Following last Sunday’s European Parliament election the press has been gloomy and for a time, so was I. This is a quick post to see the forest and the trees and to consider “how much wood can these wood chucks chuck”. The post below contextualises the results of this latest election with figures describing the distribution of seats throughout the various elections, turnout, as well as popularity in France, the UK and Germany.
Considering the recent performance of several economic variables, it becomes clear that economic woes are making people disenchanted with the establishment and looking for an alternative and scape goats. While the fact that Eurosceptic parties are not dominant in the periphery (aside from Greece, perhaps) certainly implies that poor economic performance does not necessarily lead to a rise in extreme right-wing parties, the salience of the Front National (FN) in France may suggest that a negative economic environment may fuel right-wing extremism more in traditionally richer countries that are prone to attributing their unusually slower growth pace to their neighbours.
However, the extent to which the average 40% of the electorate that turned out to vote on Sunday is representative of the broader European electorate is arguable. While it is a plausible argument, it is not clear whether the discontent is with Europe or with the national politicians. In the short term, the European Parliament does not have the sort of sweeping fiscal or military powers that could see the rise of the extreme right among its ranks make a lot of damage. Schengen and the Euro are not about to die. But these parties and the discontent that they represent will continue to affect the agenda. I for one don’t think that putting an end to the Euro or to Schengen will solve anything at all. It will make us more alienated from each other putting up barriers we were lucky that the previous generation destroyed and bringing back the ghost of (failed) exchange rate manipulation. I conclude with some brief references to the fact that the fact that more integration could solve the underlying economic problem behind what discontent may actually be there.
So if you are appalled by these results, you do kind of have yourself to blame. Next time go out and vote. It is too incredibly simple not to do it!
The Results of the 2014 European Parliament Election
It’s been 3 days since the European Parliament (EP) election and at least in the UK, people are still talking about it. Here it is being sold as an earth shatering event, interpreted as having sent a clear message to the main political that dominate the establishment that the present status quo does not work. But is that really true?
Voter Distribution and the Status Quo
Looking at the evolution of the EP seat distribution, we can see that of the two main groups in the EP (Cons and Socialists) the Conservatives lost the most votes. They went from 36% of the assembly to 28%*. Meanwhile
The other point that is important to make about the European Parliament elections is turnout. As I discussed a long time ago, European Parliament elections are considered “second tier” elections, meaning that the electorate doesn’t think they really matter. So they use them to punish national leaders for whatever is going on at home, generally corruption scandals and or a slow economy. Meanwhile, national leaders don’t want to spend capital on an election that does not give them much power. From the point of view of political parties, the EU and its many positions of power have traditionally been treated as a good place to throw unwanted members away so that they don’t make too much of a fuss at home. As a result turnout for EP elections has been below 50% at least since 1999. Therefore, the extent to which the electorate that turned up to vote on Sunday is representative of the public is questionable.
Of course this is nothing unusual. Looking at the turnout for US Congress elections, it seems that for this type of election 40% might just be the equilibrium level. People just don’t seem to care much about them. So even if they are not necessarily representative, those 40% are the ones that turnout, so we should care about them. Of course we should, but given the attitude of the electorate to these elections, it might prove appropriate to at least peak into national politics of France and the UK where Eurosceptic parties won a plurality of votes (not a majority).
The Front Nationale and Turnout – Should we Worry?
I found the following figures circulating on Facebook and liked them enough to share them. They go to make the same point I just proposed.
I got curious and decided to have a look around.”On se console”, but by how much?
Unfortunately, the figures above don’t quite add up to the data I’ve found, so either that data is wrong or I’m looking at the wrong data.
According to the French Interior ministry 4.7 million people out of 46 million registered voters voted for the FN on Sunday, up from +/-1 million out of 44 million registered voters at the previous European Parliament election in 2009. Nevertheless, 6.48 million people did vote for the FN at the 2012 presidential election. The abstention rate appears as the main cause of the share of votes of the FN. More votes in 2012 only represented 17.9% of the votes, where as last Sunday’s gave it 25% of the vote. Indeed, this latest European Parliament election only brought 40% of the voters out, whereas 79% showed up for the 2012 presidential election.
So we would think that all is swell. It’s just a statistical glitch brought about by a jaded and lazy electorate that couldn’t be bothered to show up and vote. This is true to a certain extent, but it hides the rest of the picture, which might not be very pleasant. Indeed, should the other half of the electorate that showed up at the 2012 French presidential election show up, the FN might not do so well, but according to (1-month old) opinion polls, it would do just as well as the Socialists and get around 22% of the vote, leaving the UMP to lead the country.
The main problem for the left in France is that Hollande appears to be a fairly unpopular president. The least popular ever apparently.
Valls, his new prime minister who talks tough on crime and immigration, on the other hand seems to be doing better, following an upwards trajectory akin to Sarkozy’s and casting a similar shadow over Hollande as the other did over Chirac. Speaking of Sarkozy, he has made somewhat of a come back in terms of popularity, certainly outdoing Hollande or Cope (from his own party).
