Greece who is to blame

That said, Harry Truman faced domestic political constraints when he orchestrated the Marshall Plan. George Washington faced domestic political constraints when he passed the Compromise of The British and French leaders who agreed to participate in the cancellation of German debts faced political constraints.

At times of crisis, great leaders manage to elevate the needs of statecraft beyond short-term interests and recognize the larger interest that major countries have in stabilizing situations and creating conditions conducive to global growth. Germany is the largest economy in Europe by far , and if anyone is going to play a leadership role, it is going to be Germany. But leadership is always moderately costly, and under Merkel, Germany has been unwilling to pay that price choosing instead to conduct itself like a small, narrowly mercantilist state.

The Eurozone's small creditor nations especially the Netherlands, Finland, and Austria have a small-state mentality for good reason — they really are small.

And small countries have a distinctive outlook on macroeconomic affairs. Fiscal stimulus doesn't work very well because you are so engaged in international trade that there is massive "leakage" across borders. Similarly, monetary policy has its effect largely through exchange rates and international trade rather than domestic investment.

And because you are small, your domestic economic policies don't have a big impact on the global economy. Because you are small, your foreign policy lacks grand ambitions and largely exists as an extension of economic growth policy.

This small-state outlook is harmless in a Norway or a New Zealand, but even though Finland really is small, when Finnish politicians speak on Eurozone policy they are influencing economic policy for the largest economic bloc in the world. Fiscal policy matters a lot for Europe as a whole, European monetary policy acts primarily on domestic investment, and the state of the European economy is very significant for global growth.

Failure to appreciate these facts has been a consistent drag on continent-wide growth and has exacerbated Europe's problems. The former leaders of Germany and France, respectively, have long since departed the scene. But they bear substantial blame for the eurozone's badly flawed design. Operating in the context of imminent German reunification, Mitterand desperately wanted a "win" for French foreign policy, and Kohl wanted a reassuring gesture that would induce Germany's neighbors to accept reunification.

What they came up with was a huge symbolic deepening of the project of European integration, including the creation of a single currency.

Important questions like "What will we do if a member of the currency zone faces a severe depression" were simply not answered by the eurozone's architects. They were practicing high geopolitics and were focused on making a very ambitious vision acceptable to the relevant domestic political constituencies. Syriza has made a hash of things since taking office in January. But if you look at the available alternatives, it is very easy to see why Greek voters turned to Tsipras and his team.

The previous government, after all, was simply a grand coalition between the two main parties — New Democracy on the right and PASOK on the left — which had landed Greece in the mess in the first place. Those were the parties who'd gotten Greece so deeply in debt, those were the parties who'd set up Europe's least effective tax collection system, and those were the parties who'd created the bad economic policies they were now claiming to be "reforming.

Combine all that with a 25 percent unemployment rate, and of course the opposition won the election. Besides Syriza, the opposition included the Communist Party and a neo-fascist party called Golden Dawn. Who would you have voted for? The policies favored by the European right — austerity budgets and business-friendly labor market deregulation — have not been a striking success over the past five years.

But the main alternative to the European right — the continent's various social democratic or labor parties — has completely failed to put forward any kind of compelling alternative. When the German parliamentary elections forced Merkel to abandon her right-wing coalition partner in favor of a coalition with Germany's Social Democrats, the opportunity for a center-left perspective on European affairs to gain steam only grew.

Europe's Social Democrats haven't espoused an alternative Keynesian or monetarist set of solutions for Europe's economic woes, they haven't put forward any innovative debt relief schemes, and they haven't come up with an alternative to the European right's vision of structural reform.

Publication does not imply endorsement of views by the World Economic Forum. To keep up with Agenda subscribe to our weekly newsletter. Author: Joseph E.

Joseph E. Stiglitz , Professor, Columbia University. The views expressed in this article are those of the author alone and not the World Economic Forum. US consumer prices have risen to their highest rate since , with consumer prices up 6. Economists say the inflation could be long-lasting. Six Chief Economists give their view on what's next for inflation - is it transitory?

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