financial crisis was devastating to the world economy. Just how
devastating is something economists still argue over. It is not easy
to add up the costs of bank bailouts, a lost decade of economic
growth, spiking public debt, grinding
austerity, and surging inequality. But the biggest cost is
political: the populist wave has upending political systems,
empowering extremists, and making governance more difficult.
Polarization and Populismhas has lasted longer and done more
RISE OF THE RIGHT
The crash in 2008 and the subsequent
eurozone sovereign debt crisis led to crisis fighting as
long-standing two-party systems in France and Spain were swept away.
Far-right forces emerge and sometimes achieved major electoral
victories. Right tendency could be seen
advancing with the
Neo Liberal Reset 1980- 2008.
In 2015 our Going to Extremes:
Politics after Financial Crises, 1870-2014found that far-right parties are the
biggest beneficiaries of financial crashes as their vote share
increases more than 30 percent. Government majorities tend to shrink
making governing with more parties difficult. These effects are not
present in normal economic downturns.
People want to attribute blame,
and the right is willing to present scapegoats.they
are manmade disasters, people blame elites for policy
failures and cronyism causing the political system to lose
trust. Political entrepreneurs turn the people against the
"ruling class [oligarchs].”
Far left’s vote share stays
about the same. Social groups fear loss of wealth and turn
to right-wing parties for stability, law and order. It was
the German petit-bourgeoisie that enabled Hitler’s rise to
power and the middle and working class elected Donald Trump.
Right-wing populists exploit
cultural cleavages. They blame problems on foreigners and
supporters of this global elite. British Prime Minister
Theresa May said “If you believe you are a citizen of the
world, you are a citizen of nowhere.”
The left has traditionally taken
an internationalist outlook and usually avoids rhetoric
against foreigners and minorities. People want to attribute
blame and the right presents scapegoats: immigrants, China,
or the European Union.
THIS TIME IS DIFFERENT
It usually take 5 years for a
voting pattern return to normal, party fractionalization to
decreases, and the far right loses momentum. This time is
different. Ten years on, fractionalization, polarization,
voting are still present and establishment political
system stumble from one shock to another.
Left centered countries usually immune to
far-right politics are affected. In
right leaning countries populist
parties won elections in
India (2014), Poland (2015), Philippine (2016) and the U.S.
(2016). Right wing reelections occurred in Turkey, Hungary,
Austria, and Italy.
politics not returned to normal?
Populism is now a tried and
tested political strategy as leaders learned to use TV
and social media to enhance polarization and divisions.
Dissatisfied voters are given a sense of identity using
Nationalism. Simple language creates intimacy.
Populists are better at
surviving in power by cultivating their image as
outsiders even after they dominate the political and
business. Checks and balances are eroded as they take over
the media in the name of “the people. They choose
business-friendly policies that foster growth and avoid
hyperinflation. Populists are following a similar playbook.
Reasons are most
important structural. The financial crisis of 2008, terrorist
attacks and surging refugee flows have widen cultural splits. Median
incomes in the Western world are stagnant
[perceived] an inequality
[perceived] is rising.
economic performance has meant that financial crisis caused political
trust mistrust remains.
We don’t know how populists perform in office, why they are reelected,
and what makes countries immune to populism. But what is clear is that
another financial crisis would do enormous damage.