Europe and Citizens United

It has been nearly a month since I have visited this space; too bad, but the day-job comes first. I don't know how daily bloggers find time to read or think. Maybe they don't find time, which would, I suppose, explain the quality of much of the blogosphere. But never mind that.

I have been thinking of many things, and reading and learning as I go. But I have generated as many questions as I have answers. Let me summarize them with reference to three events.

The European Crisis. What has been going on in Europe, centered around Greece, in the past few weeks has been extraordinary. As luck would have it, The American Interest is coming out in a few weeks with a major cluster called "What Happened to `Europe'?". This is just dumb luck--Joe Joffe suggested doing something like this before the Greek crisis burst open--but I'll take it. The main question is, has the EU and the European "model" hit the wall of reality, and the wall won, or are we just witnessing growing pains that will leave the experiment stronger for the challenge?

I suspect the former, but who knows? The $1 trillion bailout seems impressive, but it is not enough to save the euro. The idea of having one currency and one central bank, but zero political center and 27 separate tax and fiscal policies is crazy. To support a single currency requires a federal arrangement that harmonizes countercyclical processes region-wide. So I have been saying for 15 years. If the Europeans jump to that, they may pull off a great advance. This was always the plan: Do something that won't work unless you do something else, and so on and on, jumping ahead from crisis to crisis. That's a nutty way to run a railroad or build a federal union, but the juggernaut has stayed on track more or less until now because of the shield provided by American military and economic power. Now that, for various reasons, that shield is no longer what it was, we--that is, the Europeans--are in serious trouble.

So what has the EU done? It has not proposed, yet at least, building the federal structures that can support a common currency. Instead, it has faced the problem of financial overextension--too much debt--by extending further--by taking on more debt. And in the process it has cast moral hazard to the howling wind. That is not all. It has allowed the whole wager, all $1 trillion of it, to depend on the prospect of fundamentally altering the nature of Greek government and society. The Greeks (of all people)! This would be funny if it were not so serious, and serious not just for Europeans but for Americans, too. Greeks have been evading taxes since Ottoman times. No one is going to change their sport anytime soon.

Capitalism, Democracy & Law. That's the other main cluster in the forthcoming July/August issue of TAI. And here, two questions have assailed me.

First, all three of my authors writing about Citizens United have focused entirely on the supply side of the problem: how to get money to politicians in ways that do not abet corruption and unfairness. Not one of them has given so much as a single thought to the demand side. The average cost of election campaigns, in constant dollars, has nearly quadrupled in the past quarter century. Why I keep asking; no one knows for sure. I think it has a lot to doing with the cost of TV ads, and rising passions in the culture wars, but there are many, academics as well as shills for corporations, who say no, it's not so. Maybe the issues in the relevant elections brought out more corporate money than ever before, and maybe the financial sector --a.k.a. Wall Street--led the way. But it has to have some explanation; what is it, then? We don't have that explanation because, as best I can tell, no one pays any attention to the demand side, and I think this is a form of intellectual madness.

Second, I wish someone would spend more time clarifying the relationship between capitalism and democracy. We all know the convenient and comforting myth which claims that markets and democracy always support and reinforce each other. Michael Novak has written a lot about that, as have many others. But this is only a partial truth. Yes, there are elements of a market system that build morals; I agree with that. Markets are not evil. But capitalism, because of the inherent inequality of talent and virtue, as Jefferson once put it to Adams (or was it the other way around?) necessarily generates inequality. But political democracy aims to guarantee equality in terms of citizenship. So rightthere you have an inherent and eternal tension: One-man, one-vote clashes with the fact that any one man will be more or less able to influence political discourse through money than another. Economic inequality does not rest easily with political equality.

At the extremes, it follows logically that there will be times when democracy must be protected against capitalism (like now), and other times when capitalism must be protected against democracy, by which I means surges of irrational, idealistic populism (as between 1907 and 1913). There is never a stable equipoise between the two. Yet we want both and need both. Managing the balance is what American politics is really about. The idea that there is no problem, that capitalism can never menace democracy and democracy can never menace capitalism are twin forms of utopianism, the former of the Right, the latter of the Left. I don't understand how anyone cannot see this. But this, I guess, is my problem.

Well, that's enough for now.