How do people lose the right to govern themselves?
Increasingly, it’s as simple as allowing a government to spend more than it takes in for a few decades.
Deficits rise. A crisis forms. And at the very end, when the government is so hooked on money it’ll do anything to avoid spending cuts, control is taken away from the people’s representatives and handed over to anyone willing to keep paying the bills.
And usually, with strings attached.
It happened this week, when Congress passed a bill to create a board that has the power to restructure Puerto Rico’s $72 billion debt. And just in time: Puerto Rico was about to (and still might) default on its debt when a $2 billion payment is due on Friday.
Does the rescue package mean the loss of Puerto Rico’s right to govern itself? Puerto Rico thinks so. The territory’s governor, Alejandro Garcia Padilla, said one of the “downsides” to being saved by the U.S. is that fiscal decisions will no longer be made by local officials (the same people who screwed things up for so long).
“It creates an oversight board that unnecessarily undercuts the democratic institution of the Commonwealth of Puerto Rico,” he said in an op-ed for CNBC.
He has allies in Congress. Sen. Bob Menendez, D-N.J., argued for hours in the Senate this week that by saving Puerto Rico from its own fiscal disaster, the U.S. was trampling over the territory’s right to control its own destiny.
“The board would have broad sovereign powers to effectively overrule decisions by Puerto Rico’s legislature, governor and other public authorities,” he said.
It’s a curious reaction. Usually, the man who is saved from choking in a restaurant doesn’t complain that his rescuer interrupted his meal.
Still, the episode shows just how reluctant government officials can be to give up control, even after it’s been proven they have none. And it’s not a rare reaction.
Greece, which seems to be in need of a new bailout every summer, is taking orders from a body whose name seems to be lifted out of some dystopian novel you had to read in high school: the European Stability Mechanism.
Just last week, the ESM handed down its orders to Greece. The country needs to reform more quickly. The delays are a drag on the economy.
“Greece needs stronger ownership of the adjustment programs,” ESM President Klaus Regling said, putting a nation with a 4,000-year history in its place as only a bureaucrat could.
The story of Greece and Puerto Rico show that sovereignty is something that has to be earned, and that more and more governments are having trouble earning it.
Could it happen to the United States? As of this week, the national debt was $19.2 trillion, and all signs point to an escalation of debt in the coming years.
If the U.S. isn’t careful, Klaus Regling might soon be telling us, “The U.S. needs stronger ownership of the adjustment programs.”
