Po­lit­i­cal chills across the con­ti­nent

The old party or­der is in a state of flux in Europe, ar­gues Bren­dan Keenan.

Irish Independent - Business Week - - FRONT PAGE - Bren­dan Keenan

THE win­ter of our dis­con­tent. The tor­rent of Shake­speare to com­mem­o­rate his 400th an­niver­sary is full of re­minders of how many of his phrases have come down the cen­turies into ev­ery­day use .

But Richard wasn’t talk­ing about the sea­son; he was talk­ing about the mood. Present global dis­con­tents are cast­ing a chill in­deed; un­warmed as yet by any son of York. In­stead, we have Don­ald Trump.

And Marine le Pen, Al­ter­na­tive fur Deutsch­land and, some would say, Jeremy Cor­byn. As for our­selves, what about Mick Wal­lace, Pearse Do­herty or, as they are be­com­ing known, the Healys-Rae? Well, maybe not.

That’s the trou­ble with the dis­con­tent. There is no doubt that it ex­ists and is wide­spread. But “dis­con­tents” might be a bet­ter word. There are many dif­fer­ent kinds. The key ques­tion is whether they all have the same causes.

You may have seen last week’s anal­y­sis by Wolf­gang Mun­chau in the ‘Fi­nan­cial Times’, about the trou­bles be­set­ting Europe’s grand coali­tions – a sub­ject bound to catch any pass­ing Ir­ish eye.

There are sev­eral of th­ese ar­range­ments where the two largest par­ties, with or without oth­ers, co­a­lesce to se­cure a ma­jor­ity in par­lia­ment. In Aus­tria, they have done it for decades.

Ger­many’s is more re­cent, although not the first of its kind. Mr Mun­chau notes that the loss of pop­u­lar­ity for th­ese grand coali­tions means that the to­tal vote of the largest par­ties is fall­ing. In some cases, they risk not be­ing able to com­mand a ma­jor­ity in fu­ture, even to­gether. It is also the case that the smaller of the two par­ties tends to lose the most.

All very rel­e­vant to our own sit­u­a­tion, of course. There was some­thing a bit glib about the com­mon as­sump­tion that a grand coali­tion be­tween the two ma­jor par­ties was the best op­tion. The com­bi­na­tion of a large Dáil ma­jor­ity and the par­ties’ terror of los­ing pop­u­lar­ity might well have threat­ened weaker, less re­spon­si­ble gov­ern­ment than even the new, ad­mit­tedly shaky, ar­range­ments.

The sit­u­a­tion in the USA, where a two-party sys­tem seems to be set in the stone of Mount Rush­more, is dif­fer­ent again. Amer­i­cans have the best po­lit­i­cal lan­guage and I liked the com­ment of a Trump sup­porter that the coun­try needed “a junk­yard dog”. More alarm­ing per­haps is the ev­i­dence that the dis­con­tents are caus­ing whites to move to the right, as rep­re­sented by Mr Trump, and non­whites to the left, whether Clin­ton or Sanders.

There is no deny­ing that the dis­con­tent is wide­spread. Econ­o­mists are try­ing to iden­tify com­mon causes. The once un­touch­able icon of glob­al­i­sa­tion is com­ing un­der in­creas­ing scru­tiny as to who are the win­ners and the losers.

One of its early crit­ics was Prof Kevin O’Rourke of TCD and Ox­ford uni­ver­sity, who points out that, while glob­al­i­sa­tion has brought enor­mous ben­e­fits over­all, there is no au­to­matic, or even ob­vi­ous, mech­a­nism for com­pen­sat­ing the losers out of the gains of the win­ners.

This may ex­plain some of the erup­tion of con­cern about cor­po­rate tax avoid­ance. Multi­na­tional com­pa­nies are the big win­ners from glob­al­i­sa­tion but the same process makes it more dif­fi­cult for gov­ern­ments to ex­tract some of their gains for dis­tri­bu­tion to the losers.

