From the 2008 Crash to the Rise of Populism

In the latest The Rest Is Politics podcast, Rory Stewart and Alastair Campbell had Yanis Varoufakis as a guest.

Varoufakis is charismatic, articulate, quick, funny, and very good at weaving complex economic arguments into simple moral stories. He often speaks as if the fog has lifted, everything is obvious, and everyone else is either confused, cowardly, compromised, or secretly agrees with him.

The episode presented him, implicitly at least, as a well-meaning Cassandra: the economist who warned Europe that austerity would fail, was ignored by unimaginative technocrats, and was later proved right. Ok, there is some truth in that. The Greek bailout architecture was flawed. Greece’s debt dynamics were unsustainable. Austerity in a collapsing economy was destructive. Even the IMF later acknowledged serious failures in the original Greek programme, including delayed debt restructuring, over-optimistic assumptions, and inadequate attention to the politics of adjustment.

But that is only one part of the story.

The real question is not simply whether Varoufakis was right about austerity and the creditors were wrong. The harder question is whether his own strategy in 2015 was credible, responsible, and safe for the Greek people. Greece was insolvent and illiquid without official support. There were no easy solutions.

There is a serious tension between Varoufakis the co-author of A Modest Proposal for Resolving the Eurozone Crisis and Varoufakis the finance minister in 2015.

The earlier proposal, written with Stuart Holland and James Galbraith, was a serious eurozone reform plan. It called for bank recapitalisation through European mechanisms, limited debt conversion, investment-led recovery through the EIB and EIF, and emergency social solidarity measures. It was Keynesian in spirit, but institutionally cautious. It tried to work through existing European institutions and avoided presenting itself as a Grexit manual.

Varoufakis argued convincingly that the eurozone had created a dangerous structure: monetary union without proper fiscal union, national banking crises tied to sovereign debt crises, and creditor discipline without sufficient investment or democratic accountability. Much of what was in that proposal made sense.

But once in office, his posture changed. The 2015 strategy he actually pursued was much more confrontational. It relied on outright rejecting the old bailout logic, threatening default, and forcing Europe to choose between accepting debt restructuring or risking Greek collapse. That strategy might have had more leverage in 2010 or 2011, when European banks were far more exposed to Greece and the eurozone firewalls were weaker. By 2015, the wider euro-area financial system had been largely protected. Greek default would still have been serious, but the immediate damage would have fallen mainly on Greece itself.

That is a key point the interview did not pursue. Varoufakis appears to have treated Grexit, or at least Greek default, as a threat the creditors would not dare allow. By 2015, they were actually much more willing to call the bluff.

Being right about the dangers of debt and austerity does not make brinkmanship with Greek banks, pensions, deposits, imports, and salaries a responsible strategy. It was clear to everyone that some fiscal adjustment was unavoidable. The easily defensible criticism of the creditor programme is that the timing, scale, composition, and lack of early debt restructuring made the adjustment far more destructive than it needed to be.

The interview should have pressed him on the obvious questions. What exactly was the fallback plan if the banks collapsed? How would a parallel payment system have operated? How would pensioners have been paid? How would medicines and imports have been protected? How would deposits have been defended? Was this a credible Plan B, or a way of making rupture sound more controlled than it really was?

Rory and Alastair should also have challenged his claim that people such as Lagarde and Draghi agreed with him. Many serious economists and officials eventually accepted that Greek debt was unsustainable and that Europe’s austerity-heavy approach was badly designed. But accepting the need for debt relief is not the same as endorsing Varoufakis’s tactics, his reading of creditor incentives, or his Plan B. He often turns partial vindication on debt sustainability into much broader vindication of his overall conduct.

In conversation, Varoufakis can often sound pragmatic and common-sensical. But his writings and politics point to a more radical political agenda. He is not merely arguing for reforms, higher taxes and better regulation of capitalism. He has described himself as a Marxist of sorts, has said that capitalism and democracy are structurally incompatible, developed a theory of “technofeudalism,” and proposed radical changes to corporate ownership, finance, digital platforms, and money. One can agree or disagree with that agenda, but it should have been made more visible.

