The last years’ period seems to be marked by the spread of illiberalism. There are ever fewer countries that can be included in the “full democracies’ category”, and ever more of them that can be labeled as “hybrid regimes” or “authoritarian regimes”. There exists a growing temptation of many governments to subordinate justice, press, and civil society’s organizations. In international relations the force of right is more often replaced by the right of force. To be sure, these involutions often originate outside the European Union – although in Hungary the governments led by Viktor Orbán had initiated them starting 2010 – but their echo is affecting the political, social and cultural environments of Europe.
Even though the Washington Consensus – based on the values of globalism, liberalism, and democracy – has brought an increase in prosperity in almost all the countries of the world, ever less educated citizens seem to reject it and to embrace nationalistic, illiberal, and authoritarian values. They seem to fail noticing that the Washington Consensus resulted in the growing of the pie (the Gross Domestic Product) and of the individual slices of the pie (GDP/capita) in every country. Instead, citizens seem preoccupied with the increase in the price of the slices of the pie (inflation), although this is a natural result of the protection they have enjoyed through monetary and fiscal policies during the International Financial Crisis and of the COVID-19 Pandemic. Also, citizens seem to be more preoccupied with the different speeds at which the slices of the pie are growing, even though inequality (as expressed by the Gini index) has had a tendency of falling in many countries.
Precisely because the values of globalism, liberalism, and democracy are being unfairly criticized by an uneducated public, we need to preserve as many of them as possible throughout the dark period that is foreshadowing and to prepare, as individuals and as nations, to not repeating the same mistakes once this parenthesis of history will be over. For the end of the illiberal epoch is doubtless, it being marked by its own contradictions. We have this certainty, first, from the knowledge of history. Not further than 1940-1941, all of Europe (with the exception of Great Britain) was under the dominance of Nazi Germany and its allies. But democracy, that seemed completely vanquished at that time, came back forcefully after a few years. Second, our belief rests on the moral character of the laws that govern the Universe. Despotic regimes, surrounded by oligarchies that have no other goal but self-enrichment, will end up by opening the public’s eyes, no matter how indoctrinated the latter might be.
Not only the Washington Consensus is – unjustly – put under scrutiny. There is also the confusion regarding the growing irrelevance of the political distinction left vs. right and of the different values which they promote in a democracy. Or, this distinction will come back to the fore when the actual confusion shall dissipate.
There is also the confusion by which the “end of globalism” is equated with the “end of federalism” (as represented by the European Union) and with a return of policies within national borders. This aberration does not take into account the fact that no European state can withstand, alone, competition with colossi such as the USA, China, Russia, or India. And that the latter represent themselves federations of states that have no intention of decentralizing (rather, the opposite).
Common mistakes of the European Left and Right
Below, we shall summarize a few of the mistakes (to be avoided in the medium and long run) which have brought us to the unenviable situation of today. We shall start with the mistakes that can be attributed both to the European Left and Right.
- Neglecting education, at all levels
The fact that currently money can be earned relatively easily, though activities without economic relevance, by influencers, by marrying a rich person, by exploiting loopholes in the grey of black economy etc., has made the relative price of education to fall in the eyes of generations Y and Z, born after 1986. The formative role taken over by social media and the indifference of teachers have resulted into egoistic, short-term gains oriented, entitlent-expecting individuals, lacking critical spirit (the latter being delegated to Artificial Intelligence). Such “citizens”, completely bereft of a civic sense, come to vote without a minimum of knowledge or responsibility.
- Neglecting innovation and entrepreneurship
Not only civic-humanistic education was neglected in the European Union, but also the technical-engineering one. Europe has failed to create a climate harmonizing the interests of innovators, of intellectual property specialists, of producers and of financiers. Thus, in 2023, a ranking by country of the number of approval patents (https://worldpopulationreview.com/country-rankings/patents-by-country), shows that the only European state within top 10 is Germany (on the 6th place), while in top 20 we can only find France (11th), the U.K. – which is not an E.U. member (14th) and Italy (17th). To be sure, Europeans will never have the same appetite for risk like Americans (hence, the rarity of financing of the venture capital type), but they can be stimulated through public policies, like in China.
- Delegating the defence to the USA
Between 1991 and 2022, Europeans have fully enjoyed the peace dividend, benefitting from the unequivocal commitment of the USA within NATO and from the ambiguity of Russia’s revanchist pretentions. Currently, Europeans seem to have woken up from this lethargy, but the increase of the defence budgets should be complemented by a deeper cooperation in the field of weaponry unification.
