Okay. Okay.
I think with that, Reverend, hush, we should go ahead and make a start. Welcome, everyone, to this week's session.
In the Political Economy Financial Markets Seminar.
It's my great pleasure to introduce two very distinguished speakers for tonight's session,
both of whom are going to be talking about the interface of economic and political crisis in interwar Europe.
Our first speaker tonight is Kevin O'Rourke. He is professor of economic history at All Souls.
He received his education from Trinity College, Dublin and his master's and Ph.D. from Harvard University.
He has taught at University College, Dublin and Trinity College, Dublin and Columbia University in New York City before moving to All Souls in 2011.
He's the author of a number of articles and books on economic history and international economics.
I'm just gonna go ahead and read out a few titles, get a sense of his range and some of the things he's published lately.
He published a book with a colleague called Globalisation History The Evolution
of 19th Century Atlantic Economy that was published in 1999 by MIT Press.
He followed that with a book entitled Power and Plenty Trade War and the World Economy in the Second Millennium, published by Princeton in 2007.
And most recently, he is the co-editor of the Cambridge Economic History of Modern Europe, two volumes published by Cambridge in 2010.
He's going to speak for about 45 to 50 minutes, and then we're going to have our discussion often.
And a stock is going to deliver an intervention for us. I think it's quite well known to everybody.
Here is kind of Lord of the Manor. He's the director of the European Studies Centre, director, of course,
also senior research fellow in the Department of Politics and International Relations.
And he too has published widely on a range of different subjects, including Balkan history, affairs of the European Union,
and most recently, the rise of the radical right in Greece in particular and Europe in general.
I just want to mention a couple of things that he's just published recently.
Reforming Greece is a big task or Herculean challenge.
What he did with Dorian seeing and also from crisis to recovery, sustainable growth in Southeast Europe.
So I think we're going to then turn it over to Kevin for 45 to 50 minutes and then often we'll
give a ten minute response and then we'll give Kevin a chance to respond to the response,
if you'd like, and then we'll just open it up for general questions. So please refrain from any questions until we actually get to that point.
But that moment will turn the podcast off and then have a general discussion probably somewhere around 6:00.
Okay, please. Kind of thanks. Is it okay, podcaster, if I stand up?
Yeah. As an Irish Catholic, I've noticed Protestants Protestant better than we do.
I think it's because I stand up for him. I'm going to stand up while I sing.
So I feel that I've been invited along today under false premises in a couple of ways.
I mean, for sure,
looking at the relationship to political extremism and the business cycle is an issue where history does seem to be rhyming quite a lot these days.
And yet I think it's also a lot easier to think of ways in which today's Europe differs
from the Europe of the interwar period and to think about ways in which they are similar.
So it isn't actually clear how many lessons can be drawn from this interwar experience.
I'm sure we'll be talking about that in the discussion as we go along.
And secondly, as you'll see when I discuss the work that I've been doing on this,
you'll see that the nature of the work is such that a lot of the most interesting questions that you might actually want to ask
about the economic roots of interwar political extremism are questions that we can't handle very well given our methodology,
right. So this is a very simple paper, actually. It's a very typical paper as written by quantitative economic historians.
We're interested in average correlation. We're quantifying relationships.
And there are at least two problems with that. We want to draw lessons.
Firstly, if you're talking about something like the development of fascism or authoritarianism or whatever it is in a particular country in the 1920s,
authorities, this is a case where the individual data points are as interesting as the average correlation and probably a lot more interesting.
So that's a big caveat. And secondly, as you'll see,
the nature of the exercise is such that I can't really say very much about the mechanisms that might be underlying the correlations,
although I will be talking about them.
But when I talk about them, I'd just be drawing from bits of the historical literature that Paul Hare knows a lot more about.
I do, and we'll see if he thinks that I've been drawing, whether I've been drawn on the right bits of literature or not.
All right. I started getting interested in the interwar period back in 2008, 2009 in the winter of 28.
I noticed Barry Eichengreen noticed that output and trade were falling every bit
as quickly as they had been doing in the first 12 months of the Great Depression.
So the blue line is an index of world industrial output indexed to the pre Great Depression peak in June 1929.
On the red line is world industrial output indexed to the pre Great Recession peak in April 28.
And when we looked at this first and drove through these graphs, it looked pretty scary.
It looked like we were basically experiencing something that was on a Great Depression type of scale.
And immediately, you know, the first thing you thought was we got a rest this right,
because if it goes on for year after year after year, I mean, that's what did the damage ultimately.
It wasn't one or two years of bad growth. It was it was three or four or five years.
But that's what does the political damage that's what that's how we were thinking.
Now, no sooner had we started to worry about this then then the world economy starts to recover.
