Understanding the rise of the populist far right

 

This is a follow-up to last week’s post. Occasionally I receive comments on social media that point me to academic analysis that I wasn’t aware of, particularly on an issue that is not macroeconomics. Last week was one of these occasions (thanks to @yusufimaadkhan.com), and it allows me to expand on what I wrote to give it wider scope.

As a brief reminder, I argued last week that support for far right populist parties depended to a significant extent on the attitudes of political elites, and in particular leaders of mainstream parties. If these elites ostracise far right or racist views, then this discourages voters from voting for far right parties. A clear example of that in the UK was Prime Minister Edward Heath sacking Enoch Powell after his ‘rivers of blood’ speech. In contrast, if mainstream political leaders attempt to attract potential far right voters by adopting far right rhetoric on issues that concern those voters (immigration, asylum, human rights), this not only destroys any social taboos on voting for far right parties but actively encourages such votes. An example of this would be the recent behaviour of first the Conservative party and more recently the Labour party in the UK.

This idea has strong similarities to the thesis set out in a book published in 2024 by Vicente Valentim, who is Assistant Professor at IE University in Spain, called “The Normalization of the Radical Right: A Norms Theory of Political Supply and Demand” and published by Oxford University Press.

The book proposes a theory based on social norms, where growing radical-right behavior is driven by individuals who already held radical-right views, but who previously did not act on them because they thought that they were socially unacceptable.

A key implication of this theory and my previous post was that the rise of right wing populism should not be seen as a surprise, but instead represents a return to a more natural state of affairs where a significant section of the population holds pretty socially conservative (including xenophobic or racist) views and votes accordingly. The unusual period is not today but the fifty odd years after WWII, where this vote was suppressed or diverted because of strong social norms against anything that appeared to be racist behaviour. Let me quote from an interview Valentim recently gave:

“the argument in the book is that many voters already hold radical-right views before radical-right parties and politicians first become successful. However, they typically hide them to avoid social repercussions.”

An obvious reason why this strong social norm existed after WWII was that the war had been fought and won against right wing populist (in particular fascist) regimes, and the horrors that these regimes can create became well known. I have suggested that part of the reason that right wing populist parties have become more socially acceptable for some is simply the distance in time between WWII and today.

Valentim's main account of the rise in radical right parties is based on political entrepreneurs.

“The fact that [voters] do not show these views lead politicians to underestimate the electoral viability of running for politics on a radical-right platform. This leaves radical-right parties with less skilled leaders who are unable to mobilize even voters with privately held radical-right preferences to go out and vote for them.”

He calls this the ‘latency’ phase. It is followed by an ‘activation’ phase, when far right leaders do manage to mobilise far right votes, and a ‘surfacing’ phase where because

“radical-right parties and politicians become successful and enter political institutions [this] makes individuals perceive that their positions are more socially acceptable than anticipated. This has two implications. First, at the demand-side level, it means that voters, who already held radical-right views but did not show them in public, become more comfortable expressing these radical-right views. … Second, at the supply-side level, politicians learn that one can be electorally successful while espousing radical-right views.”

Valentim identifies triggers that can begin the activation stage. In Germany, for example, he points to the 2015 refugee crisis, although in my view German unification must also be important. In the interview Valentim points to Obama’s presidency as a trigger for the US, but my own view is that in both the US and UK the growing unpopularity of neoliberalism played an important supply side role in motivating right wing politicians to move to social rather than economic issues. I’m also not sure that the ‘latency’ phase can be put down to the ignorance of political entrepreneurs. To go back to the Heath/Powell moment in the UK, it was quite clear that Powell had plenty of popular support. Rather it was the social values held by mainstream political leaders and many in the media that kept Powell’s views outside the Overton window of acceptable public discourse.

While our views on what sustains social norms against very socially conservative views and what leads to their breakdown may differ, we agree on how the behaviour of mainstream politicians can magnify that breakdown. To quote from the interview again:

“mainstream actors have a crucial role to play in processes of normalization. After radical-right politicians become successful, other politicians often move closer to their position (what is often called accommodation). This move can have important consequences in further normalizing radical-right views, because it makes those views seem even more widely accepted.”

Can social norms against racist or xenophobic views, or more generally against the demonisation of minorities, be replaced once lost? Valentim thinks not, although he does point to the role of education in changing people’s views. I share this pessimism, in part because of the role that very wealthy individuals inside and outside the media are playing in supporting the far right. After all, the social norm against these views has not normally broken down because the majority of voters don’t approve of that norm, but because political elites have allowed that social norm to be broken.

