Extremism and Basic Income: Part 1
How did Donald Trump become so influential in American politics? I think at least a major part of the answer is that he tapped into something of momentous political weight: the fear and anxiety that many blue-collar, Americans feel about the economy and their own financial well-being.
Right-wing populist parties and candidates have been gaining ground across the world. (See here, and here for commentary.) The truly scary thing about this trend, to my mind, is what it portends for the future. The causes of the fear and anxiety driving political extremism are likely to persist, and will probably get worse. Implementing a Basic Income — i.e., an unconditional cash grant given on an individual basis to all citizens and permanent residents — could help to suppress extremist political movements. Or so I’ll argue.
Consider the following argument:
1. Financial distress leads to an increase in political extremism (i.e., support for extremist parties and candidates).
2. The causes of recent financial distress (particularly amongst the poor and poorly educated) are likely to remain — and even get worse.
3. Therefore, we should expect to see increases in political extremism.
4. We ought to combat political extremism wherever possible.
5. A BI would be an especially effective means of reducing financial distress.
6. Therefore, we should implement a BI.
There is some room to doubt the empirical premises of this argument: 1, 2, and 5. But they seem quite plausible — to me, at any rate. In this two-part article I’ll explain and defend them. Here, in part 1, I’ll support 1–3. In part 2 I’ll assume 4, but defend 5 and the inference to 6.
Financial Distress and Political Extremism
“The rise of the middle-class — a 20th-century innovation — was a hugely important political and social development across the world. The squeezing out of that class could generate a more antagonistic, unstable and potentially dangerous politics.” – The Economist
Political extremism ebbs and flows, often with the tides of the economy. In the 1930’s, in the wake of the Great Depression, virulent forms of nationalism and xenophobia took over Europe. Germany and Italy are, of course, the obvious examples. But there were many others. In the post-World War II era, such extremism seemed to be a thing of the past. However, in the early 1990’s, Europe’s economy was again in rough waters. The unemployment rate in Germany was around 7% and climbing, and German politicians were rightly worried. As Helmut Schmidt warned:
“More people are unemployed in Chemnitz, Leuna, or Frankfurt an der Oder than in 1933, when people there elected the Nazis. If we cannot overcome this [problem], we must be prepared for everything.” (quoted in “How Germany is Attacking Recession” Fortune, June 14 1993)
Schmidt’s concerns were well-founded. A range of serious social problems, including especially crime rates, correlate quite strongly with unemployment. Most importantly for the purposes of this article, high unemployment correlates quite strongly with support for extreme — especially extreme right-wing — political parties (see Bay and Blekesaune 2002; Clark 1985). In fact, 1992 marked the first time since WWII that fascist political parties won seats in the Bundestag (that’s Germany’s legislature). Italy followed suit in 1994 with a neo-fascist party of their own. Similar events were also taking place in Russia with the Liberal Democratic party, and in France with the National Front (of the Jean-Marie Le Pen infamy). Most of the support for these parties came from, what Jeremy Rifkin called “angry, unemployed youth” (1995, pg. 214).
The practice of blaming immigrants for stealing (and corporations for outsourcing) jobs is a staple for such parties. In 1978, posters for the Front National proclaimed that, “Two Million Unemployed is Two Million Immigrants Too Many!” Similar slogans were found elsewhere. For a time the slogan for the German Republikaner party was: “Eliminate unemployment: Stop immigration!”
Even when extreme parties and candidates don’t have a direct role in the government, they indirectly influence policy. They exert a gravitational pull away from moderate views. Less extreme parties or candidates will try to attract the supporters of the extremes. News coverage of the extreme parties and candidates also normalizes their views, and can even lead such views to appear more acceptable or legitimate (Jackman and Volpert 1996).
The claim that unemployment is an important force behind right-wing extremism is an old one. (Presumably left-wing extremist parties and candidates could also benefit from economic turmoil, however the data don’t lend as much support for that conclusion.) Political economist Armin Falk and his colleagues review some of the 20th century literature on the question:
“Several studies have argued that high unemployment rates facilitated the rise of the Nazis in Germany in the 1930s (Fischer and Modigliani, 1978). An empirical analysis of voting behavior on the state level further supports this hypothesis (Frey and Weck, 1981). The relative deprivation theory offers a possible explanation for this relation (Hofstadter, 1963; Lipset, 1963; Falter and Klein, 1994). According to this theory, unemployment, or the threat of becoming unemployed, causes a loss in status and feelings of deprivation. The perceived gap between people’s expectations and achievements may trigger anxieties; these may, in turn, transform into negative feelings towards, and reactions to, groups such as immigrants and asylum seekers (Hernes and Knudsen, 1992; Runciman and Bagley, 1969). As a consequence, people may even develop a preference for authoritarian leaders, an anti-foreigner ideology, and violent predispositions.” (2011, 261–262)
This theory has continued to receive support from recent research in sociology and political science (see here, here, and here). Summarizing their study, Falk and colleagues write, “our empirical evidence suggests a systematic effect of regional unemployment on right-wing extremist criminal activities. The estimated effect is statistically highly significant and quantitatively large” (pg. 282; my italics).