I mean, economists are known for their sense of timing. So we, we we published an article that had it up to here, and no sooner had we done that,
then the thing turned around, which is good news, but actually it was okay for that.
We were okay with this intellectually also, because the point of that first article was to say, you know,
we need to avoid the perverse policy response that followed the start of the Great Depression,
where they engaged in pro-cyclical fiscal policy, where they on several occasions raised interest rates trying to keep countries on gold and so on.
And the good news is, at the global level, we did actually do a lot better after 28 nine.
There was the London meeting in April 2009.
They agreed on well, it wasn't a very big coordinated reflation,
but there was a bit of coordinated reflation and at the least they allowed automatic
stabilisers to operate and there was a big concerted central bank response as well.
So this is sort of more or less what we expected to see and we were happy to see it, however.
As you probably know, this wireless recovery is really a story about the emerging world.
So this is the industrial output chart for the emerging world.
And what you see in the rich countries is that there's a recovery.
And then sometime around 2011, it starts to it starts to flatten out and it gets worse.
Because if you look within the rich countries, what you see is that the recovery is really driven by the United States.
In the eurozone in particular. The thing started flattening out in 2010 and has been on a clear, albeit gentle downward slide ever since.
And again, all the we were irritated and worried about this intellectually.
We were okay with it because this is kind of what the basic model would have predicted, because 2010 is, of course,
when everybody starts worrying about Greece and when reflation in the eurozone is replaced with austerity.
And any simple undergraduate model would tell you that that will not immediately but eventually lead to output declines.
And so, in fact, it turns out to be so.
The origins of the paper I'm going to talk about today are round about here.
This is when we learned what the policy response to the Greek crisis was going to be.
And if you're somebody like myself or Barry Eichengreen, you're going to instinctively start to worry that we're tightening too quickly, too early.
And what are the implications of this going to be?
And we started immediately thinking about the intentional political consequences as well as the economic consequences, because, you know,
once you start thinking about the age of war as an analogy, flawed or otherwise, it's the politics of that analogy that make it so, so striking.
And that's what happened to industrial output. Of course, the thing that really could do the damage in the long run politically is unemployment.
And again, it's the same sort of story. There's a concerted rise in unemployment during the Great Recession,
and then it starts to fall in the United States and has been on a downward trajectory ever since I started to rise.
It's the same timing. It's 2010, 2011 in the Eurozone.
And we know how high unemployment is right now in countries like Greece and Spain.
All right. So not just economic historians, policymakers, too.
Around about 2010 started to worry that this might turn sour.
Ultimately, here is a quote by somebody that many of you will know, I suppose, Adam Posen, who was still at the Bank of England in those days.
And this is from a speech he gave at home. And it's a it's a nice quotations.
Everybody was worried about the debt, the public sector debt in these days.
And he's pointing out that there are other stocks of capital that you might legitimately worry about if you're a policymaker.
For example, the stock of Democratic capital that has been built up since World War two in Europe,
maybe we should worry about handing that on intact to our children and grandchildren as well.
All right. So that's that's when we started thinking about this.
I put a post on the Irish Economy blog and then Barry's that he wrote a paper about this and and that's how it all started.
However, today is completely different to the 1930s in many ways.
We haven't come out of World War One. It came out of 5060 years of unprecedented peace and prosperity and so on, so that, you know,
the reparations and, you know, revanchism and frontiers and all of the aftermath of our side.
I mean, that's that's that's that's not got anything to do with us economically.
If you think about the welfare state, I mean, the consequences of being unemployed in Germany or somewhere in 1929,
1930 were much more radical than the consequences of being unemployed in most of our states today.
And that charity has got to have an important economic and political consequence.
And we have bigger states, you know, so even if countries aren't actively replacing their economies,
those bigger states are going to be a stabilising mechanism. The automatic stabilisers going to be working more effectively and so on.
In a sense, the proof of the pudding there is in what happens if, if, if we haven't allowed the automatic stabilisers to work.
So in a country like Ireland or Latvia or so on, you've seen these double digit declines in output of Greece since this thing starts that
that tells you what could happen if we completely ignored the automatic stabilisers.
The difference today is that it's only little countries that don't collectively matter very much,
that have been engaged in that kind of very harsh pro-cyclical policy.
In the twenties and thirties. It was all the big economies that were doing the same thing.
So I do want to emphasise that today is completely different authorities in all sorts of ways.
I'm sure we'll hear more about that in the discussion.
And yes, so this was the point of this is the point of my blogpost that sparked this paper.
Yet there were people saying, look, we don't. Not to worry about this at all, you know, because Europe is just very, very stable.
And where we you know, famously Hitler only got 2.6% of the vote in 1928.
It was a tiny, minuscule party at that time.
