On Sept. 6, 1946, U.S. Secretary of State James Byrnes gave a speech in Stuttgart, Germany. A movement was afoot to penalize the Germans for their role in World War II by deindustrializing the country. Byrnes opposed anything resembling economic spite and promised the country a fair chance to rebuild. “Germany is a part of Europe,” Byrnes said, “and recovery in Europe will be slow indeed if Germany with her great resources of iron and coal is turned into a poorhouse.” It became known as the Speech of Hope.
Whatever he lacks in efficacy, Greek Finance Minister Yanis Varoufakis knows his history. On June 7, in an op-ed for the website Project Syndicate, he harked back to Byrnes. “Today, it is my country that is locked in such circumstances and in need of hope. Moralistic objections to helping Greece abound, denying its people a shot at achieving their own renaissance,” he wrote. He called on German Chancellor Angela Merkel to come to Greece and give a similar speech—“a break with the past five years of adding new loans on top of already unsustainable debt, conditional on further doses of punitive austerity.”
Merkel, of course, will do no such thing. She and many of her European peers appear increasingly open to the possibility that Greece will crash out of the euro currency. What makes Varoufakis’s op-ed poignant is that he’s largely right about the damage wrought by austerity. Even before the latest chaos, the economy had shrunk by a quarter from its peak. Greece needs debt reduction far more than spending cuts and tax hikes. “I can think of no depression, ever, that has been so deliberate and had such catastrophic consequences,” Columbia University economist Joseph Stiglitz wrote on his blog on June 29.