Bussiness and Economics in European Union

Styglitz and Democracy in EU

On September 15th, the Spanish newspaper El Mundo published an interview with Joseph Stiglitz . This interview took place coinciding with the release of his new book, called The Euro: How a Common Currency Threatens the Future of Europe.

In it, the journalist asks Mr. Stiglitz about his statement in the book that democracy is in danger in Europe. His answer is as follows:

“Una de las cosas que más le preocupa a la gente en una democracia es la economía. En Grecia, Portugal y España el 62% de los votantes dijeron que no querían austeridad; votaron por partidos anti-austeridad. Alemania y la Comisión Europea, sin embargo, dijeron lo siento, no tiene opción. Votan, pero dejan de tener derecho a determinar su futuro. Es muy malo para la democracia cuando la gente dice 'creía que éramos una democracia 'y se les responde 'no, nunca más en las cosas que importan porque abandonaste ese derecho'.”

Roughly translated into English:

“One of the things that people are most concerned with in a democracy is the economy. In Greece, Portugal and Spain, 62% of the voters said they did not want austerity; they voted for anti-austerity parties. Germany and the European Commission, however, said I am sorry, you do not have a choice. They vote but no longer have a right to determine their future. It is very bad for democracy when people say ‘I thought we were a democracy’ and they are answered ‘no, no longer for these important things as you abandoned that right’.”

We will not be getting into how Mr. Stiglitz has come up with the 62% figure when he pools together three countries, or what parties he considers anti-austerity. However, we feel his assertion raises an interesting point on people’s freedom to choose and how democracy works, providing an excellent stepping stone for a few pieces conducting a general analysis on democracy and, ultimately, how it works or does not work in Europe and the world.

Mr. Stiglitz contends that a majority of people in Greece, Portugal and Spain have voted against austerity, but ultimately their votes have not mattered when deciding on the economic policies they have been subjected to. In other words, their votes have been disregarded and their countries have been subjected to policies others have decided on.

Mr. Stiglitz is originally from Indiana, one of the fifty-one States that compose the United States of America. In the last ten presidential elections, Indiana has voted mostly Republican (except for the 2008 election, which led to Obama’s first term). On four of such elections, 1976, 1992, 1996 and 2012, Indiana’s pro-Republican vote did not lead to the election of a Republican President . During the first and last of these President’s terms (1976-1980 and 2012-2016), Indiana had a Republican Governor , while the President himself was (is) a Democrat. Following Mr. Stiglitz’s argument, one could say that in these cases the Indiana voters did not see their preferences respected either. However, I am sure that Mr. Stiglitz would not consider saying that democracy is or has been in danger in the United States of America.

The bottom line is, when you are part of a Union, the will of each individual member does not always prevail. It is the majority’s opinion that dictates what happens in each case. Mr. Stiglitz seems to contest this was what happened in this case, when he says that Germany and the European Commission’s point of view prevailed over the democratic vote of the citizens in Greece, Spain and Portugal. He leaves out that these three countries are part of a Union, just like Indiana, where decisions are taken by majority and that these decisions have to be respected.

Having individual members decide their course of action separately seriously hampers common efforts and ultimately destroys the Union. This is something that the United States have been aware of for quite some time, which is why they quickly changed from a Confederation to a Union. Saying, as Mr. Stiglitz does further on in the interview that “it may be necessary to let the Euro die in order to save the European project”, would be tantamount to accepting that the Union’s decisions are only mandatory for those who agree with them. To carry on with the comparison with Indiana and the United States, it would be like Indiana ignoring the result of the past presidential elections and calling Mitt Romney their President.

Germany, as one of the Member States of the European Union may have campaigned for austerity, but ultimately requiring that these policies be adopted by Greece, Spain, Portugal and, in general all those countries in financial trouble, was an agreement adopted by consensus. The European Commission itself is, if not elected, at least ratified by the European Parliament, who is democratically chosen by the people of Europe. It is therefore the Union as a whole, through the representatives chosen by those the people have elected, that imposed austerity.

Granted the system is intricate and unnecessarily complex. It would most certainly be easier to have a more direct election system, but then again, the same can be said of the US electoral system. Let us remember that the people of Indiana do not vote for the presidential candidate, they elect eleven members of the Electoral College, who then elect the President.

Saying democracy is in danger because Germany and the European Commission have overturned the choices made by a majority of Greek, Portuguese and Spanish voters, as Mr. Stiglitz does is an exercise in populism. It aims at opposing the decisions of the ‘unelected’ European elite with the will of the European people. Nevertheless, it is an exercise that is aided and abetted by the obscure and questionable system through which European officials are appointed and decisions are taken in the Union. The enemy however is not Europe. It is, as usual, faulty integration, the flaws in the system and the stance, so often adopted by certain people and political parties, that things are better if each country tackles them on their own. To counteract this noxious view, it is essential we open a serious dialogue on how democracy works and tackle a serious reform of the European Institutions.

Follow us