BERLIN—To win voters lost to an anti-globalization backlash, Europe’s mainstream parties are going back to the 1970s.
In Germany, the U.K, Denmark, France and Spain, these parties are aiming to reverse decades of pro-market policy and promising greater state control of business and the economy, more welfare benefits, bigger pensions and higher taxes for corporations and the wealthy. Some have discussed nationalizations and expropriations.
It could add up to the biggest shift in economic policy on the continent in decades.
In Germany, Europe’s biggest economy, the government has increased social spending in a bid to stop the exodus of voters to antiestablishment, populist and special-interest parties. Reacting to pressure on both ends of the political spectrum, it passed the largest-ever budget last year.
“The zeitgeist of globalization and liberalization is over,” said Ralf Stegner, vice chairman of the 130-year-old Social Democratic Party, the junior partner in Chancellor Angela Merkel’s government coalition. “The state needs to become much more involved in key areas such as work, pensions and health care.”
The policies mark the end of an era in Europe that started four decades ago, with the ascent of former British Prime Minister Margaret Thatcher and her U.S. ally, President Ronald Reagan.
After Thatcher abolished capital controls in 1979 and began selling off state companies in the 1980s, other European governments followed suit, embracing supply-side policies, deregulation, market liberalization and tax cuts. Revenues from privatization among European Union member states rose from $13 billion in 1990 to $87 billion in 2005, according to Privatization Barometer, a database run by consultancy KPMG Advisory S.p.A.
Today, concerns about growing inequality, stagnating wages, immigration, the debt crisis and China’s rising power have fueled the recent political shift. European businesses and governments also worry about potential changes in U.S. policy, amid looming threats of trade sanctions.Smaller State Governments across Europe retreated from many economic sectors and sold state companies starting inthe 1980s.Privatization proceeds in EU countriesSource: Privatization Barometer reports00.billion1980’85’90’952000’05’10’150102030405060708090$100
This erosion of the old technocratic consensus about how to run an economy, even in countries where populists aren’t getting any closer to power, could be one the most lasting consequences of the recent antiestablishment surge.
Even in countries where populist parties are already in government, such as Poland, those parties have shifted their focus from nationalist and anti-immigration rhetoric to championing generous welfare policies and state aid.Bigger BenefitsGermany’s government has increased socialspending in a bid to win over voters. Germany’s government spendingSource: Germany’s Federal Ministry of FinanceNotes: Data through 2017 are actual; 2018 and 2019are targets. €1=$1.14.billionSocial and welfare benefitsOther spending2012’13’14’15’16’17’18’19050100150200250300350€400
Germany’s SPD has embraced additional welfare spending, paid for by tax revenues, to combat a retreat of voters so rapid it threatens to turn the once-dominant force in German politics into a niche player. The party is now pushing for policies such as unconditional pension for people who have worked for a certain period but didn’t make sufficient contributions into the pension pot.
In the U.K., Jeremy Corbyn, leader of the opposition Labor Party, has proposed renationalizing railways, public utilities, the postal service and the Royal Bank of Scotland ,the country’s second-biggest lender. It’s effectively a reversal of the privatization spree initiated by Ms. Thatcher. The party is also toying with policies such as universal basic income for all and a four-day working week for public-sector employees.
Labor has been polling ahead of the ruling Conservatives in opinion surveys for most of the past two years.
The re-nationalization plan would cost around $210 billion, according to an estimate by New York-based consulting firm S&P Global. Labor has said it would issue treasury bonds to finance nationalizations. Thames Water, the U.K.’s largest water company, added a clause to its bond to make sure holders are repaid immediately should it be nationalized.
In France, President Emmanuel Macron reacted to weeks of violent street protests by abolishing plans to increase fuel prices and announcing measures to boost the incomes of low earners. The estimated cost of the spending is more than €10 billion ($11 billion). In a symbolic concession to the antiestablishment yellow-vest movement, Mr. Macron declared he would shut down the university École Nationale d’Administration, his own alma mater, because it instigated elitism.
