The technocrats’ populist

Anyone who is serious about democracy in Europe will need to think long and hard about yesterday’s Greek election result. Syriza’s rise to political influence in Greece has been a disaster for democracy. Syriza’s major political achievement has been to depoliticise the Greek people, to convince them openly to agree to being ruled by someone other than their own elected representatives.

The turnout at around 55 per cent was low. This should not come as a surprise. Local authority elections generally have lower turnouts and, since Alex Tsipras had already signed away Greece’s sovereignty in the bailout deal in July, Greek voters were being asked to vote for a government with the powers of a local authority. The largest group of voters supported Tsipras’s Syriza party, endorsing the view that austerity implemented by a party that claims to be against it is the best that can be done. As low political horizons go, these are minimal indeed. The idea that the Greeks’ should have a national government accountable to themselves rather than to the Eurozone was marginalized, with the breakaway Popular Unity party achieving less than three per cent and no seats in parliament.

Alex Tsipras has pulled off a remarkable political feat. He now has the opportunity to become the modernising new broom in Greece, a new broom to be wielded by the Eurozone’s technocrats. And he has done that off the back of months of militant populist posturing in the bailout negotiations. How has he achieved that this astonishing volte face? The pivotal moment was his U-turn after the No vote in July’s referendum. Having mobilized the Greek people for a show of defiance, he then cut the ground from under it by immediately agreeing to what the Eurozone wanted. To many this looked like a betrayal of the party’s anti-austerity mandate. But Syriza came to power in January on a contradictory political platform of no to austerity, yes to the Eurozone. Tsipras has exploited that contradiction effectively. He survived the U-turn because having led the Greeks to make a show of defiance in the referendum, they were prepared to resign themselves immediately to the bailout deal since that was all that was on offer from the Eurozone, they were committed to remaining within. And, having survived that, Tsipras has now renewed his mandate by decisively seeing off the anti-Eurozone left in his own party. The Greek people have in the process openly endorsed a political arrangement in which their government will be the servant of distant, unaccountable powers.

It would be a mistake however to attribute Tsipras’s achievements only to his political cunning and skill. No doubt he has some of these talents, but it has to be recognised that he owes his current position to the fact that the wider Greek left was in no position to give the Greek people any confidence in their own capacity to take their political destiny into their own hands. The left was unable to inspire the Greek people to free itself from the clutches of the European banks that are demanding and, courtesy of the Eurozone, getting kilos of its flesh. The left was unable to give a lead with a clear independent platform that explained what a disaster Syriza’s contradictory position would prove. As a result, when the crunch came in July, Greek citizens had nowhere to go, except to make their show of defiance and then resign.

The politics of the Greek bailout involve the relations of a small, peripheral European nation to the Eurozone. By contrast the politics of the forthcoming British referendum involve the relations of a major European nation to the EU. There are significant differences between the two situations. However there is one critical question that is common to both. Are our governments to be accountable to us, their citizens, or will we allow them to be accountable instead to other European governments before they are accountable to us? For the process of insulating governmental decision-making from popular accountability is common to both the EU and the Eurozone. The left’s problem with inspiring a self-confident democratic movement is far from unique to Greece. With Jeremy Corbyn’s Labour Party opting to subordinate domestic political accountability to the EU apparatus, the Greek debacle demonstrates the urgent need to begin to address the left’s historic failing and to make an unambiguous case for the sovereignty of the people.

Peter Ramsay

What German Left? (Part 1)

Guest post by Phil Mader, researcher in sociology at the University of Basel, Switzerland, and an editor of the Governance Across Borders blog, www.governancexborders.com.

TCM’s launch article for this occasional series argued that today’s German Left was more German than Left. It would be hard to disagree. However, equating the German Left with the SPD (as the article mostly did) offers too narrow a picture. It’s not easy to say what’s Left (and left) of the traditional social/Christian democrat divide in Germany, so for the sake of a tour d’horizon, I’ll attempt an overview of the factional positions and various counter- and cross-currents rippling across the left-of-centre political spectrum in Germany. Marx and Engels bitingly remarked in the German Ideology that “The thoughts and actions of the foreigner are concerned with temporariness, the thoughts and actions of the German with eternity.” They were, of course, criticising their contemporaries, but the statement retains validity for both the tamer and the more radical elements of the German Left, the former being more concerned with the permanence of the German model than Europe’s present ailments, the latter preoccupied with more abstract matters than the current impasse. This first article deals with the moderate parliamentary Left: the Social Democratic Party (SPD) and the Green Party (Die Grünen). The next examines the leftier Left: the Linkspartei and the extra-parliamentary Left, including the trade union sector and the autonomous movement.