While it is depressing to acknowledge the idea that it is normal for far right populist parties to have large vote shares once social norms against very socially conservative views have broken down, it does suggest that trying to find demand side explanations for the growing popularity of right wing populism may be pointless. For example, while it may be very desirable to reduce regional and other divergences in economic prosperity, and this will help stop right wing populists winning elections, doing so is unlikely to return us to a world where the populist far right is an insignificant political force. More generally, it may be pointless to look for economic or cultural demand-side factors that largely explain the growing appeal of right wing populism.

Labour, a supply side explanation for the rise of populism, and the growing acceptability of xenophobic discourse in the UK

 

I never cease to be amazed at how bad Labour politicians are at politics. It may seem arrogant for an economist to say that, but it’s not just my view, but the view of so many of the political scientists or journalists that I follow. Take, for example, the recent fall in net migration numbers, from a high point of nearly a million under the Tories to just over 200,000 last summer. That is a huge fall, and what Labour should be saying first and foremost that it is a huge fall, and secondly warning that this kind of fall will certainly not be repeated and may not be sustained. Yet what did the Prime Minister say? “It’s a step in the right direction.”

The Home Secretary has also said she wants to go further. In what should have been a huge political boost for Labour, they have created a future hostage to fortune by implying that 200,000 is still too high, and that they would like numbers to fall even more. They might get lucky of course, but equally they might not, and governments have very little ability to control immigration numbers without damaging the economy. Some have already noted that the government's desire for lower numbers is inconsistent with the OBR projections in the Budget forecasts, and that lower immigration numbers than forecast would worsen the public finances. So the government has managed to snatch future defeat from the jaws of victory.

I am bored writing about and I’m sure you are bored reading about the specifics of why Labour’s approach to immigration and similar social or cultural issues is so wrong-headed and will cost Labour a lot of electoral support. In this post I want to go further, and suggest that Labour’s approach might be at least in part responsible for a more widespread shift in the Overton window that has allowed racist, xenophobic and socially divisive discourse to become increasingly acceptable.

To do this I need to talk about demand and supply theories of the rise in right wing populism. Here demand refers to voters and their preferences. There are many of these demand side theories, which can in turn be subdivided in cultural and economic. For example, on the cultural side rapid social liberalisation is likely to produce a backlash among socially conservative voters, who will in turn be attracted by populist politicians pushing culture war issues. On the economic side it is argued rapid globalisation without a strong regional policy can lead to sections of society being left behind, and they will be attracted by populists attacking the ruling elite.

In contrast, supply side explanations look at why politicians and other key figures on the right and centre might increasingly resort to populist rhetoric and policies, and how this may in turn encourage other far right parties or groups. This is a theme I have explored a number of times in my posts. In particular the idea I have discussed is that right wing politicians, still wedded to neoliberal policies, find that these policies and the inequality they create are increasingly out of favour with the electorate. As a result they shift their campaigning on to social issues, such as immigration, in an effort to win elections. To this can be added a similar move by wealthy media barons and very rich donors, concerned that a backlash against neoliberalism might threaten their own wealth and power.

In this I have obviously been influenced by the New Labour period, where the Conservatives increasingly used immigration as its weapon of choice in attacking the government. Something very similar happened in the United States, where culture war issues moved to the fore in the contest between Republicans and Democrats. It is true that in the US immigration as an issue was less prevalent at first, but arguably this was because race was at least a subtext in a number of policy areas.

How could supply side factors account for the rise in right wing populism? An argument might go as follows. There will always be a significant section of society that holds pretty socially conservative and even racist views. As a result, political parties will emerge that cater to those views. In principle, those parties could achieve significant levels of public support (20-30%, say).

Whether they do or not depends on the attitude of the mainstream political parties to strong socially conservative or racist views. If the mainstream shun those parties representing those views and associated policies (as they used to do in the UK), by in particular labelling them as racist and by supporting bi-partisan anti-racism policies, then political support for those parties will be held in check. An electoral set up that favours two dominant parties and which makes it hard for minority parties to get representation obviously helps in this.

Conversely that share can be magnified if the right wing mainstream party attempts to attract these same voters. This is not just because by doing so they emphasise those issues and make discussion of them respectable, but also because these issues are the populists’ bread and butter. The diagram below illustrates what I mean.

If the mainstream shuns policies and discussion that is potentially or obviously racist, that squeezes the Overton window of mainstream discourse so it excludes strong socially conservative views. If instead that barrier is removed, then the window can become enlarged in a socially conservative direction. If in addition the mainstream right wing parties focus on trying to attract socially conservative voters, that can shift the Overton window even further north.