Mr. Macron reversed a decision to eliminate 200,000 civil-service jobs and announced a tax increase for companies that overly rely on short-term contracts, which his government blames for creating an underclass of workers. In addition, monthly pensions of less than €2,000 have been pegged to the rate of inflation.
He also embraced the idea of holding referendums on certain policy issues, a key demand of populist leaders. The first major referendum will decide whether the sale of the state’s majority stake in the company that runs Paris’s airports should go ahead as planned.
Denmark’s Social Democrats, who had been out of government since 2015, won a general election on June 5 following a policy makeover that included going further left on economic policy, while sharply turning right on immigration. They pledged to increase public spending and taxes for companies and the wealthy, and to enable early retirement by rolling back some recent pension changes. Their far-right rivals the People’s Party suffered a major loss in the election.
The reaction from European economists is decidedly mixed.
Some have greeted the shift as a welcome correction to years of pro-business and free-trade policies they think have dug deep rifts in Western societies.
“The lesson from Germany is: Strong growth and a generous social welfare system alone are insufficient to satisfy voters. Globalization and technological change are putting pressure on many people,” said Marcel Fratzscher, head of the German Institute for Economic Research, a Berlin-based think tank. “Europe’s social welfare state needs a fundamental overhaul as it has to focus on empowering people and on stopping the market abuse of firms and lobby groups.”
Others are concerned Europe is deviating from proven economic recipes just as growth is wobbling, or that the policies are outdated.
“We are indeed seeing a kind of return to the pre-Thatcherite approach, but it is doubtful that policies from the era of closed markets and capital controls could work in a globalized world. A vision of the past can’t be implemented in the present,” said Branko Milanovic, a New York-based Serbian-American economist who studies income distribution and inequality.
In Germany, despite a decade of robust economic growth and near full employment, almost four million working people receive welfare benefits to supplement their income. Around one-quarter of all employees work in the low-wage sector, according to government statistics and research by Mr. Fratzscher’s group.Low Wages Increased competition put downward pressure on wages, while shrinking unemployment benefits increased incentives for Germans to take lower paying jobs. Share of German workers who are low paid*Source: German Institute for Economic Research*Those who make less than two-thirds of the country’s median earnings%1996’982000’02’04’06’08’10’12’14’1614161820222426
Subsidies to Germany’s mandatory pay-as-you-go pension scheme almost reached the €100 billion mark for the first time in 2018. Earlier this year, Ms. Merkel’s government adopted a new industrial strategy that centers on protecting German companies from foreign competition, including by enabling the government to buy stakes in businesses to shield them from foreign acquisition.
Peter Altmaier, economics minister and author of the industry strategy, said it was designed in part to address the anxieties of Germans who have been drawn to far-left and far-right parties in recent years.
Germany’s SPD, the junior partner in Germany’s government coalition, is now debating whether large real-estate investors should be expropriated as a way to stabilize rents. In Berlin, where they preside over the local government, the SPD announced a freeze on rent prices. The head of its youth wing recently called for car maker BMW to be nationalized, earning grass-roots plaudits and some support from SPD ministers and mayors.
The SPD scored its worst result ever at last month’s European Union election. Polling around 12% to 14%, it is a shadow of its 1998 self, when it gathered 41% of the vote.
The environment-focused, center-left Greens more than doubled their votes between the country’s last general election in September 2017 and the EU election. It is now polling at around 26%. At least two polls since early June showed the Greens had become Germany’s most popular party for the first time since its creation in the 1980s—ahead of Ms. Merkel’s Christian Democratic Union.
Twenty years ago, the German Greens co-wrote with the SPD the country’s last big tax cuts and a deeply unpopular overhaul of labor-market legislation. Today, the party is toying with an unconditional universal income and seizing real estate from commercial landlords as a way to stop rent increases.
The far-right Alternative for Germany, known as AfD, lost ground in last month’s EU election, and is now polling around 13%.
