Around the world, the populist, ethnonationalist far right is gaining vote share — in some cases (ahem) even winning elections.
Also around the world, political observers are shocked — shocked! — that such anti-democratic impulses are gaining ground. But an important new study from three German economists suggests that these phenomena could have been predicted.
In fact, given the 2007-2008 financial crisis, they were virtually preordained.
First, an overview of the populist political rebellion.
On Sunday, Italian voters rejected a constitutional referendum widely seen as a proxy for establishment politicians. It was also a victory for a consortium of populist parties headed by the anti-globalist, anti-elite, Euroskeptic Five Star Movement.
The same day, Austria held its own highly symbolic election. The leader of the nationalist Austrian Freedom Party, Norbert Hofer, came astonishingly close to becoming the first freely elected far-right European head of state since World War II.
Hofer lost, but he still managed to claim a projected 46.7 percent of the vote. That’s the highest national vote share to date for his party — and, for context, higher than the percentage claimed by America’s president-elect. So it’s hard to argue that the threat that he and his co-partisans represent to a liberal democratic Europe has been neutralized.
Speaking of Donald Trump, he of course represents a tremendous victory for the self-described alt-right. This is a populist, white-nationalist movement in the United States, whose informal leader will soon hold one of the most powerful positions in the White House.
Likewise, in Britain, we can see the phenomenon in Brexit and the rising ethnonationalist, populist U.K. Independence Party. And across the channel, France’s anti-immigrant National Front is gaining steam, as is Germany’s comparable AfD party.
Some commentators have analogized this anti-establishment wave to that of the 1930s, when economic instability helped hardline populists gain popularity not just in Europe but also here in the United States.
That’s fair. But it’s also limiting.
According to the study I mentioned earlier — based on an analysis of 800 elections across 20 countries over 140 years — systemic financial crises have usually produced similar results. Indeed, the researchers find that several trends recur.
One, political polarization and fractionalization rise. The middle hollows out, and parties on the far right benefit more than those on the far left. In fact, on average, the far right sees an increase in vote share of about 30 percent in the five years following a financial crisis.
Two, governing becomes much harder, precisely because of this splintering. There are more political crises, and there’s more leadership turnover.
And three, social unrest — anti-government demonstrations, strikes, riots — increases.
These patterns generally do not occur in the wake of normal recessions or major macroeconomic shocks that are not financial in nature.
“People see financial crises as man-made disasters,” explains Moritz Schularick, an economics professor at the University of Bonn and study co-author. This means that afterward, there is a popular impulse to punish those thought to be responsible.
The scapegoats are often minorities and elites. As we’ve seen in the recent wave of global anti-elitism, casualties might also include incumbent political parties, central banks, experts, educated cityfolk and the foreigners both at home and abroad viewed as greedily nibbling on natives’ share of the economic pie.
Why does the populist far right profit more than the populist far left?
Schularick theorizes that after periods of economic uncertainty, people are drawn to the far right’s promises of law and order and financial stability, rather than experiments in wealth redistribution.
“They’re voting for reestablishment of order, whatever they perceive that to be,” he says.
This is, in my view, among the more tragic implications of this research.
Voters seek out law-and-order politicians precisely because the world has seemingly become so lawless and disorderly; yet those politicians are likely to produce even more chaos, uncertainty and instability.
This is true for Trump, who even before taking office has produced an international incident through his “courtesy call” from Taiwan, and whose domestic and international policies suggest more volatility to come.
And it’s likewise true for the anti-establishment, anti-system parties gaining ground across Europe, where they threaten to rip up international agreements and pull out of an already strained currency union.
The one silver lining buried in this depressing study? Right-wing populism may already have peaked. The researchers find that the political effects they document diminish over time, generally reverting back to pre-crisis conditions about 10 years after a crisis.
I wouldn’t exactly set your watches yet, but the latest global financial crisis began about nine years ago.