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SOFIA – The logic behind the European Union’s drive to constitutionalize budget constraints and remove key economic decisions from electoral politics is internally sound. After all, a common currency without a shared political sphere can survive only if electing a new national government does not mean changing basic macroeconomic policies.
But the logic of the EU’s effort collapses at a crucial point. When voters are unhappy with the economic status quo, but lack the power to change the relevant policies through democratic processes, they fall for conspiracy theories, turn on the political establishment, and demand a radical transformation of existing arrangements.
Many European countries are now embroiled in such revolts, as popular backlash against tough austerity turns into protest against the functioning of representative democracy. With populist movements gaining traction across Europe, the left-right dichotomy is fading. Now, it is the people versus the political class, “us” against “them,” the 99% against the 1%.
Consider the current wave of popular protests against rising electricity bills in Bulgaria, which has already brought down the country’s center-right government. While Bulgaria has a low budget deficit, it remains the EU’s poorest member state, weighed down by slow GDP growth and high unemployment. Almost one million Bulgarians have left the country since 1989.
As austerity policies – including wage freezes and delays on value-added tax reimbursements to businesses – squeeze citizens, reports of government corruption and the influence of organized crime have incited public outrage. The lack of European flags at the demonstrations – and the fact that protesters have largely scapegoated the Czech and Austrian electricity providers that control the local market – reflects a dearth of hope that the EU can help to change the situation.
But widespread outrage does not translate into a strong vision. While Bulgaria’s protesters forced the government to resign, they did not demand a new government. Rather, they called for the immediate fulfillment of vague, often contradictory demands, including a new constituent assembly and radical changes to the political system. They appear to expect their government to function like a computer – enter a command and the desired program is run – but they lack a strategy for building such a system.
As a result, the recent outburst of civic energy is unlikely to fix Bulgaria’s problems. Given the movement’s lack of inspiring leaders, the political establishment’s quick call for early elections will most likely be enough to keep new figures out of the political arena. In the absence of galvanizing demands, the demonstrations’ most likely outcome will not be far-reaching political and economic reform. Rather, we can expect a new generation of expatriate Bulgarians (though, as the United Kingdom’s current debate over Bulgarian and Romanian immigrants suggests, they probably will not be welcome elsewhere in Europe).
Ironically, Bulgaria was the poster child for the EU’s “change governments, not policies” paradigm. Its maintenance of fiscal discipline, despite weak institutions and high electoral volatility convinced many that the model could work in all EU countries. But the protests have shaken this conviction.
In Bulgaria, newly founded political parties won elections twice in the last decade, and most Bulgarians voted differently in 2009 than they had in 2001. Since the hyper-inflation of 1997, the country has been governed from the right, by the Union of Democratic Forces; from the left, by the Bulgarian Socialist Party; from above, by the king-turned-prime-minister, Simeon II of Saxe-Coburg-Gotha; and from below, by Boyko Borisov, the former head of Simeon’s security detail.
Amid these radical shifts, macroeconomic policy remained largely unchanged, with all governments adhering to a prudent fiscal and monetary stance. Indeed, despite rampant poverty and a currency-board system, which prohibits devaluation, Bulgaria’s budget deficit is less than 1% of GDP, and its public debt/GDP ratio is roughly 18% (compared to budget deficits of roughly 3.5-4% of GDP and average debt/GDP ratios of roughly 90% in the eurozone as a whole).
Until recently, public support for fiscal rectitude was rooted in the desire to fulfill EU demands. After all, most Bulgarians believed that the EU provided the best mechanism to force change on their corrupt and inefficient national elites. But citizens’ inability to influence fundamental economic policies with their votes rapidly eroded the public’s trust in democratic institutions – and turned the street into the country’s most effective political institution.
Now, in addition to lower electricity prices, citizens are calling for a new constitution, and demanding an overhaul of the political class. What is at stake in Bulgaria today – as in Italy – is the country’s very governability.
Bulgaria’s experience demonstrates that, while democratic governance can be manipulated to distract voters from demanding economic reform in the short run, such a strategy ultimately will prove to be highly damaging. By taking away people’s power to influence the outcomes that matter to them, the EU’s new policy paradigm has diminished their loyalty to both national and European policies and leadership, while destroying their sense of civic responsibility.
Europe’s choice is not between austerity and economic growth. Rather, EU leaders must choose between flexibility and rigidity, between permitting voters to make mistakes and losing legitimacy. As Bulgaria’s crisis demonstrates, without hope, financial stability is just another name for stagnation.
Reprinting material from this Web site without written consent from Project Syndicate is a violation of international copyright law. To secure permission, please contact us.
