Monday, May 27, 2019

Elections Reinforce Europe's Decline

As I have been saying for years, European politics is being fragmented. The center is losing, the flanks are gaining and the economy continues to tank. That last point is monumentally important - and almost as monumentally ignored. 

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Never bark at the Big Dog. The Big Dog is always right.

Since at least 2014 I have explained that Europe's political center was in decline. I have pointed at a trend where political flanks were rising, fracturing the continent's often-revered political stability.

After the elections this past weekend mainstream commentators have picked up on this trend. What they have not yet understood is where this fracturing - polarization as some call it - actually comes from.

From the Associated Press:
European Union leaders and party officials plotted strategy Monday after European Parliament elections ended the domination of the main center-right and center-left parties and revealed an altered political landscape where the far-right and environmentalists stand as forces to be reckoned with.
This is generally correct. However, it might be worth reconsidering the "far" prefix to "right", as the parties included under that label are increasingly beating "centrist" parties in elections. Either that, or we acknowledge - without moral consent - that the electorate is gravitating to the "far" right.

Furthermore, the parties labeled "far right" are increasingly similar to traditional European social-democrat parties. We see this with the SD in Sweden and, even more so, with Fidesz in Hungary. Their policies are social-democrat in almost every aspect except for immigration; with their entitlement-laden welfare state policies, Fidesz is almost a mainstream European party.

The mislabeling of nationalist parties is not confined to Sweden or Hungary. In France, Marine Le Pen's former Front National - now called Rassemblement National in French - has tried hard to decouple itself from its fascist roots, while reinforcing its support for a large, redistributive government.

This appears to have paid off. The AP again:
French President Emmanuel Macron launched a flurry of meetings, ahead of a summit Tuesday where the 28-nation bloc’s presidents and prime ministers will take stock of the results from elections that attracted the highest voter turnout in 20 years. Macron’s Republic on the Move party looks to have secured 23 seats in the assembly for the next five years — the same number as the far-right National Rally, whose leader Marine Le Pen was trounced by Macron in national elections two years ago.
In terms of actual votes Rassemblement National even edged ahead of Macron's La Republique en Marche. While the next French national elections are three years away, the RN's win in the EU election reflects the long-term trend in national elections that I have been warning of; together with his predecessor, the socialist Francois Hollande, Emanuel Macron and his LREM represents the declining center of French politics.

As nationalist parties more prominently embrace the traditional European welfare state, they will gain more support. The welfare state has been on the losing end of Europe's long, slow drift into economic stagnation. The political center is associated with it - rightly so - giving voters an opportunity to pin their hopes for continued welfare-state dependency on a new crop of political parties.

It remains to be seen if the nationalists will get to determine Europe's future. While they have made significant gains in national elections recently, from Sweden to Italy, the left has also surged to new heights. Relabeled "green", the traditional socialist left has successfully marketed itself as the ones who can save the Earth from some unproven climate catastrophe.

In its name, this new green left is beginning to show the same totalitarian face as its communist predecessor did. As one example, Mr. Pär Holmgren, newly elected for the Swedish Environmentalist Party, has proposed ending parliamentary democracy in the name of "climate change".

He is not alone in wanting an eco-fascist dictatorship. The idea of totalitarianism in the name of the environment has even spread to the United Nations, whose Global Sustainable Development Report for 2019 proposes draconian central economic planning over the entire world.

In other words, as a result of the EU elections we can expect a rise in totalitarianism from the outer rim of the left. In a similar fashion, there will be a crop of nationalist parties that will push for totalitarianism in the name of an immigration crisis. In both cases there will be less totalitarian parties that share the "passion" of, respectively, the climate alarmists and the anti-immigrants, but with the center of Europe's politics slowly imploding there is a growing possibility that the uncompromising forces on both sides will become disproportionately influential.

The same can, and probably will happen at the national level. This is important for the EU's future, especially long term. Due to the constitutional structure of the EU, national elections have significant influence over its legislative process. The fracturing of Europe's politics visible in the EU elections will continue at the national level, where it actually began.

As for the EU parliamentCNBC reports:
The EU Parliament will be much more fragmented over the next five years with the established centrist bloc set to fall short of securing a majority at this week’s election, early results show. The current projection from the European parliament is that center-right and center-left blocks will end up with a total of 329 seats out of 751. The lack of a majority for the centrist bloc — the center-right European People’s Party (EPP) and the center-left Socialist and Democrats (S&D) which has held power in Brussels for several decades — could further complicate decision-making at the European Union. Pro-EU parties will hold onto two-thirds of the seats at the EU Parliament, but their nationalist opponents have also produced solid results. Italy’s anti-immigration Lega party has reportedly secured 28 seats, essentially doubling its level of national support.
The analysis is superficially correct, but to understand the interaction between the national and EU levels of European politics we must separate the nationalist movements from those who are generally skeptical of the EU. Casual journalism tends to cluster them together, but there is really nothing similar between, on the one hand, Hungarian Fidesz, Polish Law and Justice and Italian Lega and, on the other hand, British Brexit Party. The former three are various versions of traditional European social or Christian democracy, believing in strong government, a wide range of entitlements provided by taxpayers and a firm government hand on social policies.

The Brexit party, on the other hand, is really formed around one issue only, namely to complete the British secession from the European Union. They have no other issue of any importance, but if they do emphasize a broader platform it will likely resemble UKIP, the party that the Brexit Party's leader Nigel Farage formed more than two decades ago.

In short: Farage and his party are not nationalists. They are more libertarian than anything else.

To understand the dynamics of both EU-level and national politics in Europe, we must realize that the Brexit party and Fidesz have less in common with one another than Fidesz has with German Christian democrats or Dutch social democrats. There is, basically, only issue where Fidesz differs from established mainstream parties, namely immigration. 

