Changing Political Trends: The U.S. and Europe

Posted by Brad McMillan, CFA, CAIA, MAI

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This entry was posted on Mar 15, 2016 3:46:39 PM

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political trendsThe news here in the U.S. is all about the election. In Europe, it’s all about the migrant crisis and the politics surrounding it, at both the national and EU levels.

In many ways, the U.S. election and those in European countries boil down to the same thing: the conflict between the nation—defined as the people who “belong” thereand those who don’t belong. The conflict is expressed economically (in the form of jobs) as well as politically (in terms of which parties will best protect those who belong).

I don’t put belong in quotes because the arguments are necessarily without merit. But they do tend to be more or less assumed rather than specifically stated, which only contributes to the conflict.

Anti-immigration theme intensifies

Germany is an excellent example of the situation in Europe. The German government committed to taking a large share of the Syrian refugees, and it has done so. Recently, however, the far-right party Alternative für Deutschland (AfD) has commanded record-setting proportions of the vote in three regions, based largely on its anti-immigration stance. This is widely interpreted as a protest vote against the elites who set the refugee policy.

But it goes beyond that, as the elites themselves have expressed a similar attitude in their unwillingness to spend in order to protect “undeserving” countries such as Greece from the consequences of their own folly. Unsurprisingly, anti-EU sentiment is also a big part of the AfD message. In France, in the Netherlands, and in Britain, the same feelings are having the same electoral effect, with nativism supplanting more traditional political criteria.

Here in the U.S., of course, we are hearing a similar message from the surprise success of the election season, Donald Trump. He, too, has promised to protect those who belong against the threat of those who don’t, including Mexicans, Muslims, and others. This has clearly struck a chord in the American electorate and rocked the political establishment.

U.S. electorate turns inward

Although anti-immigrant political waves have happened before in the U.S., notably with the Irish, Italians, and Mexicans, they have largely passed over time. Here, such sentiment has typically been driven by economic troubles; when those eased, so did the sentiment. Eventually, major political parties became more eager to recruit recent immigrants than continue to exclude them. The Boston Irish are a prominent example of this.

This time may be different. With one candidate making opposition to immigration a core part of his message, a major party could build its platform around that idea. This is another take on the protectionist theme I discussed the other day—and again, it’s a change from what we have seen in the past 50 years. 

There may well be a longer-term political trend developing here. If economic growth remains weak, it looks quite possible, based on the European examples, that opposition to immigration could become a core issue for at least one party. In Europe, these parties have formed in the past decade and are enjoying increasing success. Combined with protectionist economic sentiment, large segments of both major U.S. parties may end up turning inward, away from the world.

Unless the economy improves, expect continued tension. If Trump doesn’t win the Republican nomination, I wouldn’t be surprised if he attempted to take over the party and have another try in four years—or, as in Europe, he could recruit like-minded candidates to start a third party around his ideas. Even if he were to move away from politics, others would certainly rise to take up his ideas.

In any event, U.S. politics may have changed more than we realize. It won’t be just about this election.

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