And now I know that these people are not Nazis or anything close.
I know that. All right. Thank you. I do know that. But, you know, some of these people are quite unpleasant.
I mean, the obvious is really Jobbik is really very unpleasant writer.
These are these are quite big numbers and these are quite big numbers before the crisis hit.
You know, and so I said, you know, can we really assume that all of this nastiness is completely in the past and I mean, ever since?
I mean, now we see the national numbers in France, of course, and that is genuinely alarming.
That was the point of that initial post of mine.
And so well that it morphed into our project, morphed into a historical paper.
So it's me, it's Barry, and it's a guy called Alan Bromhead who I don't know.
He says he is Dphil student here at Oxford.
So it's a paper by the three of us, and we ended up being sufficiently worried about drawing lessons from the past for the present,
from the past, with the present that we kept that out of the paper. This is just a purely historical paper.
We're not really so much concerned with the question of can we generalise from the 1920s and thirties to today,
but can we generalise from the German experience in this period to the experience of other countries?
So Germany is different in lots of ways.
I mean, it's famously the country where, you know, mass unemployment leads to Hitler and so on.
But can you really generalise from this? It was distinctive in all sorts of ways.
It had a particularly reactionary agrarian aristocracy before World War One, which sort of lingers into the interwar period.
They had been defeated in World War One. Not everybody was defeated by World War One.
Hard to pick people winning it, but not everybody was defeated. It was driven by all sorts of class, some logical and religious divides.
And the Weimar electoral system was famously friendly towards small parties.
So maybe the association that we think exists between unemployment and the Depression and Hitler in Germany is sui generis,
and there's nothing more general that can be said about this phenomenon.
So we decided that we would see if there was a general relationship between business cycle conditions and extremism in the interwar period.
So there's two big questions. Do we find this link in general between economic hard times and voting for extremists in other countries?
And then secondly,
but this is a minor part of the paper actually do the structural features that have been advanced as explanations for German voting patterns,
for example, they're their medieval aristocratic junker, just, you know,
are there are those sorts of structural features also at work in other countries?
As it turns out, there's not that much we can say about this, but we we do try to say something.
So what we do, we have data for 171 elections in 28 countries.
All right. And we're going to analyse the determinants of voting for extremism in these 171 elections we're interested in.
Was there a link between the business cycle and voting for extremists?
And we're interested about what conditions might have led to that link being particularly tight.
Maybe it's not a one size fits all correlation.
Maybe there are different sorts of countries, and this correlation is tighter in some types of countries than in other types of countries.
What the paper is not about is the collapse of democracy. So an Oxford College ironic approach has written a big book about this.
And well, there's a problem once you start thinking about this, because a lot of the democracies collapse before the Depression.
So we're you know, we're just not going there. All right. This is a paper purely about voting behaviour.
And then we started looking for literature.
There is some literature on voting for right wing extremists today or over the last two or three decades.
It tends to be interested in things like where you have more unemployment too.
People are more likely to vote for a right wing populist party, and they find that probably yes.
But then there are nuances. So this paper here says there is a link between unemployment and populism in
countries where there is an immigrant class that can serve as a scapegoat,
but not in countries where there are not so many immigrants. And then there's a debate about that.
So there is a statistical debate in the political science literature about this.
And anyway, this is the paper that first made us think maybe we could write a paper.
It's just looking at not election results, but an opinion surveys,
and it's finding that there is a link between between growth and self-declared support for extremism.
But of course, self-declared support for extremism isn't the same as supported at the ballot box, which is what we're really interested in.
And there's obviously huge literature, historical literature about all of these phenomena in the interwar period,
but we couldn't find exactly what we were looking for. Right. There's a there's a big literature on the rise of the fascists and the Nazis.
There is a quantitative literature on the determinants of the mood for Hitler within Germany.
And I'm going to be referring to that briefly. But we couldn't find similar quantitative literatures that talked in general about
links between right wing extremism and the business cycle across countries.
And so we felt that there was a definite gap in the market there.
Let me talk a little bit about the literature on Germany, because it's the best developed for obvious reasons.
And if there are students here, I mean, it's the sort of literature where there are actually research questions that can be,
I think, generalised to other countries potentially and so on.
So in the in the German literature, there are two distinct questions that you could ask.
Firstly, what's the impact of the Great Depression? And secondly, who voted for Hitler?
This is a sort of a time serious question. It's about what drove the upward trend in the Nazi vote over time.
And this is about, you know, in a given election, what groups in society voted for Hitler or not?
And these two questions can end up being conflated sometimes because unemployment is what goes up during the Depression.
It's not our best measure of the Depression, but that doesn't mean that the unemployed voted for Hitler.