Alastair could have challenged him from the centre-left: yes, austerity was destructive; yes, Greece needed debt relief; yes, the eurozone was badly designed. But why risk a banking collapse without a durable majority, a credible coalition in Europe, and a tested administrative plan?

Rory could have challenged him from the centre-right: if you talk about parallel liquidity, fiscal money, or a public payment system that can be converted into a new drachma, why would depositors keep their money in Greek banks? Why would investors trust the state? How do you protect contracts, pensions, small businesses, and property rights during such uncertainty?

The Greek crisis was complicated, divisive, and deeply damaging. Varoufakis wasn't simply one brave economist facing a room full of cruel technocrats, as he likes to present himself. The important story here is about weak leverage, institutional constraints, political miscalculation, bank runs, default risk, and the dangers of turning economic theory into negotiating theatre.

The missed opportunity in this episode was that Rory and Alastair seemed too impressed by the performance and not sceptical enough of the narrative.

Being right about austerity is not a license to gamble with rupture.

Maybe they'll push him more in a future episode.

Civil Liberties in Difficult Times

The right to protest is a core civil liberty, and restrictions on it should be narrow, evidence-based, and focused on conduct: violence, intimidation, harassment, incitement, or unlawful support for proscribed terrorist organisations.

Where organisers have demonstrable links to proscribed groups, or where specific conduct crosses into incitement or intimidation, that is a matter for law enforcement. Police can impose conditions on routes, timing, and location. Offences can be investigated and prosecuted. But those cases do not justify blanket bans on political protest.

At the same time, a cumulative atmosphere of intimidation cannot be dismissed. If Jewish citizens avoid parts of their own cities, hide visible signs of Jewish identity, or feel abandoned by public institutions, that is a grave failure. Antisemitism is real, historically deep, and the surge in anti-Jewish hate cannot be explained away as opposition to Israel. Criticism of Israeli policy is legitimate. Harassment of Jewish individuals or targeting of Jewish institutions is antisemitism, and the state must act decisively to protect citizens.

Concern about antisemitism also cannot be used to suppress criticism of Israel or public support for Palestinian rights. Institutional bans, harsh employment consequences, and legal threats can become disproportionate and illiberal. Both evasions should be rejected in a liberal democracy.

The same clarity is needed with Islamism. Islamism is an authoritarian political ideology that seeks to impose a religious order through state power, coercion, or violence. It should be named as clearly as far-right extremism, white supremacy, or any other form of political extremism.

This must be clear: Muslims, Islam, Islamism, and jihadism are not interchangeable. Muslims must not be treated as collectively responsible for Islamist movements. Many Muslims, including reformers, dissidents, secular Muslims, and ex-Muslims, are themselves often targets of Islamist coercion. Anti-Muslim discrimination in employment, housing, policing, and public life is also real and unacceptable.

The cases are not identical, but they do not need to be identical for a consistent liberal standard to apply.

Jews face antisemitism. Muslims face anti-Muslim bigotry. Islamist extremism is real. Far-right extremism is real. Peaceful protest is a right. Intimidation and incitement are not.

A consistent liberal position protects speech, defends protest, polices conduct, names threats accurately, and rejects collective blame wherever it appears.

Civil liberties are not self-enforcing. If we are unwilling to defend them in difficult times, we should not assume we will keep them.

Artificial Intelligence: Digital Utopia or Dystopian Nightmare (Addendum 2026)

In late 2023, when large language models had just begun to seize the public imagination, I wrote a short essay to think through where AI might be taking us, and three years on it seems worth revisiting those original premises in light of how quickly the technology, and the debate around it, have evolved.

I think the broad thrust of the original article still seems right.

