The Sustainability of Europe

by Henry on May 13, 2011

“Matt Yglesias”:http://yglesias.thinkprogress.org/2011/05/the-sustainability-of-greece/

bq. I’m not intimately familiar with the details of Greek public finance, but it does occur to me that sage words I keep reading in the American press about how Europe’s leaders can’t just keep kicking the can down the road and need to deal with Greece’s basic insolvency strike me as unwarranted. In general, the capacity of large wealthy societies to allow festering problems to go un-addressed seems perennially underrated. … as I can remember people have been talking about how the United States needs to address entitlement spending and trade imbalances … Presumably at some point something will happen. But in practice we’ve managed a great deal of can-kicking, seem to have more can-kicking in us, and actually the public and the political elite alike are quite averse to the kind of steps that would address these issues. Is Greece so different?

On the economics of can-kicking, I think this is right. On the politics of can-kicking, not so much. The difference between the US and the European Union is that the US is a relatively robust political entity. Americans may vigorously dislike this or that aspect of their government, but their political arguments are mostly about what the US should do, or be, not whether the US should exist at all (even die-hard we-were-screwed-in-the-Northern-War-of-Aggression-ers mostly seem to think of themselves as patriots; Alaska and the commonwealth of Puerto Rico are the only parts of the US I can think of with significant secessionist movements). Europe is quite different. The EU’s legitimacy is relatively fragile. Very few people indeed think of themselves as more European than French or German. Even fewer feel that they have any strong allegiance e.g. to the European Council or the European Commission.

So my worry is straightforward. Greece is not so big a problem that it cannot be kicked down the road by the Europeans indefinitely. So too, Ireland and Portugal, and perhaps even (with more straining) Spain. But the specific _manner_ in which the can is being kicked down the road has consequences for European legitimacy. Greeks, Portuguese and Irish people don’t like being at the sharp end of imposed austerity. They have obvious villains to blame for it – the EU (in particular the ECB and the Commission) and the ‘Germans.’ But Germans, Dutch people etc don’t have much reason to like the EU these days either. For them, it is associated with a giant sucking noise pulling frugal German taxpayers’ savings into the gaping maw of Greek pensioners. Neither those on the receiving or those on the giving end of current policies is very happy. And both have good reason to associate their unhappiness with the EU. And the EU does not have much legitimacy to spare in any event.

I don’t think that this will lead to the collapse of the European Union. I do think that it is likely to result in very long-lasting institutional stagnation, if it continues. Ad hoc decisions, none of which seem unjustifiable at the time, may have long term fallout for European integration (for one: can we see Irish people voting through any new Treaty changes any time soon?). And kicking the can down the road at best does nothing to solve these problems (which I do not think are likely to go away of their own accord), while doing a lot to exacerbate them. NB though that this is my personal view – I suspect that at least one CTer disagrees, and is more optimistic.

Agnotology and Santa Claus (updated slightly)

by John Quiggin on May 13, 2011

For students of agnotology there is no more striking finding than the observation that many people, presented with evidence that undermines a strongly held belief, react as if that belief had been confirmed[1]. This seems to undermine any possibility that evidence will ever settle political disputes. And yet, evidence does seem to seep through in the end. Although belief in Saddam’s Weapons of Mass Destruction persisted long after the absence of evidence had turned into clear evidence of absence, it faded away in the end (not that it has completely disappeared even now).

As a slightly more optimistic take on the experimental evidence, I offer the example of Santa Claus. Young children, presented with the suggestion that Santa isn’t real, blithely ignore it. Slightly older children, though, react in exactly the manner of the experimental subjects, reaffirming their belief in the Santa story and (of course) the associated presents. Later, of course, they accept the truth.

In some social contexts children are likely draw the obvious analogy between Santa and God, while in other contexts, the distinction between the two beliefs is maintained successfully. But regardless of context, there is an obvious risk, for those who would like their children to grow up as theists, in insisting too hard on the reality of Santa.

Similarly, I suspect that the apparent success of Republicans in believing six impossible things before breakfast, and in taking up new delusions as old ones are abandoned, may mask an underlying erosion of faith. Birtherism may morph into torturism without any obvious sign of stress, but at some level people must gradually become aware that their political beliefs are more like the faith that belief in Santa will bring presents and less like the belief that kicking a rock will give you a stubbed toe.

fn1. The general phenonomen of confirmation bias (paying attention to evidence that supports your belief and disregarding contradictory evidence) is well established. The first finding of reinforcement Nyhan and Riefler find that Democrats ignore contradictory evidence, while Republicans respond in the way I described. I can’t find the study that supported this. Nyhan and Riefler cite earlier research by Redlawski that I haven’t been able to find.