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The AfD has campaigned on immigration in recent elections. Party leaders recently consulted with Steven K. Bannon, President Trump’s former chief strategist and now an adviser to nationalist and populist parties in Europe. In a meeting in Berlin on May 13, he advised the leaders to tone down their anti-Islam fervor, purge radical members, and refocus their message from identity politics to economics.
“The real message is the economy,” Mr. Bannon said in an interview. “Populists need to talk to the workers.”
Jörg Meuthen, the AfD co-chair who met Mr. Bannon, said he agreed, but questioned the timing of the message. He said Germany’s economy—with record low unemployment and slowing but still positive growth—remained too healthy for an immediate policy shift.
“When the recession kicks in and people start worrying about their jobs, then we can roll out economic campaigns and show our competence. Populists must look at what is affecting people emotionally, and at the moment that is migration and the climate,” Mr. Meuthen said.Globalization BacklashProtest parties focused on denouncing the economic, cultural and security impact of globalization have drawn more attention across Europe.Populist party poll performance in selected countries Source: NomuraNote: Weighted averages of national polls.%GermanyFranceSpainU.K.2015’16’17’18’19051015202530
In Spain, Pedro Sanchez, acting premier and leader of the Socialist Party, won the national and the EU elections this year after sharply raising the minimum wage and announcing a boost in social benefits and corporate taxes.
Mr. Sanchez’s bet on wooing working-class voters lost to protest parties paid off, said Daniel Diaz Fuentes, professor of economics at the Spanish university of Cantabria. Mr. Fuentes said that the rise of populism could trigger a re-nationalization wave.
“I think that the state will become a much more active entrepreneurial actor via venture capital and involvement in investment via the banking system,” Mr. Fuentes said.Two TrajectoriesThe income of low earners has decreased since 1980, while that of top earners has grown.Income shares of the top 10% in European regions*%NorthernWesternSouthernEastern1980’902000’102022242628303234Income shares of the bottom 50% in European regions*Source: Thomas Blanchet, Lucas Chancel and Amory Gethin, World Inequality Database*Population-weighted country averages%NorthernWesternSouthernEastern1980’902000’102022242628303234
Wolfgang Schmidt, deputy German finance minister and one of the strategists behind the SPD’s new approach, said the success of socialists in Spain, Britain and Denmark, in elections and opinion polls, shows that voters have turned against economic orthodoxy.
“As a society, we need to stop looking down on people. Anxiety about the future of work is driving voters to populists. People read about automation and self-driving cars and they ask themselves what will happen to their jobs in the near future,” he said.
Many European politicians and economists say the swing away from markets and back to the state misses the point of many voters’ anxiety, which is rooted in politics or culture. An annual poll about the fears of Germans conducted by the R+V Versicherung AG insurance group found that nine of respondents’ top 10 fears focused on politics, security and health. Economic concerns dominated between 2004 and 2015.
Paul Ziemiak, the second most senior official in Ms. Merkel’s conservative party, opposes what he says is an SPD-driven spending spree. “These policies have never made any country successful. Countries that have [tried them] have ultimately failed—politically, but also economically,” he said.
Protectionism would destroy a German economy built on exports and cross-border supply chains, said Clemens Fuest, an economist and adviser to the German government. Ambitious redistribution programs such as pension increases, early retirement or a universal income would collapse as soon as tax revenues fall in the slowdown. Companies were privatized 30 years ago because the state is generally bad at managing businesses, he said.
“Established parties are taking over the populists’ agenda to show voters that they have heard their message,” Mr. Fuest said. “But they are making big promises that cannot be kept.”
I have formulated five tenets for the project of building up Central Europe. The first is
- that every European country has the right to defend its Christian culture, and the right to reject the ideology of multiculturalism. Our second tenet is that
- every country has the right to defend the traditional family model, and is entitled to assert that every child has the right to a mother and a father. The third Central European tenet is that
- every Central European country has the right to defend the nationally strategic economic sectors and markets which are of crucial importance to it.
