Greece and the Tri-lemma
I am a proponent of globalization and I’ll admit that my understanding of financial markets is exceedingly limited, but I have a hard time disagreeing with Dani Rodrik’s claim that democracy, the nation-state, and globalization are incompatible and that we can, at most, have only two at one time. I’ve certainly had similar thoughts before, albeit obviously far less developed than Rodrik’s. Rodrik argues that a major reason the Greek crisis has become such a problem is that the EU is still too undeveloped to have properly responded to the crisis, while Greece is still too democratic to do so. In other words, a key aspect of the problem is that the EU system attempts to retain democracy and national sovereignty while attempting to create an integrated economy.
Chris Bertram adds a giant caveat to Rodrik’s thesis, noting that Rodrik cannot merely be referring to “democracy” as a set of procedures but must also be referring to a system in which groups are politically mobilized and capable of exerting overwhelming pressure on political institutions.
I suspect Rodrik’s thesis explains quite a lot, actually. I think, for instance, it explains why the American Right is as likely to oppose free trade policy as the American Left, at least when the issue is presented without reference to partisan positions. I suspect that the division on views of trade policy is roughly the same on both sides, with the wealthier and more elitist elements of the Right and the Left willing to forgo either democracy (most often on the elitist Right) or national sovereignty (most often on the elitist Left), while the working class elements of both the Right and the Left reflect the more populist preference for national sovereignty and democracy (in my experience there are typically few who wave the American flag more proudly than your average union member, and there are few who cloak themselves more proudly in the rhetoric of democracy than your average anti-UN movement conservative).