In fact, the unemployed probably some of them did, I suppose, but they're probably much more likely on average to vote for the communists.
And so there's been a statistical literature about how you think about this.
So this is the argument that says there's something going on here, folks.
But so this is the Nazi vote. I cheated very slightly in that there are two elections in 1930 to support the November election as signed up to 1933.
So the graph would look nice.
And I assigned to the December 24 election just 25 so that, you know, it wasn't having to do with two elections in one year.
But I mean,
actually doing that makes sense because famously the Nazis do see a dip in the share of their votes and the economy is recovering by late 32.
So that's the Time series correlation. But in the cross section, this is a stylised picture,
but the the correlation coefficients are are drawn from real, real data exercises in the cross section.
You know, the the communists are more likely to vote, you know, for for the car,
the unemployed are more likely to vote for the communists than for the Nazis.
So there's a negative relationship, say, across districts between the share of the Nazi voters and the unemployment rate.
But what's happening over time is that negative correlation is shifting out.
That's what that's what's happening. And so essentially the the relationship that you find regarding was a to unemployment and
voting for Hitler depends on whether you're primarily picking up time series by indication,
in which case you will find a link or cross variation,
in which case you won't write into the statistical literature about how you tease all of this out.
The more interesting literature really is who actually voted for him, right?
So so this is Gary King, who's a political scientist at Harvard and a brilliant guy.
So, you know, at the constituency level, we know who voted for the Nazis, the liberals, you know, and everybody else.
And we also know from the census data, because we can match that to the constituencies now who are self-employed, blue collar, white collar and so on.
And so what we'd really like to know is, you know, what share of the unemployed voted for the far left, the centre, you know, the Nazis and so on.
Now you will notice that there are a lot more question marks here than there are numbers and this is a problem.
But Gary King is a clever man and he's found a solution. So he has a maximum likelihood estimate.
It allows you essentially to fill in all of the blanks. The proof of the pudding is in the eating.
So what he does is he comes up with results that look sensible.
So he finds that the areas where you are most likely to get an increase in the Nazi vote moving from 28 through
to 32 are in areas where you have high proportions of self-employed people and domestically employed people,
which includes agrarian peasants, but predominantly in Protestant areas like his.
In the Catholic areas, they're still voting for Santorum and so on. All right.
So that's sort of what we thought we knew. And so in a sense, that helps to validate the methods.
I should point out that the same problem Head, who's a co-author with us, is doing his dphil here,
and he's exploiting the fact that in about 20% of the constituencies that counted the women's votes on the men's votes separately,
which is an extraordinary things, you can actually see how the women voted in constituencies compared with the male votes.
And what you find is that the women were actually more moderate than the men and
then they become more like the men in 32 and they become more like the men,
especially in these groups. They're self-employed and domestics.
So there's all sorts of things that you can do with this methodology, and you could do this for other countries too.
I'm sure we're not doing anything quite so exciting, unfortunately.
So we're interested in the impact of economic.
Growth on right wing extremist voting.
It would be better to do on employment and the right wing votes.
But unemployment statistics for the interwar period are just not comparable. It's a complete mess, so we can't do that.
So we have to look at GDP growth. All right. We have this for a bunch of countries over time.
So we have several Norwegian elections. We have several German elections before.
We do want to take account of the fact that Norway is not the same as Germany.
This would seem sensible. And so we have fixed effects. So.
So. So we have a dummy variable in our regression that is one for Norway and zero for everybody else.
So you're allowing for the fact that Norway is different from Germany.
But that means that if there are any other features of being Norway that are invariant across time,
we can't tell you anything about how they influence the vote in Norway.
They're all sucked up on that dummy variable. And that's that's a basic problem when it comes to thinking about mechanisms and structure and so on.
All right. Most of the data are in Europe, but we have some non-European data also, and we're relying on the political scientists here.
So we're particularly interested in votes for anti-system parties or anti-system parties defined
as a party that would change the system of government rather than just the government itself.
And we're particularly focusing on the extreme right wing anti-system parties and the the communists.
And well, I'm going to start up. So this is your favourite, your country.
You can see if it makes sense. And I'm going to quickly scroll down just in case it doesn't.
There are some judgement calls here. So for example, the NDP is this anti system,
so we're relying on somebody else's classification and he says they become anti-system after a certain point, you know.
Well, we well we worry about as you'll see in a moment.
So this is the relationship we're interested in relationship growth and extreme exposure.
We have control variables of various sorts or there are other things that might matter.
There are people who've argued that modernity is good for democracy.
So we collected data on urbanisation. That's a variable that Lipsett thought was important.
We know whether in your country you had a nasty, reactionary, pre-war agrarian elite.
We have data quoted from other authors on whether they're just an for cleavage, as we know.
