, it is odd to claim that a crisis caused by a 10-year infusion of excessive cash can be cured by means of further stimulus. The theory that it can assumes that Greece lacks sufficient “effective demand,” or the capacity of consumers to purchase goods and services at current prices. Restore this and a virtuous circle of growth will follow.

A single statistic should suffice to cast doubt on this assumption. Greece’s gross domestic product was similar in 2001 and 2014, measured in constant 2005 prices, meaning that “effective demand” in these two years before and after the debt crisis was approximately equal. And yet unemployment in 2014 was almost triple the 2001 level. The key to resolving Greece’s economic woes must, therefore, lie in something other than demand.

Equally telling is that during the five years since the crisis began, Greek imports have exceeded exports by almost 60 percent. Although Greeks are certainly buying fewer foreign goods than in 2007, it is clear that insufficient “effective demand” is not the root problem here. What has been lacking is “effective supply” — the ability of the Greek economy to produce enough competitively priced goods to sell and grow.

So why has the recession been so deep and so lasting, if not because of austerity? The answer lies in what happened between 2001 and the start of the financial crisis.

After the euro was introduced in 1999, Greece received more in credit than it needed every year, between 5 percent and 10 percent of gross domestic product. Populist politicians funneled this excess money to their political clients, explaining the windfall as a “development dividend” that resulted from “structural convergence” with the core euro area countries. This was a fantasy, because there was no such convergence. Yet, it was natural for the recipients of this largesse to see it as real and permanent income.  Greece Reconsidered