Call me crazy, but I think Democracy is probably a good thing.
There are clever theories for it’s not. Burke and Hobbes, Polybius, Plato; it may have even been the Take that Cancelled Socrates.
I don’t think this is insane; senators tend to be a lot less annoying than congressmen, and part of this is certainly that for about four years after they’re elected they don’t have to worry about their next campaign.
But what the pandemic has taught us is that buffers against the will of the voters rarely lead to responsible governing and instead do a lot of bedshitting.
There are a few places you can see this going on.
Consider the EU. [Just warning you, we’re gonna be on this EU tangent for a while] It’s difficult to think of any arena in which the EU has not recently disgraced itself. That doesn’t mean countries should leave, Britain. On the contrary, if your foot is stuck in a bear trap, and you rip it out, you will die.
But let’s look at the major crises that Europe has faced in recent years:
- The 2008 recession
- The authoritarian governments in Hungary and Poland
- The invasion of The Ukraine.
- The wave of refugees from Syria
- Brexit
- The Coronavirus pandemic.
All big problems. And regarding absolutely none of these would we say, “At least the EU was there to help!”
I should clarify: by the EU, I do not mean the 550 million assorted Frenchmen, Germans, Italians, Spaniards, Greeks, and so on who make up the citizenry of Europe. Nor do I mean their governments. I only mean the basically unelected regulatory and monetary authority in Brussels.
It is this authority which has been such a remarkable failure.
First, the ECB. Do we all remember how, from 2012-2016, vacations in Europe were extremely expensive?
This was because the EU had a policy of tight money. Look at how low and random their inflation has been since 2010:
And at the same time the union imposed drastic austerity measures upon her non-Teutonic members.
All this contributes to Euros being hard to get and Europeans being expensive to hire. This is why my French exchange trip in high school cost so much damn money.
And the ECB did this despite Europe clearly being in recession at least through 2016, and probably later:
This is, more or less, exactly what any economist would tell you not to do.
The reason this happened is obvious. That reason speaks Europe’s ugliest language and has a nasty tendency to goose-step. Europe kept to this tight money because Germany’s economy was doing quite well past 2010:
So, for Germay, tight money was ideal. They didn’t want stimulus, their economy was fine. So, they resisted it. They didn’t resist fiscal stimulus because they feared inflation, of course. You can’t have inflation in Munich without inflation in Madrid, and latter was just not gonna happen. No. What the Germans wanted was high interest rates to to keep high the value of the Euro, and they succeeded handily:
There’s an evident reason for this. Germany’s economy is, roughly, a barter of domestically made cars and coffee-makers for British financial services and American/Chinese miscellany. They like having lots of financial services and miscellany, and they weren’t having any trouble selling the cars and coffee-makers (unemployment was so low), so they’d like to keep the prices at BMW as high as they could. Come what may to Italy and Spain.
But this is insane. Policy that is good for the Reich while bringing mass suffering upon the rest of Europe is bad policy (there have been disagreements over this in the past).
And yet, the other nations of Europe followed along, chattering on with Victorian nonsense about tightening the belt as if Keynes had been a poet.
So I think we can chalk this one up as a loss.
Next, let’s take a look at Russia, Hungary, and Poland. Viktor Orban has turned Hungary into a dictatorship. The Law and Justice party of Poland is doing the best they can to follow suit. Vladimir Putin has invaded Ukraine.
Has the European Union, ostensibly a governing authority over two of these countries and morally responsible for the third, done anything at all? No. Instead, the veto-heavy design of the institution has allowed Orban and the Polish government to paralyze any responses the union might wish to make.
So those look like failures as well.
Now, the wave of refugees from Syria is a more difficult problem, because mass immigration is an issue for which the union was not designed.
A founding principle of the union is the free movement of labor as well as capital and services. This sounds nice, doesn’t it? But what the result is that each member state’s immigration policy is decided by the union as a whole: once immigrants are somewhere in the union, they are anywhere.
This works fine for a regime like the 1990s, where most arrivals to Europe were Americans and Japanese consultants coming for a few years before going back to their own shores.
But it gets trickier when there are millions of arabic-only semi-literate refugees literally dying to get to European shores.
It’s hard to say what constitutes an institutional failure in such a situation. Obviously it would be ideal if the refugees be accepted and integrated into European society, or at least did not drown in the Mediterranean.
I don’t think that was politically feasible. But what we can call a failure is if there is a situation which upends politics because citizens find it so revolting and doesn’t let an immigrants join the nations of Europe. And, given recent elections in Denmark, Germany, France, Hungary, Italy, and the Netherlands, that is exactly what is happening.
What should have happened in Europe was an orderly acceptance of certain refugees and rejection of others, with careful tracking, negotiations between countries for who had to take them, and early plans for integration. In an orderly immigration system, high numbers of immigrants are quite politically viable.
