Welcome to this series from The Tsunami is Coming: What Keeps You Up at Night?

This is a set of conversations in which experts and thought leaders name the shifts they see coming and the fractures in the status quo that haven’t yet made headlines.

Eric Mengus is an economist at HEC Paris, a colleague, and someone I’ve had the privilege of arguing with about public policy for years. The problem, he says, isn’t the debt itself but what the debt takes away: the ability to act when the next shock arrives. Energy prices spike, and you can’t subsidize. Defense needs surge, and you can’t invest. The instrument that democracies rely on to absorb pain has been hollowed out by decades of avoiding pain.

Everyone agrees on the diagnosis. The consensus isn’t the problem. In fact, the consensus is the problem: every voter, rich or poor, is convinced that fiscal consolidation will cost them specifically. A politician who runs on fixing the debt doesn’t lose one constituency. They lose all of them.

Is fiscal rigor the skeleton key to Europe, as some are tempted to argue? Give the Germans what they want (i.e. fiscal discipline), and the rest follows, or so the theory goes.

Eric’s response was more interesting than the claim itself.

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