The Failure of Liberal Democracy in Europe

By Jeffrey A. Tucker

The New York Times podcast took a tour of Europe as only this show can do, with astonishing production values and depth of insight. It provided a fresh look at a creeping but dramatic shift in the shape of European politics. In Italy, Hungary, France, Germany, and Poland, the reporters were able to discern the move away from the early ideals of the European Union and toward a new assertion of national identity as a political culture force.

Their treatment could easily have caricatured the movement as entirely one-sided and dangerous, away from democracy and toward authoritarianism. There are serious elements of that, together with moves toward press censorship, exclusionary migration policies, and protectionism, consistent with what one would expect from right-Hegelian ideology.

The reporters were correct to see that liberalism in Europe is on trial. But that’s a tricky word to use without filling in the details. They describe it in broad terms as a concern for human rights, civil liberties, inclusionary politics, and an aspiration for the well-being of all social classes.

I can accept that. But there is a crucial missing part of this description that the podcast assiduously avoided: commercial freedom. That, in turn, requires strict limits on government – even a wall between government and the economy. In fact, it is impossible to speak coherently about liberalism historically without making the concept of limited government central to the discussion.

This was nowhere discussed in the five-part series. And yet here is where Europe as a project has failed – particularly in the construction of massive regulatory and welfare states. This failure may eventually come to pave the way toward anti-liberal authoritarianism, unless liberalism rethinks itself right now, before it is too late.

Why Populism?

The New York Times narrative mercifully avoided the conclusion that the dramatic shift stems only from invidious intent. It went much deeper to help the listener become more comprehending of the deeper problem: that of the evident failure of the European-wide political union to meet the needs of the people.

As the reporter finally concluded, this is not an anti-democratic movement in intention; quite the opposite. The rise of populism in these countries amounts to an assertion of the will of the people against what they see as a distant elite that has denied peoples in nations the rights to govern themselves. It also means the seeming rejection of democratic liberalism, which is failing to deliver, else we wouldn’t be seeing this political sea change. It’s not enough to scream “racism,” “xenophobia,” and “bigotry”; liberalism must look inward to find precisely where it has failed.

This is also where the Times podcast completely failed. This is because it refused to speak about two overwhelming issues that have doomed European liberalism: Europe’s heavy redistributionist states and its invasive regulation of labor and commercial markets generally.

Welfarism Is Not Liberal

The naive redistributionist thinks it is absolutely no big deal to take from the haves and give it to the have-nots, in exchange for which everyone gains a greater degree of economic security. It’s a no-brainer, right? Not so much. There is the matter of justice here from the individual point of view. People don’t like having their hard-earned stuff taken from them. People can be browbeaten into going along under the following condition: the recipients of the largess are people with some kind of cultural/religious/linguistic connection to them. The welfare state, in this case, feels perhaps like sharing among a family or community.

When that sense of solidarity becomes questionable or shattered, the public consensus in favor of welfarism flips toward resentment and then anger – the blaming of the other for looting the public purse. This is not my opinion. This is the clear conclusion of the deeper scholarly literature on the topic, however little this mighty truth is spoken about in the popular press. You can review the major findings here, but let me quote the results of the biggest multinational study ever conducted on this topic.

In countries that are shaped by a low level of diversity, an increase in religious, cultural, and ethnic variety results in a lower tendency to support redistributive policies. In this case, ethnic minorities may be perceived as posing a political or economic threat to the cultural majority in the country…. [A]n increase in diversity yields a significantly negative effect on the generosity of the welfare state that is most pronounced with regard to cultural and ethnic fractionalization.

The seminal book on this scary topic came out in 2004, by Alberto Alesina and Edward Glaeser, and all research since that time has confirmed this. The insight shocked the academic class, but the results have yet to leak into popular media. In fact, the literature predicted even 15 years ago the movement away from universalism and toward “welfare chauvinism” – a two-tier system of insiders and outsiders. This is a big move against diversity and political inclusion.

