American Professor Advises Greek Government

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Lisa Mullins: Harvard economist Richard Parker is also in Athens. He's there to advice Prime Minister George Papandreou. Parker says that Greek leader is having to make some pretty tough calculations.

Richard Parker: He's a Center-Left politician and he didn't come to office with the intent of cutting wages, cutting pensions or emptying out public sector offices and this has been an ongoing and deeply painful process to him personally, morally and politically, that said, no one has come forward in Greece with an alternative except bankruptcy. And bankruptcy would produce results far worse than what is going on now.

Mullins: So with the vote today and there's a second an important vote tomorrow has --

Parker: Yeah.

Mullins: -- Greece dodged that bullet of bankruptcy?

Parker: Yes. It has pushed the issue into the future. But, I mean, as an economist, what I can tell you is that imposing austerity when the economy is in recession is not a smart thing to do, and you know, the United States is struggling in its own way to get out of its own recession and the grid lock about spending is in my view part of what's causing this recession to last longer than it would otherwise. So the fact that he's had to impose austerity budgets, that he's in fact cut the public budget by 5 percentage points of GDP in one year, that's more than any European government has ever cut public spending in terms of percentage of GDP has produced real pain and he knows that that's really painful and he's trying to find ways to get the economy moving again as quickly as possible.

Mullins: What and maybe you don't necessarily advice the Prime Minister about this, he's a man of great experience in politics, but I wonder what you suggest to him perhaps about addressing the mismanagement that has gone on and certainly the protestors have addressed this themselves, mismanagement to the nations finances, the corruption, the tax evasion culture. How does he respond to those things even if he believes that that is, something that he's been tackling successfully?

Parker: Well, he's elected on a campaign against corruption, against mismanagement and against bureaucracy back in October of 2009 and that was what he was voted in to do, is to tackle all of these issues, you know I think that this is a classic situation in which the short tropes that are useful in telling stories, particularly economic tropes about the come out of a moralistic framework did damage to the larger and more complex process that they're facing here. This is a country of 12 million people, it's a democratic country, he is operating in an entirely democratic fashion. He doesn't jail upon us, he doesn't muscle upon us, he accepts opposition from within his own party. He believes in democracy and I frankly as an American think that that deserves help. We're spending billions and billions of dollars in places like Iraq and Afghanistan to prop up governments that don't come close to a tenth of the kind of commitment to democracy that this one has. So I think that there's a very special reason why we should be helping Greece in this situation.

Mullins: Amplify that a little bit more. Depending on what happens over the, the next couple of days and what's happened today. In fact how is the United States affected?

Parker: Well I mean, I think that you've seen it, which is that U.S. stock markets are rising the way European stock markets are rising because the potential for contagent that came from a Greek default has been large and you know, what we need to do is get not only the Greek economy but the European and the U.S. economies back to a position of strength which means our banks are not carrying vast amounts of very weak loans, the banks are not afraid to lend, the stock markets starts on a healthy upward path and you see unemployment starting to go down and wages starting to go up. We're not out of the recession that was created by this financial crisis on Wall Street and that was why collective action was needed in the case of Greece to prevent a contagent from spreading. And I do believe that out of this crisis Prime Ministers and populations are running to Europe needs to go forward and I think that balance is a perversely enormous positive contribution to Europe. Perverse in the sense that this is a terribly painful thing for Greeks as well as for other Europeans financially.

Mullins: Richard Parker is an economist at Harvard University. He joined us from Athens, Greece, where he's advising Prime Minister George Papandreou. Thank you.

Parker: Thank you Lisa. Good to talk with you.