- Delegating the energy supply to Russia
Germany’s industry, especially, has been for a long time the biggest beneficiary of cheap energy supplies from Russia, with an internal political consensus to this end. Currently, this policy has been completely revamped, in the quest of alternative sources of energy. Europeans seem to have understood that their own security has a cost that deserves bearing. Therefore, a return to energy being supplied from Russia should not be encouraged, even if the war in Ukraine were to end.
- Delegating the industrial production to China
For too long, the European Union has believed that in a conflictless world it can become the service supplier of the world, while delegating industrial production to countries such as China. The new geopolitical fault-lines show that this policy has been naïve and that Europe’s survival and prosperity depend on the existence of a solid manufacturing base (even though more expensive than the competitors’).
Romania too has not avoided these errors, the whole political spectrum indulging in a harmful inaction.
European Left’s mistakes
The European Left has departed from the values it had defended after World War Two, in the process losing a lot of supporters.
- Neglecting the representation of working people and abandoning meritocracy as a ladder for social ascension
Instead of mainly supporting the economically justified requests of employees (as it has done through history), the European Left has become the standard-beaver of different minorities (religious, sexual, racial etc.), losing in the process the support of the bulk of voters. Moreover, the European Left has stopped promoting meritocracy, i.e. social ascension through hard work, a fact that left the stage open for demagogues and populists, for those who encouraged social ascension through more or less illicit ways. On the other hand, the Left has failed to explain to the retirees of the baby boomer’s generation that the welfare state is not a bottomless pit and that there are economic constraints regarding both the minimum retirement age and the ratio of pensions to wages.
- Chasing away religion from the educational space
Following an Enlightenment tradition, religion and spirituality were chased away not only from politics and economy (perhaps a normal process), but also from education.
Or, without clear moral landmarks, the new generations have become easy prey to the illusion hunters from the social media and not only. It was neglected that an individual does not live only in the material sphere, but also needs a set of spiritual guidelines. And if the latter don’t exist, their place will be immediately occupied by all sorts of ideologies (communist, fascist, populist etc.). In fact, Left’s persistence in denying the formative role of religion and spirituality has led to the mistakes shown below.
- Positive discrimination of sexual and racial minorities
We can all agree that minorities of all kinds should not be negatively discriminated and should enjoy the same rights and obligations like everybody else. But this does not mean that there should be enforced a policy of positive discrimination of the said minorities, i.e. their favouring when it comes o hiring, promoting, nominating in leading positions etc. Some excesses from the past need not being corrected through excesses of an opposite sign in the present. Otherwise, there occurs a disdain for the majority of voters who – rightfully – feel wronged.
- Treating with neglect immigration, both quantitatively and qualitatively
Europe has attracted and will continue to attract a significant number of migrants from less developed states. This phenomenon has clear economic underpinnings, such as the need to replace the working force of European economies with unfavourable demographics (E.U. member states have, without exception, a negative natural growth, i.e. more deaths than births) or the necessity to fulfill low-skill works that the Europeans no longer want to perform. However, in certain European states this process of attracting immigrants went too far, number-wise. Thus, in states like Austria, Ireland or Sweden, immigrants came to represent in 2024 one fifth of total population; in Belgium, Germany or Spain – one sixth; in the Netherlands, U.K. or Slovenia – one seventh; in France, Portugal or Latvia – one eight (https://www.visualcapitalist.com/charted-the-share-of-foreign-born-population-in-oecd-countries/). Small wonder that this phenomenon has generated a reaction of rejection from the part of local population, together with a migration of the votes towards nationalist parties such as FPÖ in Austria, AfD in Germany, or RN in France. Not only quantitatively, but also qualitatively the problems of the immigrants have been treated in an inappropriate way. Instead of conditioning the immigrant’s family’s reunification on the existence of a suitable revenue from work, permission was given to large families to come, putting pressure on the social insurance budgets, which ignites, once again, the locals’ discontent.
- The failure of multiculturalism
It would have been desirable to grant permanent residence rights for immigrants’ conditional upon their passing a citizenship test, on an American or Australian model. Instead there was preferred, by Left parties, a model of multiculturalism, in fact of coexistence of profoundly incompatible cultures, religions and ways of living. Reneging on the Judeo-Christian character of the European culture by Europeans themselves has led to this jumble of values, that resulted in the ghettoization and terrorism of the newcomers who could not/wished not adapt to the way of living of local communities.
In Romania, the doctrinaire un-defining of the political Left and its weak contacts with European tendencies led to the avoidance of most of these mistakes, maybe excepting the first one (neglecting the representation of working people and abandoning meritocracy as a ladder for social ascension). In fact, the Romanian political Left has accepted, in the economic sphere, some measures that were favouring the rather affluent strata of society (abandoning progressive taxation, allowing putting one’s personal expenses on the firm’s books, not penalizing firms with negative capital etc.).
