Calling the ECB absurd is not out of line

Daniel Drezner complains on his blog that James Surowiecki at the New Yorker is oversimplifying the euro crisis. In particular, Drezner takes exception to Surowiekci's claim that "the problem is not that the E.C.B. can’t act but that it won’t. The obstacles are ideological and, you might say, psychological." Drezner, putting on his hat as a political scientists, responds that "in labeling the problem as one of ‘ideology’ or ‘psychology,’ Surowiecki is explicitly arguing that it's just so absurd that the correct policy is not being pursued."

Although I am both a European specialist who is fully aware of the complexity of the euro crisis and a fellow political scientist, I am not all sympathetic to Drezner's argument. When governments are confronted with a problem that requires public policy to resolve, those governments are faced with different sets of interconnected issues. The first set are the policy issues that arise when you try to find alternative policies that will resolve the problem. The second set are the political issues that arise when actors try to choose between the alternatives and implement the chosen policy. Finding a successful solution to a problem requires overcoming the challenges presented from these different sources.

Surowiecki's frustration with Europe, which mirrors my own, stems from the realization that there are no significant policy issues related to the resolution of euro crisis. There is only one possible short-term policy solution — the ECB acting as lender of last resort — and both theory and experience predict it will work. Europe's failure to implement this solution is entirely the result of politics. Whether it is institutions, interests, or ideology that prevent Europe from acting, it is the politics not the policy that is to blame. It is not out of line to call this situation absurd because the failure by the ECB to act is foolish. It may be rational to the ECB, but a rational decision can still be absurd. And calling the ECB foolish may not help Europe, but it sure feels good if you are as frustrated as Surowiecki and myself.