In short, all research shows that in the long run, you have to choose either a generous welfare state or diversity. Europe imagined itself to be this multinational union of the free movement of peoples that have previously warred with each other for centuries. What’s more, technology and cultural change have increased opportunities for greater choice in every area of life, further fracturing the tribal preconditions of political tolerance for redistribution. The result is that the political consensus for the combination of welfare and diversity has broken down. What is being called the European “Right” today can be recast as a political attempt to save welfarism against the diversity that is eating away its substance.

What’s more, welfarism reduces economic growth, an empirical reality confirmed a thousand times over. Reduced economic growth means diminished economic opportunity and the rising perception of economic and social stagnation.

True to the social-democratic bias of the medium, the Times kept calling this “inequality.” When the center Left uses that loaded term, they don’t really mean a mathematical concept. What they mean is economic stagnation, reduced opportunity, and persistent poverty (plus the center Left likes the term “inequality” because it implies that the cause of economic stagnation is the presence of riches and the solution is redistribution).

Regardless, the populist perception that the tax-and-spend state is a rip-off, especially for the hardworking legacy population of the country and to the advantage of bureaucrats and nonworking newcomers, has support in the literature. It’s not a fake-news fantasy stemming from a bigoted bias but a grim reality that cries out for some political fix.

Labor Regulation

The European refugee crisis of 2015 brought for this generation a shocking test of the entire welfare/regulatory regime in Europe. The system failed the test. New immigrants couldn’t get work or set up a business because strict labor regulations wouldn’t allow that. The laws had been created to secure “labor rights” for unions and citizens, and that meant the exclusion of new arrivals, who had no choice but to gather in groups for their own survival, too often living off the public purse and growing in anger and radicalism. The subsequent rise of violence made the entire system politically untenable.

Now, in a genuinely liberal society without such regulation and redistribution, new arrivals are heavily incentivized to commercially integrate and culturally assimilate. After all, the wartime and postwar refugee crisis was larger and more serious but didn’t cause the same level of political upheaval that the most recent crisis has caused, to say nothing of the incredible amount of immigration the U.S. absorbed in the late 19th century. The difference between now and then is that states have erected massive barriers to entry and redistribution schemes – all premised on population homogeneity and stable growth – that do not accommodate shocking demographic changes.

Just to underscore the point here, the problem is not immigration or even mass immigration itself, contrary to the claims of the nationalist movements. The problem is that democratic liberalism has been corrupted by a gigantic overlay of regulatory restrictions and redistribution schemes that have disabled the normal capacity of the market economy to adapt to dramatic demographic changes. The problem is extremely serious, too, because it feeds into the creation of a system of governance that liberalism itself was designed to keep at bay.

National Consciousness

The saving of the massive state overlay of the society in Europe has unleashed an anti-liberal nationalism. With a new national consciousness come other problems. How exactly do we define nationhood? What is its political substance? There are five traditional identifiers: race, religion, language, geography, and lineage. In practice, all five traits are coercive toward both the included and the excluded. They cobble together a collective machinery that treats individual choice as a secondary matter. And as Jonah Goldberg never tires of pointing out, the agency in society that is most likely to do the defining and the cobbling is the state and a strong leader that seems to embody the ideal.

The real question, then, is what gives rise to the willingness and desire on the part of a people to give up a portion of their freedom and rally around group identity as a political form? Here the podcast did a fine job in identifying a few factors: the lack of economic opportunity and the rise of mass immigration after the refugee crisis in the Middle East (which in turn was precipitated by the U.S. war in Iraq and further interventions in Libya and Syria). The searching series, as enlightened as it was, nowhere came close to providing the answers, apart from a vague hint in episode 5 that capitalism needs rethinking.

In fact, what needs rethinking is not capitalism – much less the ideals of universal human rights and liberties – but the corruption of liberalism by a state that knows no limits to its powers.

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Jeffrey A. Tucker

Jeffrey A. Tucker is Editorial Director for the American Institute for Economic Research. He is the author of many thousands of articles in the scholarly and popular press and eight books in 5 languages, most recently The Market Loves You. He is also the editor of The Best of Mises. He speaks widely on topics of economics, technology, social philosophy, and culture. He is available for speaking and interviews via his emailTw | FB | LinkedIn