The financial circumstances fail to provide a justification for backing right-wing populist candidates.
The economic predicament in Eastern Germany fails to explain the surge of right-wing populism, asserts economist Reint Gropp. This isn't to dismiss the responsibility of the traffic light coalition in contributing to radicalization through their economic policies, according to Gropp, who serves as the president of the Leibniz Institute for Economic Research in Halle.
Now, the business community and politicians have long been sounding the alarm. And their fears seem to have materialized: the far-right Alternative for Germany (AfD) emerged as the strongest force in Thuringia's state election, and only narrowly fell short in Saxony. What repercussions do you expect for the economy consequently?
Gropp differentiates between the election outcomes in Saxony and Thuringia. While a democratic party coalition has the potential for a majority in Saxony, forming a government coalition against the AfD victor is uncertain in Thuringia. Economically, things appear challenging.
What specific challenges does the economy encounter vis-à-vis the AfD?
The primary issue for businesses across various industries and regions is the scarcity of skilled labor, which results from demographic changes. In essence, each year, a substantial number of individuals retire whilst fewer young individuals enter the workforce. The AfD hasn't proposed a solution for this critical economic issue. On the contrary, their refusal to support labor migration and integrating refugees exacerbates the issue further. Consequently, Germany may simultaneously lose personnel who are essential as well as investors and businesses.
Are these concerns tied solely to the prospect of the AfD governing in Thuringia, or are such developments already set in motion by the success of the right in elections and dominance in political discourse?
The influence of the AfD is already discernible despite a lack of governmental accountability. It serves to propel other parties ahead and shift their political positions. In instances like Saxony, the CDU Minster President, Michael Kretschmer, espoused remarks in the election campaign dissimilar to his party's majority views, such as on the Ukraine conflict. In general, populist parties have a tendency to influence the policy of non-populist parties as well.
Right-wing extremism and violence have long been prevalent in parts of Saxony and Thuringia. Aren't these anticipated exoduses already underway?
Empirically, it is difficult to establish a definitive explanation for why individuals leave certain regions or refuse to relocate. However, I believe that following the electoral victory of the AfD in Thuringia, we've crossed a threshold. This provides a signal to people in locations like the U.S., France, or the UK that the political climate may be unfavorable. At least in Thuringia, the persuasive effect of the AfD's victory may persuade many skilled foreign workers to reconsider their settlement plans, resulting in complications.
Besides migration and skilled labor, are there other AfD positions concerning the economy that are problematic?
Climate change and reducing CO2 emissions will likely be a significant topic in the coming decades, alongside demographics. The claim that climate change doesn't occur, and action is unnecessary, is propagated by the AfD. This diminishes the populace's willingness to endure certain sacrifices that will undoubtedly be necessary. The costs of adapting to climate change may escalate if one fails to see the opportunities for transformation, instead only perceiving the associated costs. This could result in significant harm on a local level, hindering investments in renewable energy, for instance.
Does the economy suffer not only from the escalation of right-wing extremism, but conversely, economic dissatisfaction in the population as a cause for populism surge, specifically in Thuringia and Saxony?
If one assesses the current condition of the typical East German relative to 20 or 25 years ago, there is no apparent reason for support of right-wing populism. Mass unemployment has given way to full employment, and wages are gradually approaching those of Western Germany.
Nevertheless, many East Germans perceive themselves as reliant or disadvantaged.
These individuals compare themselves not to their own progress, but to an artificially idealized vision of how others are faring. Empirically, there is little correlation between the local economic situation and the proportion of those who vote for right-wing populism. Local economic conditions account for just 2%–3% of the vote for right-wing parties; however, the relationship between how one informs oneself and voting for right-wing populism is strong. Individuals who support right-wing populism disproportionately rely on social media for information, which provides a distorted reality.
In the realm of social media, people are frequently exposed to clips of individuals boasting about working merely two hours a day from home and earning a million euros annually. A person residing in Hoyerswerda observes this and remarks, "I put in eight or more hours daily, pay taxes, yet only earn 40,000 euros. This leaves me feeling underwhelmed, as I fall behind this fantastical, highly successful group." Such feelings of discontent aren't exclusive to East Germany. Rather, it's a phenomenon more prevalent among West Germans. In comparison, East Germans tend to act similarly to the majority of populations in countries like Hungary, Austria, Italy, or France.
Is this economic dissatisfaction in East Germany mainly a product of imagination or misconceptions?
The discontent arises from misleading or exaggerated comparisons. Numerous individuals, including marginalized groups like refugees or benefit recipients, often harbor the belief that they are afforded undue advantages by the state, whereas they have to tirelessly strive for their own achievements. This perception is far from reality.
What implications does this have on economic policy, could it potentially contribute to an anti-radicalization strategy?
Economic policy by itself may not suffice to counter radicalization. It's essential to target the fundamental causes of economic discontent, such as inequality and lack of opportunities. However, it's equally crucial to mitigate the propagation of misinformation and distorted realities. Addressing these issues may necessitate a multifaceted approach that encompasses education, media literacy, and endeavors to present a more truthful and balanced representation of reality across various media platforms.
Economic policy becomes less significant in this context than some might believe. On the other hand, a consistently communicated and executed strategy assuming economic policy is highly valuable. Regrettably, the inconsistent economic policy of the traffic light coalition has engendered widespread uncertainty in recent times. This uncertainty is likely to resonate more forcefully with individuals in East Germany, due to historical experiences, and consequently exert a stronger influence on voting behavior.
What holds less importance are specific economic policy decisions, such as generous subsidies for individual industrial projects - rather, a consistent, unambiguously communicated strategy?
Indeed. It's my hope that the election outcome serves as a reminder for the traffic light coalition in Berlin to make the most of the past year prior to the upcoming federal election to enhance their consistency, coherence, and strategic thinking in this aspect, which would significantly contribute to the battle against right-wing populism.
Max Borowski and Reint Gropp engaged in conversation.
The economic challenges posed by the AfD's stance on skilled labor migration and refugee integration could have significant repercussions, potentially leading to the loss of essential personnel and investors in Germany. Furthermore, the AfD's denial of climate change and the need for CO2 emission reductions could hinder investments in renewable energy and increase the costs of adapting to climate change.
