In all this Euro and EU confusion, democracy is the loser.
Governments need legitimacy in a relatively free society. Governments need to gain and hold the consent of the governed. In mature western democracies the act of winning an election usually gives a government legitimacy. The government can hold and strengthen that if it governs wisely. It gradually loses it if it governs badly, but normally retains sufficient consent to govern until the following election.
A really bad elected government can reach the point where popular protest makes its task difficult. Losses of support amongst its own MPs as some of them come to represent the popular antipathy to the government can stop it doing things it wishes to do. A vigorous opposition can come to have more credibility than a tired government, with the public seeking influence with the “government in waiting”.
In Euroland the act of winning an election may now not buy that same legitimacy that used to pass on victory to the victor. Indeed, in Greece recently, the established parties all lost votes as the people no longer have confidence in the system. Any responsible Greek government had to to reflect the popular will that they stay in the Euro, but that means accepting conditions the Greek people do not accept. Any responsible Greek opposition should have said the only way out of the policy restrictions the Greek people dislike was exit from the Euro, and offered that package. Instead, the EU has generated dishonest politics, with oppositions proposing improvements within the EU framework that they are probably powerless to achieve if granted office. Governments still often pretend to be in charge, when many of their decisions are determined in Brussels.
The threat the Euro posed to democracy and accountability was always obvious, but was ignored by its proponents. I wrote in ” Our Currency Our Country” (1997)
“Member states wouldn be severely constrained in their budgetary policies…Ministers would be left defending spending cuts and tax increases which they had not wanted and probably disagreed with. The strikes and protests in France in 1995 are a sign of things to come.”
and in “Just Say No” (2001)
“The single economic policy of the Treaty is incomplete. It is all about exchange rates,money and inflation.It ignores jobs, incomes and output. If pursued to its conclusion, it could easily alientate the voters of Europe who think jobs and incomes are more important than financial matters”
The unpopularity of “austerity” is not surprising. The truth unfortunately is that in the troubled countries of the EU state spending is far too high and state borrowing unsupportable. There is no choice but to cut the excess spending of the state, whether they stay inside or outside the Euro. There is no quick fix by borrowing more to “stimulate growth” – excess state borrowing and state spending has been tried to years and has now induced recession. They do need private sector led recoveries, which will need realistic tax rates, sensible regulation, and a banking system that can finance new projects.