Now I personally don’t believe for a moment that this supply side model is the complete story of the rise in right wing populism. Demand side factors are clearly important. For example times of economic hardship, including periods of austerity, help lead to dissatisfaction with mainstream parties and that helps populists. But I do think supply side explanations are important. The supply side model shows how the attitudes of the politicians of the mainstream parties, and their backers in the media and among the wealthy, can play a crucial role in either suppressing or amplifying support for right wing populists. In the UK, the Conservative party in terms of policy and rhetoric have done this to such an extent that to all intents and purposes they have become a right wing populist party.

Which brings me to the Labour party and its treatment of the issues that form the bedrock of right wing populist support, like immigration and asylum. It often appears as if Labour treat these issues as emerging only from demand side influences, and in particular from the natural racism and xenophobia of the electorate. Their idea is that if they just move to satisfy this demand, then they neutralise immigration or asylum as an issue. It is like a brand leader that is losing market share to an incumbent because the incumbent has tweaked the product in a way customers like. The obvious response is for the brand leader to add that tweak to their product, taking away the incumbent’s product’s unique appeal.

This analogy is a terrible one, because the preferences of socially conservative voters are not specified in this kind of detail. People who vote for Reform, or the AfD, do not have detailed preferences over, say, the process by which immigrants can become citizens. As a result, all that will happen if a mainstream, non-populist party makes the immigration or asylum process ‘tougher’, is that populist parties will shift the goal posts and demand something tougher still. This is how the supply side model of populism works. Of course right wing populist parties will do this, because the whole basis of their support is to be 'tougher' on immigration and asylum than the government. 

This is exactly what has happened in the UK. Populist rhetoric has moved away from talking about immigrants in general and towards the demonisation of particular ethnic or religious groups, and away from a concern about current immigration numbers towards demands for deportation of legal migrants. Associating immigrants and asylum seekers with crime is part of that pattern.

Of course populists do run a risk with such escalation, not so much in compromising their core support but in uniting social liberals against them. But that risk can disappear when Labour is also moving to a much more illiberal position. [1] Instead it represents an example of the Overton window shifting towards social conservatism that I discussed above, and it is what has happened in a big way in the UK over the last year or so.

Why in the last few years in the UK has it become acceptable to publish articles in the press that invoke replacement theory, and to routinely find politicians calling for the deportation of asylum seekers and migrants irrespective of their legal status, along with suggestions that Islam and other cultures are ‘not British’? There is little evidence supporting ‘demand side’ explanations: UK voters haven't suddenly become more xenophobic or racist. Instead we need to look at ‘supply side’ explanations that focus on the behaviour of mainstream politicians [2]. In particular, a Labour government adopting very socially conservative policies on immigration and asylum may have led to a response by right wing populists that has shifted the Overton window to include more xenophobic policies and discourse.

[1] If it was just the Conservative party adopting more extremely socially conservative positions, then Labour would benefit from social liberals being radicalised to prevent right wing populists (Reform or the Conservatives) winning. However because Labour has also adopted very socially conservative policies on asylum and immigration, many social liberals will turn to smaller political parties like the Liberal Democrats and Greens, which of course is likely to benefit right wing populists under a FPTP electoral system.

[2] There are other supply side explanations which are also undoubtedly important, the two most obvious being the influence of Trump, and Musk owning and influencing social media.

The Budget suggests the Chancellor is thinking too much about short term management and too little about long term legacy

 

My posts come out on a Tuesday and Budgets are on a Wednesday. Not great timing, which is why in the past I’ve often done special posts one or two days after the budget. But so much of last Wednesday’s budget had been pre-announced that it didn’t seem worth doing this last week. So the question is whether there is anything interesting to say a week later?

For the mainstream media the answer appears to be no. Rather than using time to take a longer view, some in the media seemed to have descended into trivial detail about process and come up with a question that just gets things completely wrong. As Stephen Bush says, the idea that the Chancellor can be accused of exaggerating the pessimism pre-budget is absurd. 

If only to bring discussion back to reality, some basic points need to be made. The first is that in macroeconomic terms spending has not changed by much. Here are two charts, showing OBR projections for current public spending and receipts (mostly taxes) both before and after the budget.

In 2029/30, total spending is up 0.3% of GDP. Compare this to the previous budget, where there were much larger increases in spending compared to previous (nonsensical) plans.

I had expected spending as a share of GDP to rise further, because of the OBR’s downgrade to expected productivity and therefore real GDP, but this was largely offset by additional forecast inflation, meaning expected nominal GDP hardly changed. The declining share of spending in GDP over time remains unrealistic: not only does health spending tend to increase as a share of GDP, and defence spending is committed to increase, there are also known pressures that will become critical over the next few years. This is the main reason why claims of exaggerating pessimism are silly.

