Mario Draghi should take in a show.

Photographer: Thierry Carlier/AFP/Getty Images

A Broadway Musical's Lessons for Europe

Mohamed A. El-Erian is a Bloomberg View columnist. He is the chief economic adviser at Allianz SE and chairman of the President’s Global Development Council, and he was chief executive and co-chief investment officer of Pimco. His books include “The Only Game in Town: Central Banks, Instability and Avoiding the Next Collapse.”
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If you haven’t already seen the amazing Broadway musical “Dear Evan Hansen,” you should make plans to do so. The show features superb acting, directing, music, plot, singing and staging -- all in service to a story that speaks to us in many ways, and is easy to connect to. It may even have its greatest resonance for policy makers, and especially the dedicated technocrats at the European Central Bank.  

The plot involves an outsider who stumbles into a lie that grows bigger and bigger over time and, in the process, drags in more people. The falsehood is substantially fueled by the comfort and engagement it provides. It transforms society for the better, giving shelter and support to those who are close to the main character, Evan Hansen, or very loosely connected to him. The musical is a rich story of community, salvation, hope and mystery, as Evan Hansen goes from being an unknown and ignored outsider to an inspirational leader of a movement.

I am withholding further details to avoid being a spoiler. Suffice to say that the lie of the teenage title character cannot last forever, and when it unravels, the show’s plot takes another brilliant twist as the other main characters realize that their salvation isn’t in the world that Evan Hansen has created for them.

The musical makes audiences laugh and cry, but also reflect on their past, present and future. I found my thoughts wandering to the world of central banking and, in particular, the travails of the ECB.

Like Evan Hansen, the status of the ECB has evolved from relatively unknown outsider to inadvertent leader of a feel-good movement. Because of the actions of the central bank, many in the euro zone have gone from being financially unsettled, if not panicked, to regaining their composure and hope for the future.

Also like Evan Hansen, the ECB also stumbled into its role and the power that comes with it, as its influence and involvement grew well beyond anything it had ever imagined. And every time it hoped to disengage, it got pulled in deeper, with an ever bigger community relying on it.

No matter how hard they try -- and they have been trying very hard -- the committed central bankers at the ECB cannot produce what Europe needs most for durable economic and financial well-being -- that is to say, sustainable high and inclusive growth. No matter how much they experiment and how deep they venture into “unconventional policy,” their tools are fundamentally ill-suited for the task. The well-being of Europe depends on the actions of others. As a result, like Evan Hansen, the ECB must often wonder about the risk of a messy unraveling. 

The brilliant ending of the musical is a timely reminder that there are ways to make the unsustainable into the sustainable without bringing down the whole edifice. It is something that can, and should happen, in Europe. But it requires governments to recognize the fragility of the euro zone’s current policy construction, and for them to do a lot more to improve it -- by adopting pro-growth structural reforms, engaging fiscal policy where there is room, granting debt relief where it is urgently needed, and progressing on strengthening the regional economic and financial architecture.

Europe may well need some sort of political surprise, to shock or scare governments out of a damaging mix of paralysis and complacency. Without that, European nations will fail to transition to high inclusive growth and genuine financial stability. And their fate will be a lot more painful than that experienced by Evan Hansen and all those who ended up relying on him.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Mohamed A. El-Erian at melerian@bloomberg.net

To contact the editor responsible for this story:
Max Berley at mberley@bloomberg.net