“Never let a serious crisis go to waste”. That was the motto of Rahm Emanue –then, president Obama’s chief of staff –in 2009. If Emanuel and Obama seized the crisis to make the reforms they wanted in the US still remains open to debate, but the sentence has since became some sort of golden rule in politics and, some will say, life.
So, what about the current crisis in Spain and in Europe? James Robinson, professor at Harvard and co-author, with Daron Acemoglu, of the best-seller Why Nations Fall, addressed the issue on Wednesday during a phone conversation with The Corner. According to Robinson’s reasoning, if we let the crisis go to waste, we will go to waste.
“All European countries bear some responsibility. If there is debt, someone had to lend money, and someone to borrow it. Therefore, political institutions play a vital role in the solution to this kind of problems.”
“Many people in the U.S. compare our times to the Gilded Age, when the so-called Robber Barons [the Rockefellers, Carnegies, Morgans, Mellons or Vanderbilts, to name a few] had an incredible political clout. Then, the Great Depression came, and the U.S. political system was able to produce, among other developments, the Glass-Steagall Act [which separated retail banking form investment banking]. The Act was very successful in creating a stable financial system. But the repealing of the Glass-Steagall in 1999 was decisive in the creation of the current crisis,” Robinson remarked.
Now the U.S. is letting a very good crisis to go to waste, because “nobody is suggesting breaking up any bank like they did with Standard Oil.”
When asked about Europe, Robinson is more pessimistic: “If a country suffers a big shock in its political and economic institutions, it can be tipped one way or another. To achieve a beneficial institutional change, you need a heterogeneous coalition of different groups, that often times have very little in common with each other, to force the right results. This is what happened in the United Kingdom in the 17th century, or in Brazil in the late 70s with the Worker’s Party. The opposite is Europe in the thirties, when the crisis begot Nazism and Fascism.”
So, let’s try to take advantage of the crisis. Otherwise, the crisis will take advantage of us. That will mean not only economic havoc, but, in the worst scenario, also a political catastrophe.