Overall – as in most parts of the Western capitalist world – the past thirty-odd years have shifted the general parameters of party politics in Germany to the right. However, the failure of the German Left to advance solidarity in the banking-cum-Southern European debt crisis has specific Germany-rooted causes. Partly of course economic profiteering plays a role, but ideologically for the vast majority (far into the Left voter spectrum) the only possible narrative of the Euro crisis is that of economic virtue versus immorality. Mirroring the overall rise of a new nationalism, for many in Germany southern Europe’s woes are a welcome confirmation of Germany’s own virtue. Its model for the past 20 years has been the astonishing, perhaps even historically unique, cumulative wage repression amounting to 79 percent of GDP (since 1995), while private debt levels remained among the lowest and steadiest in Europe.

German popular wisdom on southern Europe is embodied in the figure conjured up by Merkel of the proverbially frugal, economically savvy and morally virtuous “Swabian housewife” who knows that you can only ever spend as much as you have. Germany’s current relative economic stability in terms of high capitalization, continued export success, and moderate unemployment (7 percent officially; but 1.4 million Germans receive wage subsidies and 900,000 are temps) appears a late reward for this “wisdom”, while tabloid tirades against lazy, scheming “Pleite-Griechen” (“bankrupt Greeks”) offer rhetorical solace to a populace which has stolidly borne the clear-cutting of social insurance and creation of a new lumpen-precariat, publicly reduced to rummaging in bins for bottles worth 8 cents deposit. Given this combination of base and superstructure, political acts of solidarity with Southern Europe are risky enterprises for any force vying for power.

Not that, under normal circumstances, Germany’s social democrats would be too keen. Far more than Britain’s Labour Party or France’s Socialistes, the SPD has a history of organic alliance with conservative elites, supporting the national cause in decisive, difficult impasses: Lasalle’s anti-communism, the SPD’s “yes” to war bonds (1914), Ebert and Noske’s violent quashing of the revolution in 1919 and 1920. Since World War II, the SPD’s two defining moments in government were Willy Brandt’s rapprochement (conservatives labeled him a traitor yet reaped the later rewards of a smooth incorporation of the East) and the Schröder government’s early 2000s “Hartz” tax, welfare, and labour market reforms, which cut deeper through the social safety net in one electoral term than Kohl ever attempted in four.

At the ballots, the Social Democrats have fought a losing battle ever since, clinging to diminishing remnants of power. After the last election in fall 2013, Social Democrat leaders never considered a possible “Red-Red-Green” Left majority, quickly choosing instead to repeat their “grand coalition” with the CDU (and making Linke and Bündnis 90/Die Grünen the smallest opposition ever in the German Bundestag). One effect of the SPD’s preference for centrist coalitions has been that any political achievements it can show increasingly bear the CDU’s stamp. For instance, the two social causes it championed in the last election – a universal minimum wage and dual citizenship – are materialising as barely recognizable compromises. Over one third of employees who should have benefited from the minimum wage of €8.50 per hour (before tax) will be exempt, and those previously unemployed for over one year are additionally excluded. Dual citizenship will be restricted to Germany-born-and-raised children, bound by strict rules of residence and discriminatory clauses. Despite occasional back-bench grumbling, today’s SPD solidly remains in the hands of Schröder’s successors – foreign minister Steinmeier and a still-powerful Peer Steinbrück – and their political stepchildren, Sigmar Gabriel and Andrea Nahles. This leadership is committed to defending and cementing the turn-of-the-millennium reforms, the undoing of many of which would be conditional for any partnership with Die Linke.

The SPD has thus become a party without a cause, and though much the same may be said for Merkel’s CDU, the conservatives retain a final trump card: values. That, together with SPD cadres’ mortal dread of sharing anything – even opposition – with the Linkspartei, explains its hunger for “scraps at the table” (TCM). SPD stalwarts still resent the treason of the Lafontaine-led Left breakaway which created today’s Die Linke (more in the next article). Conservatives’ praise for Schröder’s and Fischer’s reforms, meanwhile, has been ample, nurturing a genuine, helpless affinity among Social Democrats across the centre aisle (“nobody except the CDU understands us”). More than once, lately, political commentators have sounded the SPD’s death knell; its aging faithfuls have kept its vote share between one quarter and one fifth, but its decline into insignificance is increasingly a real possibility. Neither going forward – devising or embracing more liberal reforms – nor back – recanting Schröder’s legacy and ousting his disciples – are emerging as practical options.

