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.