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For US and Europe, governance by brinkmanship

The US and Europe are handling their fiscal crises with political brinkmanship, resulting in piecemeal solutions. The US seems to have adopted German Chancellor Angel Merkel’s much maligned step-by-step approach to problem-solving. Politically, that may be the only choice.

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Germany's Chancellor Angela Merkel holds a news conference at the end of a European Union leaders summit in Brussels Dec. 14, 2012. Op-ed contributor Thomas Kleine-Brockhoff says: 'The heart of the problem in Europe and the US is the same: Citizens are demanding services from their governments that they are not willing to pay for.'

Sebastien Pirlet/Reuters

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For years Europe has been pilloried by politicians and commentators for its perceived mismanagement of the euro crisis. Always a day late and a euro short, the old continent was addicted to last-minute temporary fixes, to piecemeal and half-hearted approaches. Analysts chided the European Union for its lack of leadership and incompetence. So systemic was the dysfunction among the EU’s 27 member countries, or so the narrative goes, that it could never happen in a determined nation-state like the United States.

Well, think again.

Welcome to the land of cliffs and other obstacles, in which crisis management looks frighteningly similar to Europe’s. So similar indeed that the British magazine The Economist found it appropriate to call the Jan. 1 “fiscal cliff” deal, “America’s European moment.”

If anything, that’s an understatement. It is not just a point in time when America looks like Europe. The future will provide for an extensive pattern of similarities with Europe. Like it or not, coming into stark relief is the truly transatlantic nature of this crisis – the parallel way in which these two different democratic systems grapple with identical problems, and perhaps even learn from each other.

Notwithstanding differences in economic structure and governance, the heart of the problem in Europe and the US is the same: Citizens are demanding services from their governments that they are not willing to pay for. Politicians have increasingly filled this gap by incurring debt. Demographic change and the shift of economic vibrancy away from mature western democracies dramatically aggravate the problem. In theory, the solution is clear: Improve competitiveness and growth potential, introduce fiscal prudence and reduce government services.

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