The Grünen, meanwhile, whose entire history since 1980 has been an intense identity struggle, are currently the most dynamic and growing political force in Germany (aside from the right-wing anti-Euro AfD). The Greens are rapidly eating into the SPD’s share of the vote, as well as attracting middle-aged, middle-class, socially and economically liberal voters from all camps; each successive shift away from its militant roots to the organic food liberalism of an eco-bourgeois party has rewarded internal “reformers” against the resistance of party “Fundis”. Die Grünen now even head the state government, of all places, in conservative Baden-Württemberg, ruling with the SPD as their smaller partner. Having won the election on a tide of popular outrage against a major railway infrastructure project (hardly their core ecological agenda) this geographic shift of the Green heartland south-west illustrates its programmatic metamorphosis. The change is personified by Winfried Kretschmann, one-time student radical turned proudly Catholic eco-libertarian schoolteacher, who heads the government. He embodies a transformation within the Green party as profound as the one once undertaken by Joschka Fischer.

The party’s recent change in leadership has cemented its trajectory towards the centre, further increasing the likelihood of a green-conservative love marriage after 2017, should the SPD flag as Merkel’s partner. The Greens supported the balanced budget amendment which enshrined austerity in Germany’s constitution with far less groaning than the SPD (only Die Linke opposed). A series of state-level coalitions (most recently in Hessen) have demonstrated the viability of such coalitions which on a newly-demarcated political centre ground.

Thus, for different reasons economic support for Greece or Portugal – let alone visions of a more thoroughly redistributive Europe – are not on the menu of the traditional centre-Left in Germany. Protection of the German economic model remains both the SPD’s and Greens’ priority, albeit with two different flavours, both oddly palatable to the conservative majority: first, a productionist economy of wage-moderated full employment in collaboration with national capital (the SPD/“Volkswagen” model), or a fiscally sustainable eco-libertarian economy of green technology leadership (the Greens/“organic growth” model). Neither envision overcoming Europe’s impasse by addressing the imbalances which Germany brings to Europe. The next article will explore the possibilities for such progressive politics further on the Left.

The Future of Work

TCM editor, Alex Gourevitch, will be speaking with Kathi Weeks, author of The Problem With Work, about ‘The Future of Work‘ this Sunday at PS1. It is part of Triple Canopy’s ‘Speculations on the Future‘ program. In advance of this event, we thought it worth laying out a few facts relevant to the discussion. While we have spoken about some of the political questions at stake in the work/anti work debate (here, here, and here), those were relatively fact free speculations. And necessarily so. The issue at stake was hopes and desires for the future, and the organizing aspirations for a possible left. These discussions, however, can always do with a small dose of vulgar empiricism. A brief look at some relevant facts suggests that the most likely, if not most desirable, future of work is roughly that of increasing dependence on the labor market and lower quality work for most people. One word of caution: the data is limited to the US and Europe, entirely because that is our area of expertise and where the data is most readily available.

Although every so often there are breathless declarations of the end of work, the collapse of work, and that technology is leading to a world without work, the historical trend is the opposite. Ever since the 1970s, an increasing share of the population has been working. For instance, the graph below shows the employment to population ratio in the United States. Notably, even after the dramatic post-2008 decline, a higher percentage of Americans still work in the formal labor market than anytime before the mid 1970s. Similar survey data from Eurostat of all people between ages 15 and 64 shows, wherever data is available, that there have been dramatic or gradual declines in ‘inactivity‘ or non-participation in the labor market. In Germany, 35.9% of 15 to 64 year olds were inactive in 1983 while in 2012 that number had sunk to 22.9%. In Spain the drop was from 44.1% in 1986 to 25.9% in 2012. For France, 31.6% (1983) to 29% (2012), and the UK 29.1% (1983) to 23.7% (2012). The Netherlands saw the largest decline from 1983 to 2012, from 41.4% to 20.7%. The most likely future of work in the US and Europe is that more people will be working for wages or salaries than ever before, as absolute numbers and as a percentage of the population.

