The last years have witnessed the rise of populism all over Europe. Parties like Alternative für Deutschland in Germany, Rassemblement national in France, the Movimento 5 Stelle in Italy, or Podemos and Vox in Spain have gained importance in detriment of traditional conservative and social democratic parties.
Despite their different (sometimes antagonistic) political and economic agendas, all these parties share a common characteristic: they are inoculated with the populist germ that started infecting European politics a few years ago. This is hardly surprising. After all, populism isn’t an ideology, but a frame that can be used to articulate both radical left-wing and right-wing discourses.
Now that the populist threat hangs over the Europe, it seems pertinent to reflect upon the causes that has led populism to occupy such a privileged place in the old continent’s political landscape. What explains the rise of populism in Europe?
A new paper published in the Journal of Economic Perspective helps shed light on this issue. Since 1985, the share of vote to parties that the authors identify as economic nationalists (most of which are far-right parties) and isolationist left (i.e. far-left parties) has increased from 40% to around 60% in 2015.
According to the authors, four different factors account for the emergence of populism in the continent: globalization, technological change, immigration, and economic crises. There is little doubt that globalization has been overwhelmingly positive, especially for developing and emerging countries. It has, among other things, raised the living standards of billions of people, increased literacy rates and life expectancy, and reduced child labor all over the world,
Globalization has also benefited developed countries. Increasing trade between these and emerging countries, a natural consequence of globalization, has resulted in people having access to cheaper goods and services, improving the lives of both lower and middle classes.
However, and despite the fact that globalization has had an extremely positive effect on aggregate welfare, the negative short-term negative impact of free trade on certain domestic manufacturing industries may have created social unrest among those who have lost their jobs due to consumers preferring imported goods. This in turn may have resulted in people voting for parties with an anti-globalization message, especially to those in the far right.
It may be the case, and the authors provide some evidence, that perceptions of globalization lowering living standards be closely linked to the emergence of populism in Europe. Yet these perceptions are usually exaggerated and, in many cases, false. Since 1990, the onset of globalization as we know it today, GDP per capita has increased by around 50 percent in the European Union.
It is true that, over the last decade, some European countries have seen their living standards decrease considerably. However, this hasn’t been the result of globalization, but of the economic, financial, and debt crises of the last years as well as the lack of structural reforms to alleviate their effects.
Something similar could be said about technological change and immigration. It is possible that misleading perceptions about the negative impact of technological change and immigration have led people to vote for protectionist, anti-immigration parties. Yet the truth is that technological changes (without them, we would still be in the caves) and immigration have a net positive effect on the economy in the long run.
Finally, and as noted above, the economic turmoil of the last decade has no doubt contributed to the rise of populism in Europe. The devastating impact of the financial and debt crises in countries like Greece and Spain played a decisive role in the emergence of both radical political movements, especially in the far left side of the political spectrum . Yet extremist parties also emerged in countries where the crisis didn’t hit so hard like Germany, suggesting that populism is a complex phenomenon that cannot be exclusively explained drawing upon economic reasons.
In sum, the emergence and strengthening of anti-establishment parties over the last decade is the result of two factors. On the one hand, biased perceptions about the effects of globalization, technological changes and immigration have created the breeding ground for radical parties to take over European politics. On the other hand, the 2008 crisis and its consequences lowered the living standards of lower and middle classes, which was taken advantage by populist parties to attract the vote of those disappointed with the status quo.