Europe’s Ruling Elites Remain under Pressure
It has been a while since we last wrote about the AfD party (Alternative fur Deutschland/ “Alternative for Germany” – see “22% can Imagine Voting for AfD” and “The March of Germany’s EU-Skeptics Continues”). Since then, quite a bit has actually changed about the party, so here is a quick summary of what has happened.
New AfD leader Frauke Petry surveying this weekend’s state election results
Photo credit: Sean Gallup
At one point about a year ago, it actually looked like the AfD was about to break apart and once again become a political non-entity. Readers may recall that the party originally arose in opposition to the euro and the centralized socialist EU super-state propagated by Europe’s political elites and the faceless bureaucracy in Brussels.
Its former leader and founder , German economist Bernd Lucke, was actually quite focused on these subjects. He generally espoused a pro free market stance and mainly sought to restore a greater degree of subsidiarity in the EU. The party supported immigration restrictions as well, but during Lucke’s time at the helm, this seemed more of a populist device designed to attract a few more votes and not the central issue the party cared about. In many ways the AfD seemed quite similar to UKIP in the UK.
German economist Bernd Lucke, founder and former leader of the AfD
Photo credit: WDKrause
However, last year a leadership struggle broke out within the party, between Lucke’s anti-euro and anti-EU faction and a faction primarily focused on immigration, led by Frauke Petry and others. The anti-immigration faction won out in the end and took over leadership of the AfD. Lucke resigned and has in the meantime distanced himself from his former party and is denouncing its new direction.
We personally regarded this event as quite a setback, but the change in the party’s program has turned out to revive its flagging fortunes rather noticeably: almost concurrently with the change in the AfD’s leadership and political direction, the refugee crisis began to impact Germany heavily. Elections in three German states over this weekend have seen the party gate-crashing establishment strongholds like a hurricane.
This continues a trend which we have discussed in these pages for quite some time: nearly everywhere, incumbents tend to be trounced in elections these days and protest parties are garnering enormous support, regardless of whether they are regarded as right wing or left wing parties (see “Incumbents Swept from Office Around the World” for details).
Voters appear primarily motivated by the wish to get rid of established ruling elites rather than the concrete programs of the protest parties they are voting for, even though all these parties are of course in some way “populist”. Ms. Merkel and many other members of Germany’s political establishment have clearly underestimated the widespread resentment their handling of the refugee crisis would create.
Living in a Bubble
This resentment is by no means confined to “uneducated extreme right-wingers”. One often gets the impression that Germany’s mainstream press would dearly like its fast-dwindling readership to believe so, but it is simply not true. By way of anecdote, here is a remark we recently overheard that is worth relating in this context (it was uttered by a lawyer who can definitely not be associated with the “extreme right”). We are paraphrasing below:
“Western citizens have to put up with ubiquitous surveillance nowadays and are often treated like common criminals at airports. All of this is being done to ostensibly “protect us” from terrorists coming from the Middle East. At the same time, millions of people from the very same area are now crossing our borders and are essentially just being waved through. Our political elites have completely lost touch with reality and are treating us like total morons”.
The man has become so disgusted with the bulk of mainstream press reportage in recent years, that he insists on using the moniker “lying press” for it these days (which has become quite popular in Germany). This is just one example – the change in social mood epitomized by such opinions is palpable everywhere and across all social classes. It is by no means confined to so-called “radicals”.
As we noted in a recent missive on Mr. Trump, whose success is part of the same phenomenon, there is apparently a vast gulf between what people will say in public and what they actually feel and say privately. For members of the political establishment, the situation is indeed very similar to the experience of the ruling elites of the former communist Eastern Bloc countries in the late 1980s. They are living in a bubble, far removed from the real world and its concerns – and they have begun to believe their own narrative. Now they are suddenly becoming aware that the electorate is no longer prepared to go along.
How most voters (rightly) perceive the EU today.
Cartoon by Peter Schrank
One should of course not be surprised that professional high-level bureaucrats and politicians (the two classes are essentially interchangeable in Europe) have lost all touch with reality. Many people employed in exalted positions in Brussels enjoy stunning salaries and perks at de minimis pseudo tax rates, often regardless of their non-existent job qualifications or the work they are actually putting in (as a glaring example see the EU’s digital commissar, whose understanding of modern technology is such that he appears barely able to switch on a TV set). The cronies are of course well supplied with taxpayer funds as well.
