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# The Unheard Perspective: Yanis Varoufakis on the Future of America and Europe

## The Crushing Defeat of the Democrats and the Rise of Trumpism

In the wake of Kamala Harris and the Democratic Party's "absolutely crushing defeat" in the US, and the apparent "second coming" of Donald Trump ushering in a "Golden Age of America" with Elon Musk by his side, there could be no more poignant time to hear from Yanis Varoufakis.

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Varoufakis, the former Finance Minister of Greece, economist, and leading light of the European left, offered a clear explanation for Trump's victory. He pointed to the fact that 60% of Americans live paycheck-to-paycheck, facing the threat of bankruptcy if they fall ill without insurance. Trump, Varoufakis argued, rightly or wrongly, tapped into this sense of "American Carnage" and the failure of the political establishment to address the concerns of the working class.

In contrast, the Democrats, led by Biden and Harris, were seen as out-of-touch, pointing to the "best economy ever" while failing to recognize the struggles of the majority. Varoufakis believes the Democrats abandoned the American worker, leading to their downfall.

## The Transformation of the American Economy

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Varoufakis provided a sweeping historical account of the transformation of the American economy, from a surplus country in the post-war era to a deficit country. This shift, he argued, was facilitated by the collapse of the Bretton Woods system and the emergence of a new "recycling mechanism" where the US trade deficit became a "vacuum cleaner" sucking in the net exports of Germany, Japan, and later China.

This process, Varoufakis explained, was enabled by the US dollar becoming the global reserve currency, with foreign capital flowing into American assets and real estate, fueling asset price inflation. Meanwhile, American industrialists began outsourcing manufacturing to cheaper locations, becoming "renters" of intellectual property rather than producers.

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Varoufakis believes this transformation, presided over by both Democratic and Republican administrations, led to the de-industrialization of the American heartland and the rise of Wall Street, setting the stage for the 2008 financial crisis. He sees Trump's victory as a direct consequence of this history, with the former president tapping into the frustrations of the working class abandoned by the political establishment.

## The Limitations of Trump's Economic Promises

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While Varoufakis acknowledges the appeal of Trump's promises to revive American manufacturing through tariffs and reshoring, he is skeptical that these measures will be effective. He argues that even if tariffs succeed in reducing the trade deficit, this would undermine the "recycling mechanism" that has sustained the American real estate and financial sectors, leading to a serious decline in these industries.

Varoufakis believes Trump is making promises that he either cannot fulfill or, if he does, would risk the wrath of his own capitalist allies and financiers. He sees Trump as facing a difficult choice: betray the people or betray his own class.

## Trump's Foreign Policy and the Israel-Palestine Conflict

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Varoufakis also addressed Trump's foreign policy approach, which he sees as more "eclectic" than purely "anti-war." While Trump may be less inclined towards the interventionism of previous administrations, Varoufakis believes he is still likely to be belligerent towards China, which he sees as the real threat to American global hegemony.

On the Israel-Palestine conflict, Varoufakis argued that Trump's policies, such as the Abraham Accords, have been seen by many Arab Americans as a betrayal of the Palestinian cause. However, he believes Trump may be less inclined to support Netanyahu's expansionist agenda than previous administrations, as he is concerned about the damage it is doing to America's global reputation.

## The Failure of the Left and the Need for a New Vision

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Varoufakis was highly critical of the left's inability to capitalize on the crises of capitalism, from the 2008 financial crash to the COVID-19 pandemic. He believes the left has been consistently outmaneuvered, failing to offer a compelling alternative vision and instead becoming trapped in a reactive, oppositional stance.

Reflecting on his own experiences in Greece, Varoufakis lamented the left's inability to translate its critique of the system into a viable political program. He sees the left's failure to provide a positive, technologically-advanced, and democratically-socialist vision as a key factor in its ongoing marginalization.

## The Future of Germany and the European Union

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Turning to the situation in Europe, Varoufakis was pessimistic about the future of Germany, arguing that its industrial model has missed the boat on the latest technological revolution. He believes the country's debt overhang and reluctance to invest in new technologies will lead to a prolonged economic decline, regardless of the outcome of the upcoming German election.

More broadly, Varoufakis sees the debt crisis afflicting many European countries as a fundamental challenge, with the key distinction being between debt denominated in a currency the country controls (like China) versus debt in a foreign currency (like Greece). He believes this debt overhang will continue to be a significant obstacle for the European project.

## The Importance of Hope and the Human Spirit

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Despite his critical analysis, Varoufakis emphasized the importance of maintaining hope, drawing inspiration from grassroots movements, indigenous struggles, and the indefinable qualities of the human spirit. He argued that while we must remain realistic, we have a duty never to give up on hope, which he sees as a fundamental part of the human condition.

In closing, Varoufakis recommended that people turn to the timeless wisdom of Shakespeare and other classic texts to find inspiration and new perspectives on the challenges of the present day. His call for a return to the humanities and the enduring power of the human spirit underscored his belief that the path forward lies not just in economic and political reforms, but in a deeper reconnection with our shared humanity.