Democracy – Under Threat in Europe – Must be Struggled and Fought For

A threat to democracy frequently follows major shocks in international relations. The period between the two World Wars saw Germany, the USSR, Spain and Italy sacrifice democracy at the altar of populist dictators. Unfortunately some of the slouching beasts from history that led to that collapse of democracy have now awakened from their slumber in Europe.

Greece, long  associated with the very concept  of democracy, is but an extreme example of this  growing threat. Many of the issues that threaten the future of democracy in Greece are present in a number of other countries in Europe, including in Ireland, though obviously with different emphasis and to a different degree. The future of democracy in Europe is being ever more closely  linked – through a ghastly financial domino theory  which says that if Greece falls, Spain, Italy, Ireland and  Portugal cannot be far behind.

Greece is  just the first to be caught between serious internal flaws in its governance which makes a  consensus virtually impossible to achieve, and  unforgiving EU/IMF paymasters  insisting that budgets must be balanced and debts paid.  To do what Greece needs to do means winning a mandate to do what most Greeks don’t want done, and there is no latter day Draco (7th century BC  Greek lawmaker who gave the world the world “draconian”  conveying the unflinching nature of his approach)  to square that circle.

Although mentally collectivist, “loyalty” in Greece attaches to the individual, the family, and/or the political group almost fully, with little if any residual “loyalty” left for the state itself. Civic life, which recent Greek governments have tried to re-create, appears almost non-existent.

This  has developed out of an informal “deal” between the public and private sectors. This highly corrupting  system, alongside an extended credit boom similar to that experienced by many other euro zone states, has led to an almost  total moral collapse.

The public sector is extraordinarily overpaid – with average earnings three times greater than the private sector, and  supplements this with a pervasive culture of bribery. The private sector is divided between massive quasi-monopolistic businesses in core areas of the economy such as shipping, oil, gas, media, banking and cement owned by a small number of oligarchs and a huge number of mainly tiny private businesses. Both, highly disparate elements of the private sector , are united in an extraordinary level of insularity and  a pervasive culture of tax evasion.

The extent of the personal, bureaucratic, and government madness  is summarised well by Michael Lewis when he quantifies Greek debt – “add  all it of up and you got about $1.2 trillion, or more than a quarter-million dollars [$250,000] for every working Greek.” [Emphasis added.] (Boomerang, Michael Lewis, Allen Lane). This is made up of $400 billion of government debt, and double that amount, $800 billion, for pensions. As many are slowly realising,  most European countries, with their rapidly ageing populations, also face this pensions (and related healthcare costs) time-bomb.

Unfortunately for Greece today these internal contradictions and sub-optimal political incentive structures can fundamentally undermine liberal democratic societies, just as internal contradictions of a very different kind discredited communism, leading to its eventual collapse.

Under communism, such contradictions stemmed from resource allocation structures that made it rational for individuals to act in a way that promoted economic decline rather than growth. In the case of most liberal democracies, the contradictions stem from incentives for politicians facing re-election to continuously mortgage and remortgage their country’s future through inappropriate or untenable spending and taxation  decisions. (Countries can get away with indebtedness for longer than individuals, but eventually the cash, or the willingness of someone to lend the cash, runs out.) Politicians have mortgaged their country’s future by promising constituents unaffordable levels of benefits, or reductions in taxes. Future generations are effectively penalised by current generations.

As countries develop under the liberal democratic model, special interest groups  tend to become so  dominant that there is no one representing the collective interest of the people as a whole or future generations. Paralysis, confusion, and cynicism becomes entrenched. In Greece, because of its history, its unique collectivist approach, and the extent of corruption and bureaucratic incompetence, these internal structural contradictions  are particularly acute.

The current political programme of  the opposition party Syriza, includes  the rollback of the paltry  “reforms” in the public sector to date, the creation of 100,000 extra posts in that sector, and paying pensions at a level of 100% of final salary!  Instead of trying to reverse the entrenched internal contradictions, this newly-emerging political force plans to worsen them dramatically, with the support of a significant element of the electorate. No solution here – just denial, and a  perfect illustration of an almost totally dysfunctional political system reacting in a way  that can only lead to bankruptcy and collapse.

From this perspective  the future for democracy looks particularly grim in Greece .

On top of this, the factors  that history shows normally support a stable liberal democracy are either absent or almost fully eroded in Greece today.

The American political scientist Fukuyama believes that three  pillars are essential for political freedom to survive and thrive – the rule of law, an orderly and efficient state, and accountability of the government to the people. (The Origins of Political Order, Francis Fukuyama, Profile Books, 2011).

Greece fails on all counts.

Pervasive corruption, gross incompetence, and the “stacking” of state institutions with political supporters of the party in power,  combine to mean that  the rule of law does not really apply in Greece. Enforcement is a matter of choice, political decision, or the willingness to bribe the relevant official.

A state that has been run in recent years as a source of largesse and wealth creation for many in the party in power, and its supporters and associates, and that cannot even state with certainty the number of people who work for it, or control tax collection or property title , cannot be described as orderly or efficient.

Elections in which  replacement of one political party is replaced  by another give  a veneer of  accountability. However the reality is that the time in power is an opportunity for many members of parliament (as evident by their subsequent  wealth, particularly property holdings,  out of line with their known earnings), their supporters in the bureaucracy, and their business and other supporters generally, to enrich themselves.

Of all the continents, Europe should have learnt,  from the 1930s, about the dreadful impact on democracy of collective irrationality and populist politics. Both are clearly on the rise in the cradle of democracy on Europe’s eastern fringes, and unfortunately elsewhere on the continent.

Greece is but a somewhat extreme example of a developing threat to democracy in Europe.   The choice now for Greece and most European states is either serious structural and institutional reform (which of necessity would challenge many entrenched practices),  not just mindless austerity with the consequent erosion of democracy itself. Internal resource allocation contradictions,  particularly those generated by special interest groups, and the erosion of the  core foundations of liberal democracy, are delivering European countries straight into a  1930-style firestorm  which may yet again prove  calamitous.

“I’m tired of hearing it said that democracy doesn’t work. Of course it doesn’t work. We are supposed to work it.” – American writer Alexander Woollcott (1887-1943).

Richard Whelan is a geopolitical analyst, and an Irish chartered accountant with 40 years experience of applying risk management to business decision-making. His website is www.richardwhelan.com.

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