Did you win or lose World War One? We know. Did you have a poor electoral system and so on?
Here's the one that turns out to actually be important. We look out whether you were a democracy before World War One or not,
because there is an argument that says that exposure to democracy helps inoculate you against non-democratic partisans.
That's a theoretical claim that's been made, and we're going to talk about that later on.
Okay. So I'm going to show you some regressions.
But before I show you the regressions, let me just show you some sort of average voting data, if you like.
So this is the votes for anti-system parties from the last election before the Great Depression,
and this is the votes for the anti-system parties in the post 1929 election where those extremist votes were at their peak.
Right. So it's before and then it's after. But it's, you know, the worst that ever goes.
Right. And it's just divided up by countries. So I'm going to help you see what you ought to see.
So, first of all, what you see is that there is an increase in voting for extremists from three 4% on average to 10%.
We want to exclude Finland sometimes because they suppress their communists and there's lots of variation in the data.
So there are countries like Germany and Czechoslovakia where there was a pretty big extremist vote before and it gets even bigger.
There are countries like Romania and Bulgaria where there was not a big extremist vote before and then a big one after.
And then there are moderate, tolerant countries like Ireland and Norway where there were no extremists before.
I know extremists after. So this is nice.
I mean, it means that there is variation in the data. It also means you can't generalise this.
Most economists are always torn between wanting variation in the data and wanting to generalise, and these things don't always go together.
Generally, it tends to be the extreme right that does well.
So these countries here are both highlighted. We see a big increase in the extreme right wing vote, for example, Romania.
But there are some countries where it's the communists that see a big increase in their vote.
So again, it's hard to really generalise. There are average correlations, but hard to really generalise.
Let me let me begin by just say something about these country characteristics that
I'm not going to be able to deal with my regressions because they're fixed by time.
So I'm interested in, for example,
whether having a pre 1914 agrarian aristocracy meant that you had a bigger fascist those in the interwar period, for example.
All right. So, so I can see whether it means that you have it.
I can see whether having a pre-war agrarian least leads to a higher fascist vote.
In general after 1990. And I can also look and see whether it leads to a bigger increase in the clashes both after and after 1929.
And by the way, I'm going to say fascist, even though I know they're not all fascists,
but pretty, you know, extreme right, anti-system party is a bit of a a mouthful.
All right. So I'm going to show you pictures.
Don't worry. All right. The pictures are ultimately based on regressions.
And actually, let me just because time is can move on, basically, we find nothing for good.
You have a pre-war agrarian least where you urbanised. Did you have a religious divide?
Did you have an ethno linguistic divide? There's no average correlations there in the data whatsoever.
All right. Where we get where we got correlations.
First of all, it's the extreme right that an average does better.
So this is how much did the fascist vote go up on average after 1929?
And it usually goes up by quite a bit. And they're often statistically significant.
And if you compare that with the communist. You know, on average, they're not doing that well.
So it's this kind of paradox. It's a crisis of capitalism.
And it's the it's not the communists who are reaping the benefits.
All right. Pictures.
So if we slice and dice the the country sample into different groups, what turns out to be statistically significant and quantitatively meaningful?
So one way of chopping up the sample that seems to make a difference is where you were World War One, loser or not.
So if you were a World War One loser, then after 1929, you have big fascist vote,
much bigger than if you had not been on the losing side in World War One.
So these are post 29 votes. These are 29 votes.
There's no fascists. Most any place before a Great Depression afterwards there is.
But especially if you are on the losing side. Communists, it looks different with communists.
Again, being a loser matters. But the effect shows up immediately after World War One, whereas the fascists, it only showed up after 1929.
Nothing causal here. But I mean, these are just interesting. These are interesting facts about the days, I suppose.
And then the other one that that seems to matter is where you had democracy before World War One or not,
which is obviously largely the same as where you on the losing side in World War One, which is a problem.
But we'll get to that. It's the same it's the same story.
Right. So the war democracies are largely immune from the siren call of fascism.
Yeah, it's the same thing. Essentially, the only other kind of country characteristic that seems to matter is, is you have a PR system.
But interestingly enough, it wasn't the fascists that seem to have systematically benefited from the communists.
All right. So so this is saying that if you got PR, you had a much bigger communist post than if you didn't have PR.
Yeah, it's it's it's much bigger, in fact. And then and then it gets even bigger still after the depression.
Okay. So summing up thus far, I guess I have I guess I have I guess I have 15 minutes left.
So I'm sure that the fascist vote increases by more after 29 than the Communists vote
on average countries have better on average in countries that have lost World War One.
And now you have a quote there to suggest that this makes sense.
And in countries of of PR electoral systems. So so where, you know, these poor people who get in the trenches, I mean, you know,
if they get mad and if they're on the front lines, they seem to have gotten louder on average.
