If elections were held tomorrow in half a dozen EU countries, according to current polls, the biggest single parties would be neither the traditional Christian nor social democrats of the centre-right and centre-left, but relative newcomers on the far right or hard left who have never been in government – from Greece and Spain, where far-left anti-austerity movements top the polls, to anti-EU, nationalist, anti-immigrant parties of the extreme right in France, the Netherlands, Austria and Denmark.…
The shift from two- and three-party systems to parliaments of five, six or seven contestants has been a long time in the gestation, but it has been jolted and fast-forwarded by the financial and debt crisis of the past four years. What started as a financial and currency emergency has morphed into a broader political, social and economic crisis, with Europe mired in stagnation and deflation, no growth, no jobs and the mainstream elites struggling to come up with answers.
“Many people have opted for different forms of political expression, first NGOs and more recently ad hoc internet-based campaigns: Facebook groups, Twitter campaigns, petitions, etc,” said Legrain. “Globalisation has also eroded the powers of national governments, shifting powers to financial markets and to the EU, causing a feeling of disempowerment and sparking nationalist and localist backlashes.”
Policymakers are sweating, struggling to be in command and control.…
Given the improbability of stable majorities, the elite response is to risk soldiering on with minority governments, as in Sweden and Denmark, or, increasingly, for the two big but shrinking centrist parties to form “grand coalitions” as the only option, as in Germany, Austria or the Netherlands.
But grand coalitions smother parliamentary democracy, policy is stitched up behind closed doors, parliaments become rubber stamps and populist rebels are strengthened, railing against the cosy, closed politics of the elites.The post-WWII order is breaking down as neoliberalism bites and democracy falters.
The humor and promise in this is that the Italian George Carlin, Beppe Grillo, is the leader of one of the populist parties. George died too young.
The most amazing part of all this to me is that the "failure of keynesian fiscal policy" during the so-called stagflation period was enough to totally upend the existing paradigm and replace it with our current sickly new mainstream consensus. Never mind that average real GDP growth in 70's beat the average real GDP growth of the "conservative miracle" in the 80's with Reagan and Thatcher.
ReplyDeleteIf a modest period of high growth, relatively high unemployment & high inflation is enough to completely alter the mainstream of economic and political discourse, how can this current train-wreck not do the same today?
How can the responses be so different?
Or the response after the 1929 crash compared to the big nothing-burger we got after the GFC in 2008?
Pressure from the bottom requires political engagement from millions of people driven to desperation. Pressure from the top merely requires money. The signs are not promising.
ReplyDeleteAuburn the gfc just really devastated the financial sector the other sectors have just kept chugging. .. (financial sector still not back but working on it)
ReplyDeleteI think your generation is getting screwed mostly by globalization. .. its depressing your all's wages as your generation has to compete with external nations for almighty USDs on unfair playing field... e.g. you all have to borrow USDs to fund your education while foreigners get free education....you all cannot save as incomes are too low, there are other injustices. ... too many to list.
Suggest beware that "banker hate" doesn't create cognitive bias and blind you guys/gals to the true systemic causes of your generation's plight...
You guys are going to have to give up on this current self interested generation in power and create a new future for yourselves that is just, efficient and most of all characterized by leadership that is very much smarter than the current one...
I think you guys can do it but you are going to have to throw a lot of the current thinking out first..
Rsp
I see there is a lot misinformation about what happens in Europe in mainstream media especally in the US. A peaceful demonstration by Belgian Unions with 100 000 participants is referred to as 100 000 rioting on the street and so on.It´´s a common pattern i noticed.They always find some 10 persons in such large crowd that throw eggs or something and get in on the frontpage.So check carefully and be sceptical on what is reported even by more "respectable" medias,it´s lot of "drama-scenarios" in the media outlets today.
ReplyDeleteI'm curious about how migration patterns within Europe have evolved and then also emigration out of Europe. Financial differences and fiscal constraints along borders should provoke the movement of people. I haven't had a chance to look through all the statistics, but the UK and Norway for example don't have fiscal limitations like Euro currency users but do have relatively open borders with Europe so their economies should have attracted EU migrants. And as with all immigrations, usually in the years following big inflows social strains will emerge as cultures clash and then there will be efforts to restrain immigrations.
ReplyDeleteJan, same in the US with US demonstrations. The media pick up on the few and sensationalizes it. I've been at such events and seen biased the media reporting about them. Fox News is just more blatant about it.
ReplyDeleteAuburn,
ReplyDeleteI agree with your first sentence.
Ryan,
There's been plenty of net migration from the rest of the EU to Britain over recent years. UK population is rising by VERY ROUGHLY 100,000 a year because of that. EU migration hasn't given rise to "clash of cultures", but Muslim immigration has, I'd say.
Auburn & Ralph,
ReplyDeleteI saw recently that the US ERISA law just had its 40th anniversary.
The passage of that law coincided with that "Keynesian rejection" so perhaps there is some causation to go with the correlation here. I.e. we've been saving too much.
Or at least the law has fomented high savings that the govt has not adequately offset with increased leading spending.
Rsp
Matt,
ReplyDeleteInteresting note about ERISA! Ironically, it was passed the same year as the Congressional Budget Act which established CBO and the Budget committees...talk about a double-whammy to aggregate demand!!!!
Justin here is a graph:
ReplyDeletehttp://allstarcharts.com/total-u-s-debt-as-a-of-gdp/
You can see the thing went asymtotic right around 1975-1980...
So this is retirement SAVINGS we see here...
Boomers lead edge was 30 in 1976... in 2011 they turned 65...
So they started to save for retirement at age 30 and the savings/deficits have added up...
Then, China got really interested in saving USDs post 2000.... started competing for USD balances with US domestic entities in earnest...
last year the deficit was 400B something and so was the trade deficit...
so nobody in US saved... boomers are moving into retirement so some late boomers might be saving yet but the lead edge is already dis-saving since 2011... so boomers net might be close to a breakeven now...
If the boomers start to spend down (dis-save) this savings in retirement and run it down to zero by the time they die, then we should see lower deficits in general... as the millenials dont have enough income to save we're giving their marginal USD income (which would be saved) to the Chinese instead.... the Chinese have much of the millenials USD savings...
And with the exporters desperately lowering their prices now to US customers in USD terms, the trade deficit should also collapse right with the forex rates..
So we should be moving into an era of generally lower deficits...
And people who look at the deficit as somehow indicative of current economic conditions will probably think "deficit too small!" ad infinitum....
We'll see... rsp,