Three recent changes to the political economy suggest not only increased participation in, but greater dependence on, wage-labor, especially by those on the bottom end of the labor market. These are a) stagnation or reduction of welfare benefits, b) stagnation or decline of wealth and c) stagnant wages and precarious employment. Welfare and wealth are alternatives to wages as sources of consumption; lower wages and precarious employment increases insecurity of and need for employment.

For instance, in the case of welfare, the stagnation or reduction of welfare benefits means that states offer the same or worse benefits to those who cannot find or live off a job. This is consistent with increased numbers taking advantage of these benefits. For instance, recent reports made much of the 70% increase in Americans using food stamps, which represents a doubling of the amount spent on food stamps, since 2008. But food stamps alone are hardly enough to live off, and their increased use reflects the increase in unemployment. More broadly, American welfare benefits are not enough for most people to live off, many states recently cut benefits, and the welfare system is famously designed to spur labor market participation, not provide an alternative to it. Moreover, in Europe, where welfare benefits are more generous and less conditional, the consequence of austerity policies is, at best, to limit the growth of any such programs and in various countries to reduce or even eliminate them. Cuts to public employment and hiring freezes, increases in retirement age, and other measures mean the reserve army of labor will be larger, and most people will have fewer/poorer state provided alternatives to finding a job.

Finally, the increase in part-time, low-wage work, alongside stagnant or declining wealth at the bottom, further entrenches labor market dependence. We were unable to find longitudinal wealth data on Europe, but in the United States we have seen net declines in wealth for the bottom 60% of the population.

Since wealth assets are not only an alternative source of income, but also, in the US especially a source of retirement income, this means greater dependence on the labor market for the working age population, as well as postponement of retirement, further swelling the ranks of the labor market. On top of which, wages remain stagnant and full-time work harder to find. Jobs are low-paying, part-time, and insecure and once one starts looking not at median but bottom quintiles, the situation is only worse. These trends are equally evident in Europe, where part-time, less secure employment has increased in places like the UK and Netherlands, alongside the more often commented increases in unemployment in places like Greece, Spain and Portugal.

In all, then, we can say that alternatives to employment have gotten worse or disappeared for the majority of people in the US and Europe, while the available jobs pay, on average, less than they used to and offer less security. There is every reason to think that the most likely near future of work will give us strong reasons to think about a different way of organizing work – about a better, if less likely, future.

Specterless Europe: What is the problem to which Europe seeks a solution?

A crisis of confidence says ECB President Mario Draghi, and just about everyone else. Confidence is lacking in the ability of eurozone countries, especially in the south, to pay back their debts. According to Draghi, as quoted in the Financial Times, “the most important element to start restoring credibility” and confidence is…you guessed it, austerity. The outlines of the new “fiscal compact” includes, first and foremost, agreement on “strong rules on public finances,” and stronger European control and enforcement of national budgets. The nature of this enforcement, and the punishments it will entail, are still in formation. The differences between Merkel and Sarkozy over the amount of budgetary control to allow national governments are familiar, though increasingly appear as the narcissism of petty differences.

After all, the underlying agreement about how to ‘restore credibility’ is striking – more Europe, more technocratic control, more budgetary austerity. There is no serious threat of exit from any national leadership, no major political or social movement directly addressing itself to the constraints of the eurozone or the imposition of austerity. The Spanish indignados have faded, Greek protesters pushed aside, with both countries electing conservative or unity governments to push through cuts. The closest thing to a direct mass challenge has appeared outside the eurozone, in the form of the one-day national strike against pension reductions by public workers in the UK.

But in what way is greater technocratic enforcement, at the European level, of budgetary limits a means to ‘restoring credibility’? After all, balanced budgets here are not ways of increasing productivity and restoring growth. The underlying structural problems in the economy not only remain but will be made worse in the short run. The eurozone is already in zero growth. Greece, as it prepares another round of cuts, revised growth downwards. Italy was already running a balanced budget before the sovereign debt worries emerged. But given 5% real interest rates, it would now have to run a 5% budget surplus – a surplus increasingly difficult to maintain under contractionary fiscal policies. Contraction slows growth, creating new need for more cuts to please creditors. Overall, then, the two major obstacles to economic growth, and thus ability to repay debts, are being reinforced: the monetary union, and fiscal constraint. From whence comes the ‘restored credibility,’ the new confidence?

