Down with Democracy?

The past 36 hours have witnessed a maelstrom of geopolitical and financial chaos to rival the most tumultuous days of September and October 2008.  The unlikely culprit?  Democracy.  The original article, for that matter–Greek democracy, for that matter.

For much of the past couple years, and increasingly in the last three months, world financial markets have been held hostage by the debt problems of a small Meditteranean nation that accounts of 0.5% of the world’s GDP.  Whenever prospects for Greece looked better, stocks soared, bonds fell, the euro rose and the dollar fell, economists cheerily prognosticated on the likelihood of buoyant global growth over the coming months and years.  Whenever prospects for Greece looked worse, stocks plunged, bonds soared, the euro fell and the dollar rose, economists filled the airwaves with somber assessments of economic health and prophecies of impeding doom.  After the most most harrowing and pessimistic period yet, markets suddenly gained new faith in Europe at the beginning of October, and began a heady and exhilarating climb to new heights of optimism, capped off by an exultant surge last week as European leaders overcame their differences to agree on a dramatic and it seemed decisive solution to the Greek problem.  

But what goes up must come down, and Greek Prime Minister George Papandreou’s announcement Monday night of a referendum pullled the rug out from under the market about as decisively as a terrorist attack on Wall Street could’ve done.  From Tokyo to New York, stock markets plunged, erasing their recent gains.  Bank stocks took what Obama would call a “shellacking.”  US Treasury bonds rallied so fast that experienced traders were left dizzy and disoriented.  World leaders and economists erupted in furor–how dare he?  How dare he call a referendum?  Papandreou himself was suddenly sitting in the hotseat, facing a no-confidence vote and the defection of key party members, his government at risk of collapse.


After years of seemingly endless crisis management carried out by a mysterious top tier of financial and political elites behind closed doors at dramatically-titled “emergency summits,” the idea that a key decision should be made by “the people” seemed ludicrous and downright quaint.  In view of the recent wave of “Occupy” protests, a popular outcry against the mismanagement of the economic crisis by the elites, it was an irony worthy of Greek drama that the next global crisis threatened to come from giving power back to the people.  After all, despite Papandreou’s stalwart confidence that a referendum on the new rescue plan would at last establish a political mandate for the difficult reforms needed, many quite reasonably feared that the Greek people, incensed by recent austerity measures, would stubbornly reject the rescue plan, pulling the plug on the euro and defaulting on their debts as the lights of Europe went out one by one.  Indeed, it is perhaps a tribute to the courage of Greek politicians that in a world increasingly ruled by plebiscite, they have until now been willing to resolutely govern, making painful decisions for the long-term good in the teeth of popular outrage.  This courage is the more impressive when viewed alongside the mass abdication of America’s political “leaders,” who, confronted by similar budget woes, have refused to lead, choosing rather to be led nowhere by the fickle will of popular opinion.

However, whether one thinks that the referendum represents a noble re-empowerment of the long-disenfranchised masses, or a cowardly and reckless abdication in the midst of crisis, the reaction it has evoked reveals that, for all our rhapsodic paeans to “democracy,” we in the West are not really ready for it.  Sure, democracy is fine for things we no longer really care about–things like gay marriage and the like.  By all means, let’s decide those by mass referenda.  But when it comes to the things that really matter, the gears that turn the wheels of the world–when it comes to money, in short–we know that “the people” can’t really be trusted, and that expert leadership needs to take charge of the situation.  Democracy may be a great ideal, a fine motivation for bombing a few oil-rich Middle Eastern countries, but it’s much too risky to actually practice.

3 thoughts on “Down with Democracy?

  1. Jess Monnette

    Brad, Interesting stuff. "But when it comes to the things that really matter, the gears that turn the wheels of the world–when it comes to money, in short–we know that "the people" can't really be trusted, and that expert leadership needs to take charge of the situation." I think I understand your argument. It seems to me, though, that this situation is not so much about "the people" generally, as "those Greek people." Let me explain. This referendum gives the Greek people the ability to vote down the bailout and associated austerity measures. One way to look at this is from a cost and benefit perspective. If the Greeks vote "yes" on the bailout they will have pay the cost of enduring austerity measures and will get the benefit of alleviated debt burden in the short term and hopefully a workable long term plan for their country. If the Greek people vote "no" on the bailout, then the rest of Europe, and to a much lesser extent other foreigners around the world, will have to pay the "costs", and at this point we don't know the extent of those costs. The benefit will be that the Greeks do not have endure austerity, I can't see off hand what, if any, benefit there will be to Europe. If we believe that the individual should be able to democratically represent himself, and thereby help decide to the extent he will partake in costs and benefits of a given situation, we should allow all those that will be paying the costs, and getting the benefits, to vote. Perhaps this could be the whole European Union.Now that we have a referendum on the table, the special 1% entitled to a vote get to dictate the terms and costs the other 99% will pay. Those costs the 99% pay will benefit the 1% exclusively. This doesn't seem proper. So, does Europe believe that a vote by "those Greek people" really represents "the people" that will pay the costs associated with that vote? I don't think this changes anything about your post, it is just the way I have been thinking about this issue. Very interesting.- JRM


  2. Brad Littlejohn

    Thanks Jess. Yes, this is why I am ambivalent about the whole thing. The highly interconnected nature of the global economy now means that democracy poses really serious problems. One country's people may get to decide what is best for them, but it has ripple effects that hurt other people, who have no say over the process. To make it fair, you'd have to have a global democracy of sorts, but of course, that would be impossible, and would functionally have to be an oligarchy.Which is why, I think, Western leaders have concluded that when it comes to global economic matters, there should be an international decision-making elite that tries to take everyone's interests into account. Obviously, that seems like a good solution on paper, but it runs the danger of creating an oligarchy that has limited accountability and transparency, and is easily corrupted by big business or the super-rich, who will try to see to it that their interests are disproportionately protected. So it's kinda a lose-lose. Which is why re-localizing our economies appeals to me so much; but it's debatable how much that's really practical at the point we've now reached.


  3. I heard on NPR last night that Papandreou backed down and canceled the referendum under intense international pressure. Interesting, and it of course proves the point magnificently that the people aren't to be entrusted with the important matters of governance. It also would seem to explain why the U. S. media, typically ecstatic over the "people's voice" are rabidly attacking the Occupy movement in the same way they assaulted the TEA party when it started a couple of years ago. Turns out Mammon is the real god in our machine – get too close, no matter what you're saying – and Smithers will be forced to "release the hounds."


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