The first and most obvious change is that large language models are no longer merely text generators that sometimes say clever things, sometimes hallucinate and generate images with 100 fingers. They have become increasingly multimodal, better at coding, better at using tools, and better at handling long structured tasks. The old chatbot has become a much more useful tool.

That does not mean the core reliability problem has disappeared. These systems still make things up, miss context and require verification, especially in technical or scientific settings. But it is no longer serious to dismiss them as glorified autocomplete. They have crossed the threshold from novelty to utility, and in some fields from utility to genuine leverage.

In 2023, I wrote that it is experts who can truly push these systems to their limits, and that remains largely true. What has changed is that the floor has risen. Non-experts can now get genuinely useful work out of these systems far more easily than they could in 2023. The moat has narrowed.

The likely disruption then is more subtle, and perhaps more alarming for that reason. As AI lowers the cost of first drafts and routine cognitive work, smaller teams can now do work that previously required larger ones. Less experienced workers can produce passable results for longer, which makes substitution easier in some contexts. Experts will still be needed, increasingly to validate, debug and judge, because someone still has to understand the system well enough to know when the machine is wrong. Employers can ask more from fewer people. What then happens to apprenticeships?

Even where jobs are not eliminated outright, parts of jobs are being hollowed out or repriced. The social effects can arrive long before the dramatic headline event of "mass unemployment". Fewer junior positions, weaker bargaining power, and the gradual decoupling of output from payroll can reshape society without anyone ever being able to point to a single clean moment when the machine took over.

On creativity, AI really is lowering barriers to entry in writing, illustration, music and design. That is liberating for many people. But we are also getting much more sludge. Production is cheaper. Attention is scattered. Distinctive style matters more.

In 2023 it was already obvious that creators would object to having their work vacuumed into training data without consent or compensation. Since then, the European Union's AI Act has begun to apply in stages, and the copyright and licensing disputes around training data have moved into the legal domain. The conversation continues. Napster changed the music industry. This too shall be settled.

Schools and universities can no longer pretend that students will not use AI or that the old assessment structure can be defended by raised eyebrows. If a machine can routinely solve standard exercises, draft essays and explain intermediate steps, then education has to lean more heavily into interpretation, judgment and oral defence. In other words, it must place more value on the distinctly human parts of thought. Frankly, it should have been moving in that direction anyway.

I now regularly ask my students to present their work orally and we discuss both the problems and their different approaches. I tell them to think about the problem themselves first and try to solve it with their group. If they want to use AI, I tell them to use it creatively: ask for hints when stuck, explore unconventional approaches, and clarify confusing concepts. They still need to understand the problem well when they present their solutions in front of the class.

I ended the 2023 essay saying that some sort of UBI will be unavoidable, and I still think that. A full UBI remains politically difficult and fiscally contentious. But a broader search has begun for ways to decouple a meaningful part of economic security from traditional wage labour. Whether that becomes UBI or something similar is still unclear.

That, to me, is the key point. It is not that AI will abolish all work, but that it can reorganise labour markets and income distribution quickly enough that the old social settlement begins to crack. If productivity rises while the gains accrue mainly to those who own the models, chips, data and capital, then societies will eventually face a blunt question: how exactly are ordinary citizens supposed to share in prosperity?

The discussion has already started. It revolves around guaranteed income, public wealth funds, and other ways of giving people a firmer economic floor in a world where wages may no longer distribute prosperity reliably enough.

We are still, I think, a long way from the end of this story. But we are no longer in the opening scene either.

The Games of a Lifetime

Book recommendation #2765 (this one's for the gamers): “Jaz” Rignall’s The Games of a Lifetime. 