SOFIA – The logic behind the European Union’s drive to constitutionalize budget constraints and remove key economic decisions from electoral politics is internally sound. After all, a common currency without a shared political sphere can survive only if electing a new national government does not mean changing basic macroeconomic policies.
But the logic of the EU’s effort collapses at a crucial point. When voters are unhappy with the economic status quo, but lack the power to change the relevant policies through democratic processes, they fall for conspiracy theories, turn on the political establishment, and demand a radical transformation of existing arrangements.
Many European countries are now embroiled in such revolts, as popular backlash against tough austerity turns into protest against the functioning of representative democracy. With populist movements gaining traction across Europe, the left-right dichotomy is fading. Now, it is the people versus the political class, “us” against “them,” the 99% against the 1%.
Consider the current wave of popular protests against rising electricity bills in Bulgaria, which has already brought down the country’s center-right government. While Bulgaria has a low budget deficit, it remains the EU’s poorest member state, weighed down by slow GDP growth and high unemployment. Almost one million Bulgarians have left the country since 1989.
As austerity policies – including wage freezes and delays on value-added tax reimbursements to businesses – squeeze citizens, reports of government corruption and the influence of organized crime have incited public outrage. The lack of European flags at the demonstrations – and the fact that protesters have largely scapegoated the Czech and Austrian electricity providers that control the local market – reflects a dearth of hope that the EU can help to change the situation.
But widespread outrage does not translate into a strong vision. While Bulgaria’s protesters forced the government to resign, they did not demand a new government. Rather, they called for the immediate fulfillment of vague, often contradictory demands, including a new constituent assembly and radical changes to the political system. They appear to expect their government to function like a computer – enter a command and the desired program is run – but they lack a strategy for building such a system.
As a result, the recent outburst of civic energy is unlikely to fix Bulgaria’s problems. Given the movement’s lack of inspiring leaders, the political establishment’s quick call for early elections will most likely be enough to keep new figures out of the political arena. In the absence of galvanizing demands, the demonstrations’ most likely outcome will not be far-reaching political and economic reform. Rather, we can expect a new generation of expatriate Bulgarians (though, as the United Kingdom’s current debate over Bulgarian and Romanian immigrants suggests, they probably will not be welcome elsewhere in Europe).
Ironically, Bulgaria was the poster child for the EU’s “change governments, not policies” paradigm. Its maintenance of fiscal discipline, despite weak institutions and high electoral volatility convinced many that the model could work in all EU countries. But the protests have shaken this conviction.
In Bulgaria, newly founded political parties won elections twice in the last decade, and most Bulgarians voted differently in 2009 than they had in 2001. Since the hyper-inflation of 1997, the country has been governed from the right, by the Union of Democratic Forces; from the left, by the Bulgarian Socialist Party; from above, by the king-turned-prime-minister, Simeon II of Saxe-Coburg-Gotha; and from below, by Boyko Borisov, the former head of Simeon’s security detail.
Amid these radical shifts, macroeconomic policy remained largely unchanged, with all governments adhering to a prudent fiscal and monetary stance. Indeed, despite rampant poverty and a currency-board system, which prohibits devaluation, Bulgaria’s budget deficit is less than 1% of GDP, and its public debt/GDP ratio is roughly 18% (compared to budget deficits of roughly 3.5-4% of GDP and average debt/GDP ratios of roughly 90% in the eurozone as a whole).
Until recently, public support for fiscal rectitude was rooted in the desire to fulfill EU demands. After all, most Bulgarians believed that the EU provided the best mechanism to force change on their corrupt and inefficient national elites. But citizens’ inability to influence fundamental economic policies with their votes rapidly eroded the public’s trust in democratic institutions – and turned the street into the country’s most effective political institution.
Now, in addition to lower electricity prices, citizens are calling for a new constitution, and demanding an overhaul of the political class. What is at stake in Bulgaria today – as in Italy – is the country’s very governability.
Bulgaria’s experience demonstrates that, while democratic governance can be manipulated to distract voters from demanding economic reform in the short run, such a strategy ultimately will prove to be highly damaging. By taking away people’s power to influence the outcomes that matter to them, the EU’s new policy paradigm has diminished their loyalty to both national and European policies and leadership, while destroying their sense of civic responsibility.
Europe’s choice is not between austerity and economic growth. Rather, EU leaders must choose between flexibility and rigidity, between permitting voters to make mistakes and losing legitimacy. As Bulgaria’s crisis demonstrates, without hope, financial stability is just another name for stagnation.
Reprinting material from this Web site without written consent from Project Syndicate is a violation of international copyright law. To secure permission, please contact us.