Like­wise, the in­tense debate about the pro­posed EU/US trade deal known as TITP. Much of the crit­i­cism con­cen­trates on the un­cer­tainty about the ac­tual gains which would ac­crue.

But in the cur­rent cli­mate, those who be­lieve there will be ma­jor gains may have to iden­tify the losers, and what will be done for them, if they are to have a chance of get­ting such a deal through.

Other, of­ten re­lated fac­tors in­clude the loss of trade union power, the ca­su­al­i­sa­tion of labour and, iron­i­cally enough, the rise in house­hold debt in re­cent decades. All this, with the big­gest threats from tech­nol­ogy still to come.

But dis­con­tent does dif­fer from place to place. In the Eu­ro­zone, it has much to do with the fee­ble re­cov­ery, which has barely re­stored pre-crash in­comes in the less in­debted coun­tries and left those in the most in­debted still suf­fer­ing greatly re­duced stan­dards of liv­ing. The ac­tiv­i­ties of the over­stretched mon­e­tary union, be­yond what the demo­cratic sys­tem can process, adds to feel­ings of un­ease and pow­er­less­ness.

Ger­many, which came through the Crash so well, ought to be an ex­cep­tion, and so it is to some de­gree. The So­cial Democrats have suf­fered from be­ing the ju­nior part­ner in the grand coali­tion but also be­cause Mrs Merkel has moved her party to the left, onto their turf. Ger­man dis­con­tents are not mainly eco­nomic at all, but cen­tre on wor­ries over the coun­try’s role as leader, and pos­si­bly banker, of Europe. Plus, of course, the refugee cri­sis.

This is the black swan event which could not be an­tic­i­pated or even planned for.

It goes without say­ing that healthy eco­nomic growth and con­sen­sus over mon­e­tary union would make it eas­ier to man­age – not be­cause more money would be avail­able but be­cause gov­ern­ments would be bet­ter placed po­lit­i­cally to deal with the cri­sis.

Ir­ish dis­con­tent is dif­fer­ent again, and not that easy to de­fine. Refugees do not come into it – yet – and the eco­nomic re­cov­ery is re­mark­able. If one looks back at the ESRI’s medium-term re­view of 2013, its fore­casts for 2016 are com­mend­ably ac­cu­rate – with one ex­cep­tion.

That is un­em­ploy­ment, which the re­cov­ery sce­nario put at 10.6pc in 2016. In­stead it is be­low 9pc on the lat­est fig­ures. (It also thought that 25,000 houses would be un­der con­struc­tion).

The job­less rate should be a key in­di­ca­tor of well-be­ing, so why is the mood so sour?

The rea­son seems to be the af­ter-ef­fects of the Crash. Para­dox­i­cally, those who kept their jobs can be more surly about the drop in dis­pos­able in­come than those who lost their jobs and had to ad­just to a whole new life.

Hence the prom­ises of po­lit­i­cal par­ties to make the losses go away. But that will be a slow busi­ness and it is small com­fort that his­tory says it could have been even slower.

There is also lit­tle at­tempt to dis­tin­guish the win­ners from the losers in the up­heavals of re­cent years. That can leave both feel­ing sore.

Win­ners in­clude those in se­cure jobs, those with no mort­gages or track­ers, pen­sion­ers and folk liv­ing in pleas­ant well-spaced hous­ing in city sub­urbs.

The losers num­ber those who can­not get work, are heav­ily-in­debted on vari­able loans, or who can­not find hous­ing where they need it.

The re­sult­ing dis­con­tent is so win­try that heaven help any party which tries to trans­fer some of the win­ners’ ben­e­fits to the losers.

Ev­ery­where, the Humpty Dump­tys of con­sen­sus pol­i­tics are fall­ing off their walls, but who will put them back to­gether again?

There was some­thing a bit glib in the com­mon view that a grand coali­tion was the best op­tion

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