Παρασκευή, 29 Ιουλίου 2016

Why today’s politics do not mirror those of the 1930s



28/7/2016

By Jacek Rostowski*

Countries that have suffered most economically are not electing populists, writes Jacek Rostowski

The wave of populism in the western world which has given us Brexit, and may carry Donald Trump and Marine Le Pen to power in the US and France respectively, has been compared to the social forces which drove the politics of the 1930s. Increasing job insecurity or unemployment in Europe and the failure of median wages to rise for many years in the US are cited as the “root causes” of the phenomenon.

This is a “social-democratic” explanation of the current western political crisis. The suggested remedies that flow from it are also predictably social-democratic: reducing job insecurity and inequality, increasing social benefits, especially for those in work, and raising taxes. If you have no choice, reduce immigration before the populists do it for you.

However, the parallel drawn with the politics of the 1930s is overblown. Fascism in Germany and Austria and revolutionary leftism in Spain thrived as a result of truly extreme economic deprivation. Gross domestic product in Germany fell by 30 per cent after the Great Crash in 1929, and unemployment reached 6m. In Spain the Civil War was preceded by widespread hunger in the south and artillery shelling of striking miners in the north.

Today, by contrast, the economic performance of Poland and Britain, the two countries that have already succumbed to the present populist wave, is well above the average in Europe. Poland has been the EU star performer, with GDP growth of 28 per cent between 2007 and 2015. Contrary to the “social democratic narrative”, inequality in Poland has fallen. The real income of the middle 60 per cent of households has increased by more than 30 per cent and unemployment is at an all-time low of 6.3 per cent on the harmonised EU definition.

The UK has also done quite well, with German-style GDP growth and unemployment at 5 per cent, whereas the next country in line for a populist insurgency may be the US, which has performed far better since the crisis than Europe.

At the other end of the scale, the countries that have suffered most are not necessarily electing populists.Three days after the Brexit vote in the UK, Spanish voters increased support for Mariano Rajoy’s centre-right Popular party, in spite of a series of corruption scandals linked to it. In an even greater surprise, they gave the leadership of the left to the moderate, social-democratic Socialist party in preference to the far-left Unidos Podemos movement.

Yet, contrary to Britain, Spain has seen its GDP fall by a cumulative 8 per cent since 2007 and is hampered by unemployment exceeding 20 per cent (50 per cent among the young). Italy, with a similarly poor record of economic achievement has also, so far, resisted the temptation of Beppe Grillo’s Five Star Movement, opting instead for the moderate left-of-centre government of Matteo Renzi. Greece is, of course, the exception that proves the rule. The 25 per cent decline in GDP it has suffered is truly on the scale of the 1930s, so maybe we should not be surprised that it elected the neo-Marxist Syriza.

So what is happening, if the present populism is not correlated with unbearable misery, as it was in 1930s Europe? The alternative to the social-democratic explanation is a conservative one: populists are doing well in countries that are doing well, because voters there do not believe that anything really bad can truly happen. Why not “give the populists a chance” to fulfil their promises? After all, maybe they can deliver.

Indeed, the leaders of the Brexit campaign have been decidedly Pollyanna-ish in their confidence that Britain will thrive, trading with the world once it throws off the shackles of Brussels. The Law and Justice party in Poland has beaten the same drum: its main slogan is a straight translation from Barack Obama’s sunny “Yes we can” (“Damy Radę”). Hardly the stuff Mein Kampf is made of.

On the other hand, voters in countries that have suffered most from the crisis know that bad things can indeed happen. As a result, they have — so far — behaved more responsibly. Even the Greeks re-elected Syriza after it pragmatically chose austerity and reform instead of Grexit.

Unfortunately this conservative explanation is not much more hopeful than the social-democratic one in its implications for the future. We may not be reliving the dark 1930s. But the wishful thinking and irresponsibility of those in comparatively well-performing countries bears an uncanny resemblance to the way the nations of Europe, in the sunny early August of 1914 went off singing to war, convinced that “it will all be over by Christmas”.

* The writer is former deputy prime minister and finance minister of Poland

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