"Does Austerity Cause Polarization?"

Hübscher, Sattler and Wagner argue that "austerity policies" causes political polarization. I have some comments.

According to Hübscher, Sattler and Wagner (2023), austerity policies have become the norm in Western Democracies. In the same period, mainstream parties have seen a decline in support. A most evident trend is the decline of Social Democratic parties across Europe, that previously where catch-parties, and have experienced substantial difficulties in the 21st century.

From The Economist.

Conversely, non-mainstream parties have experienced a rise in support, where the trend of right-wing populist parties seem most salient. A host of explanations have been given to understand these two trends. Hübscher, Sattler and Wagner (hereon HSW) argue that we have to think how government policy has led voters away from traditional parties. The core logic of their argument is summarized here:

So in my words, regardless of whether the center right or left is in power, austerity policies will lead to increased polarization. I find the second case somewhat puzzling, as it seems that we assume that left-wing parties will regardless of the situation implement the austerity policies that alienate voters. Parties should be incentivized to adapt their policies to voter preferences. Hence, it seems curious that a certain policy is deemed to alieneate voters, and that parties adopt this policy uncritically.

I become even more confused when I arrive to the hypotheses. First, parties aren’t able to credibly convince voters that they can shift positions on austerity policies (first highlight). Then, the micro-level hypothesis is that voters will more attracted to parties that implement anti-austeriy policies. How can these two propositions co-exist?

What is Austerity?

I’m a bit unsure of what fiscal austerity is in the article. On the one hand, there is a proposition that there is a clear consensus about fiscal austerity. Here, it seems like a binary phenomenon, that mainstream parties on the left and right adopt.

But, in the analysis, it seems that austerity is continual phenomenon, where governments can choose a dosage of austerity. This seems important for the theory. If governments can choose the degree of austerity, then voters should plausibly believe that mainstream left-governments will implement softer policies than mainstream right-governments.

Result-wise, the distribution of the fiscal consolidation score raises concerns about how this mechanism exactly comes to play. Most of the time, it seems that there’s not a lot of fiscal consolidation going on, challenging a view that this is the norm.

So is austerity the dominating phenomenon or not? Another approach would be to look at elections that were before the supposed austerity norm. It seems difficult for me to argue that austerity is the consensus norm, and then have an empirical approach that looks at the marginal effect of the change in austerity.

What is the counter-factual?

My main reaction after reading the paper was trying to understand what the counter-factual is. Remember, the claim here is that austerity is causing political polarization. So, the implicit claim is that a lack of austerity increased support for mainstream parties.

If I take Denmark, the case I know best, “austerity-policies” where introduced by the Schlütter cabinet in the 1980’s. Schlütter took over from an incredibly political tumultuous situation in the 1970’s, where governments consistently failed in creating stable coalitions. They were short-lived, and all failed to bring Denmark out of the economic miseries that it was experiencing, with rising inflation and poor international competitiveness.

The apex of these tumultuous 1970’s was the 1973 “earthquake election”, where the number of parties in parliament was doubled from 5 to 10 parties. The biggest success was the newly founded “Progress Party”, led by Mogens Glistrup, that claimed near 16% percent of the vote, while the Social Democrats lost a third of their seats. Glistrup ran on an anti-tax platform as a reaction to the tax hikes in the preceding years and a growing national debt.

Since the 1980’s, governments have enjoyed considerable stability. In my thinking, austerity policies have depoliticized economic policy and has paved the wave for other, more value-ladden issues, such as immigration.

It’s hard to test this counter-factual, but my prior would be that a failure to solve the economic woes of the 1970’s would’ve led to an decrease in political stability and strengthened the position of challenger parties. The voters would’ve been worse off in the long run, and the would punish the politicians unforgivingly for this.

The Abstainers

One trend that HSW devote significant attention to is that abstention has risen in this period, and that a rise in austerity leads to a decline in participation. They interpret that voters are left without attractive options, and therefore choose to abstain from voting. This is in line with their theory that austerity causes an increase in political polarization.

A challenging interpretation would be that abstainees are satitisfied with the status quo. It isn’t that important for these voters to implement anti-austerity policies, why they stay home. They are indifferent to economic policy.

This isn’t probably the case for all, but it’s hard to discard the fact that some voters are satisfied with the status quo.

Parting comments

The above considerations may reflect that HSW are ambitious in the scope of their argument, and that assumptions must be made to make a novel argument on a factor that evidently seems consequential for electoral outcomes in the 21st century. There are plenty of questions that the paper raise that seem evident to pursue, and I look forward to follow the debate of the impact of austerity on voting.