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Wed Mar 11, 2015, 12:51 PM

 

Europe's Choice: Euro or Democracy

Mar 11, 2015 6:46 AM EDT
By Clive Crook

This week, the European Central Bank started buying bonds under its new quantitative-easing program. Last Thursday, its president, Mario Draghi, declared that a stronger euro-area recovery had begun even before the QE policy was actually under way. January's announcement that QE was coming had been enough, he said, to lift spirits and get the economy moving.

Draghi could plausibly claim to be the most important policy maker in Europe. And if you believe in democracy, that's a problem. The U.S. Federal Reserve has a lot of operational independence, but it's accountable to America's voters through its obligation to report to Congress; more than that, it feels and must respond to the pressure of U.S. public opinion. The ECB's connection to citizens of euro-area countries is far more distant.

Its standing is quintessentially European -- and an illuminating aspect of Europe's much-noted "democratic deficit." This wider lack of democratic accountability, together with the economic stress induced by the euro system, could eventually destroy the entire European project.

The democratic deficit isn't an unintended by-product of European integration. From the start, Europe's political elites have advanced their ambitions for the EU in the face of popular skepticism, if not outright hostility. Gestures to democratic legitimacy would be offered, but a persistent goal has been to take policy making out of politics. This suppression of democracy was seen as a good thing in its own right: The less voters were involved, the better the results would be.

In principle, that idea was defensible. However, when it came to the euro -- the EU's most ambitious and least-wanted project -- the results didn't play along. Europe's single currency has been a catastrophe. It deepened and prolonged the recession. The ECB's optimistic new forecasts call for growth of 1.5 percent in 2015. That would be good by the standard of the past seven years, but not by any other. Even by 2017, euro-area unemployment is projected to be only a sliver below 10 percent -- and in some of the worst-hit countries, it will be double that.

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http://www.bloombergview.com/articles/2015-03-11/europe-s-choice-euro-or-democracy

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