The electoral consequences of the financial and economic crisis in Europe

The electoral consequences of the Great Recession are analysed in this article by combining insights from economic voting theories and the literature on party system change. Taking cues from these two theoretical perspectives, the impact of the Great Recession on the stability and change of Western, Central and Eastern European party systems is assessed. The article starts from the premise that, in order to fully assess the impact of the contemporary crisis, classic economic voting hypotheses focused on incumbent parties need to be combined with accounts of long‐term party system change provided by realignment and dealignment theories. The empirical analysis draws on an original dataset of election results and economic and political indicators in 30 European democracies. The results indicate that during the Great Recession economic strain was associated with sizable losses for incumbent parties and an increasing destabilisation of Western European party systems, while its impact was significantly weaker in Central and Eastern European countries, where political rather than economic failures appeared to be more relevant. In line with the realignment perspective, the results also reveal that in Western Europe populist radical right, radical left and non‐mainstream parties benefited the most from the economic hardship, while support for mainstream parties decreased further.     

Austerity and niche parties: The electoral consequences of fiscal reforms

Austerity policies — policies of sharp reductions of a government's budget deficint involving spending cuts and tax increases — are claimed to boost support for radical political parties. We argue, counter to popular claims, that austerity measures actually reduce support for radical and niche parties. Austerity policies force traditional left-right politics to the forefront of political debate with the traditional mainstream parties having a stronger ownership over those issues. We systematically explore the impact of austerity measures on the electoral fortunes of niche parties in 16 developed countries over a 35-year period, while controlling for a number of socio-economic variables. We find that austerity policies that rely on tax increases affect radical parties on the left and the right in different ways than fiscal adjustments based on spending cuts.     

Trust in elections and the institutional design of electoral authorities: Evidence from Latin America

It is often assumed that the institutional organization of electoral management bodies (EMB) has an impact on the credibility of elections, but this proposition has been difficult to verify empirically. I examine whether the degree of autonomy from the political process of EMB administrators affects attitudes towards elections among citizens and legislators by analyzing mass and elite surveys across Latin America. I conclude that levels of confidence in the electoral process among political elites are higher in countries with politically autonomous EMBs, but this effect is muted in the analysis of citizen attitudes. This association holds after controlling for individual-level determinants of trust in elections and for other relevant country-level predictors in multilevel statistical models.     

Public opinion, party messages, and responsibility for the financial crisis in Britain

The political consequences of the crisis in world financial markets are only beginning to be understood. In this article, we take up one of these many repercussions by examining public beliefs of who’s to blame for a complex and unparalleled set of events. Analyses of survey data from Britain find that while most assign responsibility for the crisis to market actors, the likelihood of blaming governments, as opposed to blaming banks and investors, is greater among low sophisticates and Conservative Party identifiers. We further show how elite messages from competing political elites evolved over-time and were reflected in mass beliefs about the crisis. Results highlight the centrality of partisan cues and, in particular, of political sophistication in understanding the dynamics of responsibility attributions. Lastly, we estimate the consequences of blaming the government for the crisis for voter choice.     

An important failure: knowledge limits and the financial crisis

Abstract

This paper introduces a theme section on knowledge limits in and after the financial crisis. It explores how and why practitioners have generally responded less conservatively to crisis than academics, and argues that academics within a variety of problematics could do more by reflecting critically on the heroic ideas about the role of knowledge which were current across the social sciences in the decade before the crisis. It then turns to introduce the section's papers before finally raising the possibility of a more explicitly political approach to understanding finance.     

Global inequality as one of the root causes of the financial crisis: a suggested explanation

Abstract

The global financial crisis was caused because the volume of toxic assets in the financial system had grown to the point where the system could no longer cope. The dominant view among heterodox economists is that this point of critical mass was reached because of various failures in the financial system. This paper puts the accompanying view that the toxic assets were created largely in response to external pressures, a principle source of which was global inequality: while income inequality was an important factor behind the supply of those assets, wealth concentration was a major factor behind the demand for them. The policy implications of this analysis are that income distribution and wealth ownership have to be more equitably structured if global financial crises are to be avoided in the future. This is not to exclude other proposals for making the financial system more transparent and accountable. The point, rather, is that these proposals are insufficient on their own. No matter how radical the re-structuring of the financial system, as long as there remain external pressures on it to create products or to indulge in practices that are harmful to it, such products and practices will continue to be introduced and financial crises will continue to occur.     