These are people who have never had to prove themselves in voluntary exchanges in the marketplace. They evidently have little idea how their policies redound on the common man and that their efforts may actually be resented by those who are forced to pay their fat salaries. Meanwhile, the major qualities required for a successful political career appear to be identical with the essential character features of psychopaths.
The only reason why they haven’t been swept away completely yet is probably the fact that a great many people have become hopelessly indentured debt slaves in the inflationary modern fiat money system. Many are therefore presumably scared of upsetting the apple cart and altering the status quo – but these things tend to acquire a momentum of their own.
Many people also simply don’t have the time to look closely at the system and obtain all the information required to see through the dense fog of propaganda. Clearly though, more and more people are in fact deeply unhappy (even if they may often not be certain why) and are prepared to vent their frustration at the voting booth.
The great gravy train is increasingly in danger…
Cartoon by Iain Green
Below we show the actual election results, with a few brief comments interspersed. The states in which elections have taken place this weekend are Baden-Wuerttemberg (the third-largest German state by population), Rhineland-Palatinate (a mid-sized state) and Saxony-Anhalt (a small state on the former territory of the GDR).
As a side note: voter turnout has risen significantly in all three elections – a sign that protest parties have been able to motivate voters who had previously simply given up on voting because they were completely disenchanted with the political establishment and saw no possibility of changing anything or sending a message by voting.
Baden-Wuerttemberg is the stronghold of the Green party in Germany these days – it has turned out to be the strongest party there. Baden-Wuerttemberg is the only German state where the Greens enjoy a relative majority of the vote. The establishment parties CDU and SPD (conservatives and social democrats) have lost a lot of ground in the state – which for a very long time used to be a seemingly unshakable bastion of CDU support.
Winfried Kretschmann – Germany’s most “conservative” Green politician.
Photo credit: Thomas Niedermueller / Getty Images
The AfD went from zero votes in 2011 to 15.1% this year, and has evidently taken voters away from all political parties in the state except the Greens and the Free Democrats. The Greens in Baden-Wuerttemberg are a special case: their leader Mr. Kretschmann is probably the most “conservative” Green politician in Germany – the party is mainly putting up with him because he is evidently able to bring home the bacon.
The Free Democrats have recovered as well, which is gratifying from our perspective. In fact, we regard this as the best news coming out of this election, as the party’s political program comes closest to classical liberal positions. Meanwhile, the social democrats have been nearly wiped out in the state (consider though that the ideological and practical differences between the socialists and the Greens are barely noticeable, so this doesn’t really mean much).
In Rhineland-Palatinate, the socialists were actually able to gain a little ground, while by contrast their fellow travelers the Greens were nearly wiped out. Ms. Merkel’s CDU has lost ground there as well, which is mainly noteworthy because once upon a time the state used to be one of its strongholds as well. The Free Democratic party made it back into parliament in the state by getting more than 5% of the vote, but the AfD once again stole the show by going from zero to 12.6% of the vote.
Saxony-Anhalt is only a small state, but the election result there was a real shocker (it wasn’t completely unexpected, but the size of the shift in voter allegiances was still stunning). Traditionally there primarily the CDU as the strongest party and “Die Linke” (The Left) as the second-strongest party have been competing in the former GDR state: the CDU has always been perceived as the party of anti-communism, thus attracting those strongly opposed to the former communist system. On the other hand, Die Linke is essentially the democratic successor of the former SED (Unified Socialist Party), which ruled the GDR for decades.
While the CDU has lost a little ground in Saxony-Anhalt as well, it did remain on top as the party with the greatest electoral support overall. What is especially noteworthy in Saxony-Anhalt is the complete repudiation of the political left: the SPD has never posted a worse result in post WW2 German state elections anywhere. At a mere 10.6% is no longer a major party in the state. Die Linke has surprisingly also lost a sizable chunk of its support and not even the Greens have emerged unscathed. By contrast, the AfD has gone from zero to 24.2% of the vote, becoming the second-strongest party in the state in a single leap.
AfD top candidate André Poggenburg of Saxony-Anhalt (left), with Thuringian AfD leader Bjoern Hocke (right), celebrating the election result in Saxony-Anhalt
Photo credit: Wolfgang Rattay / Reuters
As can be seen from all this, the election was actually not really about “left” and “right”. Obviously, many people who have traditionally voted for left wing parties have decided to give their vote to a party widely perceived (and certainly described as such in the entire mainstream press) as an extreme right-wing party.
