Are balanced budgets possible in democracies?

Sure enough, Mr. Juncker was afterwards thrown out by the Grand Duchy’s voters. Luckily for him, he was promptly appointed as president of the European Commission, one of the most powerful posts in the world, where he gets to combine executive and legislative power without having to worry about the electorate. You can see why he might not be wild about representative government. As he sternly told Greek voters at their recent election, “There can be no democratic choice against the [EU] treaties.”

Still, let’s do the bibulous Luxembourger the courtesy of taking his argument seriously. After all, plenty of people, not just Eurocrats, believe that the recent financial crisis exposed the limits of democracy. Left to themselves, the argument goes, people vote for higher spending and lower taxes, and then whine when the money runs dry. California is often held up as a case study on your side of the Atlantic; Greece on mine. Since people don’t understand macro-economics, we’re told, certain decisions ought to be entrusted to experts, such as European Commissioners or Central Bankers. Experts who, precisely because they are invulnerable to public opinion, can make long-term decisions.

So let’s ask the question: Are balanced budgets possible in democracies? Can people be persuaded to vote for what the Left calls “austerity?” Yes. In Britain, they just have. Five years ago, David Cameron inherited a deficit that was the same size as Greece’s. Now it has been more than halved, and the budget is expected to be in surplus by 2018.

Why did Britons, unlike Californians or Greeks, reject the high-spending parties? What was Cameron’s secret? The answer is slightly disquieting for small-government purists, including me. He took things slowly. Government spending was barely cut at all. Instead, the public sector was, in effect, frozen, while the private sector grew.

Over the five years of the last parliamentary session, state expenditure fell by a measly 2.9 percent. But because we Conservatives had to devote a huge chunk of the budget to paying interest on the previous government’s debts, and because like every other party, we had promised to spend more on healthcare every year, the reductions across the other departments were around 9.2 percent.

Still, over five years, that’s hardly radical: Any business would expect efficiency savings of that order. The “brutal cuts” which various trade unions have been marching against exist only in leftist fantasy.

But if the amount spent by the government barely changed, the proportion is falling sharply. When we took office, the state accounted for 44.8 percent of the economy; now, it’s 40.7 percent and, by the end of the current Parliament, it should be below 35 percent. Leave the state alone, and the private sector will eventually swallow it whole. Think of one of those Mayan ruins, the green spray smashing its way through the broken flagstones, the creepers choking the pillars. All you have to do is stop building; the rest follows.

So why didn’t it work in Greece? Not because the voters were given too much trust but, on the contrary, because they were given too little. When the EU assumed control of the Greek economy, it licensed Greeks to lose control. The current mess there wasn’t made by voters, but by experts: the dolts who insisted on creating a single currency for Europe (a project that had almost no public support) and then insisted on including Greece, despite its obvious unsuitability, because they liked the symbolism.

The sharpest contraction in their economy happened when their elected prime minister had been toppled in a Brussels-backed civilian coup, and replaced with an unelected banker called Lucas Papademos.

Remember that Bill Buckley crack about how he’d rather be governed by the first thousand names chosen at random from the Boston telephone directory than by the economics faculty of Harvard? Well, looking at what has happened in the Eurozone, he was right.

Had the euro never been launched — had we trusted the people rather than the experts — we wouldn’t be in this mess. Greece is not being ruined as a result of electing a far-Left government; it elected a far-Left government after being ruined by the ultimate bureaucratic project, the single currency.

The Nobel Prizewinning Indian economist Amartya Sen once said, “Don’t ask whether a nation is fit for democracy; it becomes fit through democracy”. He was right. Give people more responsibility and they will behave more responsibly. It has just worked in Britain. Who knows? It might even work in California.

Dan Hannan is a British Conservative MEP.