Jobs Not Growth: An Alternative Path for Development

Greece’s current predicament is not mainly due to structural problems—or at least, will not be cured by attacking presumed structural problems. Greece is surely not alone in suffering from the tremendous rise of unemployment (and especially youth unemployment) and as well falling GDP. This chapter argues that the main problem is with the setup of the EMU, which separated member countries from their currencies. This means that with the exception of the handful of members who can run “beggar thy neighbor” trade surpluses (forcing euros to flow from other members), the majority of countries using the euro face fiscal constraints that force austerity. This chapter proposes a direct job creation program modeled on the American New Deal, funded by the center to promote full employment through “fiscal transfers” that would relieve the constraints.