The increase in taxes is larger, at 0.6% of GDP by 2029/30, the difference being the additional headroom created on the current deficit target (going from 0.3% to 0.6% of GDP). As the second chart shows, taxes only go up at the end of the period, reflecting the decision not to increase future tax allowances with inflation.

Because taxes went up rather than spending being cut, this can be described as a left wing budget, as some in the media have. [1] However the reason why, in macroeconomic terms, this doesn’t feel like a left wing government can also be seen in the charts. Spending as a share of GDP is pretty well where it was at the end of the last Conservative government. This government had reversed the additional austerity the last government had pencilled in, but once you allow for trends in health spending and debt interest the substantial reduction in the level of public service provision that we saw under fourteen years of Tory rule has not and will not be significantly reversed.

The budget was also left wing in terms of the detailed tax increases imposed. Tax rates on interest income were raised. We had a form of wealth tax, where wealth is in the form of housing. Tax and spending changes were progressive, as this chart shows

This, and in particular getting rid of the child cap on benefits, is all good. Ian Dunt is absolutely right when he writes:

“Rachel Reeves did numerous admirable things in the Budget. People should bear this in mind the next time they claim there is no difference between the Conservatives and Labour. There is. You are mad if you claim otherwise.”

But the reason that those on the left are not dancing in the streets is that some of these changes were hard won. There is little more than a year between Labour MPs losing the whip because they voted to end the child benefit cap and Starmer or Reeves saying they weren't going to apologise for actually doing so.

What is missing from this budget, and is also missing from this government, is any sense that it has a long term plan and is putting in place the resources to achieve it. Yes Labour has its missions (or maybe not), but the whole point about successful missions is that you put substantial resources in place to achieve them. This government is either in denial that it needs to do this, or is too scared to do so. [1]

Fourteen years of Conservative government achieved two major economic goals: it crippled our public services in order to cut tax, and it crippled our economy by first macroeconomic mismanagement (austerity)) and then by leaving the EU. One key goal of this Labour government should be to reverse both. But this government has deliberately chosen to carry on starving the public sector of resources because it was too scared to tell middle-earning voters that their taxes had been comparatively low for too long and needed to rise. It has deliberately chosen to keep in place the essentials of Brexit, a policy that ensures that the standard of living for most UK voters has and will continue to stagnate, because it is too scared to tell some voters that they made a big mistake.

Undoing fourteen years of damage of course takes time. There is nothing wrong with saying we need to raise headline taxes gradually, or that we need to improve trade with the EU one step at a time. But you need to set out the roadmap. You need to tell voters where you want to go and how you are gradually going to get there.

A good example of this lack of ambition is the new mansion tax. It represents an ad hoc adjustment to a council tax system that is in urgent need of reform. Even with the new tax in place, those in less expensive houses still pay a much larger proportion of the value of the house than those in mansions. As a first step in a gradual process of updating and reform of the council tax system the mansion tax might represent a useful short term step, but there seems no appetite from the government to undertake such a reform.

Instead this government still seems to be operating in opposition mode, where every move it makes has to be measured not in terms of what the country needs but in terms of how it will play with the media and voters. How else can you explain the nonsense of leaks and briefings before the budget. This is doubly annoying because they are not very good at managing public opinion in the short term. The polls show that, but Reeves herself has made a large number of political mistakes in a relatively short amount of time.

To take one example, raising the income tax rate would have been more sensible than not indexing allowances, and it could have been done earlier. It wasn’t done because of the tax pledge, but not indexing allowances raises taxes on working people. Saying the pledge was about tax rates not only doesn’t wash with most voters, but it has allowed the media to spin out the discussion of taxation. In truth, saying you had to break the pledge because of events sounds way better politically than saying that technically we didn’t break the pledge because the wording in one part of the manifesto mattered more than the wording elsewhere.

I really wish Reeves and Starmer would stop thinking about how their policies will play with focus groups and instead start thinking about their legacies. Within a year and a half of becoming Chancellor, Gordon Brown had radically reformed how macroeconomic management was done by making the Bank independent, had introduced a new and very different set of fiscal rules (that lasted for 10 years), and set out the criteria by which the UK would eventually decide not to adopt the Euro. There are a host of economic or political projects that a Chancellor wanting to actually make a significant long term difference could choose. The only thing that approaches such a project that I can think of with Reeves is stability, but Chancellors who offer stability when public services are in perennial crisis and living standards are stagnanting will not be fondly remembered.

[1] It is possible that there is a long term reform plan for reform, but we are not being told about it, because saying what the plan is would incur political costs. For example, maybe there is a long term plan to phase out ISA’s for savings that don’t go into buying stocks and shares. It is, after all, not clear why such savings are subsidised. But if that is true, is the political cost best incurred now or nearer the election. The obvious answer suggests there is no hidden long term plan for reform.