You’ve probably heard the saying that “those who don’t learn from history are doomed to repeat it.” Unfortunately, there is reason to believe that the circumstances that led to right-wing nationalist support in the early 20th century are reoccurring now in the U.S. and in Europe. This is because there is an eerie political trend when it comes to the aftermath of financial crises. A study by the Center for Economic and Policy Research (CEPR), which covered 800 elections and 100 financial crises from 20 advanced economies between 1870 and 2014, shows that following a financial crisis, the politics of the country in question takes a mostly hard-right turn. In addition, governing bodies (parliaments) become fractionalized; the governing body shrinks, the opposition party expands, and the number of political parties increase, making it more difficult to govern after a financial crisis, which makes it even harder to deal with. What’s interesting is that this trend is only seen with financial crises, and not other types of recessions.
So how does this relate to us now, particularly in the United States? The accompanying article presents the implications as follows:
“The typical political reaction to financial crises is as follows: votes for far-right parties increase strongly, government majorities shrink, the fractionalization of parliaments rises and the overall number of parties represented in parliament jumps. These developments likely hinder crisis resolution and contribute to political gridlock. The resulting policy uncertainty may contribute to the much-debated slow economic recoveries from financial crises.”
Now how familiar does this sound? While the United States doesn’t have multiple political parties like many European democracies do, we’ve seen the emergence of the Tea Party within the GOP during the 2010 midterm election. The Tea Party is the far-right faction of the Republican Party, and they have not only divided the GOP, but the rest of Congress as well. The Democratic Majorities in both houses of Congress, which were won in 2008, were lost in 2010, the very next election. The 112th congress (the congress won from 2011-2013) was the least productive in U.S. history, and the 113th congress was 2nd least. The U.S. is experiencing a recovery, and while it is faster than that of the European Union, it is still considered slow.
This is scary. The 2007-2008 financial crisis eerily resembles what the research shows. Here is what is scarier. The study suggests that the first five years are indicative as to how long the continuing political consequences will last. Yet here we are seven years later, and of the current highest poling right-wing presidential candidates, Donald Trump, Ted Cruz, and Marco Rubio, two belong to the far-right Tea Party, and Donald Trump (another divisive figure in the Republican Party) is fiercely nationalistic.
This isn’t just isolated in U.S. In Europe, particularly France and Hungary, are experiencing a wave of far-right nationalist support. The National Front, “a socially conservative, nationalist political party” (Wikipedia) led by Marine le Pen has had recent success in regional elections, and Marine le Pen has shown strong poll numbers for the 2017 French election. Jean-Marie Le Pen, Marine le Pen’s Father and the President of the National Front from 1972-2011, has been convicted of inciting racial hatred, holocaust denial, and anit-Semitism. The National Front under Marine le Pen finished first in the 2014 European Parliament election.
The good news is that most of the “political upheaval” from the financial crises are no longer significant after about a decade, though this is hardly true for every case.