Enter Democracy, Stage Right
This is something that Tyler Cowen, at Marginal Revolution, likes to say. I don’t quite know what to make of the spectacle of the Greek referendum debacle over the past few days. First they were going to have a referendum to judge whether or not to take October’s “bailout” + austerity package. Then they weren’t. Only they were. And in fact, the financial turmoil surrounding the will-they-or-won’t-they seems to have forced the opposition into agreeing to the bailout, thus making a referendum unnecessary.
However, it does expose a gaping hole in the Euro project. It is noted confidently that something like 70% of the Greeks support remaining in the Euro…yet the prospect of an actual referendum seemed to terrify Eurocrats. I think the cognitive dissonance there is actually on the part of the Greeks…while 70% of Greeks “approve” of remaining in the Euro, the political chaos over there strongly suggest that the Greek populace is not willing to make the sacrifices required to remain in the Euro. Frankly, it’s hard to blame them. The old regime ran up its deficits by lying to bankers about its finances…but it also couldn’t have happened without lying to the Greek people.
They’ve been led to believe that they can have First World services and Third World tax enforcement, which is what accounts for the hole they’re in now. And now a bunch of imperious Germans are imposing a “fix”; Third World Services and First World tax enforcement. If I were Greek, I’d start to wonder when exactly I had been given the chance to vote for all of this. If I were in Brussels, I’d start to wonder about the long-term sustainability of the Euro project when it all hinges on maintaining a democracy deficit in the European South.