- The fourth tenet is that every country has the right to defend its borders, and it has the right to reject immigration. And the fifth tenet is that
- every European country has the right to insist on the principle of one nation, one vote on the most important issues, and that this right must not be denied in the European Union. In other words, we Central Europeans claim that there is life beyond globalism, which is not the only path. Central Europe’s path is the path of an alliance of free nations.
.. a pattern in which matters in Europe have effectively been decided by competition between two camps: on one side, communities based on the continuing foundations of Christian tradition – let us call them Christian democratic parties; and, on the other side, the organisations of communities which question and reject tradition – let us call them left-wing liberal parties.
.. a situation can arise in one country or another whereby ten per cent or more of the total population is Muslim. We can be sure that they will never vote for a Christian party. And when we add to this Muslim population those of European origin who are abandoning their Christian traditions, then it will no longer be possible to win elections on the basis of Christian foundations.
Those groups preserving Christian traditions will be forced out of politics, and decisions about the future of Europe will be made without them. This, Ladies and Gentlemen, is the situation, this is the goal, and this is how close we are to seeing it happen.
.. we must demonstrate that there is an alternative to liberal democracy: it is called Christian democracy. And we must show that the liberal elite can be replaced with a Christian democratic elite.
.. Christian democracy is not about defending religious articles of faith – in this case Christian religious articles of faith. Neither states nor governments have competence on questions of damnation or salvation. Christian democratic politics means that the ways of life springing from Christian culture must be protected. Our duty is not to defend the articles of faith, but the forms of being that have grown from them. These include
- human dignity,
- the family and
- the nation
– because Christianity does not seek to attain universality through the abolition of nations, but through the preservation of nations
.. The bait for this trap is hanging right in front of our noses: it is the claim that Christian democracy can also, in fact, be liberal. I suggest we stay calm and avoid being caught on that hook, because if we accept this argument, then the battle, the struggle we have fought so far will lose its meaning, and we will have toiled in vain. Let us confidently declare that Christian democracy is not liberal. Liberal democracy is liberal, while Christian democracy is, by definition, not liberal: it is, if you like, illiberal.
- .. And we can specifically say this in connection with a few important issues – say, three great issues. Liberal democracy is in favour of multiculturalism, while Christian democracy gives priority to Christian culture; this is an illiberal concept.
- Liberal democracy is pro-immigration, while Christian democracy is anti-immigration; this is again a genuinely illiberal concept.
- And liberal democracy sides with adaptable family models, while Christian democracy rests on the foundations of the Christian family model; once more, this is an illiberal concept.
.. Liberalism, he says, has become a system and a way of looking at the world that destroys nations and traditions, especially the Christian tradition. He’s right about that: it’s not a bug of liberalism, but a feature. It’s something that’s very hard for Americans to see, because we were founded as a liberal nation, and unlike contemporary Europe, we have not yet faced mass migration from non-Christian civilizations. For traditional Europeans, this is not an abstract discussion. They are fighting to save their civilization. If that requires illiberal democracy, fine.
.. they recognize that the kryptonite they’ve been able to use so effectively for so long to paralyze opposition no longer works on people like Orbán.
.. Americans rarely stop to ask if the people there actually want liberalism, at the expense of the things that make them a people.
.. Who is a more trustworthy contemporary steward of European faith and culture:
Viktor Orbán, or bishops who preach more immigration and more gay pride parades?
“As a right-wing conservative and founding member of the Freedom Caucus, I never expected that the co-worker I would work closest, and best, with at the White House would be a ‘globalist,’ ” Mulvaney said in a tweet. “Gary Cohn is one of the smartest people I’ve ever worked with.
.. Globalist belongs in a class of words (“cuck” is another one, as is “othering”) that tends to say a great deal more about the person who uses it than it does about the person he says it about.