What we are seeing is not what one might call ‘economic’ confidence, based on restoring economic fundamentals, but ‘political’ confidence. Measures, implemented by ostensibly neutral technocrats, are aimed at creating a new supranational political technology of social control, wherein investors in debt are given greater confidence that their claims will be given priority in any struggle over the stagnant or shrinking pie. The flash in the pan, halcyon days of the bubble, when a rising tied lifted all boats are gone. This is a struggle over a stagnant surplus. The new confidence is in who will control political apparatuses, both at the state and European level, and creditors have clearly won this round. They have barely faced a challenge in spectreless Europe.

Guest Post: Europe and Democratic Funding

Editors’ Note: The European banking crisis continues to unsettle markets, and to raise serious doubts about not just the economic but also political future of current European institutions. As our guest post today by Anush Kapadia points out, underlying the turmoil is the achingly familiar ‘democratic deficit’ problem, but this time present in a new form. The basic democratic challenge this time reaches beyond the question of the EU’s institutional structure to the question of how its member states, and supranational institutions, relate to (financial) markets. As Kapadia points out, this democratic challenge, though it has special characteristics in the European case, is a general one facing any state seeking funding yet also seeking to retain enough autonomy to remain under the control of its citizens.

Europe and Democratic Funding

Anush Kapadia

The European crisis is one of legitimacy, not of the European project per se but of the financial fundamentals of moderns states. The lopsided nature of the European project merely serves to highlight the potentially undemocratic side of the financial undergirding of state power. It also foreshadows a potential solution to the problem.

It is not hard to notice that while scorn is routinely reserved for the unelected Eurocrats who want to squash national sovereignty, very little seems to be said about the legitimacy of unelected markets dictating terms to sovereign states. Morality, it seems, is on the side of the creditor: sovereigns, like us ordinary folk, should pay their debts.

But sovereigns, like people, have a responsibility to maintain their own autonomy to the extent they can. When governments fund themselves in ways that put their sovereignty at risk, they are abrogating their democratic duty. This is the double-edged nature of government borrowing: democracy can be aided by the flexibility and liquidity of marketing government debt, but beyond a point debt turns to poison.

So how can democratic states take advantage of the bond markets without being consumed by them?

The answer from creditor-morality is simple: don’t borrow beyond your means. And there is truth in this homily. The problem of course is that the very extent of ones means is subject to the judgment of the self-same creditor. To a large degree, solvency is in the eye of the creditor.

For any economic unit, the pattern of cash inflows rarely maps perfectly on to the pattern of cash outflows. Individual cash (dis)hoarding can of course mitigate this mismatch; what we call “banking” is merely the socialization of this liquidity-matching function: units with excess inflow lend to units facing outflow constraints via the intermediation of a bank. If the matching process stops, a borrowing unit’s cash commitments can swamp its cash inflows: the unit is dead. If your creditors stop rolling over your debt, the music stops very quickly indeed.

Prudence dictates that the unit steer clear of such peril. Yet when faced with myriad constraints, units will load up on credit if that dimension is eased. The market price of the unit’s debt is meant to be an indicator of proximity to peril. Yet as we have seen, this indicator is notoriously fickle: one day the unit is extremely creditworthy, the next day it’s bust.

Now especially if the economic unit is a democratic state, it has a solemn duty to avoid such peril. This means that it has a solemn duty to avoid fickle funding. And this in turn means avoiding the bond market beyond the point of prudence.

This is exactly what Europe has been groping towards, willy nilly. It is precisely because Europe lacks a common fiscal authority that it is seeking this solution. In so doing, it foreshadows a more democratic method of state funding.

Most see Europe as an unfinished federal project and indeed weak on that score. What they miss is that Europe is a new experiment in interstate relations, not a slow-motion rerun of US history. The people of Europe do not want to be part of a federal state. This is axiomatic; it renders the nation-state analogy for Europe nugatory. Our imaginations are constrained by this nation-state frame.

This national impossibility is what ultimately ties the hands of the ECB as an effective lender of last resort; its paranoid ideology is merely icing on the cake. A prudent lender of last resort mitigates the fickle nature of market funding by stabilizing the credit system as a whole when the market mood inevitably turns. This function can only perform its stabilizing work if it has credibility; it has credibility because it is backed by a fiscal authority.

