It’s startling how some left-wing economists in the United States have convinced themselves that the Greek debt crisis is evidence of a disdain on the part of the European establishment. It looks like there is still a powerful streak of resentment toward presumed European elitism running through the veins of American commentary.
Paul Krugman previously blamed the “arrogance” of the European policy elite for pushing the eurozone “into adopting a single currency well before the continent was ready for such an experiment.” He liked to blame the euro for all of Greece’s problems, ignoring the simple truth that the country would probably have got into much bigger trouble, and definitely much faster, if it hadn’t been able to rely on the relative stability of the single currency.
Simon Johnson recently joined Krugman, writing for The Huffington Post that the very same “European policy elite”, “after months of denial,” is still failing to comprehend the deeper flaws that are supposedly are the root of the crisis.
The Europeans, according to Johnson, “have not planned for these events,” which is true; “they never gamed this scenario and their decisionmaking structures are incapable of updating quickly enough.”
Maybe Europe could have stepped in to help sooner but note that just weeks after European Council president Herman Van Rompuy pledged solidarity, a multibillion euro bailout plan for Greece was made available together with the IMF. Just how fast would Johnson have liked the “decisionmaking structures” of the union to “update” themselves?
What’s more, though, “the incompetence at the level of top European institutions is profound and complete,” he believes. Johnson is echoing a sentiment expressed by Greek prime minister George Papandreou in February, who complained at the time that the EU was turning his country into “a laboratory animal in the battle between Europe and the markets.”
If one considers the speed with which European policymakers enacted massive bailouts of financial institutions on the brink of collapse last year; if one considers the relative urgency with which European leaders agreed to an unprecedented effort to contain the crisis in Greece this week; and if one considers that the involved directorates-general for Competition, Economic and Financial Affairs, Enterprise and Industry, Internal Market and Services, and Trade respectively employ just 749, 506, 785, 469 and 470 civil servants, it’s hard to sincerely blame Europe for “profound and complete” incompetence at an institution level.
No matter, “what we need is a new approach,” according to Johnson — “at the G20 level.”
So, an organization that isn’t even an organization but an informal platform lacking any power to regulate let alone intervene would be better equipped to handle near sovereign bankruptcy than the European Union which, if nothing else, is committed to preserving the common market and of which member states have an actual stake in ensuring the future stability of the euro because they carry the same currency? Sure.
The one thing that is “seriously wrong” here is not European attitudes but the utter incoherence of non-European analysts to fail to see the union for what it is.
Except for a handful of forward-looking officials working on the Rue de la Loi in Brussels, there are few politicians in Europe who dream of a federation. Yet these American commentators insist on describing Europe as though it already were!