World Insights Bringing You best of world at one placeThe longer the legacy of the 2008-2009 crisis continues to bite, the greater the opportunities could be for the centre left to benefit
US President Barack Obama will use his State-of-the-Union address on Tuesday to make economic inequality central to his agenda for 2014. Fifty years on, from Lyndon Johnson’s ‘war on poverty’, the White House believes this core fairness issue has the potential to reboot Obama’s flailing second term of office and prove a winning national theme for the Democratic Party in November’s mid-term congressional elections.
Should Obama’s agenda secure significant traction, it would encourage campaigning on similar themes by other left-of-centre politicians right across the world. To date, the mainstream left in many countries, from Asia-Pacific, Europe to North America, has failed to capitalise electorally upon what has been the most acute period of economic crisis since at least the 1930s.
While some are therefore sceptical about the wisdom of Obama’s political strategy, US history emphasises that income and status differences can be powerful sources of appeal to disaffected strata. And such groups, a good example of which is currently unskilled and semi-skilled labour, are potentially open to powerful organisation by skilful politicians operating across the political spectrum.
In the last century alone, skilful champions of these agendas include Ronald Reagan in the 1980s and Franklin Roosevelt in the 1930s. And, in earlier political epochs, William Jennings Bryan (1890s) and Andrew Jackson (1830s) proved creative players of this game too.
While significant increases in US income inequality since the Reagan era have to date had limited political consequences, Obama passionately believes that “dangerous and growing inequality and lack of upward mobility … is the defining issue of our time”. In this context, the political challenge for the president and the Democratic Party is to effectively focus and mobilise groups disaffected by these trends into more powerful coalitions.
To this end, Obama plans to use his State-of-the-Union address to build support for his economic fairness agenda. The central thesis is that, with more and more rewards going to the highest earning 5-10 per cent of the population, it is crucial to restore the American dream of “opportunity and broad-based economic growth”.
The president will also press for specific proposals to address income inequality, including extending jobless-benefits, and expanding the federal minimum wage to at least $10 (Dh36.78). Some of these measures are popular among voters of both parties and the White House believes Republicans will pay a political price if they stand in the way of their enactment. The success of Obama’s domestic political strategy will be carefully gauged right across the world. In many developed and emerging markets, economic inequality has increased in recent decades. And this has been exacerbated by the slump in living standards in much of the world in the aftermath of the post-2008-2009 “Great Recession”.
To date, the mainstream left in many countries has failed to capitalise, electorally, upon the international economic downturn in recent years. However, their fortunes could yet be on the rise.
In Europe, for instance, United Kingdom’s Labour Party Leader Ed Miliband hopes to win office next year on a platform of voter discontent in the country over stagnant living standards. Meanwhile, Canada’s Liberal Party leader Justin Trudeau is championing a narrative of the struggling middle class in advance of the 2015 ballot in that country. And, in New Zealand, Labour Party Leader David Cunliffe hopes to seize power in an election expected this year by exploiting economic inequality issues.
Just as politicians from Reagan to Roosevelt show that Obama’s strategy to champion economic and status differences could be a winning theme in the US, history also points to the prospect that left-of-centre parties across the world may perform better electorally as the aftermath of the international economic downturn beds in. Here, professor Johannes Lindvall’s fascinating research on the political consequences of the Great Depression, and the post 2008-2009 Great Recession, is potentially instructive. He has shown that the electoral implications of both of these defining historical moments were similar to begin with: Conservative parties generally performed stronger in ballots than the mainstream left soon after both economic crises began.
As Lindvall asserts, this could be potentially explained, in part, by the fact that the initial trauma of both the Great Depression and Great Recession were widely perceived as so significant that many middle-class voters cast their lot in with conservative parties, which were seen as better able to tackle the crisis. In the two years after 2008-2009 alone, for instance, centre-left parties lost ground or were jolted by significant electoral setbacks, in wide-ranging countries in Asia-Pacific (Australia and New Zealand), to Europe (Czech Republic, Finland, Germany, the Netherlands, Sweden, the UK) and North America (in the 2010 US mid-term elections).
What is potentially even more interesting, however, is that Lindvall found that once the Great Depression was no longer seen by voters as a major continuing threat, the political pendulum tended to swing back towards parties of the centre left.
Of course, it is by no means certain that history will repeat itself. Lindvall, for instance, notes that politicians of the mainstream left today have less new agenda setting ideas and policy options than in the 1930s when an era of expansionary fiscal policies and welfare programmes blossomed.
Nonetheless, the longer the legacy of the 2008-2009 crisis continues to bite, from higher youth unemployment to stagnant living standards, the greater the opportunities could be for the centre left to benefit. Now, as in the 1930s, economic hardship is being felt in many countries not just by the poor, but also the middle classes. And, it is this discontent that left-of-centre politicians, including Obama, Miliband, Trudeau and Cunliffe, are seeking to tap into.
By Andrew Hammond
