A key feature of the current global economic and geo-political environment – a world of “fake news” and “post-truth” politics – is the loss of “trust” in traditional politicians, traditional political parties, the political process, and in many of our most important institutions. All this is being compounded by the rapidly increasing significance of social media and disruptive technologies.
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Yet, as an aside, it is somewhat hard to understand that, while “trust” has been lost in politics, most seem willing to “trust” unregulated, disruptive, developments such as UBER and Air B&B. People seem to readily “trust” and accept an unknown UBER driver, in an unspecified vehicle, and are happy to “trust” virtually all comers who may rent their homes.
This loss of “trust’ in the political class and system has been clearly evident, but to varying degrees, in recent elections – in the UK BREXIT vote, and then in Teresa May’s early election bid; in recent elections in France, Germany, Austria, and the Netherlands; in the ascension of Trump in the US; it is now at work in Japan’s snap election; and in our recent federal election, where Turnbull barely scraped back, while one in three voters didn’t vote for either of the two major parties.
For varying reasons, and in response to different developments, voters have found some way to register a protest against the “ruling class”. More often than not, it has not been a vote “for” an alternative, or for a particular policy, but rather simply finding a way to register a protest “against” those who have governed and in some sense have “failed to deliver”, or have failed to respond decisively and appropriately to some significant development.
The initial BREXIT vote was mostly over concern about immigration and, in particular, the “threat” of a flood of refugees from the Middle East, and especially from North Africa. Indeed, mass migration has been a very significant factor driving electoral outcomes across Europe.
The recent German election was most instructive. Even though Merkel is probably the most significant global leader, and even though she will probably be able to stitch up some sort of coalition to get a fourth term, her CDU/CSU party actually did poorly, with its share of the vote falling by 8.5 percentage points. She was only saved because the main competitor party the SDP’s vote share fell by 5.2 points, whereas the centre-right FDP and the hard-right AfD achieved hefty increases. In the 709 seat Bundestag, she will have 246 seats, the CDU/CSU 153, the AfD 94, the FDP 80, LInke 69 and the Greens 67.
The defining issue was how Merkel had accepted 1 million refugees – would be the same as us accepting 240,000. The result will probably be a coalition between CDU/SDU, the FDP and the Greens.
Similarly, Trump won by appealing to those who had been left behind, not sharing at all in the growth of the last couple of decades, coupled with concerns over Chinese and Mexican trade impacts, and immigration – all blamed on Washington and the political class.
The result of all this is even more fragmented government, short-term, populist and opportunist in its focus – heavily nationalistic.
The policy danger is that the world will seek to close borders, anti free trade, anti immigration, risking a reversal of all the growth and good that was generated in recent decades.
The need for leadership, with a longer-term focus has never been greater.
