Tuesday, December 22, 2009

Did the great financial meltdown of 2008 make people turn left or right?

When the financial meltdown of autumn 2008 got underway, there was much debate on how this would affect politics around the world. Some argued that it would make people swing left - after all the cause of the crisis was the private sector out of control and not regulated enough (regulation, which the Cameron-commissioned Redwood report slammed as too heavy turned out to be too light). Others argued that financial crises made people turn right as they became more conservative, and cited the 1930's for proof.

Well, we've now had several general elections around the globe, so we should have a feel for how the global crisis has affected voters. Here are the general elections conducted since the crisis broke:

Canada: The Canadian federal election came during the crisis itself; it was held on Oct 14th 2008. The Conservative Harper government increased their seats by 19, with a swing of 1.38%, but failed to gain the overall majority they wanted. The result was that the incumbent conservatives continued to govern with a minority government. Swing: right

USA: The American federal election was held in November 2008, and voters swung decisively left. Obama took the White House and the Democrats took control of both houses of Congress. The turning point in the election was John McCain's histrionics during the TARP bailout, after which Obama started to pull ahead. Swing: left

Iceland: The Icelanders held a crisis general election two years before it was due, in April 2009, when their government resigned. Iceland was one of the worst hit countries in the financial meltdown, and a combination of being outside the protection of the EU and infuriating the rest of the world by trying to renege on international financial law meant they had to go to the IMF for help. IMF help came at the price of interest rates at an eye-watering 12%. The right-wing Independence party, which had been in power for the previous 18 years got hammered in the election. The Social Democrats were elected in an alliance with the Greens. The Social Democrats ran the election on a promise to try to gain entry into the EU and join the euro within four years. They followed through and formally applied for EU membership in July 2009, and the EU accepted the application, and has started accession proceedings. Swing: left

India: The enormous Indian electorate held their federal and state elections in stages from mid April to mid May 2009. India was relatively unscathed by the financial crisis thanks to the old-fashioned reserve requirements imposed by their central bank and heavy banking regulation imposed by their centre-left government. The governing centre-left Congress party gained seats, with a swing of 3.96%. Prime Minister Manmohan Singh became the first Indian Prime Minister to be re-elected in 40 years - an impressive feat given that India's stroppy voters take pleasure in kicking politicians out. Swing: left

Japan: Japan held their general election in August 2009. Japan was indirectly affected by the financial crisis due to their reliance on exporting to the USA. After spending most of the 1990's mired in zero growth and deflation, they had hoped they had moved back to normality from the middle of this decade. But the crisis plunged them back into deflation and something seems to have snapped. The centre-right LDP, which has ruled Japan since 1955, was swept from power in a landslide defeat (they lost 177 seats). The Japanese finally got tired of crony capitalism where public funds were used for pet projects in LDP constituencies, while doing nothing for the main economy. The centre-left Democratic Japanese Party took power. Swing: left

Germany: The German federal election took place on schedule in Sept 2009. The centre-right CDU had been governing in a grand coalition with the centre-left SPD since 2005. The grand coalition was held to have handled the financial crisis well - but credit went to the CDU's Angela Merkel, whose party gained enough seats to be able to form a government with their preferred partners, the Free Democrats. Swing: right

Norway: The norweigian general election was held in Sept 2009. Norway was largely unaffected by the financial crisis, insulated by it's oil money. The ruling labour party was returned to power, along with the Socialist Left party and the Centre party in a Red-Green alliance. Norweigian Labour gained seats compared to the previous election. Swing: left

Greece: Greece also held a general election two years before it was due, in October 2009. The right-wing New Democratic party, which had been cooking the books, was swept from power, and the Panhellenic Socialist movement led by George Papandreou came to power with a mandate to clean up corruption and sort things out. Greece has also been badly hit by the financial crisis. Swing: left

The conclusion to be drawn from above is that the crisis has moved people leftwards. Only Angela Merkel escapes, and her government is pretty moderate as right-wing governments go.

One thing to note though is that most of Europe conducted it's general elections before the crisis hit (Sweden 2006, Denmark 2007, France 2007, Ireland 2007, Belgium 2007, Netherlands 2007, Italy April 2008, Austria in Sept 2008 - In Austria, the socialists are the largest party and hold the chancellorship, but the far-right made substantial progress too), so it's hard to tell what their populations think about the crisis. They arn't due to go to the polls again till 2010/11.


Anonymous said...

I think its quite likely that the political economy will push politics leftwards but Centre right parties can reinvent themselves much as New Labour/Democrats did to hold power in a centre right economy.
(or the post 1951 Tories did)

Hw much of the changes are influenced by voting govts out ? (new lab is exceptional in holding power for so long).

Bank nationalisations etc surely mean that govt's right or left will have a different relationship with capital ?

DevonChap said...