And this leads. Well, I like this guy liberated. You know, this guy who's a political scientist, I must say, I like his account of all of this.
I think we can talk about that in the discussion.
Make it fascist, do better in countries that lost World War One, but only after 1929, in new democracies, especially after 1929.
And now what have we not accounted for? It's just been before and after.
Before 29. After 29, we haven't accounted for the fact that the Depression starts at different times in different
countries and at different times in different countries is worse in some countries than others.
And this is where we want to do some regression analysis.
So this is what the data look like. So this is the growth over three years.
And here's the fascist vote share. You can see there's lots of zeros.
There's lots of countries that never had a fascist party to vote for. All right.
And that's going to influence the type of regression that we run.
The type of statistical exercise that we engage in has got to take account of the fact that there are all of those zeros in the data.
All right. And we're also going to want to see if any correlations we find a robust to excluding Germany for obvious reasons.
Is this just a German story or is it something more than that? Um, yes, I've said that.
So let me let me show you some regression results. Okay. So.
These regression results. They show that they show the impact of various variables on or the statistical
relationship between various variables and the extreme right wing anti-system votes.
I'm looking at in particular the impact or the relationship between growth and fascist vote growth over the previous one year.
Over the previous two years, over the previous three years. That's what I'm really interested in.
All right. There are some control variables there.
So we do want to allow for the fact that 1920 933 was different to 25 to 28 was different to 19 1923.
So we are at least controlling for some things that are making the world worse and worse as you move forward in time.
Nothing much there. If you look at urbanisation.
But that's because a country is more or less urbanised and that's a sort of pretty country fixed effect.
I mean, it will it will become a little bit more urbanised over the course of this period.
But basically, there are some countries that are more urbanised, some that are less.
And so this is all going to be swallowed up in these country fixed effects.
I was talking about if you just forget about the fixed effects and exclude Germany,
then indeed more urbanised countries have smaller fascist votes, which is, I guess, what Lipsitch would have predicted, you know.
But Germany messes things up for him because Germany is very modern and has a very big fascist.
All right. But it's fairly weak. And there's there's something there if you look for evidence of of electoral systems mattering.
So for any political scientist, you know, in a PR system, you have an electoral threshold like 5% in Germany, we all know.
But then you can also think about what's the effect of electoral thresholds just based on things like given that you have constituencies,
how many seats are in the constituency, how many parties are vying for those seats?
Then de facto, what share of the vote you need to gather in order to have a probabilistic chance of getting somebody into the parliament?
All right. So it's a de facto kind of thing.
And there's some weak evidence there that the higher the threshold you have to jump over, the lower is that fascist vote.
But it's not terribly strong. But there's something there. This is what we're interested in.
And what's interesting is that if you look at the impact or the Statistical Association for the growth in the fascist vote over one year,
if you exclude not control variables, it goes away. It goes away.
It goes away for two years. It's there for three years. It's there for four years.
It's there for five years. So there's a statistical relationship between growth over three, four or five year horizon,
but not over the one and two year horizon, which from introspection makes sense.
But that's just from introspection. You know, you lose hope at a certain point.
That's why it's important to cut these things off. Now, you might be worried that the you might be worried that if we're looking at growth
over three years and if there are several elections in that three year period,
that we're double counting bad experiences somehow.
So if you do it again but exclude all elections falling within three years of each other, you get the same result.
And if you exclude Germany, you get the same result. It's not just a German phenomenon.
Okay, so there is a statistical relationship there, it seems, between growth over the longer than,
say, for three, four or five year horizon and the fascist vote, but not shorter periods of time.
I'm interested in how big these effects are. And let me actually I give you a better I give you a better slide on that in a moment.
All right. I'm here. Here's where I'm coming from.
We're interested in whether the association between growth and the fascist vote is bigger in some countries than in others.
So what you can do is you can chop the country of the country, sample up into countries that were democracies before World War One, and that won't.
And then you can basically see if the association between growth and the fascism fascist pose is higher in one group of countries than in the others.
So what this says here, this is an interaction for the competition between growth and a pre-World War One dummy.
What this is basically saying is if you are a pre-war democracy,
the total association between growth and the fascist vote is this plus this, which is almost zero.
It's very small. All right. So if you're a Briton or if you are Ireland or if you're another country that had been democratic before World War One,
there's no real relationship there. The the total relationship that I found earlier is being driven statistically by the relationship
that you find in the sample of countries that hadn't been democratic before World War One.
And when you then look and see how big this statistical association is.
Well, one way of doing it is to think about if you experienced the growth decline that they experienced in Germany,
how big of an increase in the fascist vote would you expect given this average correlation?
