It began with the euro. The euro was a cherished project of European elites, deeply distrusted by the general public. It should be obvious by now that the ignorant masses were right and "enlightened" elites were wrong about the euro -- it really was an intolerable violation of national sovereignty. Granted, the public was right for the wrong reasons. In the absence of a trans-national currency, the most stressed countries can let their currencies fall and export their way out of trouble. The process is painful, but not disastrous. It also violates elite and public intuition, which says that falling currencies are bad and to be avoided. But being wrong about the euro is forgivable. Everyone is wrong sometimes. Refusing to undo the euro is forgivable. The process might be so messy that even the current situation is preferable. But goddamit, even countries like Poland that benefited from not being in the euro want to get in. Even Iceland, which not only benefited from being outside the euro, but had a semi-revolution, wrote a new constitution, and prosecuted the bankers, the @#$%^!! authorities still want to get into the euro!
Since the crisis broke, mistake has compounded mistake, following a familiar script from Europe in the 1930's, Latin America from the 1980's, Asia from the 1990's, etc. Each time, conventional wisdom has called on countries facing massive capital flight to put wooing capital at the top of their priority list. Cut spending, shred the safety net, fire everyone with a good paying job, make sacrifices and ever more sacrifices, inflict general economic devastation on one's self to win the approval of international investors. Yet inexplicably, no one ever seems to want to invest in economic devastation. This is conventional wisdom. All respectable people agree to it. Is it any wonder, then, that if the only people who question the need to keep following failed policies, to keep inflicting ever more pain, to insist that lowered bond ratings are the be-all and end-all and that the human consequences are of no importance, are well outside the respectable mainstream, that such parties are gaining in popularity?
People are forgetting the whole purpose of the European Union in the first place. It grew out of the horrors of WWII and the hope that closer integration would prevent future wars and nationalism. But then again, the horrors of nationalism, of fascism, and (ultimately) of WWII arose from the Great Depression and the conventional wisdom among all respectable people of the day that more sacrifices and ever more sacrifices were what was called for. When respectable people could not deliver, but public turned to the disrespectable -- to fascists and other dictators. Is that what we want to see happen again?
I outsource my comments to Paul Krugman:
[T]he European elite remains deeply committed to the project [the euro and European Union], and, so far, no government has been willing to break ranks. But the cost of this elite cohesion is a growing distance between governments and the governed. By closing ranks, the elite has in effect ensured that there are no moderate voices dissenting from policy orthodoxy. And this lack of moderate dissent has empowered groups like the National Front in France, whose top candidate for the European Parliament denounces a “technocratic elite serving the American and European financial oligarchy.”I also highly recommend this piece on how the center-left is committing suicide by insisting on placing European integration ahead of domestic well-being.