On the front page of today’s New York Times , readers encounter this headline: Greece and Italy Seek A Solution From Technocrats. The article chronicles the political transitions taking place in these two debt ridden countries. A sample:
Greece named Lucas Papademos, a former vice president of the European Central Bank, interim prime minister of a unity government charged with preventing the country from default. In Italy, momentum was building behind Mario Monti, a former European commissioner, to replace the once-invincible Prime Minister Silvio Berlusconi as early as Monday.
Can technocrats manage the debt crisis? The Times asks. Politicians failed. Can bureaucrats succeed? And if they do, what does that portend?
The article goes on to chronicle the difficulties of the two countries. While they both have massive debt, they take a different approach to handling the situation. Italy has welcomed technocratic advice and solutions; Greece has resisted “outside interference.” Greece has a small economy (comparable to the size of the Dallas/Fort Worth Metroplex); Italy has the world’s 7th largest. Roman politicians welcome a unity government; Athens has suffered political polarization for the last forty years.
This article confirms my earlier bias: Italy is a credible member of the EU; Greece is not. While I doubt the long-term efficicacy of “technocratic reforms,” I think they are the most plausible short term remedy for the Europeans. Certainly I don’t see European socialists abandoning Keynesian economics during this crisis. Thus, they may muddle through the current situation, but will not enjoy an economic boom that would come if they implemented laisse-faire, pro-growth policies.
Americans should pay attention to the European debt crisis, particularly the political impotence shown by its political class. Note this Times observation:
Mario Baldassarri, the chairman of the Senate Finance Committee, singled out the political class, saying, “Because in Italy there are 3,000 or 4,000 people who count on waste and theft of public spending and now they are more powerful than 60 million people.”