I guess you guys have to be creative here.
– Barack Obama to Angela Merkel
Spot the odd one out:
- Greek politicians defenestrate George Papandreou. They await a caretaker coalition government to push through tough reforms, ”opening the way for a non-political personality with a strong economic background to serve as interim premier,” who might be the former central banker Lucas Papademos, according to the FT.
- Italian politicians prepare to defenestrate Silvio Berlusconi (apparently in hours, according to reports at pixel time). They await a caretaker blah blah, you know the rest. “In private, opposite politicians concede they would rather let Mario Monti, former European Commissioner, head a government of technocrats,” according to the FT.
- No less a set of august personages than the heads of the French and German governments, plus the chiefs of the European Commission, ECB, EU Council and Eurogroup, meets as the “Groupe de Francfort” to find high-level, ad hoc, and yes, technocratic solutions to the never-ending summit malaise. Reuters, rather unkindly, describes them as Europe’s “new Politburo”. (And supplies our above quote.)
- It is the middle of 2001. Argentina’s president Fernando de la Rua (1999 election slogan: “I know I’m boring”) defenestrates finance minister Ricardo López Murphy, just eight days after giving his predecessor, José Luis Machinea, the boot for the failure of Argentina’s IMF-sponsored ‘Blindaje’ recipe of fiscal austerity. The new finance minister, Domingo Cavallo, is a technocratic old hand, the architect of the peso’s convertibility with the US dollar. “The crisis is so serious that we must take the bull by the horns and put our shoulders to the wheel, without electoral speculation,” Cavallo tells La Nacion. Months later, Cavallo dismantles his own currency regime amid national disaster, introducing capital controls to stave off a bank run. Even a parliamentary grant of special powers to the finance minister fails to stop his policies blowing apart. Argentina defaults.
OK, you got us!
The odd one out is the Groupe de Francfort.
The other three are all examples of “bottom-up” technocracy, or governments shoving aside their domestic electoral concerns (or trying to ignore them) to send in “experts”. Argentina offers an extreme, but abject, lesson that technocracy does not work if the policies in question are already out of touch with economic reality.
Actually it makes things worse. A brittle coalition government, without a real electoral mandate, can’t signal to the IMF or ECB or whoever that domestic credibility is being lost, and austerity plans may need to be modified, surely. This is about credibility and feedback. (Seriously, ask a political scientist about two-level games.) Wasn’t this the whole problem in Greece in the first place? Why is Italy, the great home of patronage politics since World War Two, going to be much different?
But it is of course the Frankfurt Group that is the exception. It’s a “top-down” technocracy through and through, by design. However the exceptional thing here is that the Frankfurt Group’s plans for a fresh bailout “bazooka” have already been taken hostage by technocrats themselves, ironically. German technocrats. The ECB doesn’t want to monetise Italian bonds, and more specifically, the Bundesbank will not commit its reserves to backing up the EFSF.
Why should they, looking at from their perspective? They are technocrats. They stand where they sit – and every month the ECB board sits down to talk price stability as a central bank that prizes its independence. You might think all this focus on inflation is crazy when Italian bonds are about to blow up, plunging Europe into a deflationary depression, but that’s their job. They’re not here to be creative, in President Obama’s words.
Ergo, Europe already has way too many technocrats. Not too few.
Related link:
The ECB is not here to save the world – FT Alphaville