Thus if the ECB were to act as an adequate lender of last resort in this crisis, it would implicitly call into being the absent European fiscal authority. And this cannot happen because the European people don’t want it. The Bundestag is merely the institutional expression of this desire. Of course, if the ECB acts as a lender of last resort in this crisis without at least implicitly calling into being a common fiscal leviathan, the ECB itself will take the place of the impaired sovereigns as the target for the markets. A lender of last resort without fiscal backing is not credible; the markets will gnaw away at it until implicit backing is made explicit. The assets that the ECB purchases will lose value to the point where the ECB’s own balance sheet will start to look shaky; the Euro itself would start to melt away.

Hence all the machinations around the EFSF (recent summit statement here). One can see how this institution might be the kernel of a common fiscal authority, at least in its borrowing power if not (yet) its taxation power. And that’s what the fight is about now. The Germans want to keep it small and limited so that it won’t prefigure some kind of common fiscal mechanism, but if it’s too small it’s not credible enough to function as a lender of last resort.

So no ECB, no EFSF. And the markets are completely roiled. Where oh where can a distress sovereign go for funding? China.

Well, not literally, but certainly figuratively. With the ECB and EFSF hamstrung because of the latent common fiscality they imply, Eurocrats have to find another set of balance sheets with spare capacity. This is where the special-purpose-investment-vehicle (SPIV) solution enters the fray.

Without getting into the details, there are two current plans to bolster the capacity of the EFSF (ignoring the somewhat loopy French plan to turn it into a bank): make it an insurance company or make it a kind of collateralized debt obligation (remember those?). There might be some combination of these solutions, but the latter is the one to focus on.

Floating a SPIV by the EFSF means that the latter would create and underwrite an entity that would issue highly-rated bonds; the proceeds of this sale would be used to buy encumbered sovereign debt. (Note: The same structure was used to by mortgages; the resulting securities were thus called mortgage-backed securities. The same tranche structure is envisioned here so that private money take come in and take the more risky elements of the vehicle). And who are the potential sources of funding for this vehicle? Sovereign wealth funds and other “international public investors.” The patient, institutional capital, in other words, not the fickle market money.

Since these new investors have very deep pockets and have their eye on the very long-term (some of them are sovereigns themselves after all), they are not subject to the same incentives as normal players in the bond market. The latter tend to be highly-leverage and work on the narrowest of margins. Having drastically underpriced sovereign risk, the fickle money markets are now drastically overpricing it; yesterday’s promise of growth has turned in today’s demand for austerity. Long-term investors look at long-term value rather than short-term prices; think Buffet rather than Bear. These investors would typically hold the bonds to maturity and can ride out short-term fluctuations because of their deep pockets. And at the moment they are getting a deal.

The absence of a common fiscal authority in Europe has lead to a credibility crisis at its heart. Most see the solution to this as an aping of the history of the nation-state: “build a fisc already!”, this position screams. But that way is closed to Europe. They are charting a new history.

Because of these constraints, the Europeans are finding that another route to stability is in effect to de-marketize some portion of their sovereign debt and place it with buy-and-hold institutions. What we might consider is that Europe’s ex post crisis response might be a way of insulating democratic states from the fickle markets ex ante.

The analogy with bank funding is clear: part of the problem with banks leading up to the crisis was that they were funding in highly liquid markets at ever-shorter maturities and in ever-greater proportions. This made them vulnerable to a run; subprime burst the bubble and the inevitable run followed. What is the proposed solution? Mandatory funding durations imposed by the regulators: long-term assets ought to be funded by long-term liabilities to the extent possible.

The state is a long-term asset, our long-term asset. It needs a funding structure adequate to its long-term democratic duties. A state simply cannot legitimately allow itself to be bossed around by the markets. This means that the state (and the banks it underwrites) should not be allowed to fund in fickle markets beyond a certain point; no matter how cheap and liquid this funding appears, the cycle will turn and austerity will result.

The East Asians learned this after their crisis and responded with cash hoarding. But this is globally suboptimal: banking was invented so that we wouldn’t all have to keep our cash under our mattresses. Better lend it out to those who need it; if we are long-term savers, we can afford to lock it up for a while.

That’s what pension funds do; that’s what sovereign wealth funds do. We know that how we fund our governments matters for its legitimacy, but our democratic common sense ties only taxation to representation. Yet the structure of state borrowing is equally critical. It is to this patient structure of funding that Europe’s experiment now turns, at least at the critical margin. There might be a lesson in there for all of us.