Europe Must Learn From the Greek Tragedy

Mervyn King

By Mervyn King

The underlying problem isn’t confined to Greece. No monetary union has ever survived without evolving into a political union.

By Mervyn King

Democracy, it is often said, began in Greece — but lately Athens has been struggling to make its invention work well. At elections last Sunday, voters ejected the left-leaning Syriza government led by Alexis Tsipras and turned to Kyriakos Mitsotakis and his conservative New Democracy. Unfortunately, further disappointment seems all too likely. The new leader inherits problems that will be extremely difficult to solve — and that raise questions for Europe as a whole.

Despite an extraordinary depression, during which GDP fell by a quarter and real incomes by much more, growth remains sluggish — too slow to do much about an unemployment rate of 18% and a debt-to-GDP ratio of more than 180%. Coping with such a severe economic setback is difficult enough; requesting patience during a persistently weak recovery might be even harder. The new government’s biggest challenge will be to persuade the country’s voters that New Democracy will live up to its name and attend to their concerns. Given the background, this can hardly be taken for granted.

Parliamentary elections are not the only expression of popular opinion. At regular intervals, the various peoples of the European Union have been asked in referendums to support the next steps toward “ever-closer union.” Time and again, voters have demurred; time and again, the EU has plowed on regardless. This happened in Denmark, France, Ireland and the Netherlands — but one of the most striking examples of seeking, then ignoring, voters’ opinions was in Greece. In 2015 voters were asked whether the bailout conditions imposed by the so-called troika of the European Commission, the European Central Bank and the International Monetary Fund were acceptable.

Read the full Bloomberg article.

Lord Mervyn King is the Alan Greenspan Professor of Economics and a professor of Economics and Law, a joint appointment with New York University School of Law.