The far-right and nationalists in Italy, Britain, France and Poland came out on top in their national votes on Sunday, shaking up politics at home but failing to dramatically alter the balance of pro-European power in EU assembly. ... “We are going to build a social Europe, a Europe that protects,” Spain’s Prime Minister Pedro Sanchez, whose revival among Spanish voters offset a fall in center-left support in Germany, told a news conference late on Sunday night.
The EU is trying to establish a continent-wide Social Protocol. Its purpose is to standardize the welfare state across the 28 (soon 27) member states. Ideologically, a large majority of the newly elected EU Parliament will be in favor of the policies imposed by this protocol; the fight will be over how much EU influence there will be over the policies in individual member states.

Proponents of this protocol will advocate for EU-level tax authority; today the EU does not have independent right to levy taxes. The Social Protocol will change that - and here the connection runs back from the EU election to the national level.

Voters in the highest-taxed countries will resist efforts to add yet more taxes to what they already pay. They will flock in growing numbers to nationalist parties in Finland, Sweden, Denmark, Germany and France - not because they are particularly nationalist, but because those parties are the most outspoken when it comes to restricting EU powers.

At the same time, the left will rally behind the Social Protocol, in the EU Parliament as well as in national politics. This can lead to gains on both outer flanks in national elections, establishing an already visible trend of polarization.

But what does this have to do with the EU? Here is how it works. The legislative process at the EU level is quite different from what is used in the parliaments in Europe - and even more different from the one defined in our American constitution. For an excellent, detailed and highly accurate account of how the EU makes laws, see The New Totalitarian Temptation by former U.S. diplomat Todd Huizinga; briefly, here is how it works:

1. The EU Commission introduces a bill (the EU Parliament cannot itself introduce bills);
2. The bill is sent to the Parliament for an up or down vote;
3. If approved, the bill then goes back to the Commission, and to the Council of Ministers;
4. Once approved there, it becomes law.

There are nuances to this process, but in a few short words, this is how it works. The EU Commission, effectively the Executive Branch of the EU, is appointed by the governments of the member states, as is the Council of Ministers. This means that national governments indirectly control the beginning and the end of the legislative process.

Since the Commission and the Council reflect parliamentary majorities in the member states, the shifts that take place there will gradually pull these two institutions in the direction of national political trends. Increased polarization at the national level means increased polarization at the EU level; when this polarization interacts with an increasingly polarized EU Parliament, the outcome will be a reinforcement of whatever outer-rim trends comes out on top.

This is an important point. It is definitely possible that nationalists will continue to rise to prominence, especially on resistance to EU control over taxes and welfare-state spending. However, it is equally possible that the green left will continue to gain ground. It would be naive to under-estimate the significance of their gains in this EU election, even though one does not have to go as far as this biased commentary from Yahoo:
A European election drubbing has served as a harsh wake-up call for Germany's leaders that young voters fear climate change and are furious about the government's glacial response to it. A surge of support, helped by the Fridays for Future protest movement, propelled Germany's Greens to second place in Sunday's European Parliament elections, at the expense of the mainstream parties. Chancellor Angela Merkel's centre-right CDU/CSU bloc and their ailing junior coalition partners the Social Democrats (SPD) both suffered historic losses after being caught flat-footed on environmental policy.
If the greens continue to grow, it will spell impending doom for the European economy. Germany is a case in point. The political influence of The Greens in German politics in recent years has put this Europe's traditional economic powerhouse on track toward energy depletion. Shunning fossil fuels and closing nuclear power plants, the German government has kowtowed to the extreme view that a modern, industrialized economy can rely on wind and solar power alone.

Reality, of course, has paid more than a few visits to the legislative hallways in Berlin, but the only visible outcome have been higher energy prices (net tax subsidies), a decline in coal imports from the United States and a determination to become dependent on Russian natural gas.

By downscaling energy production and making it less reliable, the German government is putting the long-term stability of its country's economy in jeopardy. German corporations, already squeezed by high labor costs and an overall unfavorable tax climate, will rearrange their long-term plans in order to guarantee their long-term survival.

When businesses make such shifts, it does not have any immediate effects on the economy. As I explained in my book Industrial Poverty, the negative effects of big government come crawling into the economy over a longer period of time. Corporate activities do not change on a whim; they do not shut down production facilities they have already invested in and even paid off. However, when the cost of production increases in one place they tend to reallocate future commitments to other jurisdictions that are more competitive and reliable, both short term and long term.

The decline of the British car industry in the 1970s and 1980s is an excellent example. The implosion of car, pharmaceutical and other industries in Sweden in the 1990s also bear witness of this long-term trend. Even the U.S. has suffered, with the Steel Belt turning into a Rust Belt and the auto industry gradually migrating from Michigan and the Mid West to the South and to Texas.

This trend of gradual corporate migration, already underway in Europe, will be reinforced wherever the new, green left gets a grip on power. The nationalists will not be much better, as their clamor to the welfare state in an attempt to use its as a crowbar to separate more political power from the EU and repatriate it back home.

Whichever way European politics will lean from hereon, the weakening of the political center is bad news for Europe's future. That is not to say a resurgence of the center would be in Europe's best interest; it was the social-democrat, social-liberal and Christian-democrat center that built the EU as we know it today. The EU is a big culprit in the continent's economic stagnation, having magnified the macroeconomic problems that were already built into the European economy when the EU replaced the EC in the early 1990s. But the EU is not the root cause of Europe's economic stagnation.

Nor can it take the EU out of it. That and the results of the EU elections tell us that Europe's decline is inevitable - and the United States must learn to live in a new world where its historic allies, save for Britain, will become unable or unwilling to be our global partners.

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