This morning I began to write a long post on the political implication of European Central Bank’s new bond-buying policy. To my chagrin, I discovered that Walter Russell Mead has beaten me to the punch. The key points:
This central bank is the only European body that can act. And as the only real actor in a continent in crisis, as the emergency deepens, its powers grow. National governments bluster; the European parliament wrings its hands…This is how you can tell where, in a mixed government, the true power of sovereignty resides.
People used to say that Prussia was an army with a state. Right now, Europe is a bank without one. This cannot last; Europe will lose its central bank or build a state. For now, however, Via Meadia salutes the first central bank in the world to achieve sovereign power. Mario Draghi is the most powerful banker in the history of the world.
Although I agree with Mead’s read of the situation, I can only hope that his salute to Mario Draghi is ironic. The Outright Monetary Transactions (OMT) program may or may not be good economic policy: the consensus seems to be that it will buy member states, especially Italy and Spain, some time to restore growth. But it is a profound blow to the principle of self-government. At least for the foreseeable future, the elected governments of Europe will have to submit their fiscal policies for approval to a council of unaccountable bankers. That makes them little more than administrators for the benevolent King Euro.
What I find most baffling about this development is that seems to have aroused so little resistance among the national elites. I can’t think of another case in which formerly ruling classes accepted similar encroachments on their power without a fight. The struggles between the kings and barons went on for centuries; American states fought a bloody rebellion against the national government. But as far as I can tell, most Europeans see the reduction of democracy to a formality as an irresistible destiny. Some even appear to welcome relief from the responsibility of governing themselves.