The ideologies generally considered as extreme left-wing and right-wing are in essence little but different sides of the same coin anyway – in that sense, the willingness of voters to make such a jump is perhaps not too surprising. The alleged ideological chasm is a lot less wide than most people generally realize.
As an aside, it is quite interesting that the successor party of the former communist SED is practically never denounced as a “dangerous party of the extreme left” in the German press. Never mind that its ideological forebears have ruled in a ruthless dictatorship, brutally oppressing millions of people for decades. That’s OK though, because they did so with “good intentions”. This actually goes to show how deeply rooted Marxist ideas have become in the supposedly capitalist West – the notion that Marxism would be just fine if only it were “implemented correctly” continues to be as widespread as it is fallacious.
Long faces among the apparatchiks: Saxony-Anhalt’s SPD leader Katrin Budde and Die Linke leader Wulf Gallert. Voters have fled from them in droves.
Photo credit: Jens Wolf / DPA
Considering that such a big electoral upset can happen even in Germany – a country with very low unemployment, a still fairly strong economy and high stock prices – establishment politicians elsewhere in Europe have every reason to fear even more upheaval (it couldn’t happen to a more deserving bunch). We enjoy their discomfort as just much as the discomfort of the Washington elites in the face of Mr. Trump’s ascent, although we remain extremely wary of what is rising in their wake in many places.
Superficially the recent wave of migrants combined with Ms. Merkel’s tone-deaf reaction to the resentment it has caused appears to be responsible for this stunning political backlash. However, as we have mentioned previously, we believe there is actually a deeper underlying trend that is finding expression.
The refugee crisis very likely only proved to be a convenient trigger event – if it hadn’t been that, it would have been something else. After all, the AfD was originally founded in opposition to the EU and the euro. In short, one must try to differentiate between actual causes and mere symptoms. In all likelihood, a big influx of refugees wouldn’t have provoked a similar backlash in the 1990s, a time when optimism was generally still in an upswing, this is to say, “social mood” was still positive.
One thing readers need to keep in mind about all this is that growing disenchantment with the system and resentment against the established order is likely to greatly affect political and economic stability and with it financial market volatility in coming months and years. This is not a trend that is going to go away quickly or quietly.
Charts/tables by: Der Spiegel
It is that time of the year again – our semi-annual funding drive begins today. Give us a little hand in offsetting the costs of running this blog, as advertising revenue alone is insufficient. You can help us reach our modest funding goal by donating either via paypal or bitcoin. Those of you who have made a ton of money based on some of the things we have said in these pages (we actually made a few good calls lately!), please feel free to up your donations accordingly (we are sorry if you have followed one of our bad calls. This is of course your own fault). Other than that, we can only repeat that donations to this site are apt to secure many benefits. These range from sound sleep, to children including you in their songs, to the potential of obtaining privileges in the afterlife (the latter cannot be guaranteed, but it seems highly likely). As always, we are greatly honored by your readership and hope that our special mixture of entertainment and education is adding a little value to your life!
Bitcoin address: 1DRkVzUmkGaz9xAP81us86zzxh5VMEhNke
3 Responses to “German State Elections: Establishment Challenged by Voter Revolt”
Most read in the last 20 days:
- Gold Price Skyrockets in India after Currency Ban – Part III
When Money Dies In part-I of the dispatch we talked about what happened during the first two days after Indian Prime Minister, Narendra Modi banned Rs 500 and Rs 1000 banknotes, comprising of 88% of the monetary value of cash in circulation. In part-II, we talked about the scenes, chaos, desperation, and massive loss of productive capacity that this ban had led to over the next few days. Indian prime minister Narendra Modi – another finger-wagger, as can be seen in this...
- Gold Price Skyrockets in India after Currency Ban – Part IV
A Market Gripped by Fear The Indian Prime Minister announced on 8th November 2016 that Rs 500 and Rs 1,000 banknotes would no longer be legal tender. Linked are Part-I, Part-II and Part-III updates on the rapidly encroaching police state. The economic and social mess that Modi has created is unprecedented. It will go down in history as an epitome of naivety and arrogance due to Modi’s self-centered desire to increase tax-collection at any cost. Indian jewelry...
- A Note on Gold and India – What is Driving the Gold Price?