Political scientists Robert Jackman and Karin Volker argue that extreme right-wing parties don’t pull most of their supporters from the ranks of the unemployed. Instead, they argue, “high aggregate rates of unemployment reveal mediocre economic performance that provides an especially propitious context for political crusades favoured by the extreme right, whose electoral support will therefore increase directly with unemployment” (pg. 508). Moreover, despite the fact that the perpetrators of right-wing extremist crimes tend to be young men (Willems et al., 1993; Neubacher, 1998), a region’s overall unemployment rate is a better predictor of such crimes than its youth unemployment rate. This suggests that the relationship between unemployment and extremism is complex.
It seems that the economic turmoil that leads to high unemployment also promotes a more generalized anxiety, and it’s the latter which leads to extremism. Falk et al. suggest that high levels of unemployment lead people to fear losing their jobs, and this psychological distress leads to a decline in the enforcement of social norms of toleration (pg. 263, 282). Those who are deeply worried about their financial prospects are less willing, or less able, to enforce social norms of tolerance, respect, and altruism. Perhaps they are too stressed to do what they believe to be right, or perhaps they feel so threatened by minorities that they are therefore willing to ignore attacks on them. Whatever the underlying psychology, it’s clear that when economic distress rises, human decency declines and extremist politicians present themselves as the solution.
The Sources of Distress: Globalization and Automation
At the end of 2016, the US unemployment rate dropped to 4.6%, which is what it was before the subprime mortgage debacle and crash of 2008, and the subsequent global economic crisis. This might be seen to suggest that the worst is behind us. However, unemployment rates are calculated based on the number of people who say that they would like a job, but don’t have one. The trouble with that measure is that large numbers of people have simply given up looking. In the last few years, about a quarter of a million people dropped out of the US labor force altogether (see here and here). This means that there are still large numbers of working aged people (primarily poor and poorly educated men) who cannot find work, or who are so demoralized that they’ve given up trying. (It’s widely acknowledged that such people were a driving force behind Donald Trump’s election victory. See here.)
Our globalized and increasingly automated economy, despite being — on the whole — a good thing, has put many uneducated workers out of a job, and made the prospects for unskilled labor seem quite bleak. As exit polls showed, the single most important issue for the majority of voters in the 2016 US presidential election — on both sides — was the economy. Many people saw Trump as someone who would do something to help with them (see here). According to the Pew Research Center:
“In the 2016 election, a wide gap in presidential preferences emerged between those with and without a college degree. College graduates backed Clinton by a 9-point margin (52%-43%), while those without a college degree backed Trump 52%-44%. This is by far the widest gap in support among college graduates and non-college graduates in exit polls dating back to 1980.”
Like many, I’m convinced that these people were mistaken. Not only will Trump almost certainly not help them, it’s unlikely that anyone could. This is because their financial strain is not the result of any local or national policies. The social, economic, and political changes that have caused their problems are global trends, and no one can reverse the course of history.
Moreover, it seems likely that we’re just getting started. The globalization of the labor force has moved many unskilled jobs to countries where labor is cheap. But, far more dangerous to unskilled workers, as I discussed in a previous article, is the threat of automation. And we’ve only just begun to tap the labor-saving (i.e., “job-eliminating”) power of technologies like artificial intelligence.
Interestingly, automation is actually a bigger threat to unskilled workers in developing economies than developed ones. Since the manufacturing sector now makes up a very small portion of jobs in developed economies (it’s less than 10% in the US), the impact of workerless manufacturing will be relatively small. The same is not true in countries like China and Taiwan, which have huge manufacturing sectors. Companies are actively trying to eliminate their dependence on these low-wage workers. Nike’s CFO, Don Blair, put it bluntly, “I think the longer-term solution to addressing a lot of these labour costs has really been engineering the labour out of the product and that really is with technology and innovation”. Thus, while the recent surge in right-wing populism has been concentrated in countries with developed economies, it wouldn’t be surprising if the trend spread to developing economies.
Conclusion/TLDR
The globalization and automation of our economy is producing financial distress, particularly amongst the poorly educated. This is not likely to stop. In fact, it’s almost certainly going to get worse as new automating technologies are developed. Given the link between financial distress and political extremism, this means that we can expect to see continuing support for extremist political parties and candidates. This is a problem. In part 2 of this article, I’ll argue that a Basic Income would be an effective solution to this problem.
