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For US and Europe, governance by brinkmanship

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In practice, reform is exceedingly hard in societies in which every bit of change will be resisted by some pressure group. In Europe, it’s even harder because the continent has a common currency, but lacks centralized institutions to steer fiscal policy among the 17 countries that use the euro. Therefore, the sole way of making change happen in Europe is “on-the-brink.”

Only when politicians look into the abyss, will they do what they would otherwise find too difficult to do. And they will do so repeatedly as long as the legislative package in front of them is never too big. Consequently, big-bang solutions are not possible, and may not even be desirable, given the needed impetus of crisis for political action.

Following this practice of governance by brinkmanship, the United States has Europeanized its crisis response by artificially erecting a number of cliffs, obstacles, and deadlines. No comprehensive solution is sought on any of these occasions. Every time a small solution is found, the public also recognizes that the big can has been kicked down the road. In the US, yet another showdown is just around the corner – raising the debt ceiling. The Congress seems to have adopted German Chancellor Angela Merkel’s much maligned step-by-step approach to Europe-wide problem-solving.

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