The true mother of all problems

Rico Grimm, a German reporter born in 1986, who works for krautreporter.de, SPIEGEL Online and the Berlin Magazine Zitty, has published on September 14, 2018, at Krautreporter.de a really excellent and instructive analysis in German language about the root causes of political right-wing populism under the headline „The true mother of all problems“ – see: https://krautreporter.de/2616-die-wahre-mutter-aller-probleme. This headline refers to a statement of the German Minister of Interior, Horst Seehofer, who said at the beginning of September 2018, that „Migration“ is from his point of view „the mother of all problems“ in Germany with regard to political extremism and violence.

I translated this (chargeable) analysis from German into English in combination with the kind recommendation to purchase a subscription at Krautreporter.de for just €60,00 per year.

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Many people believe that right-wing populists in Western industrialized countries could only become so strong thanks to the refugee crisis, but that is only partly true. An event that took place almost to the day ten years ago is much more important. The most amazing thing about the whole thing with the Mohammed cartoons was that afterwards one thing did not happen. I can only see that today, 13 years later.

In autumn 2005, the Danish newspaper Jyllands-Posten had printed several satirical drawings about Mohammed, the most important prophet of Islam. One of these drawings showed, for example, that he was wearing a bomb as headdress instead of a turban. In some predominantly Islamic countries tens of thousands of people took to the streets because of this. Danish embassies were on fire, churches in Nigeria were devastated. 100 people died all over the world during these riots. The war of cultures invoked by so many seemed to have begun in Grøndalsvej 3, the editorial address of Jyllands-Posten, in the tranquil town of Viby with its 30,000 inhabitants. The cartoonist is still under police protection.

Denmark was led by a conservative government in 2005. But the Dansk Folkeparti, the Danish People’s Party, also sat in parliament. This party equated Muslims with a „cancer“ and called their religion a „terrorist movement“. In the first election after the Mohammed crisis the People’s Party moved with an openly Islamophobic agenda and should have won significantly more votes. Everything had come as the People’s Party had preached to the Danes for years: We are different from them. Multiculturalism cannot work. It is a struggle. We have to defend ourselves.

But the party won only one seat. Only one, from the point of view of the situation.

From the point of view of the situation in which Europe finds itself today: hard to believe. But it is true. It was not until ten years later that the Danish People’s Party achieved its breakthrough. It needed a different event, a much bigger one.

Right-wing populists and neo-Nazis are currently on the brink, in Germany, Sweden, Italy, Hungary and Austria, for example. Also in the USA. The debates about rejections at the border, rescue at sea in the Mediterranean, about radical Islam and asylum seekers who break the law benefit them. The right has always intended to set their topics in a targeted manner. They have now achieved that (even if a majority of the people have completely different worries).

The rise of the right began long before the refugee crisis

Many look at these debates like a deer at the approaching car light in a dark forest. They immediately feel the danger, and because one car after another shoots through the trees, because one debate follows another, there is no time for the most important question: Where does this goddamn road in the forest actually come from?

The right-wing parties and movements have become stronger through the debates about flight and migration – but their actual rise began long before that, on 15 September 2008 in New York.

On that day, the investment bank Lehman Brothers had to close, and a crisis broke out that the West had not experienced for 80 years. A crisis that paved the way for the rampant mistrust of those „up there“. Because the crisis showed citizens that their bankers were greedy, their experts blind and their politicians incapable and powerless to avert the crisis.

For those who did not follow the news at the time, this thesis must read like a provocation. What do greedy bankers have to do with the Hitler greetings from Chemnitz and Köthen? But there is a direct connection.

The crisis had begun on the real estate market in the USA. The banks gave more and more people, who actually had too little money, bigger and bigger loans so that they could buy houses. The banks resold these loans, these buyers in turn did the same and at some point nobody knew who was actually behind the loans. More and more debtors could not pay any more. At first, only those banks specialized in real estate got caught, but soon also the huge financial institutions on Wall Street and in Europe. The bubble burst, millions of people lost their homes, their jobs and their savings, legends of US industry balanced on the brink of ruin, and the governments of the world had to save the banks with billion-dollar guarantees. They wanted to prevent the complete collapse of the financial system. On October 5, 2008, the situation in Germany’s banking system was so critical that the then Finance Minister Peer Steinbrück and Chancellor Angela Merkel stepped in front of the cameras and assured the Germans: „Savings deposits are safe.