And the answer is you'd expect an increase in the fascist vote of eight percentage points, eight percentage points, as opposed to one out pence.
If you take that the DMV role was fascist, then the increase in the vote is only 20 percentage points.
Let me explain quite a lot to if you think that they flipped in an important matter, then we're explaining a smaller share.
But we're so we're explaining quite a bit. But it's not the whole story.
But there is something there. All right. So this is just a quote from Eric Hobsbawm.
You know, there are you know, the notion,
the notion that having been a democracy over a longer period of time might inoculate you against these kinds of political temptations.
Isn't a new story all that we're doing here is we're finding statistical evidence for it.
If there are economists in the audience, you're going to be worried about the possibility that it isn't the slump that is causing fascism,
but the fascists that are causing the slump.
So maybe I'm glad that you're smiling because I mean, I think the direction of causation is pretty clear in myself.
But the argument would be that if you're an investor and you see Hitler doing better in 1930, maybe you panic and this has about it.
And there should be was a bit of that going on. Right.
So we we try to convince our readers that this isn't so much of a problem,
but insofar as it is a problem, I think it strengthens our key political message,
which is that if there had been better macroeconomic policy earlier on in the crisis,
then this supposed a two way feedback mechanism between worsening economic conditions and worsening political conditions wouldn't have gotten going.
So mean. That's ultimately what our agenda is. So we feel, you know, okay, about this, correlations are interesting.
Sometimes we do a bunch of robustness checks. If you are worried about this kind of thing.
So this is a base case estimation risk with something called fixed effects tobit you could do a round of effects total,
which you can do with your dummies. You can do no one else with your dummies.
It's pretty robust. You try different things and you got a pretty robust correlation.
And there's some evidence this is looking at growth and growth squared.
So that's to see it as a non-linear effects. So when growth gets worse, does that have a much bigger bout effect on the voting behaviour?
And it does. You know, there's some evidence, some evidence there of nonlinear linearity which is maybe not so surprising.
This is the next slide that I really want to talk about.
Do the same thing for communists. And there's nothing there. There's nothing there.
There's no relationship between growth in the communist voters, which is, you know, surprising.
Maybe, but maybe not. Depends on whether you're a historian or not.
Possibly. I show this to economists and they're very surprised. So they then say, well, why on earth are the fascists benefiting from this?
And the communists aren't. And here I can say, look, I'm only I'm only an economist myself, you know, what do I know?
Right. But so so this is the sorts of things that I think historians say, right?
So there's an extent to which Social Democrats were discredited in some countries by their involvement in World War One.
The left wing movement splinters, you know, the communists and the Social Democrats.
There's civil warfare between the two sides, especially after this left turn in 1929.
And then if we were looking for resonances, because I do, I guess, share.
Cars. The cars view what useful history as you know.
So.
So if you're looking for resonances, I don't know what the real historians in the room think of this book, but I quite like this book by Shari Berman.
So Shari Berman says, you know, the problem with a lot of the speed parties is they were Orthodox Marxists.
They were waiting for the revolution to happen. They never really came up with programs that would have preserved private property,
but banned the market so that it serves the interests of people and not the other way around.
In countries like Sweden, where they did that, you know, or even Ireland, I suppose,
as a kind of funny example of that, you know, where there was interventionism that seemed to work.
People loved that. And the problem was the Orthodox left in many countries wasn't wasn't offering that.
So that's what I read from the literature. And there might indeed be resonances there.
But but maybe historians want to disagree with this interpretation of the data.
All right. We also looked at what determines how many people you got into parliament.
Well, the higher the vote share, the bigger the seat share.
That's not very surprising, but less obvious.
The higher the electoral threshold that you have to jump over to get into parliament, the lower the seat share.
And so so so there is evidence. There's weak evidence.
If you look at voting and there's very strong evidence. If you look at how many deputies you get in the parliament,
that the electoral systems matters and of the people who after the war looked at Peter and said, you know, there's a problem here.
They weren't necessarily completely wrong. So that's that's just that's just making that point.
All right. A final slide and then I'll move on to conclusion common.
So up till now, what I've been doing is looking at the relationship between the fascist vote and the communist vote and GDP growth.
And I found that it only mattered over the three year horizon for about a half of our countries.
In our sample we have consumption growth. This is from Barrow and one and you might think that consumption is something
that's getting a bit closer to what households are actually experiencing.
All right. And actually what you find is that you get massively bigger and more statistically significant effects,
even though we've chopped our sample size in half. So I think that there may be, as you know,
work that one could do potentially thinking about what aspects of macroeconomic economic activity are particularly politically significant.
But but then part of me thinks that actually the more historical questions that are really interesting ones.
