Tuesday, November 22, 2011

The myth of technocracy

Paul Krugman has written a great Op-ed (Cruel Euro Romantics) which, as usual, nails it.

The arrival of technocrats at the helm of two of Europe's most stressed governments has been largely welcomed by people who should know better. And indeed, no genuine democrat can really regret the demise of Silvio Berlusconi. But what exactly can technocracy offer us in the middle of this terrible crisis?

Well, they don't have a magic wand, for sure. Times remain tough, and Italy's bond spreads have merely stabilized at the unsustainable levels they reached under Berlusconi. But, as Krugman argues, the problem with technocracy goes further - that in fact, these technocrats are the ones who got us in this mess in the first place, with their fantasy world of a diverse Eurozone gliding seamlessly towards convergence under monetary union. Why on earth should anyone have expected this to happen?

So these technocrats are really 'romantics' - rather than robotically applying the findings of the best economists, they chose instead to invent for themselves an imaginary world in which the Euro would succeed where other monetary experiments had failed. Krugman, of course, argues that the failure of technocracy is their choice to use the wrong kind of economics, and that the right kind - his kind - would allow us to solve the problem, or least avoid catastrophe. I'm inclined to agree. But there is something else here that Krugman misses.

The other problem with technocracy, is that it does not engage the people. In fact, this is the very point of it. Technocrats have the theories and facts to make the right decisions, so they should be left to do it, free of the daily noise and fury of politics. But even if they had the right policies, they still have to convince the people that their policies will deliver some approximation of the collective good, otherwise the compliance with rules and norms any society rests on will break down.

This is the colossal failure of the European Union. It is bad enough that they designed institutions that have left us on the brink of disaster. But worse, they did so without ever bothering to explain what the benefits, costs, and likely risks of the project were. Now, again, the European policy elite wants us to write another blank cheque to the same people who have already let us down. It can't work.