What was intended as a guarantee for citizens‘ money – which even at that moment actually worked – now appears to be a declaration of bankruptcy. It should never have come to the point where this sentence had to be said.

After financial crises right-wing parties gain 30 percent of votes on average, left-wing parties do not benefit

People who had never broken a law their whole lives, who had always worked well, who paid their taxes and perhaps didn’t approve the dismantling of their social system with the German Chancellor Schröder’s Agenda 2010, but saw the need – these people were now asked to pay to iron out the mistakes made by a few thousand millionaires in the investment banks. Maybe it was necessary, maybe it was really the only way to prevent a collapse. But it was certainly unfair.

Everyone felt that, even the politicians in the governments knew it. In almost all democracies in the West, millions of citizens stopped trusting their elected representatives in parliaments during the months of the financial crisis. The system had turned against them, now they turned against the system. They began to look for alternatives. In southern Europe they turned left, voted Podemos in Spain and Syriza in Greece, but in the east, west and north they turned right:

 

Researchers Manuel Funke and Christian Trebesch from the Kiel Institute for the World Economy have looked at how financial crises affect elections in a study from 2015. They analysed 800 elections, 100 financial crises, 20 countries, spread over 140 years. A very good data set. They came to the unequivocal conclusion: right-wing parties benefit. On average, right-wing parties can increase their share of the vote by 30 percent in the years following a financial crisis.

The Danish People’s Party was the successor to a party that had been founded at the end of the 1980s in the midst of a major economic crisis. But it was only in the spring of 2015, in the years following the financial crisis, that it was able to double its share of the vote. The Swiss SVP, for which Roger Köppel, known from talk shows as a right wing member, sits on the National Council, was only able to reach wider sections of the electorate when the Swiss economy stagnated and companies had to close down (as a result of a real estate crisis!). Hitler’s party, the NSDAP, came to a narrow 2.8 percent in May 1928, in the midst of the world economic crisis it was over 18 percent in 1930 and later even more.

But it still goes on. Because the right-wing parties are gaining ground, those in power are losing votes and their majorities are shrinking. New parties in the parliaments generally make governance more difficult. One look at the tricky coalition negotiations after the AfD’s success in the 2017 Bundestag elections is enough to confirm this thesis.

„What will happen to us now?“

People who lose their jobs are particularly susceptible to electing extreme right-wing parties. Several studies show this independently of each other. The region around Pirmasens in the Palatinate was known for its shoe industry until the 1990s, when pressure from foreign competitors forced many companies to close. Today the AfD reaches up to 15 percent in some constituencies. Hof and its neighbouring towns were once strongholds of the textile industry, today they are strongholds of the AfD. And the Wende shock therapy completely gutted the proud industrial East Saxony, the region around Chemnitz. There, experienced men cried when their excavators and machines were dismantled in the early 1990s and they hung their protective helmets in the locker for the last time. „What will become of us now,“ they asked themselves.

This question leads to the heart of the financial crisis and right-wing populism. It expresses the feeling that social scientists describe dry-abstractly as „economic uncertainty“, the feeling one has when one sees in the news in 2009 that banks are staggering with a balance sheet total of hundreds of billions of euros and one notices at work that the customers of the company prefer not to buy anything new for the time being. If the short-time work introduced by the government in the financial crisis saves many employees from being dismissed for operational reasons, but not all, and if everything seems to be booming in this country today, but in reality wages are only rising in the export-oriented sectors.

It’s about fear. The anger comes all by itself.

Actually, the populists are disappearing after ten years

There were enough stories from the time of the financial crisis that promoted both. Like the story of Emmely. She had been a saleswoman in a supermarket and had been dismissed without prior warning for embezzling two pawn vouchers with a total value of 1.30 euros. First the boss and then the constitutional state treated them with an absurd severity, while only a handful of financial crisis bankers ever had to answer in court, let alone go to prison.

