Wednesday, November 02, 2011

Democracy and Catch-22

Europe has now captured the attention of the entire financial world. Here, the stock market soars one day, plummets the next, depending on the news from Greece or Spain or Italy. At the moment, the market is in plummet mode, as Italy’s 10-year bond yields have run up to over 6 percent.

The central problem in Europe is that the strong, mostly northern economies are unwilling to bail out the weaker, mostly southern members of the Eurozone unless these countries swallow some hard medicine, much of it involving tax-collection procedures and the size of their public sectors. In Greece, Prime Minister Papendreou said okay at first, then decided to put the question to the voters in a referendum. Most people expect the public to defeat austerity resoundingly, and that is the current crisis du jour.

Now, it is clear that Papendreou is putting austerity to the vote, not because he has an abiding love of democracy, but because he knows he is not strong enough to force his people to swallow the castor oil. Neither is Silvio Berlusconi, Prime Minister of Italy. So all a weak leader has to do is call for a referendum. Vox populi, right? The problem is, the public will vote, not for what is necessary to save the Eurozone, but for a continuation of what some call a Club Med culture.

That brings us to the Occupy Wall Street protests, in which the self-styled 99 percent want the other 1 percent to pay higher taxes. Well, of course they do, especially when half of them pay no income tax at all. If you put the issue to a vote, 80 percent would vote to raise taxes on 20 percent. President Obama knows this ("it's not politics, it's math") and is campaigning accordingly.

Democracy is a two-edged sword. That’s why the founders of our country designed a constitutional democracy, framed to prevent the 99 percent from ganging up on the 1 percent. But Thomas Jefferson and George Washington did not have to contend with polls, in which CNN and the New York Times and CBS tell us daily that 78 percent of the public believe such and such. With such precision, who needs elections?

The Occupy crowds, like the Greek voters, may not have the specialized knowledge needed to design a solution to a frustratingly complex problem. But they are loud, and in this political season their voices will be amplified by vote-hungry politicians. One hopes that there are enough sensible people out there to keep the world from sliding into a de facto pure democracy, because that way lies Catch-22 and chaos.