10 July 2019

Spain shows how to take the fight to populist demagogues

By

The rise of populist movements has traditionally been connected to economic and political crises. Time without number, times of turmoil and social conflict have bred demagogues feeding on people’s anger and hopelessness, offering simple answers to complex problems.

Spain has been no exception to this pattern over the last few years. The Great Recession of 2008, which hit Spain’s economy severely, gave birth to a new leftwing movement in Podemos. The party, led by former Hugo Chávez’s adviser Pablo Iglesias, burst onto the political landscape in 2014 with a now familiar anti-elitist message.

Similarly, the 2017 secessionist bid in Catalonia created political unrest throughout the country, which enabled far-right party VOX to become a decisive political force (fifth in the popular vote), something that had never occurred in the Spain’s post-Franco history.

The key to VOX’s success has been the use of a populist message based on two pillars: Spanish nationalism and an anti-immigration discourse.

Despite their notable ideological differences, both parties share the same whiff of populism that has always characterised this type of organisations. And this is good, for it means that they can be defeated appealing to the two worst enemies of populism: economic growth and political stability.

When the economy is growing, unemployment is low, and, as a result, living standards increase, left-wing populist forces suffer.

The example of Spain is paradigmatic. Since 2016, unemployment has moved from 20.5 per cent to below 14 per cent, the budget deficit has decreased by 36 percent, and GDP growth has averaged 3 per cent. Over the same period, Podemos has lost 1.4 million votes and almost 40 per cent of its seats in Congress in favour of more moderate forces, especially President Sánchez’s Socialist Party.

The same is expected to happen to VOX as soon as the dust settles in Catalonia. Even though the degree of confrontation between the Catalan and Spanish government is still very high, pragmatists on both sides will eventually reach an agreement on the region’s place in Spain. When that happens, VOX is liable to return to political insignificance.

However, economic growth and political stability cannot simply be taken for granted. The next government will need to implement structural reforms if it wants to halt the expansion of populism in the coming years. These reforms need to go in two directions.

First, Spain has the potential to become the Ireland of southern Europe, an objective that can be achieved by lowering income and corporate taxes, reforming the labour market to make it more flexible and slashing business bureaucracy to lure investment rather than putting spokes in the wheels of the economy’s productive sector.

Second, the country needs to wrap up the administrative decentralisation process that started in 1978 with the approval of the Constitution. Today, so-called autonomous communities (the administrative units into which Spain is divided) control how money is spent, but they have little say over tax policy. This considerably limits the decision-making capacity of regional governments, one of the main complaints of Catalan secessionists.

A true decentralisation would encourage fiscal competition among autonomous communities (or much better, among city councils) boosting economic growth in tax-friendly regions.  In addition, it would increase self-government at the local and regional levels, which would put downward pressure on the Catalan question.

These solutions aren’t exclusive to Spain, of course. In fact, they can be extrapolated to the wider problem of populism in Europe. Economic reforms are certainly long overdue in both France and Italy, both countries where far-right politicians are now part of the mainstream political scene.

The EU must limit its ambitions too. Countries where Euroscepticism is stronger could well turn their backs on populism if Brussels focuses less on endless integration and more on consolidating the existing economic and monetary union, preserving freedom of movement (which obviously requires a common immigration policy), and establishing a few basic rules aimed at preventing national governments from passing legislation that infringes citizens’ rights.

Let’s be clear, economic growth and political stability will not eliminate populism completely. Yet they are undoubtedly necessary conditions to turn the demagogues into the marginal players they should be.

CapX depends on the generosity of its readers. If you value what we do, please consider making a donation.

Donate

Recurring Payment

Thanks for your support

Something went wrong

An error occured, but no error message was recieved.

Please try again, or if problems persist, contact us with the above error message. We apologise for the inconvenience.

Luis Pablo de la Horra is a Ph.D. Candidate in Economics at the University of Valladolid (Spain). He has been published by several media outlets, including The American Conservative, E!Sharp and the Intellectual Takeout.