Economic voting under the economic crisis: Evidence from Greece

Having joined the Eurozone in 2001, Greece experienced a short period of economic euphoria before confronting a major financial crisis some nine years later. In the period between joining the Eurozone and accepting the joint IMF/EU bailout package, the economic situation facing Greek voters changed dramatically. I use this setting to test the economic voting hypothesis. Using longitudinal aggregate data from 1981 to 2009, I investigate the relationship between macroeconomic indicators and vote share of the incumbent party to test the “grievance asymmetry” hypothesis. Moreover, by using individual-level data from 2004 to 2009, I investigate the extent to which retrospective sociotropic evaluations about the state of the economy are associated with support for the incumbent party. The results suggest that sociotropic economic evaluations are associated with government party support, but in a period when the economy is at its worst the incumbent has no real chance of winning and should expect support only from its long-time loyal supporters.     

The European Union and political behaviour: The shadow of the Great Recession

The symposium aims to analyse the politicisation of the European issue following the onset of the Eurozone crisis, in particular its impact on individual attitudes and voting both at the national and supranational level. By way of an introduction, we address the state of the art on the importance of the Eurozone crisis for EU politicisation, as well as outlining each article and its contribution. While our authors may sometimes focus on different dependent variables, they all speak to the question of whether the Great Recession made a lasting difference, and whether EU politicisation matters. Most articles are longitudinal, and test for changes due to the crisis (Dassonneville, Lewis- Beck and Jabbour; Ruiz-Rufino; Talving and Vasilopoulou; Jurado and Navarrete). But preoccupation with the Great Recession is also present in the articles assessing the political learning that unfolded from it (Ruiz-Rufino), or the ones which investigate whether EU effects can be detected during the post-crisis years (Talving and Vasilopoulou; Lobo and Pannico; Heyne and Lobo). Despite the diversity of approaches, and certain differences in findings, each article contributes to a major debate ongoing in the literature, especially three key debates which have arisen: the crisis’ impact on European party systems, economic voting, and the degree of legitimacy of democratic systems.     

Spatializing the future: financial expectations,EU convergence and the Eastern European Forex mortgage crisis

Existing accounts of failure to predict the financial crisis focus on the complexity of the financial system, and are less useful for understanding crises in non-securitized markets. We examine the roots of optimism leading up to the Eastern European mortgage crisis through the case of Hungary, and use recent theories of expectations, which understand them as both pragmatic and fictional practices that commonly incorporate narratives. Based on archival research and interviews with bankers, regulators and legislators, we demonstrate how the EU convergence narrative was central in forming optimistic expectations. Fusing the underspecified convergence process with an orientalist geographical imaginary, this narrative and its associated measures translated growing indebtedness as ‘catching up’ with Europe, de-emphasized exchange rate risk through a belief in European convergence and precluded crisis scenarios originating in the European Union. Our findings contribute to theories of how economic expectations are formed, stabilized and maintained by developing the concept of ‘spatializing the future’, denoting practices that handle uncertainty by charting the future as movement in concrete geographical or abstract space, along externally verifiable pathways.     

Embedded policy preferences and the formation of international arrangements after the Asian financial crisis

New bilateral and multilateral arrangements emerged after the Asian financial crisis in the areas of financial assistance, financial regulation, and exchange rate stabilization. Strikingly, however, very few such arrangements emerged at the regional level. This paper argues that (1) the success of bilateral and international arrangements was the result of policy preference compatibility among East Asian countries and (2) the countries’ policy preferences can be explained as a function of their financial system features (securities-market-based or bank-credit-based) and external balance positions (capital-dependent or capital-sufficient). Although this framework cannot predict whether countries will agree on a particular policy proposal, it can explain the diversity of their proposals, the likely lines of conflict, the nature of their compromises, and why certain proposals succeed (or fail) even without the strong support (or opposition) of major powers.     

Application of Theil group logit methods to district-level vote shares: tests of prospective and retrospective voting in the 1991, 1993, and 1997 Polish elections

Political scientists often wish to test hypotheses in the context of district-level vote-share models of elections involving more than two parties. Although a group logit framework for estimating such models was developed many years ago by Henri Theil, the complexity of its variance–covariance structure has prevented it from being widely applied. The authors demonstrate how data can be transformed to take account of the Theil variance–covariance structure so that seemingly unrelated regression can be used to estimate vote-share equations on either an intra- or inter-election basis. This method offers a simpler and more accessible way to analyze multiparty elections than the method proposed recently by Katz and King [Am. Polit. Sci. Rev. 97 (1999) 15]. The demonstration involves testing hypotheses about incumbency (retrospective) and policy (prospective) voting in the 1991, 1993, and 1997 Polish elections. The authors find that the estimations favor the policy voting hypothesis.     