Hidden Motives It is well-known that India's government wants to coerce its population into “modernizing” its financial behavior and abandoning its traditions. The recent ban on large-denomination banknotes was not only meant to fight corruption. Obviously, this very bad Indian has way too much cash. Just look at him, he looks suspicious! Photo via thenewsminute.com In fact, as our friend Jayant Bhandari has pointed out, fresh avenues for corruption ...
- Gold Price Skyrockets in India after Currency Ban – Part V
A Brief Recap India's Prime Minister announced on 8th November 2016 that Rs 500 and Rs 1,000 banknotes will no longer be legal tender. Linked are Part-I, Part-II, Part-III, and Part-IV, which provide updates on the rapidly encroaching police state Expect a continuation of new social engineering notifications, each sabotaging wealth-creation, confiscating people’s wealth, and tyrannizing those who refuse to be a part of the herd, in the process destroying the very backbone of the...
- Attaining Self-Destruct Velocity
Bad Monday Some Monday mornings are better than others. Others are worse than some. For one Amazon employee, this past Monday morning was particularly bad. No doubt, the poor fellow would have been better off he’d called in sick to work. Such a simple decision would have saved him from extreme agony. But, unfortunately, he showed up at Amazon’s Seattle headquarters and put on a public and painful display of madness. Good-bye cruel world! On this our planet,...
- India's Currency Debacle – An Interview with Jayant Bhandari
A Major Crisis Last week Jayant Bhandari related the story of the overnight ban of certain banknotes in India under cover of “stamping out corruption” (see Gold Price Skyrockets In India after Currency Ban Part 1 and Part 2 for the details). Banned 500 rupee banknotes The problem is inter alia that the sudden ban of these banknotes has hit the Indian economy quite hard, given that 97% of all transactions in the country are cash-based. Not only that, it has...
- Will the Swamp Swallow Trump?
Permanently Skewed TRUMP HOTEL, New York – Trump’s rambling army – professionals, amateurs, camp followers, and profiteers – is marching south, down the I-95 corridor. There, on the banks of the Potomac, it will fight its next big battle. Lieutenants in Trump's army: Bannon, Flynn & Sessions Photo credit: Drew Angerer / AFP Here at the Diary, we do not like to get involved in politics. But this is a special time in the history of our planet – a...
- All Aboard! Trump’s Express Train to the Future
Free Money! BALTIMORE – Last week, the Dow punched up above 19,000 – a new all-time record. And on Monday, the Dow, the S&P 500, the Nasdaq, and the small-cap Russell 2000 each hit new all-time highs. The last time that happened was on the last day of December 1999. Ironically, two events that were almost universally expected to trigger large stock market declines were followed by quite rapid and strong gains. Would the market have fallen if Hillary Clinton had won...
- There Are Two Types of Credit — One of Them Leads to Booms and Busts
Stumped by the Bust In the slump of a cycle, businesses that were thriving begin to experience difficulties or go under. They do so not because of firm-specific entrepreneurial errors but rather in tandem with whole sectors of the economy. People who were wealthy yesterday have become poor today. Factories that were busy yesterday are shut down today, and workers are out of jobs. What has caused the bust? The modern-day economic orthodoxy continues to be unable to provide...
- Gold Bull Market Remains Intact – Long Term Fundamentals Outweigh Short Term Market Gyrations
A Strong First Half of the Year, Followed by Another Retreat In early 2016 gold had a big bull run. The precious metal rose close to 25% this year, pushed higher in a summer rally that peaked on July 10th. Gold experienced a bumpy ride over the remainder of the summer though, as investors became increasingly concerned about a potential rate hike by the Federal Reserve. Uncertainty returned to gold market and has intensified further since then. Initially, gold rallied sharply...
- Too Early for “Inflation Bets”?
The Trump Trade After 35 years of waiting... so many false signals... so often deceived... so often disappointed... bond bears gathered on rooftops as though awaiting the Second Coming. Many times, investors have said to themselves, “This is it! This is the end of the Great Bull Market in Bonds!” The long bond's long cycle – red rectangles indicate when the post 1980 bull market was held to be “over” or “over for sure” or “100% over”, etc. We have...
- Putting an End to the Regulatory Industry
Gross Regulatory Overburden Corporate life in America these days is fraught with tedium. First the MBAs imposed their silly six sigma processes and reduced workers to mere widgets. Then the regulators went through and squashed out any fun that remained. Gone are the days when shrewd eccentrics could get rich using techno-babble to hawk the Turbo Encabulator. Alas, there are rules and regulations stymieing all creativity. In fact, as a matter of law, such restrictions are shoved...