This is a novel approach to getting the Greeks to do what the international lenders (aka the Troika) want: tell them that not only can they not choose their own prime minister, but if they don’t get their policies right, the eurozone will put their own commissioner in charge of making the decisions. Or else they won’t get the next tranche of their bail-out money.
What is this about? Naturally it’s caused Greek public opinion to explode in fury. The sober-minded middle classes can put up with with a bit of external intervention to break domestic political log-jams. And while the ‘technocratic’ government is trying hard to do what is asked of them, it’s found it difficult to fix the faulty revenue system and to make hard spending cut choices for an economy that is already contracting horribly sharply. But the historical and political insensitivity of the proposal leaves me astonished. Sebastian Dellepiane has reminded me that economists seem to find it all too easy to dispatch politics into the rubbish bin when they are convinced they have the right technical answers – see this amazing piece of finger-wagging to Argentina in 2002.
It seems so obvious both from economic theory and from empirical evidence that what Europe badly needs right now is a policy mix that will generate economic growth and facilitate job creation. The forthcoming EU summit is at least going to talk about this (though I’m not holding my breath). So why the heavy warnings?