
TR: Are there any other things that we didn’t ask you about that you’d like to talk about?
MP: No, I don’t think so. These were very interesting questions. But I would like to return to what I called my optimism. Because, ok, I am very worried about the refugee crisis, as you are, and I’m looking forward to the problem being resolved in a European way. But I don’t forget that, in the past year, Europe has absorbed over a million refugees. So it’s unfair to, you know, say that Europe at present cannot solve the refugee problem. In my lectures, back in Greece, I used to tell my students the following: suppose that the Chinese government allows its citizens to get a passport and leave the country, and they decide to come to Europe. We will have a problem. As you know, the population of China is approximately 2 billion, and if they decide to move freely, we are going to have a big political and economic problem—the more so if they come to Europe. So, the free movement of people, of course, has to be allowed, and we must prioritize people who are asylum seekers who are persecuted on political and religious grounds. But, everyone is entitled to move freely around the globe. This has to be, however, done normally, and not in the way it was done in the recent past. So, I would close this interview by saying: don’t get pessimist just because some agreement runs contrary to your convictions. Try to understand the agreement as a process in the right direction. Work toward making it a success, and introduce whatever changes to that agreement are necessary to make it a success. Stay firm on European ground, solving problems, based on free citizenship, democracy, and prosperity for all.
TR: Thank you so much!
MP: Thank you.