In This Review

Austerity: European Democracies Against the Wall
Austerity: European Democracies Against the Wall
By Lorenzo Bini Smaghi
Centre for European Policy Studies, 2013, 151 pp

Smaghi, a former member of the executive board of the European Central Bank, examines the main characteristics of the European financial crises of recent years, focusing on members of the eurozone. The book offers a useful chronology and a clear exposition, in nontechnical terms, of the origins of the euro crises through 2012. Smaghi argues that most analyses of the eurozone’s problems and most proposed remedies have focused on the symptoms rather than the underlying causes of the crises, which lie in the failure of European democracies -- aging societies in an increasingly youthful, globalized world -- to adapt to fundamental changes at home and abroad. Such adaptation would offend cherished European beliefs and a deeply rooted sense of entitlement to public spending, which politicians, focused on staying in office, are loath to take on. Without being apocalyptic, the author argues that the survival of the euro will require ceding more authority to Europe-wide institutions and to the directly elected European Parliament.