2016-05-23

Negative Mood and Stupid Policy Fallout: Europe Swings Right

Socionomic theory says we have economic depressions because the public is literally depressed (on net, there's always a mix of mood) and this causes a decline in economic activity. Mood shifts in waves and trends, similar to how the stock market trends (because the market is also driven by mood swings that push valuations up and down as expectations rise and fall). Learn about socionomics

A very simply political model of socionomics is based on cooperation/conflict. When mood is positive, people cooperate. When mood is negative, they fight. Incumbents win elections during positive mood and challengers win during negative mood. During positive mood, the economy is growing, the stock market is rising and incumbents tend to win elections. This is a time when international treaties of cooperation are most likely to be proposed and/or ratified. When mood is negative, the economy is contracting, the stock market is falling, and incumbents tend to lose elections. This is a time when international treaties of cooperation may be abandoned or broken. Internally the same breakdown applies.

Mood is currently negative. The first thing this does is increase the odds a challenger will win an election (or seize/add power in a non-democratic country). Political volatility also rises, as it does in bear markets. We should expect more radical candidates to win, and also to expect a wider range of potential outcomes.

The U.S. presidential election provides a perfect example. The Republicans nominated Donald Trump and the Democrats are strongly supporting Bernie Sanders. Since a challenger is expected to win in 2016, this election favors Trump because the party in power is the Democrats.Trump is also running against the Republican establishment, which ups his odds of success. However, it's also possible that Sanders could win if nominated because he also represents a challenge to the status quo. If the Democrats flip to Sanders, it raises the odds of a Democrat victory. If they stick with Clinton, the socionomic trends favor Trump because he is running in tune with social mood. (Romney did not.)


Negative Mood


Social mood peaked around the year 2000, with the creation of the euro and EU serving as the capstone events. The failure to ratify the EU Constitution in some countries, and the refusal to accept a No vote by the public, were signs that the mood had shifted against unity and the EU leaders were taking an increasingly anti-democratic stance. Both of which are consistent with negative mood. The negative mood shift with regards to the euro, the conflict between the debtors and creditors, the disappearance of the political left in Central Europe, are all signs of negative mood. The breakup of the European Union and/or the Eurozone is still ahead as long as the current negative mood continues.

Up until the past couple of years, the United States appeared most likely to experience unpredictable political volatility because it was pursuing an immigration policy suited to peak social mood. Much of the world had adopted some restrictions on immigration or seen the rise of anti-immigration parties, in part because Europe's parliamentary system allowed anti-immigration parties to quickly express shifting mood. Europe also saw rising nationalism express itself in debates over the Greek debt crisis. Still, the U.S. continued on with a very out of tune immigration policy, and the result was finally delivered in 2015, when Donald Trump essentially won the GOP presidential nomination in June 2015 by announcing he would change immigration policy.

Then Angela Merkel one upped the U.S. She managed to implement a policy even more extreme than the United States and spread the effects all over the continent thanks to EU integration. The fallout is a more rapid ascent for a more radical right-wing.

Europe was always at risk of turning harder right because it has a hard right. The Anglosphere countries have relatively libertarian right-wings. Trump's economic and foreign policy are very reminiscent of pre-WWII Republican presidents, not Nazi Germany. Britain's upstart party, UKIP, is similarly libertarian in its outlook. (Corbyn and Sanders are also similarly moderate compared to actual communist and even Maosit parties in Europe.) Meanwhile in Hungary, the right wing is in power and it's only credible challenger is an even more right wing party, Jobbik, which has a paramilitary wing.

Europe was also likely to breakup because of negative mood. Central Europe is swinging right while Western Europe stays relatively centrist, and the strain between creditors and debtors is reaching the breaking point. Eventually, something was going to give.

BBC: Austria presidential vote: Postal ballots to decide result
Norbert Hofer of the Freedom Party was slightly ahead of his rival, Alexander Van der Bellen, the interior ministry said on Sunday.

If elected, Mr Hofer would be the first far-right head of state in the EU.

A key campaign issue was Europe's migrant crisis, which has seen asylum-seeker numbers soar.
RT: ‘This is my home’: Thousands gather for anti-migrant rally in Rome

Brexit looks like it will fail, but a lot of people are not so sure.
FT: Ireland frets about a Brexit vote it cannot influence
Guardian: Beyond borders: the Irish villages dreading a Brexit vote

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