.. To be an anti-globalist, on the other hand, does specify something. It means someone who is convinced that serious business is transacted at conferences like Davos or Bilderberg or Munich, and that 500 or so people run the world at the expense of everyone else.
.. anti-globalism is economic illiteracy married to a conspiracy mind-set.
.. Who in the White House is left to tell the president he’s nuts when he tries to pull out of Nafta?
.. expats are our real globalists, representing the things that make America great:
- openness to new ideas, and
- a love of America honed by a combination of critical distance and a new depth of appreciation.
The increasingly illiberal European country offers shelter to a growing number of international nationalists.
.. Orbán’s “refugees” have been moving to Hungary, and Budapest in particular, for years. A small clique of Identitarians, or aggrieved nationalists from Sweden, the United Kingdom, the United States, France, and elsewhere, all motivated by their disdain for their home countries’ commitment to liberal values, have found an ideological match in his Hungary, where two extreme far-right parties, the governing Fidesz and Jobbik, the largest opposition party, make up most of the National Assembly.
Jobbik is the first European political party to champion a border wall. Its members frequently express open anti-Semitic and anti-Roma sentiments, and prioritize the preservation of “Hungary for the Hungarians.”
.. they have created a structured propaganda circuit, in the hopes of spreading their ideas far and wide.
.. At the center of the scene is a publishing house called Arktos Media. It is routinely referred to as the preeminent publisher of the alt-right
.. Dugin’s “ethnonationalism,” a belief in the creation of ethnically homogenous nation states, has been championed by white nationalists, who argue that Europe and America are innately white nations.
.. Arktos titles largely promote a viewpoint it characterizes as “alternatives to modernity” that are critical of liberalism, human rights, and modern democracy... he argues that multiculturalism and liberal human rights—what he calls “cultural Marxism”—have been the dominant culture since the fall of Nazism, and outlines how transforming this culture space is necessary for political and social change... In 2014, Jobbik’s popularity surged, thanks to a platform that pledged to preserve Hungarian ethnic purity... These are people with an almost medieval view on the world and they find a safe haven in Hungary,” Kréko told me... multiculturalism is the supreme enemy.. Both believe in draconian immigration laws based on ethnic and racial preservation... 20th-century intellectual fascist Julius Evola’s A Handbook For Right-Wing Youth.. Evola, who White House chief strategist Steve Bannon quoted in a 2014 speech at the Vatican, is considered by academics as “possibly the most important intellectual figure for the Radical Right in contemporary Europe.”.. Marton Gyöngyösi, another key politician in Jobbik credited with calling for all Jews in Hungary to be registered on a list... Jobbik’s resistance to immigration, he said, is limited to people from “Africa or the Middle East,” because they do not share the same “cultural values” as Hungarians, as opposed to the “Austrians or Polish or American people who come to our country and who share the same civilization, the same religion, or the same values or way of life.”.. Friberg has sought to obscure his violent transgressions under a cover of intellectual legitimacy... He has spent his far-right career repackaging eugenicist ideology by rebranding the same or similar material with words such as “identitarian,” “traditionalist,” or “archeofuturist.”.. Michael Polignano, co-founder of Counter-Currents, moved to Budapest in 2016, and joined the nationalist scene. After moving to Hungary in January 2017, men’s rights activist Matt Forney wrote:“Imagine there’s no leftists. It’s easy if you try. No protests in the streets, and in front of us, only cute white girls. That world exists, and it’s called Hungary.”.. YouTube and Twitter personality RamZPaul, who has lived in the Hungarian capital off and on since 2013, tweeted in February to nearly 35,000 followers: “Budapest is like Paris of the 1920s. #Hungary.”.. British Nationalist Party leader Nick Griffin .. has been deeply involved with a radical Christian organization called “The Knights Templar International,”.. a resettlement campaign called “Operation Ark” for “refugee” South African Boers to relocate to rural Hungary.. Breitbart is now rumored to be opening a Hungarian office in the near future.. these nationalist internationals are creating a sanctuary from which to broadcast anti-globalism across the globe.