WSJ | Radical parties rise when mainstream parties tolerate stagnation

Editorial Board, Wall Street Journal:

Syriza may fall short of an outright majority in parliament, which means it would need a partner to form a government. The most likely partner is the center-left Potami party, which exit polls show in a close contest with the neo-Nazi Golden Dawn for third place. Potami, which comprises for the most part professionals with little background in politics, is an explicitly pro-European party. That may temper Mr. Tsipras’s left-wing lurch.

The rest of the eurozone is less vulnerable to Greek contagion than it was two or three years ago, which may make Berlin and Brussels less willing to bend to Greek demands. But if they’re too inflexible, they could create the possibility of an accidental exit if Mr. Tsipras sees little alternative. The rest of the eurozone would survive but the breakup would still be ugly. The best outcome of a renegotiation would be more debt relief in return for more pro-growth reforms, rather than antigrowth tax increases.

The larger lesson for Europe is the volatility of politics without economic growth. Radical parties rise when mainstream parties lack solutions, especially when they see economic pain imposed from far-away capitals. Portugal, Italy and even France could see similar political uprisings if they don’t do more to break their unsustainable welfare-state models and adopt supply-side economic reforms.


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