Legend has it that Alexander Hamilton, the greatest technocrat among America’s Founding Fathers, described the fledgling nation’s people as “a great beast.” They “are turbulent and changing; they seldom judge or determine right,” he said on another occasion. Generally speaking, the first secretary of the Treasury of the United States was a lot more comfortable with the thought of bankers running things and the rich reining in what he called the “unsteadiness” of the masses.
There is a worrisome echo of Hamilton’s words in Europe today. Greece and Italy are trying to avert financial doom by throwing out their old governments and putting academics, businessmen, and bureaucrats in charge. The hope is that such a move will calm the markets, put a halt to runaway speculation, and reassure international financial institutions. The traditional politicos, having blown their budgets and maxed out their national credit pandering to the public beast, are pushed aside in favor of technos who supposedly have no interest in wooing the masses.
You could see this coming. Back in 2007, even before the global financial crisis, Luxembourg’s Prime Minister Jean-Claude Juncker famously summed up the reason his fellow politicians are so lacking in economic rigor: “We all know what to do, but we don’t know how to get reelected once we have done it.” The implication of this observation, now known as “Juncker’s curse,” is clear: when hard times hit, call in the wonks, who don’t really care what voters think. Prime Minister Juncker also currently serves as president of the Eurogroup of finance ministers that’s trying to hold together the EU’s common currency, and in his view the newly appointed prime minister of Italy, Mario Monti, is just “the man for the situation.” Monti, a university president and former European commissioner in Brussels, has never been elected to anything, much less run for reelection. In fact, none of the members of his new cabinet are politicians in the usual Italian mold. His newly appointed Greek counterpart, Prime Minister Lucas Papademos, has equally strong credentials as a Eurocrat and a technocrat: until last year he was No. 2 at the European Central Bank.
But there’s a paradox in this supposedly nonpolitical approach, and it’s potentially fatal to all the best-laid plans for fiscal and economic reform. In times of crisis, the great beast doesn’t just go away; on the contrary, it grows restive—and indeed, ferocious. Persuading the public to endure the rigors of the technocrats’ calculus is more a matter of politics than of mathematics. The original sin of European monetary union, as New York Times columnist David Brooks and others have pointed out, was to pretend that something so momentous could be handled by the elite at a purely technical level when there was no real political consensus for union. The problem right now—in Europe, the United States, and much of the rest of the world—is not a failure to make the numbers add up. It’s the lack of political leaders with the guts, the smarts, and the charisma to persuade their constituents to accept the painful bottom line.
Papademos’s predecessor, George Papandreou (himself the rather technocratic scion of what was once a rabble-rousing political dynasty), spent most of his last two years as Greece’s prime minister trying to convince the financial world that the Greek people would change, that they would give up what Jacques Delors, the former head of the European Commission, calls their “art of fiscal fraud.” The Greeks did not change. Instead, on the verge of national bankruptcy, they exchanged Papandreou for Papademos, as if his even-more-techno, even-less-politico résumé was a panacea in itself. Despite initial votes of confidence, the continued street protests in Athens and the reluctance of right-wing political leaders to commit to the new austerity package suggest that Papademos will be no more effective as a leader than Papandreou was. Perhaps even less, in fact, given the new prime minister’s lack of experience at swaying crowds.
With the advent of hard times and what seems an ever-bleaker future in the West, some commentators betray an ill-disguised envy of highly technocratic and highly undemocratic China. The economic growth machine there has become a juggernaut, not least because what the country’s technocrats dispose, Beijing imposes. But China is a very special case, and elsewhere the long-term record of technocracy conjoined with autocracy is far from encouraging.
Egypt is a recent case in point. In the decade before his ouster, Hosni Mubarak appointed a slew of well-respected technocrats to his government. On paper the country was prospering, even if the number of people growing rich was pitifully small. Year after year, the IMF could point with a patron’s pride to the macroeconomic gains made under the guidance of the technocratic prime minister, finance minister, and commerce minister, all widely respected in the business and banking communities. Foreign direct investment grew from $1 billion in 2004 to more than $13 billion in 2008, and growth was at 5.1 percent as recently as last year. The numbers looked just great, in fact, until the popular revolt that threw all of the those technocratic ministers out of office—and several of them into jail along with Mubarak.