If you're in your 50s, and not altogether alien to the gaming world, you may recognize “Jaz” Rignall as the legendary editor of ZZap!64, arguably the most famous computer gaming magazine of the era in the UK. Jaz calls his book “a meandering, almost five-decade-long journey through my gaming life”. It is a collage of gaming memories with his fingerprints all over them, especially the early years when gaming was treated like a minor social illness and he was joyfully effervescent about it. He writes about “the tabloid press and politicians who felt that video games were a corrupting influence on the nation’s youth”, which was a pretty common mood back then. 

In Greece, when I was growing up, the message was pretty much the same: “stop wasting your time and go study", while many adults spent hour upon hour passively staring at the TV screen. I think kids gravitated to games because they were making narrative choices. It was active, not passive. It felt like a secret underground railway into the fantastic. Fast forward a few decades and that obscure “waste of time” hobby is now mainstream and wildly profitable, with estimates putting global games revenue at roughly $184B versus about $26B for the global box office.

For me, Jaz's book detonates memories somewhere in Greece, roughly early 80s through early 90s. My first arcade experiences in the town of Lavrio in southeast Attica (famous for its silver mines in ancient times) during summer holidays, where my grandad would sometimes take me to feed coins to Space Invaders, Pac-Man, and later Street Fighter II. The air was thick with cigarette smoke and testosterone-filled language from the young males with the 80s haircuts that would frequent that joint. But I was a kid fascinated by the sounds, and the patterns, and the colours, and those older lads never really bothered me.

At home, my first handheld was a Nintendo Game & Watch, probably some barrel-tossing Donkey Kong variant, which I'd borrowed from a friend. It looked like a shadow theatre you could hold in your hands. A few years later I got my first computer, an Atari 800XL, learned my first BASIC, and then waited patiently twenty to thirty minutes for cassette games to load (alas, even this failed to prepare me for the horrors of Greek bureaucracy). Some friends had the far cooler Commodore 64, or an Amstrad CPC with that iconic green-and-black glow and 3-inch floppies that loaded games like magic. I got my first 4-colour CGA PC in the mid 80s and moved to 16-colour EGA around 1989. I’d open the case and stare at how the parts fit together, which gradually turned into a lifelong habit of building my own rigs.

Games arrived irregularly through swaps with friends and pirated copies from older teenagers who’d mastered the dark arts of cracking copy protection. By my mid-to-late teens, once I’d scraped together enough savings, I’d go downtown to buy originals in those glorious big boxes with the amazing cover art. The Greek computer magazine PIXEL was my standard go-to reference, and finding copies of ZZap!64 in Athens felt like spotting an exotic bird.

Up to that point, I enjoyed playing games, but I think the fascination was still only skin-deep. My personal revelation and conversion moment came when I first encountered King’s Quest IV in a friend’s house. There was no rushed pushing of buttons, no flashing lights and rapid movements. It was quiet, almost like a stage. An unremarkable pixellated character waiting there patiently, and underneath, a prompt to enter text. Suddenly, I understood that the game expected you to communicate with it. It wasn’t about flashy graphics or good reflexes; it was about solving puzzles to move the story forward. You’d enter a few words, and the game would give you feedback about the environment and ways to interact with it: “You bend down to pick up a small golden ball.” It was the beginning of the era of adventure games (a genre that came and went), and it involved a lot of typing and experimenting with ideas. I started keeping a thick English-to-Greek dictionary on my desk, while these games expanded my vocabulary one obscure word at a time: “What the hell is an uvula, and why would I want to tickle it with a feather?” 

Jaz writes in the book that he was very competitive. I never really was. I was fascinated by puzzles, complex storytelling, secrets, exploration, and the weird joy of making a world reveal itself. Quest for Glory, Conquests of Camelot, Space Quest 3, EcoQuest (which I played during summer in short bursts before I went snorkelling in the Aegean), Monkey Island and Indiana Jones and the Fate of Atlantis (still my favourite Indy story), plus the slow-burn strategy games like Civilization, Populous, and the TSR gold boxes (my introduction to RPGs). Learn while you play. I also enjoyed flight simulators: the clunky glory of piloting an F15 Strike Eagle on the Atari to the sleeker space-flight combat manoeuvres in Wing Commander. I also fondly remember the cosmic space-opera storytelling of Star Control II, which had giant planets parked close to their host stars before astronomers confirmed hot Jupiters were a thing. Art inspiring science and science inspiring art.