I wonder if you are confusing a swing left with anti-incumbancy. 4 of your swings left were a change of government. The two where a left leaning government retained office were for countries that avoided much of the effects of the crisis. The right held on in countries not badly effected either.

This doesn't prove a swing leftward or rightward in people's views. A counter view is that countries badly hit have ejected their rulers. It just happens that the countries worst effected that have voted since the crisis had right of centre governments so a change moved resulted in the opposition coming in from the left.

Britain along with Japan, USA and Greece has been badly hit by the recession. If Britain votes in the Tories next year they will be fitting into that trend. 'Throw the bums out' it just as plausible cry as 'Up the Workers' in voters reactions to this crisis.

DevonChap said...

A quick surf on the web found a couple of results that don't really fit your thesis.

In Nov 2008, after entering recession New Zealand replaced its 9 year severing Labour government with a centre right one.

On 27 September 2009 in Portugal the Socialist Party lost 9% vote share and its overall majority in Parliament with moves to both the more extreme right and left wing parties. Portugal has been moderately hit by the recession.

Neither supports a move to the left in hard economic times.

snowflake5 said...

I'm not certain it's down to anti-incumbancy at all. Voters seem to be going for whoever will most firmly control the financial markets.

Part of why Merkel got relected was because unusually for a conservative, she was willing to talk about taxing banker bonuses and reining in hedge funds. UK conservatives however speak more like the US Republicans.

The roll-call of countries swinging left is even more impressive because before the crisis hit, countries appeared to be moving right...

snowflake5 said...

Ah yes, I missed out Portugal: a very interesting election.

The ruling Socialists were relected to a minority government with 37% of the vote. BUT, the interesting thing is that the opposition centre-right PSD increased it's vote by just 0.3% to 29.1%. The big gain came from the Left bloc, and right-wing centre party - but both only hold a total of circa 10% of the vote each. So much for the right sweeping in.

Repeated in the UK, the Libdems and UKIP would gain, leaving us with Labour as the largest party...

DevonChap said...

Of course you can dream but we don't live in Portugal.

We don't have a European or glbal electorate, what swings our electors is different to Germany, and France is different to Portugal.

However, I would like to point out at the Euro elections the right made gains everywhere except Greece. Does that fit your thesis?

snowflake5 said...

Euro-elections have a very low turnout compared to general elections - see my previous post about this. Partly because most European voters don't care as much about the European parliament than who will govern them in naional parliaments.

What is true was that the right was on the march everywhere prior to the crisis. The right sneaks in, in Canada and New Zealand in elections that occured at the end of 2008, when their electorates were probably not sure exactly what the fall-out of the crisis would be.

Since then however, the left has been on the march, bar Germany. And Angela Merkel could easily fit into the Labour party with her views on bankers, Europe etc.

I think that trend will continue: people do not want more de-regulation despite what George Osborne and his Republican counterparts like Sarah Palin say.

DevonChap said...

We shall see in May who is right.

DevonChap said...

I was wondering if you were going to revisit your article where you asserted the economic crisis had pushed voters to the left.


I’m done a quick check of the legislative elections in the EU in 2010 and the results don’t back you up.

Hungary (11 and 25 April). Landslide for right wing Fidesz removing centre left government. Result swing right

UK (5 May). Centre right Conservatives gain most votes and seats though sort of a majority. Governing Labour slump to second worst post war vote share. Liberals hold balance of power. Swing from Labour to Conservatives 5%. Centre right coalition formed. Result swing right.

Czech Republic (28/29 May). Centre left coalition loses majority. While main right wing party Civic Democrats lose more ground, new centre right parties TOP 09 and Public Affairs more than make up for that and centre right coalition formed. Result swing right.

Netherlands (9 June). Broad Christian Democrat led coalition brought down by Labour withdrawing. Both Christian Democrats and Labour lose ground to free market Liberals, who top the poll for first time, and Nationalist Geert Wilders. Result swing to deficit cutting centre/nationalist.

Slovakia (12 June). Centre left coalition loses majority despite increase votes for Social Democracy party as coalition partners fall. Centre right/liberal coalition formed. Result – swings to both left and centre.

Belgium (13 June). Broad based coalition fell. Elections see increased Socialist vote in Wallonia but slight decline in Flanders. Between them Socialists the largest ‘party family’ in Belgium. Centre right Flemish nationalists make most gains. Result – a mess as always with Belgium.

Sweden (19 September). Social Democrat slump to their worst defeat since 1920. Governing centre right coalition increase their share of the vote though lose majority through the entry to the Riksdag of the nationalist Swedish Democrats. Result – swing right.

Further afield
Australia (21 August). Ruling Labor loses their overall majority and draw with centre right Liberal/National coalition (swing 2.6%). First time since Second World War an Australian government not re-elected with majority after 1 term. Labor governs with support of independents. Result -swing Right.

In general the swings have been to the right or centre though with the exception of Hungary, not large swings.