That’s why it’s no contradiction that Germany has come through the crisis outstandingly in comparison, but today an extreme right-wing party in the Bundestag leads the opposition to a very large extent. The AfD was not founded as an anti-foreigner party, but at the height of the euro crisis as a conservative-market-liberal voice against the „communitarisation of debts“. The almost forgotten Bernd Lucke, the AfD founder, is a professor of economics and fought against countries like Greece being tricked out with (German) billions in aid. Once again it was taxpayers‘ money that was at stake. The euro crisis was a direct consequence of the financial crisis.

Of course there is a cultural battle over the question of what a modern society should look like. Of course the AfD is winning, Trump and the Italian Lega Nord are winning today because they openly serve racism in the minds of many of their voters. But the feeling of insecurity, the feeling of loss of control, whether conceited or not, has paved the way for this, it has even given people the idea to look around outside the system.

September 15, 2008 flushed parties into the middle of society that want a radically different country. The question is what happens now.

Normally, as the two researchers Trebusch and Funke found out, the populist parties disappear again. They were also able to calculate exactly how long this would take. Ten years on average. This time it will probably take a few more years. Because this financial crisis was not average – and not normal. She was the true mother of right-wing populism.

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The German economic journalist Thomas Fricke wrote in a very readable SPIEGEL column on May 11, 2018:

„What causes bitterness? One explanation is that the citizens have been constantly preached that they should please take responsibility for themselves. What is crazy is when suddenly entire industries are swept away by cheap Chinese competition. Collective bitterness could also increase because 40 percent of the population has had little or no income growth in recent years, while others have their money increased on paradisiacal islands or still get a few billion dollars on top of it, even though they have tricked with diesel. Collective bitterness arises when, as ten years ago, money is suddenly there to save big banks after people have been told for years that unfortunately nothing is left over for pensions, schools and medicines. Or when suddenly laws apply according to which – mantra of personal responsibility – even people who have not had a new job for a year are threatened with falling to Hartz IV, who have worked hard for many years and cannot find a new job so quickly due to the banking crisis or general recession.“

This analysis hits the nail on the head and also shows that the consequences of inequality pose additional threats to our democracy.

P.S.: As a complementary readings I would recommend my following five blogs:

1. „The influence of social media on the division of society“ published in German language on September 13, 2018: https://kubraconsult.blog/2018/09/13/der-einfluss-der-informationsgesellschaft-auf-die-spaltung-der-gesellschaft/ (automatic English translation see: https://translate.google.com/translate?hl=en&sl=de&tl=en&u=https%3A%2F%2Fkubraconsult.blog%2F2018%2F09%2F13%2Fder-einfluss-der-informationsgesellschaft-auf-die-spaltung-der-gesellschaft%2F )
2. „Unequal land and its consequences“ published on May 11, 2018: https://kubraconsult.blog/2018/05/11/unequal-land-and-its-consequences/ (German version published on May 8, 2018, see: https://kubraconsult.blog/2018/05/08/ungleichland-und-seine-folgen/)
3. „The life lies of the Euro“ published on July 26, 2018: https://kubraconsult.blog/2018/07/24/the-life-lies-of-the-euro/ (German version published on July 8, 2018, see: https://kubraconsult.blog/2018/07/09/die-lebensluegen-des-euro/)
4. „Why the global financial industry must be regulated and enchained“ published on June 8, 2017: https://tivot.blog/2018/02/10/why-the-global-financial-industry-must-be-regulated-and-enchained/ (German version: https://tivot.blog/2018/02/10/warum-die-globale-finanzindustrie-reguliert-und-in-ketten-gelegt-werden-muss/)
5. „Why Bitcoin&Co. are by far not the biggest issue in our global financial system“ published on November 28, 2017: https://kubraconsult.blog/2017/11/28/why-bitcoinco-are-by-far-not-the-biggest-issue-in-our-global-financial-system/ (German version: https://kubraconsult.blog/2017/11/29/warum-bitcoinco-bei-weitem-nicht-das-groesste-problem-in-unserem-globalen-finanzsystem-sind/)