The Euro Crisis: The democratic deficit
Central banks acted quickly to try and deal with the liquidity crisis of 2008; the EU set up the EFSF and the ESM as a way of dealing with the fiscal crises of its weaker members; the IMF was brought in as a body with experience of “enforcing” conditional loan programmes. None of these bodies have direct democratic legitimacy; indeed it is their lack of democratic accountability that gives them freedom of action.
Writing in the FT today, Glenn Hutchins argued that
When our economy was most fragile, in the aftermath of the crisis, elected politicians wrangled year after year.
Fortunately, the central bank was independent of politics, which enabled it to act.
This argument is rather worrying for those of us who believe in democracy; in a crisis, it needs to be
circumvented. We have double delegation these days, in which our elected representatives delegate decisions to technocrats, who cannot be removed by voters. These technocrats have the freedom to take unpopular decisions.
.. The technocratic solution to the euro crisis is the creation of fiscal and political union, in which the wishes of local voters (such as Greeks) will be over-ridden even further and decision-making will be seen as even more remote than now. The near-success of Scottish independence and the enthusiam for a Catalonian version is a sign that voters are increasingly enthused by the idea of local control. But the solution to so many problems requires international co-ordination, which in turn is dependent on pooled sovereignty and the kind of last-minute backroom deals that we have seen throughout the Greek crisis. Your blogger may be gloomy by nature but its very hard to see how this circle can be squared.