Instead, Europe is poised for an extremely aggressive nativist turn. We can call this democracy in action, but it springs from anti-democratic causes. Everyone in Europe felt that they had lost sovereignty over their own immigration policies, and this infuriated enough people to overturn their political worlds.
But perhaps the most disturbing failure of Europe has been its response to Brexit, because it wasn’t a failure at all.
Every economist wanted Brexit not to happen, all the markets fell when Brexit passed, and they fell even further when it happened. Why? Well, trade restrictions are bad, especially between large, developed economies that are near each other. So, of course, Britain tried to negotiate free trade between the UK and EU coming into the 2020s. And the EU opposed them.
The EU knew that the British government wasn’t going to allow free movement of labor into the UK. Given that, they heavily restricted trade with Britain, especially in financial services. Europe made Brexit as nasty a divorce as possible.
But why would they do that? For the same basic Econ 101 reasons that free trade with Europe is good for Britain, free trade with Britain is good for Europe. So, Europeans lose from making Brexit as unpleasant as they did.
What solves the mystery? Simple. Even as the citizens of the EU lose from trade restrictions, the EU, as an institution, wins. The more that trading with Europe means you need to follow EU regulations, the more powerful are the EU regulatory bodies. If the EU makes it painful to leave, other countries that might consider splitting off (Spain, Portugal, Greece) know they had… Better not.
The EU didn’t fail with Brexit, it defeated its own constituents.
But, fortunately, Brexit turned out not to be as bad as everyone feared. And that gets us to the EU’s most recent failure.
The silver lining was that, because of Brexit, Britain didn’t have to suffer the EU’s atrocious response to the Coronavirus pandemic, particularly regarding vaccines.
Enough people have written about the EU’s abysmal vaccine rollout, from the political maneuvreings that prevented distribution, to the dangerous and counter-productive public image control, to the comically self-destructive stinginess on vaccine purchases, resulting in an EU poised for a Springtime fourth wave of COVID deaths and continued economic contraction that the Israel and the Anglosphere (even perhaps the US) will totally escape.
Of course, lots of individual European countries had great public health responses, especially Norway, Denmark, Finland, Switzerland, and Germany. It’s the response from Brussels that has killed tens of thousands, and is set to kill tens of thousands more.
So, I think that we have to conclude that the European Union is a broken institution, deep, deep in its core.
But why? Lots of things in Europe work well; Europe has wonderful governments, innovative companies, and delightful civil societies. So why is Europe itself such a failure?
Perhaps, perhaps, it’s that the EU is insufficiently democratic. EU policy is the product of negotiations between countries and highly powerful independent bureaucracies, carrying along a tragicomic parliament that commands little power, less attention, and no talent whatsoever.
But that’s enough looking at Europe.
So let’s look at institutions we’re more familiar with: States! Are the more “democratic” ones also better managed? I would say states are more democratic if there is serious competition for elected positions. So, to compare a number of similarly wealthy blue states:
- New Jersey
- New York
- Massachusetts
- Minnesota
- California
- Maryland
- Connecticut
- Illinois
There are basically three of these of these that provide high quality public services at reasonable prices: Maryland, Minnesota, and Massachusetts. Shocker! Those are the states that have viable statewide Republican parties in statewide elections. Chris Christie is special.
Those states aren’ t any less lefty than the others, they just have state-wide Republican parties with strong reputations as moderate and competent. This disciplines the Democratic parties of the state without really leading to any less progressive policies.
Perhaps democracy is good.
Now we’ve looked at states. Let’s look at different federal agencies. I only really know two, so let’s compare the Federal Reserve and the FDA. People might disagree, but the FDA really seems to be pretty bad.
In contrast, the Fed is pretty good. It’s also more democratically accountable.
Economists make a big fuss about the importance of an independent central bank, but the Fed isn’t really that independent. And that’s fine. Fundamentally, the Fed is slamming down interest rates right now because Jerome Powell wants it to. And Jerome Powell is in power because Donald Trump wanted to make the Money Printer go Brrrr. (and for dumber reasons).
Central banks are more democratically accountable than medical regulators, because voters judge presidents based on economic performance. And then those presidents pick who more or less runs the Fed. Pretty… Uhh… Direct relationship. In contrast, basically no one knows what the FDA is doing. The Fed is much more accountable. And, for all that the Twitterati complain that the Fed is too hawkish, it gets pretty good outcomes. Look: inflation’s been pretty stable:
They pushed interest rates a little too high in about 2015. Then they course corrected and slowed down the rise. Sure, inflation’s been a little below target, so they’ll run it above target for a while. They’re doing a good job.
And the economist’s fantasy that this is unrelated to public pressure is probably wrong.
Hey, Democracy: it’s good.
Indefensible Expectations 