At a very pleasant party in a snowy London, on Saturday evening, I got chatting to a Greek man who has been living in the UK since 1985 and as I suppose was inevitable, the subject of Greece’s financial disaster came up. He and I agreed that the policymakers and various others who deceived their country into the euro should be put into jail. But then again, one of the problems of modern democracy is that far too many voters actually want to be deceived that 2+2 = 5, that it is possible to spend more than one earns, etc. When a whole country becomes locked into living a lie, as tends to happen when a large chunk of the electorate hopes to live off another chunk, honesty is a loser strategy for a politician. Had a Greek politician said in the years immediately prior to the euro’s launch that Greece was unlikely, ahead of the Universe suffering heat death, to ever qualify for euro membership, such a person would be damned.
So it is certainly true that some of the political class (and I include central bankers in that classification) deserve to be locked up for their lies. But remember, they lied because the punishments for telling lies about economics and finance have been non-existent in many countries for a long time. I think one of the last politicians who made a point of telling the unvarnished truth to voters was Margaret Thatcher, and at the time, she was regarded as evil and “uncaring”. Another fairly honest politician was the late Sir Keith Joseph, who was dubbed the “the mad monk” for his pains.
This book by Bryan Caplan, The Myth of the Rational Voter, I think has obvious relevance to how a whole country can seek refuge from hard facts, as Greece seems to be doing. For a more impressionistic, sad-but-amusing tale of Greece and other countries’ financial blowups, Boomerang by Michael Lewis is an excellent page-turner. The chapter on Greece features some property speculator monks. Yes, monks.
Oh, I will get around to writing that “Iron Lady” review when I have the time.
Two plus two can equal five, for a while. Then it equals ‘three’ for a lot longer.
Well said, PFP!
To be fair to demcracy it has not really been tried.
Few Welfare State programs in the world have been established by popular vote.
What happens is that politicians create these programs – and (to judge by British and American history) WITHOUT any great popular demand for them.
There were no great protests demanding that (for example) Lloyd George create the stuff he did, or that FDR and LBH create the stuff that they did.
People vote for politicians because they like their image (or whatever – as elections are very rarely faught on specific policies) and they create schemes that start off very small – but then grow like cancers.
I would not be astonished to learn that Greece was much the same (in this respect) as Britain or the United States.
Of course then vast numbers of people become dependent on the new schemes – and everyone plans their lives on the basis that the schemes will be there.
So when the time comes to take them away (because they unsustainable), of course there is mass protest (understandably so).
Ditto credit bubble financial systems are rarely (if ever) established by popular vote.
Even in Switzerland (just about the only country I can think of that allows the people to vote on national policy matters) I do not remember the vote that broke the link between the Franc and gold (I think it was buried in the details of a new Constitution, which was voted on, but the break with gold was hardly noticed).
As for everywhere else – it is politicians and admistrators (not the people) who make these policy choices.
“But Paul we are talking about REPRESENTATIVE democracy”.
But that is not really democracy. Although the establishment (the Economist magazine and so on) hate even “respresentative democracy” – see their demands for “independent Central Banks” (so that the big banks and the rest of the connected can be subsidized without limit – without either the people OR elected politicians having any say in the matter).
“Do not get me wrong”.
Democracy might be a total failure – I do not know.
However, it has not been tried – so we just do not know how it would work out.
Paul, true democracy may not have been properly tried — but your argument sounds strangely like those who say true communism has never been properly tried.
Both groups of ‘never trieds’ have strong arguments. But it’s startling to see the argument applied to democracy. Was startlinng us your intent? Good show, then!
Who is LBH? You don’t mean LBJ,do you?
Look at your keyboard, renminbi: ‘j’ and ‘h’ are next to each other.
Ah – but Ellen, Communism has been tried.
For example, communities of monks and nuns – and the Shakers and so on.
It seems to work (sort of) on a small scale (when monestaries get large they get very inegalitarian) and falls apart totally if CHILDREN come into the picture.
But still – I get your point.
No I was not doing anything clever – just saying a few words for the people (the ordinary people) because everone was kicking them.
They never asked for the Welfare State – not in America or (as far as I can find out) anywhere else.
The “great and the good” thought it would be a good idea and imposed it.
Only later (when people were dependent upon them) did the schemes become sacred.