The impact of EU intervention on political parties’ politicisation of Europe following the financial crisis

Abstract

This article examines the effect of the financial crisis and economic intervention by the European Union on political parties’ politicisation of the EU within national elections. Data from the Manifesto Project for elections between 2002 and 2017 in 12 Eurozone countries is used to assess how the crisis and intervention altered the saliency, position and clarity of parties’ EU policies. The analysis shows that the crisis only led to an increase in EU saliency in those states not subjected to intervention whilst intervention is actually associated with a decrease in the saliency of the EU. In terms of increasing Euroscepticism, intervention appears to exhibit a greater effect than the crisis although the results display marked asymmetry between different parties on the left and right. The same is observed to be the case for the level of blurring that parties are engaged in to mask their EU positions. The implications of the findings suggest that economic intervention within the EU has negatively impacted democracy in intervened-in member states by reducing the manoeuvrability of parties to provide voters with clear choices on the direction of European integration.     

Technocratic attitudes and voting behaviour ten years after the Eurozone crisis: Evidence from the 2019 EP elections

The onset of the Great Recession raised the profile of technocracy, or government by experts, as a contrasting model to democracy. Yet, there is little research on how attitudes towards technocracy may impact European citizens' political behaviour. Moreover, the consistency of technocracy supporters' political attitudes, especially towards the EU, is questionable. This paper uses new survey panel data collected before and after the European parliament elections in May 2019 in six countries (Belgium, Germany, Greece, Ireland, Portugal and Spain). We investigate how citizens’ technocratic attitudes affect their voting behaviour in the European elections. We find evidence that citizens with technocratic attitudes are less likely to support mainstream parties, and tend to either abstain or, if they vote, to give their vote to anti-system parties, especially from the populist right. In addition, by distinguishing technocracy supporters according to their partisanship, we conclude that technocracy is a thin ideology that can be combined with different patterns of political support: while many technocracy supporters have no party identification or support non-mainstream parties and show dissatisfaction with democracy and the EU, another subgroup of technocracy supporters identifies with a mainstream political party and show above average political support and support for the EU.     

Why reregulation after the crisis is feeble: Shadow banking,offshore financial centers,and jurisdictional competition

A crucial element in the complex chain of factors that caused the recent financial crisis was the lack of regulation and oversight in the shadow banking sector, which is largely incorporated in offshore financial centers (OFCs), but instead of swift and radical regulatory reform in that sector after the crisis, we observe only incremental and ineffective measures. Why? This paper develops an explanation based on a two‐level game. On the international level, governments are engaged in competition for financial activity. On the domestic level, governments are prone to capture by financial interest groups, but also susceptible to demands for stricter regulation by the electorate. Governments try to square the circle between the conflicting demands by adopting incremental and symbolic, but largely ineffective, reforms. The explanation is put to empirical scrutiny by tracing the regulatory initiatives on shadow banks and OFCs at the international level and within the United States and the European Union, where I focus on France, Germany, and the United Kingdom.     

Issue ownership and salience shocks: The electoral impact of Australian bushfires

As climate change increases the frequency of natural disasters, understanding how such disasters affect voting behavior has become crucial. While the literature has demonstrated that voters punish the party of the incumbent when they experience severe destruction, it remains unclear how other political parties are affected. In particular, we argue that voters shift their support to Green parties following natural disasters, given that these parties have ownership of environmental issues. We further argue that disasters decrease mainstream leftist parties’ vote share because liberal-minded voters are more likely to be the ones switching to Green parties. Empirical tests on bushfires and voting in Australia provide some support for our predictions, as all the expected effects of fires on voting manifest in state-level tests but not constituency-level tests. This suggests that our theory may operate only at certain levels of governance, paving the way for future research into why this might be.     