It’s difficult to tell what should happen. If Hollande to does not run for a second term in office lets Valls be the candidate of the Socialists, it would appear that he has more chances to win than anyone else. However, this is not 100% sure. For one, I am not sure that Valls is loved by all of the socialists and I’m fairly confident those to the left of the PS in France would actually have to think for a bit to even begin to see the differences between Valls and Le Pen, which there are many. Moreover, even if he did run, it would be quite difficult for him to campaign for change now that he is the prime minister. He’d effectively be running against his own CV, which is never easy, although not impossible.
Meanwhile, the Right’s UMP is a mess. Cope hates Fillon and Sarkozy and Fillon hate Cope. Juppe has been in jail and Chirac is too old and has been found guilty of embezzlement. That being said, Cope’s resignation yesterday opens the field for fresh leadership… A new contest should take place next month.
So, should Hollande run at his present level of popularity without the support of Valls, the UMP continue to roll around in its own waste and the FN to maintain its discipline, we could see a first round presidential election where the FN leads the way. Should this happen, I would suspect that a repetition of the 2002 second round election would take place with whichever of the two top (UMP or PS) parties not making it to the second round suggesting its supporters vote for the other main party instead of the FN or abstention. Still, it would be a mess.
UKIP: A Turning Point for British Politics?
Looking at the British leg of the EP election result, UKIP +/- swept the nation, wining 26.6% of the vote worth 4.4 million votes, to gain 33% of the EP seats assigned for the UK. However, turnout at 34% was even below that of France. To put it in another way, if UKIP had received these many votes at the previous election it would have represented 14.8% of the 29.7 million voter strong electorate that participated in that election. This is telling for two reasons:
- First, while apparently around 66% of the electorate can’t be bothered to vote for European Parliament elections in the UK, that share of non voters is not equally split between voters. European politics is not very important for most British people, thus the lack of turnout. However, it is the foremost issue for UKIP supporters. Thus, the 4.4 million votes for UKIP are likely to represent the party’s total support at the present time. Thus if the general election was held now, UKIP would probably not be top of the charts. Nevertheless, if we believe this total to be stable for now, the party has grown in strides in the last 4 years since the last general election, when it did not even get 1 million votes. If you had not been paying attention to the recent local elections in the UK, you could be forgiven your surprise at their recent performance, but if you were looking at it, it makes sense.
- Second because that 14.8% figure seems to match quite well the latest YouGov poll. According to it, UKIP is not where near where it should be to indeed represent a threat to any of the two establishment parties. 34% of the electorate would vote for Labour, 32% for the Conservatives. UKIP remains in the “Other” category, where it is clearly in the leadership, but at 15% it still gets less than half the votes that the other two main parties can expect. So the 14.8% of the total electorate that the 4.4 million votes that UKIP got at the EP election would represent, for the time being seem to be the sum total of its support in the UK. The main losers are the LibDems who have handled their term in the coalition government terribly and can now only count with 8% of voter intentions. So no immediate threat from UKIP to the establishment, although it is not unlikely that they’ll get some seats in Westminster next year.
So no, I don’t think it is a fundamental turning point in British politics. Not unless you are UKIP or the LibDems.
Conclusion – It’s the Economics Stupid!
So nothing much to worry about for now. Good!
But clearly, people are unhappy. But why? Well, for the most part, it is understandable: The EU has not grown much outside of Germany since 2009, and what little growth has happened seems to not have been much to the benefit of France’s labour market.
Admittedly it has had a tendency to grow less than the USA since the 1980s. But that is not to say that people are happy about it. This is particularly true since 2009, when the Euro-zone spiraled out of control. The sovereign debt crisis has more or less ended thanks to fiscal austerity and the ECB’s OMT. Financial markets are happy again and we can all breath in the knowledge that the world will not end. But the economic outlook of Europe is still bleak. So, it would seem that if we want to avert a political shift to polite (in the UK) or unpleasant (in France) xenophobia we should cater to the region’s economy. So what to do?
Interestingly, there’s little that either France or the UK can do:
- For one, there’s an argument to be made that wherever it is that the countries are, it is their equilibrium level of growth or that we are still on the readjustment path brought about by the onset of the sovereign debt crisis.
- On the other hand, as the countries in the periphery borrow less and as their ability to consume falls, their current account has a tendency to improve, driven by a decrease in deficits.
Trade being the zero-sum game that it is, and faced with the geographical constraints that are unavoidable, improvement in the south has inevitably meant less exports for France and for the UK.
While not the only reason, this is clearly an important factor when you consider the trading relationships between these countries.
The only one that seems to be looking for an answer is Draghi, who has been scratching his head trying to come up with a way to do QE in the Euro-Zone, which is clearly not an easy thing. But again, any such solution is temporary and manipulative of the market at best, which is not a moral judgement, but imposes some burden on policy makers that might be difficult to get rid off.
Of course I believe that there are a number of steps towards further integration that would be of considerable help in improving the European economy, particularly when taken in tandem with monetary policy. I’ve argued these points here and here (at least) and more recently here. Because nothing has happened since I argued those points, I won’t repeat them again.
* Note that a number of changes throughout sessions of the European Parliament lead to differences between the distribution of seats at the beginning of a parliament and at its end.