At some point the internet started becoming a thing, and we got clunky dial-up multiplayer where someone in the house picks up the phone and your game ends instantly, while you slide down the rankings unceremoniously. In 2004, World of Warcraft hit the shelves and became, by far, the best online community gaming experience I’ve ever had.

Jaz writes somewhere: “As far as I’m concerned, video games are most certainly art. And like all art, they are highly subjective.” There are a lot of crap games out there, to be sure, but there are also plenty of masterpieces that will stand the test of time and still be talked about far into the future, as the industry matures and becomes ever more culturally relevant.

I’ll close this semi-coherent trip down memory lane by saying that Bitmap Books continues doing fantastically good work preserving gaming history. Their CRPG book and The Art of Point and Click are also excellent companions if you like this sort of gaming archaeology.

The problem with satellite swarms

The Vera C. Rubin Observatory will soon begin a rapid, long wide-field survey called the Legacy Survey of Space and Time (LSST). The survey itself is simple enough to describe: take many deep snapshots of the entire night sky, night after night, do this for about a decade, and carefully track anything that changes or moves. The list of things that change or move will include potentially hazardous asteroids, exploding stars, a bunch of other known astrophysical phenomena and a lot of “what the hell is this thing” discoveries. It will also help us better understand the nature of dark matter and dark energy.

All this is very cool and we astronomers are very excited about it. However, there’s a potential complication that can harm this project (as well as other already existing observatories). SpaceX and other (commercial as well as state) actors are discussing and planning very large new satellite fleets, including proposals described publicly as orbiting “data center” infrastructure that could scale to hundreds of thousands of satellite spacecraft. FCC filings reported in the press suggest the intention is far beyond today’s already huge constellations of satellites. At that scale, satellites become frequent very bright streaks through telescope images, especially around twilight, and they can also add a diffuse, harder-to-remove glow to the background sky as sunlight scatters off many of these objects.

Ok, so why is that a problem for me, you may ask. I just want a better signal for my phone. Well, this is not only about pretty astronomical pictures. It is about disrupting an early-warning system for potential asteroid threats, changing the shared night sky in ways that are extremely difficult to reverse (your kids and their kids will never get to experience the night sky like you did), and about degrading a very important, high quality scientific dataset that taxpayers already paid for, that is meant to be openly available to everyone for many decades to come. As Andy Lawrence argues in his book “Losing the Sky”, the night sky is a shared environment. If we treat it like an unregulated dumping ground, we lose something that is hard to replace, scientifically and culturally.

The good news is that dealing with this does not require a ban on satellites. But it does require setting standards and demanding accountability. It means designing satellites to be much darker in practice, choosing appropriate orbits that reduce how long they stay sunlit over major observatories, sharing precise orbit predictions so telescope operators can plan around crossings, and doing honest cumulative environmental and safety reviews before scaling up. It requires close coordination between the satellite developers and the affected parties. It also means treating orbital crowding and debris risk as a real public-interest constraint, not an afterthought. It is entirely possible to keep the benefits of space services and at the same time maintain access to the night sky, but only if “move fast and launch everything, because of competition and market share capture” stops being the default.

What can you do as an individual? You can (1) raise awareness: read about, support and share work by groups like the International Dark-Sky Association, (2) ask your elected representatives and regulators to require brightness standards, transparent orbit data, and cumulative impact assessments for mega-constellations, (3) support companies that adopt meaningful darkening and operational mitigations, and (4) talk about this as a solvable engineering and governance problem, not a culture war. Increasing public pressure is often what turns “nice-to-have” in theory into practical requirements.