A POPULISM SPURNED BY THE DOWNTURN´S DISCONTENTS / THE FINANCIAL TIMES COMMENT & ANALYSIS

April 18, 2014 2:51 pm

A populism spurned by the downturn’s discontents

By Niall Ferguson

European populism is more like the Mad Hatter’s Tea Party than Boston’s, writes Niall Ferguson

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Political backlash usually follows economic crisis. Everyone knows how the Great Depression fuelled support for extremists on both the left and right. Less well known is the way the original Great Depression – the one that began in 1873 and involved a quarter-century of deflation – led to a wave of populism on both sides of the Atlantic. Could this history be repeating itself?

Some 1930s-style fascists are out there, notably in Greece, Hungary and further east. Yet for most Europeans and Americans, fascism is a toxic brand. Far more common are movements that echo the populism of the late-19th century.

Today’s populists are a motley crew of xenophobes, nationalists and cranks – just like their predecessors. Causes dear to 1870s populists ranged from anti-Semitism to bimetallism. Nowadays anti-immigration and euroscepticism are more likely. In America, the financial crisis begat the Tea Party. Europe’s equivalent looks like a populist wave, which many expect to break spectacularly in the upcoming EU parliamentary elections. The real story will be more surprising. Despite the severity of the shocks inflicted on European economies since 2008, most voters will back mainstream parties. Unlike in the 1930s, but as in the 1870s, the centre will hold.

You can see the populists’ media appeal. Compared with the men and women in suits of mainstream European politics, Nigel Farage – the smoking, boozing leader of the UK Independence party – is a newspaper editor’s dream. The same goes for Marine Le Pen, the blonde bombshell of France’s National Front.

As those contrasting examples suggest, there is in fact no such thing as a homogeneous populist movement. When they convene, UKip MEPs are part of the Europe of Freedom and Democracy group. Then there are the so-called Non-Inscrits – MEPs not attached to any of the recognised party groupings in the European Parliament. These include members of Austria’s Freedom party as well as the Dutch Freedom party.

So what does this motley crew have in common aside from varying degrees of hostility to immigrants? The answer is a growing revulsion against European federalism. At a time when the establishment is struggling to increase the powers of Brussels, a big win for these groups would indeed be serious.

The European Parliament long ago ceased to be a talking shop. It is now effectively Europe’s House of Representatives, sharing legislative power with the European Council. It elects the president of the commission, vets commission nominees and has the power to force their resignation. A populist parliament would sound the death knell for “ever closer union”.

Yet detailed country-by-country research by my colleague Pierpaolo Barbieri suggests that the populists will fall far short of such a victory. The elections will be a toss-up between the centre-left Progressive Alliance of Socialists and Democrats (S & D) and the centre-right European People’s party (EPP). The S & D will claim victory because the EPP will probably lose seats, as will the Alliance of Liberals and Democrats for Europe. True, Non-Inscrits will probably win about 90 seats – nearly three times the 32 seats they won in 2009 – but the EFD will remain stuck at around 30. A total share of approximately 16 per cent of the total of 751 seats hardly represents a populist landslide.

Crucially, there is very little chance that these disparate elements will be able to act in concert. The Economist recently had fun depicting Mr Farage, Ms Le Pen and the Dutch maverick Geert Wilders in a common populist teapot. In reality, Ukip loses votes when it is associated with Ms Le Pen. In organisational terms, European populism is more like the Mad Hatter’s Tea Party than the Boston tea Party.

The populists’ real breakthrough will be in France – where the Front National outperformed in recent municipal elections. Ms Le Pen has political skills far superior to her father, who had all the subtlety of Obelix. Yet this is a national phenomenon. It will matter only if it makes Ms Le Pen look like a credible candidate for France’s next presidential elections.

Moreover, it is only in France that populists have a real chance of coming first. In the UK, where Labour seems likely to win, the Tories may yet edge ahead of UKip as the British economy recovers far faster than the Keynesian Cassandras had anticipated. In Germany the eurosceptic party Alternative for Germany is growing, but it is still polling only 6.5 per cent. It will probably win about six seats, compared with 38 for the CDU/ CSU of Angela Merkel, chancellor.

And for every France there is a Spain. As Alfredo Pérez Rubalcaba, opposition leader, said in Madrid last month: “Spain will not send a single anti-European deputy to Brussels”. The same applies to Portugal which, despite the hardships of the crisis, remains staunchly pro-European. In Greece, the leadership of the leftist Syriza – which so worried the commentariat – is rapidly moving into the European mainstream. And in Italy, Matteo Renzi’s reinvigorated Democratic party will come in comfortably ahead of Beppe Grillo’s Five Star Movement.

There is also a backlash against the populist backlash: new pro-European parties are polling well in Austria (the Neos) and Greece (To Potami). These newcomers appeal to younger voters, for whom populism seems old and crass.

The financial crisis was bound to have political consequences. Yet the striking thing about Europe’s populists is not how well they are doing, but how badly. A hundred years ago the ultimate beneficiaries of a deflationary downturn were Social Democrats, not populists. The same looks to be likely today.


The writer is Laurence A Tisch Professor of History at Harvard

Copyright The Financial Times Limited 2014.