The electoral consequences of austerity: economic policy voting in Europe in times of crisis

Abstract

Voters typically observe macroeconomic outcomes in order to evaluate government performance. However, during crises, when the clarity of economic responsibility is poor and the economy is in recession, citizens need additional sources of information in order to form a reasoned opinion. Government policy response is one such source. This study shows on a sample of 24 European nations from 2004, 2009 and 2014 that in the post-crisis period, economic policies have emerged as one of the key predictors of vote choice, with government decisions to pursue fiscal austerity leading to significantly lower levels of incumbent support. Furthermore, the paper tests the possibility that the effect of austerity is conditioned by the clarity of responsibility. In multilevel systems, where policies are externally imposed, voters could be expected to hold incumbents less accountable for unpopular measures. The analysis, however, provides no evidence that policy effects depend on the extent to which national governments share policy responsibilities with supranational and intergovernmental institutions. Accountability for policy actions is primarily attributed at the domestic level as voters are able to identify the decisional role of national governments.     

The power and limitations of televised presidential debates: Assessing the real impact of candidate performance on public opinion and vote choice

A growing literature establishes that presidential candidates can help and hurt themselves through their performance in televised debates. Debate performance, however, is a somewhat elusive concept. Voters' post-debate assessments of the participants may be heavily colored by pre-existing attitudes toward candidates, parties, and the incumbent president. This paper attempts to tease out the “true” impact of debate performance, i.e., those times in which the candidates' superiority or inferiority on stage breaks through voters' cognitive filters. We find that debate performance is responsible for only about half of the variance in viewers' assessments of winners and losers; that it is possible to be declared the winner in the post-debate polls based entirely on factors exogenous to the debate itself; and that even a highly successful performance might yield only a narrow win in the post-debate polls. We also present evidence that, when measured properly, debate performance can actually alter candidate preferences.     

The impact of globalization on the composition of government expenditures: Evidence from panel data

According to the disciplining hypothesis, globalization restrains governments by inducing increased budgetary pressure. As a consequence, governments may attempt to curtail the welfare state, which is often seen as a drag on international competitiveness, by reducing especially their expenditures on transfers and subsidies. This globalization-induced welfare state retrenchment is potentially mitigated by citizens’ preferences to be compensated for the risks of globalization (“compensation hypothesis”). Employing two different datasets and various measures of globalization, we analyze whether globalization has indeed influenced the composition of government expenditures. For a sample of 60 countries, we examine the development of four broad expenditure categories for the period 1971–2001: capital expenditures, expenditures for goods and services, interest payments, and subsidies and other current transfers. A second dataset provides a much more detailed classification: public expenditures, expenditures for defence, order, economic affairs, environment, housing, health, recreation, education, and social expenditures. However, this second data set is only available since 1990—and only for OECD countries. Our results show that globalization did not influence the composition of government expenditures in a notable way.     

Re-examining the evidence on the electoral impact of terrorist attacks: The Spanish election of 2004

This paper re-examines the electoral effect of the 11-M terrorist attacks in Madrid. Previous research has focused on post-electoral surveys to construct counterfactuals for the evaluation of the electoral impact of the attack. Bali (Electoral Studies, 2007) claims that the terrorists attacks had an important electoral impact while Lago and Montero (2005) claim the opposite. In this paper I propose to re-examine the evidence using a methodological approach based on actual votes instead of opinions revealed by surveys, and the difference-in-differences estimator. The calculations under the counterfactual of “no terrorist attack” support the forecasts of the polls taken prior to the terrorist attack and the results of Bali (2007). The incumbent (conservative) party would have won the election with between 42% and the 45% of the votes, while the socialist party would have obtained 37% of the votes.     

Mind the gap(s): Winning,losing, and perceptions of electoral integrity in mixed-member proportional systems

This study investigates whether and how experiences of winning and losing at the ballot box shape voters' views about the integrity of the electoral process in Germany's mixed-member proportional system. Relying on comprehensive data from the German Longitudinal Election Study (GLES) 2021, the analysis provides evidence for a consistent winner-loser gap in voters' electoral-integrity perceptions, with electoral losers evaluating the electoral process systematically more negative than electoral winners. Moreover, the analysis shows that the winner-loser gap is particularly pronounced for voters who lost in two consecutive federal elections (‘repeated losers’) as well as for those who suffered electoral defeat with both their list and district votes (‘double losers’). These findings provide novel insights on how voters in mixed-member proportional systems cope with winning and losing at the ballot box, highlighting that electoral losers place (part of) the blame for their electoral defeat on the electoral process and procedures as such. In addition, the findings point to the relevance of specific features of electoral systems in shaping winner-loser gaps in electoral-integrity beliefs.