European Right’s mistakes
European Right’s mistakes are fewer than those of the Left, but not less consequential.
- Privileging the national factor at the expense of European federalism
It is well-known for a long time – and confirmed by the Letta and Draghi reports – that Europe fails by far to capitalize the economies of scale resulting from a potential single market of 450 million persons. The fragmentation of manufacturing and services, the jealous preservation of national champions lead to inefficiencies when compared to the main global competitors. The European Right was the defender of parochial interest of national capitalists, instead of creating for them a level playing field encompassing the whole European Union. And an eventual retreat within national borders, into a so-called “Europe of nations”, would only benefit the strategic rivals that have every interest to see a weakened and divided Europe.
- Neglecting monetary and fiscal orthodoxy
In the historical past, the Right was associated with sound money and sound finances policies. Currently, out of the desire to over-stimulate production and consumption (and to obtain votes in the process), the principles of monetary and fiscal prudence were abandoned, whence the swelling public debts, thrown upon the shoulders of future generations.
- Privileging in business of egoism and of short-termism
Total subordination of principles to the power of money has led to the proliferation of some practices that are profoundly detrimental from an economic and social point of view: the rise of crypto-assets, of gambling, of a manipulative social media. Products are deliberately manufactured with a short life span, in order to break and to be replaced in a short time, services are getting more invasive in individuals’ private lives, everything is for sale (at the right price).
The next two mistakes have not (yet) been committed by the European Right, but the danger of committing them looms large:
- The eventual abandoning of the climate agenda
Under the excuse “Europe, with only 7 percent of the global population cannot save the whole planet from climate catastrophes” there is a hidden desire to abandon the remarkable progress obtained by Europe until now and to which the European Right had a constructive attitude. The truth is that the other states follow, willy-nilly, the European leadership in matters of climate regulations. Whether we talk about government alternance in democracies like the USA or Brazil, or about long-term planning in autocracies such a China, the public and the politicians cannot remain indifferent to climate challenges which provoke ever more victims annually and for which the cost of inaction rises exponentially.
Continuing the replacement of energy produced from hydrocarbons with energy from alternative sources (hydro, wind, solar, nuclear) makes sense in Europe, not least because this continent is less endowed with hydrocarbons and cannot depend on their import from strategic rivals. As for the disadvantages resulting for Europe from using a more expensive energy, the solutions are linked, on one hand, to the finalizing of the Pan-European energy grid and, on the other hand, on the start of applying the so-called CBAM (Carbon Border Adjustment Mechanism) through which are penalized the products of other, less climate-conscious, countries. Thus, Europeans will play a higher price for imports, but at the same time will stimulate an ecological production in other parts of the world.
- The eventual abandoning of regulation
This is also a rather theoretical risk, in a world dominated by an acerb and rule-less competition. On one hand, Europe needs to simplify its sometimes absurd regulations. On the other hand, completely abandoning of European Regulations would be detrimental, mainly in fields such as social media, Artificial Intelligence, crypto-assets, genetically modified food etc. Until a reformed educational system will produce a discerning public, people will need protecting from errors they might commit out of greed or lack of knowledge.
In Romania, the domestic right has arduously promoted the first three mentioned mistakes (privileging the national factor at the expense of European federalism, neglecting monetary and fiscal orthodoxy, privileging in business of egoism and short-termism) and has obvious temptations to abandon the climate agenda and regulation. So that one is left wondering: from where are coming public discontent and the anti-system vote, when all the “remedies” proposed by nativist parties have already been applied? Might it be some sort of mimetic, to copy the rest of the world?
Possible ways out of the impasse
There is enough space for compromise between the European Left and Right, provided they both identify their common interest (a strong Europe in the global context) and abandon the extreme positions.
First, there is a need to make a distinction between Right parties that have hardened their discourse only as a reaction to the excesses of the Left, but remain dedicated to the European projects (such a Fratelli d’Italia) and those parties that have as a goal the weakening until irrelevance of the European Union (such as FIDESZ).
Then, the European Left should seek a reasonable compromise with the parties from the first category, abandoning in the process such losing ideas like privileging minorities, stimulating migration without limits, multiculturalism, etc. Conversely, pro-European Right parties should rebalance their national and pro-European discourses, to put their public finances in order and to continue supporting specifically European climate and regulation policies.
Let us hope that, at least at the European level, enough political leaders will be able to rise to meet these challenges.
* The above text was published in Romanian in issue no. 75 of the print magazine CRONICILE Curs De Guvernare.
(Valentin Lazea is the Chief-Economist of the National Bank of Romania)
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