The Political Consequences of Austerity in Southern Europe

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Lisbon, July 2013

So I have written a blog post (both in Spanish on El Diario’s Agenda Publica and in English on the LSE’s Europp blog) that seeks to explain why the Portuguese party system has stayed relatively stable in the face of austerity policies while the Greek party system has exploded. The main arguments were

1)   that the more extensive nature of party patronage in Greece has made mainstream parties more vulnerable to austerity policies . Since they relied quite heavily on the distribution of rents (public sector jobs, pensions and social benefits targeted at specific groups) as a way to reward voters, they collapsed when these tools were ruled out by Troika-imposed austerity. Portuguese parties, by contrast, could not really rely on these strategies in the run-up to the crisis because of low growth and deteriorating public finances. No growth, no leeway to distribute rents, better resilience.

2)   that responsibility was easier to attribute in the Greek case, where PASOK ruled alone in the run-up and in the direct aftermath of the bailout, whereas the Portuguese PS and PSD formed an informal coalition which diluted responsibility. I wrote that in the political context of Southern Europe, where everything you do is bound to be unpopular, the only solution left for parties if they want to survive may be to form a political cartel to defuse blame.

A few points of background: I came up with the first part of the argument while working on a paper with two Greek colleagues. Obviously, it is quite difficult to test empirically but I thought it would be worth throwing it out there. The second was inspired by existing arguments about the politics of blame avoidance in welfare state reform (for instance here). Since, I only wrote about two countries, it is obviously difficult to say which mechanism is the most important. Moreover, one can think of a number of other reasons that can explain variations in outcomes, such as historical traditions, different cultures of protest, etc. I am personally skeptical towards cultural explanations because anything can be explained by culture, but it’s probably a matter of taste. As a political economist, I tend to favour explanations that involve some form of material/economic interest.

The post has generated a number of reactions. Some said it was just utter nonsense and that I didn’t know what I was talking about. I suspect that the argument may have come across as saying that democratic politics is alive and well in Portugal as compared to Greece where democracy is on the brink of collapse. This is really not what I meant. Recent polls indicate that 88% of Portuguese citizens do not trust the government (see this as well, which points to similar developments elsewhere in Southern Europe). The question is to know when this distrust and anger translates into the collapse of existing parties (as in Greece or Italy) and when it translates into abstention and apathy (as in Portugal and perhaps Spain). This latter occurrence is of course damageable for democracy, but as far as party competition is concerned, it does not change much.

Pedro Magalhães from the Insitute of Social Sciences in Lisbon has posted a well-thought reply that takes a critical take on some of the arguments. I am sincerely honoured that somebody took the time to take on these ideas. The points raised by Magalhães have to do with the generalizability of the argument, and the idea of the political cartel as the only viable option for parties to survive. These are very valid points and I thought I’d say a few things about them.

Magalhães rightly points that the two countries where the party system seems to have been substantially transformed are precisely those where technocratic governments were formed, namely Italy and Greece. In these countries, technocratic governments or grand coalitions have generated a backlash, with the electoral surge of Beppe Grillo’s Movimento Cinque Stelle in Italy and Syriza or Golden Dawn in Greece. I think that this evolution has a lot in common with the rise of the populist radical right in so-called “consensus” democracies such as Austria, Switzerland, Denmark or the Netherlands. In these countries, coalition governments have de facto constituted a political cartel that isolated policymaking from electoral pressure for years. Writing about Switzerland and Austria in 2000, Richard Rose wrote that “a grand coalition is vulnerable to becoming a monopoly unresponsive to new issues. Sooner or later, some citizens will abandon established loyalties and vote for the rascal they do not know in preference to those that they know too well”. In many ways, this could apply very well to what has happened in Greece and Italy, and goes along Magalhães’s argument. When you seek to insulate policymaking from electoral politics, you are bound to face severe anti-system protest and electoral setbacks.

Now, when I wrote that forming a political cartel was probably the only viable option for parties to survive, I was probably wrong. In fact, after giving it some thought, I think that there are two strategies mainstream parties (those with an aspiration to govern) can pursue in the context of the crisis, and each of them has severe electoral drawbacks. Basically, there is the “plague” option and the “cholera” option.

  1. They can collude and form a cartel to implement austerity and commit not to blame each other (Kent weaver calls it « circling the wagons »), which sooner or later may cause an electoral backlash and the strengthening of anti-system parties as discussed above. This is the Greek and Italian case.
  2. Opposition parties can oppose austerity and blame the government for licking the boots of the Troika (“jump on the bandwagon”). The problem of this strategy is that agenda control in Southern Europe is extremely reduced in the current set of supranational/economic constraints. If you blame the government for austerity but want to stay in the eurozone, you will probably have to carry out the very same type of policies that you oppose when you come back to office. One way or another, you will have to betray your voters and face the electoral consequences. You can make voters believe that normal political competition can take place and that alternative agendas exist, but there is in fact only one policy option and it is largely dictated from outside.

There are still a number of questions that I still can’t figure out. For instance, why has Syriza become the first party on the left in Greece, while the Portuguese Bloco de Esquerda or the Communist party do not seem to have benefitted from the crisis? As I said elsewhere, I suspect that there is a pervasive tendency of Portuguese citizens to choose exit rather than voice, notably through emigration and/or abstention, while this tendency is not present in Greece. I would be quite curious to discover ways to investigate this link empirically.

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