Saturday 16 April 2016

The Economist Forecasts the Demise of Social Democracy

This is the part where the semi-economist tries to do political analysis. Which is also the part where reasonable arguments give way to empty speculation. But why not indulge, it is the weekend, after all.

The Economist recently published a really interesting analysis of Europe's left and social democratic parties. Its story is clear and quite evident in most European countries: the demise of the traditional left, social democratic parties is all over the place. Just a few decades ago, most of Europe was governed by social democratic of similar parties. In Europe anno 2016 the left is instead falling apart - or at least changing into something else:
A study published by the BBC in 2013 showed that little more than a third of British voters belong to the traditional working- and middle-classes; the rest are in new, hybrid categories such as “new affluent workers”, “technical middle class” and “emergent service workers”. Young voters raised on social media create esoteric identities of their own rather than commit themselves to collective ones like class. They prefer movements to parties. 
Where are all the votes going? Many have been hoovered up by populists, typically of the anti-market left in southern Europe and the anti-migrant right in the north. But alternative left parties (feminists, pirates and greens, for example), liberals and the centre-right have also benefited. And so has the Stay On The Sofa party.
But leftist parties falling apart is neither a new nor novel thing:
Europe’s left has seen losing streaks before; its fortunes fell sharply in the late 1980s and early 1990s. It bounced back under leaders like Tony Blair and Gerhard Schröder, who sacrificed their parties’ old affection for rigid labour markets and high taxes in favour of a centrist, “Third Way” combination of social reform, deregulation and good public services funded by the ensuing economic growth.
If history is any guide, then perhaps the return for social democratic parties is to concede even more of their deeply-held convictions. Like the U.K. Labour Party's infamous dropping their nominal claim to socialism back in 1995. This time, maybe anti-free trade or (high) income taxation will yield, an economist would hope.

Or perhaps the hardcore leftism we see at universities blooms out and becomes the dominant social democratic idea?

I think the piece in the Economist also credibly points to the growing North-South divide in Europe. Between a publicly thrifty North and debt-ridden South; between the anti-market South and the anti-immigrant North; between the efficient North and the mañana-style South. Stereotypes, of course, but perhaps more accurate than in a very long time.

And not too far away from Bryan Caplan's Simplistic Theory of Left and Right (and even more applicable for the 2016 U.S. elections):

1. Leftists are anti-market.  On an emotional level, they're critical of market outcomes.  No matter how good market outcomes are, they can't bear to say, "Markets have done a great job, who could ask for more?" 

2. Rightists are anti-leftist.  On an emotional level, they're critical of leftists.  No matter how much they agree with leftists on an issue, they can't bear to say, "The left is totally right, it would be churlish to criticize them."   
the difference between moderates and extremists is the intensity of their antipathy, not the object of their antipathy.
Is it exciting times for Europe? Maybe. But honestly the prospects of going back to Europe from my beautiful exile in Australia has a stronger flavour of fear than of excitement.

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