No pain, then no gain for Greece

It remains to be seen whether the souped-up austerity policies promised by Greece will work, writes Dani Rodrik

GREECE has bought some time with a new package of financial support, but the country is not out of the woods yet. It remains to be seen whether the souped-up austerity policies that Prime Minister George Papandreou’s government has promised will prove to be politically acceptable and sustainable.

History suggests some grounds for scepticism. In a democracy, when the demands of financial markets and foreign creditors clash with those of domestic workers, pensioners, and the middle class, it is usually the locals who have the last say.