The Great Recession clearly gave rise to right-wing populism
Austerity is a powerful tool for bigotry and fascism
What's to blame for the resurgence of racist right-wing populism? Since the election of President Trump, the American left has been consumed with this question, with leftists blaming the failures of neoliberal economic policy and liberals leaning more on cultural explanations.
Over at Vox, Zack Beauchamp has an entry in this debate on the latter side. He argues that left-wing economic policy actually causes people to be more racist, largely because welfare states tend to disproportionately benefit poor minorities and immigrants, and hence raise resentment among whites. But his account of economics is jarringly incomplete — in particular, skipping almost entirely over the financial collapse of 2008, the ensuing plague of austerity, and the ongoing eurozone currency crisis. And this provides by far the strongest evidence for the leftist case.
Let's review. In 2008, the whole world was convulsed by a financial crisis, leading to mass unemployment in the United States and Europe. The initial response was fairly similar in both places, featuring immense public bailouts of ailing banks. But after that, there was a sharp divergence: America generally tried large fiscal and monetary stimulus, while Europe did the opposite with spending cuts and tax increases — that is, austerity — and tight money.
Though the U.S. stimulus was inadequate, the worst was avoided, and economic conditions improved slowly, surpassing its pre-crisis GDP by 2011. In Europe — and especially within the eurozone, where the common currency became a gold standard-esque economic straitjacket — the result was disaster. So much austerity was forced on debtor nations that they fell into full-blown depression. Greece's economy is worse than that of America in the 1930s — and the eurozone as a whole only matched its pre-crisis GDP in April of last year.
Mass unemployment is electoral poison, and about every party that happened to be holding power during the worst of it — generally either center-right (Fianna Fáil in Ireland, People of Freedom in Italy) or center-left (the Socialist Party in France, the Democrats in America) — suffered serious setbacks in subsequent elections. Radical parties on both the left and right gained as establishment parties were badly discredited. New fascist parties (Golden Dawn in Greece) sprung to prominence, and older fascist-lite ones (National Front in France) gained strength.
But Beauchamp barely even references this history, restricting his argument almost entirely to welfare policy. He assembles reasonably convincing evidence and expert testimony to the effect that welfare states increase racist resentment in both the United States and Europe. But he does not mention mass unemployment, austerity, or the eurozone. These are yawning absences in an article purporting to deal with the social effects of economic policy.
Welfare is one chapter of leftist economic policy, but the first and most important one is full employment. That is the major route by which leftist economic policy can deflate right-wing nativism. Center-left parties often claim to support full employment, but they have manifestly failed to do so over the last eight years, and arguably long before that. (President Obama was plumping for austerity in February of 2010, with unemployment at 9.8 percent.) Fascists organize best in the chaos and misery of depression, as people lose faith in traditional solutions and root around for scapegoats. Is it really a coincidence that the Nazi electoral high tide came at a time of nearly 30 percent unemployment?
Now, politics is a chaotic process. It takes a lot of ideological spadework to convince people that austerity is the problem, and a lot of time and effort to build a political coalition dedicated to an anti-austerity platform. And sometimes it doesn't work well, as Beauchamp's detailed discussion of the U.K. Labour Party's difficulties since losing the elections of 2015 (on a pro-austerity platform, mind you). But savage infighting within the party is likely just as much to blame for Labour's collapse as leader Jeremy Corbyn's left-wing views. Sometimes political coalitions fracture over personality and internal struggles for dominance.
What's more, Beauchamp doesn't mention other cases where organizing has been more successful, such as Greece or Spain, where parties that didn't even exist before the crisis have leaped to the front rank of politics. In Greece, the center-left PASOK has all but ceased to exist, while the left-wing Syriza actually won in 2015 very obviously because of their anti-austerity platform (the fact that they later were prevented from implementing it at economic knifepoint by eurozone elites notwithstanding). Now, the fascists are the only credible anti-austerity party left in that beleaguered country.
It's perfectly plausible — obvious even — to say that immigration or more welfare can lead to a racist backlash, especially if you means-test benefit policy to restrict it to disproportionately minority poor people only, as American liberals tend to do. But it simply beggars belief to argue that running on full employment and an end to austerity in a time of depression is a guaranteed loser.