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Global News and Perspectives

When the world turned right. Again.

COVID 19, Vaccine, Trump is now anti green
Bolsonaro , Salvini
, left wing good bye.

We didn’t start the fire. It was always burning…

Sometime in the middle of the last decade, the world, it seems, took a sharp right. Seems, being the operative word. The truth is that the popularity of right-wing politics is far from new – and its rise has got a lot to do with the financial health of nations.

A comprehensive study conducted by a group of German economists in 2015 outlines the effects of financial crises on politics. As COVID wreaks havoc and threatens to devastate economies around the world, it’s a good time to go back to this report to understand today’s political landscape better – or rather that what is to come post COVID.

The research found that financial crashes lead to a rise in right-wing parties and also to protests against the government. The result, the study ominously states, would lead to the dawn of political systems that are less interested in (or, capable of) implementing laws that focus on economic solutions and are more focused on right-wing policies (no surprise, this).

We’ve seen this in the not too recent past. In the aftermath of the Great Recession in 2008 populist parties more than doubled their vote shares in many developed nations. These included France, the UK, Sweden, Finland, the Netherlands, Portugal and Japan.

Let’s look at a few examples.

The Sweden Democrats improved their vote share from 2.9% in 2006 to 5.7% in 2010 (a few years after the Global Recession). In a September 2018 election they increased their vote to 18% from 13% four years earlier. The SD, as they are called, have managed to capitalize on Sweden’s rising insecurities on immigration.

In the Netherlands, the right-wing Populist Party for Freedom gained close to 10 percentage points soon after the 2007 crisis.

In France, the Front National party earned 13.6% in 2011, in the first election following the crisis, compared to just 4.3% in 2007.

The far-right Finns Party, which built its popularity on two planks – immigration and climate change – came within striking distance, but lost with a narrow margin in the April 2019 general election.

Then there’s Italy’s Matteo Salvini, who leads the League. Salvini has led an aggressive anti-immigration policy and the party has seen its popularity surge after the financial crisis.

The bottom line then, is this – the political parties that make nationalism their mainstay and root for tighter immigration laws are the ones who benefit more politically from a financial crisis. Interestingly, the left-leaning ones don’t, as much.

See graph:

Notes: The figure shows average vote shares of far-left (white columns) and far-right (black columns) political parties. The grey columns represent the sum of the two. The left panel refers to average vote shares in the five years before the start of a financial crisis and the right panel shows average shares in the five years after. The differences are statistically significant at the 5% level, except for the far-left vote share, which does not significantly increase in the post-crisis period. Table D1 shows the crises included.

Source: Going to Extremes: Politics after Financial Crisis, 1870-2014. Manuel Funke Moritz Schularick Christoph Trebesch

What the research also shows is that far-right parties have seen substantial electoral gains after the global economic crises of the 1920s/1930s and after 2008. Here’s a figure that throws some light on this pattern in European countries.

Notes: The figure shows the vote shares of far-right and right-wing populist parties in the European Parliamentary elections 2004, 2019, and 2014. These 9 EU countries are also included in the main analysis. The figure is for illustration only, since electoral data from the European Parliament are not used in the remainder of the paper. The grey columns show averages.

Source: Going to Extremes: Politics after Financial Crisis, 1870-2014. Manuel Funke Moritz Schularick Christoph Trebesch

So here we are today

Fast forward to 2020. The onset of COVID has made that right turn even sharper (and longer). And it doesn’t look like the path will circle back to a central point anytime soon. If anything, it’ll carry on unabated, as more people get on to that bandwagon. If COVID is going to be, as doomsayers predict, the worst crisis we have seen in our living history, then the political and social repercussions will be as dramatic.

President Donald Trump’s executive order temporarily suspending the issuing of green cards to certain groups is a case in point. The primary aim of this order is to protect the American workers who have lost their jobs due to COVID 19.

And that’s what it really boils down to – jobs.

Immigration policies are often directly proportional to unemployment. As the latter goes up, so does the former (become more stringent that is). And today, when COVID is causing the loss of millions of jobs and, in some cases simply wiping out sectors, leaders are tightening their laws to protect their people (and their politics). Unemployment can prove to be an electoral poison, so few leaders are willing to take any chances.

Imagine this:  8.6 million jobs were lost, in total, at the time of the 2008 Great recession. COVID, in contrast, has already wiped out more than 33 million jobs in the US – more than 20 million jobs were lost in April alone, a month in which the unemployment rate stood at 14.7%. Scary as that figure is, some say the figure is higher – close to 20%, the worst since The Great Depression.

What’s Trump order?

The proclamation basically means that, for the time being, the US will stop issuing certain green cards. It also suspends the Diversity Visa Lottery, which issues about 50,000 green cards every year. Moreover, the statement also said that within 30 days of the effective date of this proclamation, the Secretary of Labor and the Secretary of Homeland Security will also review non-immigrant programs. What this means is not clear. What is clear is that the order affects immigrants who are outside the US on the date of the proclamation, or the ones who don’t have valid immigrant visas yet.

The message is clear – immigration is not going to be the same for a while. COVID has already wiped out a decade’s worth of job gains in the US – basically all jobs that were created since the Great Recession. And it’s not over. The flattening of the curve may come too late for most economies around the world.

The world will stay in right gear for now – at least till unemployment remains a pressing issue. It’ll probably come a full circle eventually, but that may be a while.

Date added
12.05.2020

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Global News and Perspectives

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