The Weimar experience in the 1930s illustrates the extent to which liberal-democratic constitutional systems can be undone as a result of severe economic collapse that destroys people’s livelihoods. One question for anyone interested in constitutionalism is whether any constitutional system can be designed which can make a society immune (or at least less susceptible) to extreme political shifts, either to the left or right. Equally, can we regard a constitutional provision such as balanced budget amendment as a reasonable attempt to make a country live within its means, or is it, in fact, a policy choice which politicians in the here and now have no right to impose on future generations?
Weimar is burned into the German psyche for very obvious reasons, but have the wrong lessons been learned? For Germany today, the dangers of getting into debt illustrated by the collapse of the Weimar Republic and the rise of the National Socialists was one reason for adding a balanced budget amendment to the Basic Law in 2009, which will become operative in 2016. The paradox, though, is that the anti-debt austerity medicine that Germany feels has worked for it, is causing severe socio-economic damage and political instability in southern European countries. When countries are being forced by other states to endure mass youth unemployment of around 50%, it is unsurprising that people will embrace more radical political options at home and see no value in an ever closer union within Europe.
What should a constitution do in times of extreme stress, and just as importantly, what should it not do? There ought to be enough flexibility in a system for governments to borrow money during a downturn to prevent it becoming a depression. Therefore, should a constitution which is intended to endure for generations to come bind those future generations and prevent them dealing adequately with the economic crises which will inevitably occur?
The concern is that the ‘fiscal constitution’ which Germany effectively imposed on southern Europe in 2011 in return for bailouts, and which it imposed on itself through the balanced budget amendment to the Basic Law, are causing huge deflation across Europe, and are preventing the countries in southern Europe from growing their way out of their debt predicament. The principle casualties so far have been centrist parties across the EU and particularly in southern Europe which have supported the fiscal straight-jacket approach favoured by Berlin.
Professor Keith Whittington of Princeton noted that “constitutions cannot survive if they are too politically costly to maintain and they cannot survive if they are too distant from normal political concerns.” (2007, p.26) For the countries and peoples of the eurozone, the constitutions which have to be maintained are not simply their own domestic ones, but the commitments arising from EU treaties and EU law.
A crunch is undoubtedly coming with respect to Greece and possibly some of the other indebted countries of Southern Europe which may well determine whether the benefits of remaining within the eurozone are worth the pain and political instability of maintaining Europe’s political and fiscal constitution. It may well be the case that Germany will blink first and do a deal to keep Greece in the eurozone to prevent the unpredictable consequences of a Greek default and exit which, as Barry Eichengreen notes, “would be Lehman Brothers squared” in terms of its likely effects on European and global financial stability. At that point money will likely flood out of all the banks of southern Europe, probably to the perceived safety of German and even UK banks. We’d then be back to the worst moments of the 2008 financial crisis.
This is where it is hard to see the logic of fiscal straight-jackets, whether they are imposed on southern Europe by Germany in exchange for bailouts, or by Germany upon itself through a balanced budget amendment. Germany is understandably wary of the dangers of debt because of its own history. However, Berlin’s ‘fiscal constitution’ is driving the PIGS states towards the exit and the eurozone towards a brick wall which may endanger the entire European project. Then, the political and economic cost of maintaining even the most well designed constitutions may just become too high.
David Miles is a Carnegie Scholar researching Anglo-American and German constitutionalism and is an Associate Fellow at the Centre for Global Constitutionalism. He is also Managing Editor of Global Politics Magazine and is a contributor for the Scotsman, the Daily Beast and Huffington Post.
Whittington, K, The Political Foundations of Judicial Supremacy, Princeton: Princeton University Press, 2007.