Another example: Pakistan. The dapper, superrich former Citi banker Shaukat Aziz served as the country’s finance minister and handpicked prime minister under then-president Pervez Musharraf. From 2004 to 2006, he oversaw impressive GDP growth of nearly 7 percent a year, and the country enjoyed a consumer boom as Pakistanis splurged on imported goods. The telecom sector attracted hundreds of millions of dollars in foreign direct investment, and mobile-phone sales reached astronomical levels. Nevertheless, not one handset was manufactured in Pakistan.
Pakistan’s economic performance, and Aziz’s reputation, depended largely on foreign assistance from the United States, Europe, Japan, the International Monetary Fund, the Asian Development Bank, and the World Bank. Aziz spoke the moneycrats’ language, and they loved it—and yet the mass of people in Pakistan remained mired in poverty. Few new jobs were created outside the traditional textile sector. The need for infrastructure investment was ignored, even though it was clear that Pakistan faced critical shortages of electricity and water. In the name of economic modernization, the government launched a privatization campaign that turned out to be rife with corruption and favoritism. When a Supreme Court chief justice tried to crack down on the abuses and threatened his grip on power, Musharraf sacked him, setting off a political firestorm that helped bring an end to both Musharraf’s tenure and Aziz’s.
When a technocrat does manage to enlist popular support in a democracy, the results can be hugely positive. Indian Prime Minister Manmohan Singh, the quiet economist who has overseen his country’s transformation into a major economic power, is a frequently cited example. Another, more surprising one is Juan Manuel Santos. When he became Colombia’s president last year, he seemed to be a career wonk. The scion of an elite publishing dynasty, he had studied economics in the U.S. and London. Over the years he had headed the ministries of foreign trade and defense, but he had never run for elected office until 2010, when he launched his candidacy for president. He won anyway, which left him facing a daunting task: to succeed the highly popular, and controversial, Alvaro Uribe, who was accused of having trampled on human rights in the process of pacifying the violence-torn countryside. Critics scoffed that Santos would be undone by cutthroat legislative politics or else become a mere puppet for Uribe.
Santos proved them wrong. Channeling his inner politician, he made a point of working all sides of the congressional aisle to draft important government reforms. The result: Colombia is not only safer than ever but also the rising star of Latin America, with a booming economy, a functioning Congress, a free press, and a transparent legal system. And what made it all possible wasn’t Santos’s well-known mastery of numbers and policy minutiae, it was his hitherto untapped and unknown talent for strong political leadership.
Shall we talk about the United States now? Although no one seriously doubts that President Barack Obama understands the fine points of economic theory, he’s never quite gotten a handle on the politics of managing the economy. “It just feels as if people keep on wanting to jigger the math so that they get a different outcome,” he complained with a rather technocratic sense of irony after meeting with Asian leaders in Hawaii last week. “Well, the equation, no matter how you do it, is going to be the same ... Prudent cuts have to be matched up with revenue.” While that assessment may sound like plain common sense, Obama nevertheless has been unable to get Congress behind him. Instead he has delegated the critical details to a congressional “supercommittee,” which now seems deadlocked, leaving the president—and the country—in the classic technocratic bind: he knows he’s right, but he might as well be wrong, since practically nothing is getting done.
For the moment, however, Italy is technocracy’s acid test. Failure to stabilize the situation there could spell the end of the euro and set off a new crisis in the beleaguered global economy. Yet only hours after Monti named his technocratic government, it was taken hostage by Italy’s fractious political parties. Students protested in Milan, Turin, Florence, Bologna, Rome, and Palermo against this regime of “bankers.” And outgoing prime minister Silvio Berlusconi displayed no intention of retiring from the scene. “I support Monti,” said the billionaire libertine who’s governed Italy for most of the past two decades, “but I do not support oppressive austerity measures.” He made clear he still has enough influence in Parliament to “pull the plug” on Monti anytime he chooses.
There’s no question that Monti’s austerity measures will be unpopular. He’s vowing to find and tax the estimated 20 percent of Italian workers who are paid under the table. He wants to cut public-service jobs, and he’s hinted he would restore the property tax that Berlusconi abolished.
All of these measures will have a direct impact on everyday Italians. Many are complaining that they never voted for this government, which was appointed by Italy’s president and approved by Parliament, sidestepping the election process. “Right now we’ve got zero representation of the people,” says Mario Pacelli, who runs a coffee bar in central Rome. “The people feel detached from this government and out of the loop. At least when the people we voted into office make a mistake, we can hold them accountable. Who are these people accountable to?”
The great beast may not be roaring yet in Italy, but you can already hear it clearing its throat.