The Deeper Meaning of the Greek Crisis
By Arnold Kling
We are going to argue about this one. Dani Rodrik writes,
The choice that the EU faces is the same in other parts of the world: either integrate politically, or ease up on economic unification.
I read his essay as saying that what Europe needs is stronger central government. And, ultimately, we will need strong central world government. [Note: I misread the essay. See this update.]
My reading of recent events is the opposite. The point of the widely-unread Unchecked and Unbalanced is that knowledge has become dispersed, making central government less and less effective. The model of Big Finance working with Big Government has produced catastrophic results. Of course, no one in Washington or Brussels can imagine anything other than Big Finance plus Big Government. What they call “financial reform” is an exercise in blame deflection. The goal for the past two years has been to get back to where we were in 2006, with a promise to regulate more cleverly next time.
This project requires massive transfers of wealth to the undeserving. Some of the transfer goes to undeserving borrowers. Most of it goes to undeserving lenders. The ruling class is certain that this is the right thing to do, and the challenge is to keep democracy from getting in the way. I continue to believe that we live in a time like World War I or Vietnam, where the ruling class is so off the rails that you can only find sanity on the outer fringes of society.