"May you live in exciting times" goes the old Chinese curse. For decades since the fall of the Iron Curtain, most of us in Europe and the west have lived under a stable regime oscillating between centre-left and centre-right parties. If not in a two-party system like here in Malta, then in a system of political alliances dominated by centrist blocks.
This edifice that has been steadily eroding now shows signs of accelerating collapse. In Italy, France, Spain, Portugal and Greece parties that once dominated the political scene now share the opposition benches with their former rivals or share power with upstart new parties. In the United States and the United Kingdom old parties have been taken over from the inside or split down the middle and in Germany the establishment hangs by a thread.
The trend is clear; the dichotomy of centre-left and centre-right politics is at an end and voters are binning old parties for radical agendas and a return to ideology.
Ideology has always been a part of politics, but in the post cold war west it had become something of an after-thought. You could vote for a moderate that promised to increase the size of government through borrowing or for another moderate with the same plan and slightly different priorities.
This lack of differentiation must have bored many voters. However, until recently they mostly shied away from ideologically consistent parties like communists, anti-immigration parties and independence movements. These parties were always there and always had radical agendas, so why is it only now that the centre is being dumped for the fringes? Why is this happening in so many different countries at the same time?
Of course, sometimes the zeitgeist just happens to blow the winds of change in a particular direction, and future historians can only speculate and argue among themselves as to why a particular thing happened when and where it did. But to me it is quite clear what is going on, and understanding the cause of this transition does not fill me with hope for the future.
A similar thing happened before, not too long ago. After the Great Depression, many of Euorpe's moderate parties were defeated or taken over by radical agendas. The high unemployment and financial uncertainty angered voters who blamed their sitting governments for the malaise.
Voters punish the government and bring in the opposition. The opposition, also unable to magically improve the condition of the voters are also booted out. Voters start to cast their hopes further out as their frustration grows. Indeed it was common, as the Fascists and Communists knew, for the same voters to switch their vote from the far-left to the far-right and vice-versa. Such ideological inconsistency is actually consistent with the driver of their actions; frustration and desperation.
Hang on, you might say. Great depression era unemployment was massive and the world was gripped by a deflationary downward spiral. The economy in the west today might be a little flat, but we're not even in a recession, let alone a depression.
That's all true, however if you look beneath the surface of seemingly good ecnonomic data, a stealth depression lurks below and is entering its second decade.
Unemployment is nowhere as bad as it was in the depression, it is 8% in the Eurozone and below 5% in the US. However, that figure is misleading as it hides those who have dropped out of the labour force entirely and those who are underemployed. Shadowstats' more believable number puts unemployment in the US north of 20%.
Much worse are the governemnt's inflation figures. Hedonic substitutions, qualitative and seasonal adjustments allow governemnts to understate inflation. Their calculations ignore significant qualitative changes and shrinkflation. Here are some anecdotes: paying the same amount as you did last year for a new laptop counts as a massive saving as the CPU is faster. Your flight is €100 cheaper but the cost to add your seat, buy a meal and check in a bag are not captured in the goods basket. You pay 10% more for that bag of crisps, which now contain 20% fewer crisps.
This understating of inflation directly boosts GDP and gives the central banks cover to keep monetary conditions artifically easy. This easy money boosts asset prices which give an impression of prosperity and allows those who own assets to continue to live beyond their means. But what about those of us with no assets? Young people, loaded with student debt, look at house prices in dismay. They go to their part-time job and realise that at this rate, they will never move out of their parent's house. The parties of their parents created this mess, only the parties on the fringe are even willing to acknowlegde their plight.
So until we return to normal monetary conditions and suffer through the asset deflation we so desperately need, voters will continue to increasingly support radical agendas. There is no easy way out and it might already be too late, in some countries at least. The horses have already bolted and the best we can hope for is a rough landing and no wars.
Christchurch, UK, 2nd May 2019
This edifice that has been steadily eroding now shows signs of accelerating collapse. In Italy, France, Spain, Portugal and Greece parties that once dominated the political scene now share the opposition benches with their former rivals or share power with upstart new parties. In the United States and the United Kingdom old parties have been taken over from the inside or split down the middle and in Germany the establishment hangs by a thread.
The trend is clear; the dichotomy of centre-left and centre-right politics is at an end and voters are binning old parties for radical agendas and a return to ideology.
Ideology has always been a part of politics, but in the post cold war west it had become something of an after-thought. You could vote for a moderate that promised to increase the size of government through borrowing or for another moderate with the same plan and slightly different priorities.
This lack of differentiation must have bored many voters. However, until recently they mostly shied away from ideologically consistent parties like communists, anti-immigration parties and independence movements. These parties were always there and always had radical agendas, so why is it only now that the centre is being dumped for the fringes? Why is this happening in so many different countries at the same time?
Of course, sometimes the zeitgeist just happens to blow the winds of change in a particular direction, and future historians can only speculate and argue among themselves as to why a particular thing happened when and where it did. But to me it is quite clear what is going on, and understanding the cause of this transition does not fill me with hope for the future.
A similar thing happened before, not too long ago. After the Great Depression, many of Euorpe's moderate parties were defeated or taken over by radical agendas. The high unemployment and financial uncertainty angered voters who blamed their sitting governments for the malaise.
Voters punish the government and bring in the opposition. The opposition, also unable to magically improve the condition of the voters are also booted out. Voters start to cast their hopes further out as their frustration grows. Indeed it was common, as the Fascists and Communists knew, for the same voters to switch their vote from the far-left to the far-right and vice-versa. Such ideological inconsistency is actually consistent with the driver of their actions; frustration and desperation.
Hang on, you might say. Great depression era unemployment was massive and the world was gripped by a deflationary downward spiral. The economy in the west today might be a little flat, but we're not even in a recession, let alone a depression.
That's all true, however if you look beneath the surface of seemingly good ecnonomic data, a stealth depression lurks below and is entering its second decade.
Unemployment is nowhere as bad as it was in the depression, it is 8% in the Eurozone and below 5% in the US. However, that figure is misleading as it hides those who have dropped out of the labour force entirely and those who are underemployed. Shadowstats' more believable number puts unemployment in the US north of 20%.
Much worse are the governemnt's inflation figures. Hedonic substitutions, qualitative and seasonal adjustments allow governemnts to understate inflation. Their calculations ignore significant qualitative changes and shrinkflation. Here are some anecdotes: paying the same amount as you did last year for a new laptop counts as a massive saving as the CPU is faster. Your flight is €100 cheaper but the cost to add your seat, buy a meal and check in a bag are not captured in the goods basket. You pay 10% more for that bag of crisps, which now contain 20% fewer crisps.
This understating of inflation directly boosts GDP and gives the central banks cover to keep monetary conditions artifically easy. This easy money boosts asset prices which give an impression of prosperity and allows those who own assets to continue to live beyond their means. But what about those of us with no assets? Young people, loaded with student debt, look at house prices in dismay. They go to their part-time job and realise that at this rate, they will never move out of their parent's house. The parties of their parents created this mess, only the parties on the fringe are even willing to acknowlegde their plight.
So until we return to normal monetary conditions and suffer through the asset deflation we so desperately need, voters will continue to increasingly support radical agendas. There is no easy way out and it might already be too late, in some countries at least. The horses have already bolted and the best we can hope for is a rough landing and no wars.
Christchurch, UK, 2nd May 2019
TLDR: The transition to new political parties is a symptom of economic hardship
