The Surge of Economic Nationalism in Western Europe
- (pp. 128-51)
AbstractWe document the surge of economic nationalist and radical-right parties in western Europe between the early 1990s and 2016. We discuss how economic shocks contribute to explaining this political shift, looking in turn at theory and evidence on the political effects of globalization, technological change, the financial and sovereign debt crises of 2008–2009 and 2011–2013, and immigration. The main message that emerges is that failures in addressing the distributional consequences of economic shocks are a key factor behind the success of nationalist and radical-right parties. We discuss how the economic explanations compete with and complement the "cultural backlash" view. We reflect on possible future political developments, which depend on the evolving intensities of economic shocks, on the strength and persistence of adjustment costs, and on changes on the supply side of politics.
CitationColantone, Italo, and Piero Stanig. 2019. "The Surge of Economic Nationalism in Western Europe." Journal of Economic Perspectives, 33 (4): 128-51. DOI: 10.1257/jep.33.4.128
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- F52 National Security; Economic Nationalism
- G01 Financial Crises
- H63 National Debt; Debt Management; Sovereign Debt
- J15 Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
- O33 Technological Change: Choices and Consequences; Diffusion Processes
- Z13 Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
The Leave campaign espoused free trade, not protectionism which Colantone and Stanig say is one element of economic conservatism. Leavers argued that once released from the shackles of the EU, Britain could conclude trade deals with other major economies (the US, Japan, and China) and also a free trade deal with the EU itself. It could be argued that this claim was unrealistic and that the advantages of frictionless trade with the EU could not be achieved without full membership. I have some sympathy with that view. But note that the problem here is protectionism on the part of the EU not of Britain. The EU is of course a protectionist organisation which discriminates in favour of its member states and against non-members such as the United States. The Leave campaign and the present government’s policies are also not isolationist. There is no suggestion that Britain should play a smaller role in NATO or other international organisations after Brexit.
On “taking back control”, I wonder if Colantone and Stanig would characterise any policy to control immigration as “nationalistic” (obviously a bad thing)? If so, then Canada and Australia which both strictly limit immigration particularly of unskilled workers would fall under this anathema. As would the United States even before the advent of President Trump. Must one be in favour of open borders to qualify as a liberal internationalist these days?
Colantone and Stanig seek to downplay the significance of immigration in the Brexit vote by in effect blaming China. In 1997 the foreign-born made up about 7% of the UK workforce. Today that percentage stands at 18%. This number is comparable to that of the United States which has always thought of itself as the land of immigration. Could this huge rise which on current policies is set to continue indefinitely really have no political implications? On this point Margalit’s argument in the same issue seems much more plausible to me.
However if one is seeking an economic explanation for rising hostility to immigration, there is one glaring economic fact not mentioned by Colantone and Stanig. This is that since 2007 productivity and real incomes in the UK have stagnated while the labour force has continued to increase at much the same rate as during the pre-crisis boom prior to 2007. Elsewhere I have argued that these two things are causally related: see my article in the International Productivity Monitor, Number 36, Spring 2019, pp. 110-141.
Centre for Macroeconomics. London School of Economics