So in conclusion, do Germans general like German lessons generalise for the scariest some do nice fascist in general.
Is it better in countries that have been the losing side in World War One had limited democratic
capital possessed electoral systems conducive to entry and experience in serious slumps,
which was our major result. So these are all aspects of the German experience that do seem to carry over.
As I say, it's not clear me that you would want to generalise today, but if you really wanted to take these results seriously,
then you might, I suppose, expect to see bigger extremist right wing votes in recent democracies that have very severe slumps.
So, you know, make of that what you will.
And there is also a longer run political context.
So let me just finish with a few more slides. And I think this is the longer run political context, because what we have now is we have a sharp,
sharp shock that's being superimposed upon a much longer and slower shift that is having major political implications.
And that shift has basically got to do with the changing division of labour globally.
So back in the sixties, right until quite recently, actually,
southern exports to northern countries were 90% primary products, only 10% manufactured goods.
And that 10%, 90% ratio, you could send that back into the late 19th century.
It was thus for forever, seemingly. And then things change and they change very quickly.
And what that means is that now the composition of their exports is such that what they're
exporting to us is potentially competing with stuff that we are or were producing domestically.
And what that means is there are now losers, potential losers from this trade as well as winners.
All right. So if I were to go back into history to find an analogy for this, I wouldn't go to the interwar period.
I go to the late 19th century.
I coached the invasion of cheap grain from the Americas and the Ukraine that had serious damage to farmers and landowners and so on.
Right around Europe and where those farming interests were sufficiently powerful,
they got protection and the backlash was sufficiently powerful that it completely overturned
the road towards liberalism that characterised the continent until the mid 1870s or so.
And if you read one, Rakowski, whatever they tell you very nice stories about how all the major political cleavages in many
European countries were driven by this basic issue of how we responded to the great invasion,
who were the equivalents of the 19th century? Farmers and landowners.
But it's blue collar workers. Right. And what we know from survey evidence is that in rich countries, in rich countries,
being high skilled is associated with being less protectionist, more in favour and free trade.
So the number here is is basically the correlation, if you like, between being high skilled and being protectionist.
So negative number means being high skilled is associated with being not protectionist or being low skilled is associated with being protectionist.
And so in rich countries, it's poor people who are protectionist.
It's rich are people who are cosmopolitan and liberal and all that good stuff.
And I mean, very suddenly the correlation actually reverses in poorer countries.
Now, this has been, in a way, a completely latent political force, I would say.
You don't see you know, you got who is the giant sucking sound man in America.
Yeah, Ross Perot. But it went nowhere. Right. And Pat Buchanan tried this in America and it basically went nowhere.
Right. So maybe you're not going to vote for Ross Perot to be president United States just because you're ticked off with the Mexicans for
sucking your jobs out and maybe you're not going to vote for the whole national that's hope just because you don't like globalisation.
But when people are given a chance to vote on trade in general and the market in general, as in France in 20 or five,
you saw exactly the correlation emerging in the ballot boxes that we see in the opinion surveys.
It was it was quite blatant. And in Ireland for the Lisbon Treaty it was the same thing.
All the blue collar worker districts voted against Lisbon, all of the bourgeois areas voted in favour.
So you've got this potentially important class divide on which now you have this shock.
Being superimposed on that is, I think what gives me a bit of a pause for concerns in other papers over I'm just editorialising,
but I worry about a situation where in this kind of context,
if all of the centrist parties in Europe just throw up their hands and say,
We'd love to be able to help you, we really would, but there's nothing that we can do on the trade front.
We're constrained by the WTO.
On the macroeconomic front, we're constrained by the ECB and the six pack of a two pack and every other bloody pack you can imagine.
And you know, and anyway, the Germans won't wear any change. Then at a certain point people maybe will start to look elsewhere because as we know,
in the interwar period, you know, there were constraints on macroeconomic policymaking.
There were some people willing to think outside the box and those people eventually got the votes.
So that's my editorialising. With no scientific basis for it whatsoever.
All right. So so over you.
All right. Thank you very much. Oh, thank you for Thanksgiving.
I thought that was particularly interesting. And also for me,
because I'm not very familiar with the quantitative research and because I've done a lot of my work
and reading on extreme right to see all of this quantified that for me was really challenging.
And one thing that I particularly appreciated was the richness of all these variables,
because all of them are actually very, very relevant when you study the the notion of of extremism.
And then I started thinking first of your title because, you know, in your in your chapter paper, do German lessons generalise.
And this, I think, is such a relevant question also for the interwar period,
because it's always a question whether Nazi Germany is comparable to any other case in European fascist,
fascist trade or whatever, you know, other authoritarian regimes that exist.
I think the only comparative would be which makes it not comparable to have the,
you know, the Soviet Union communist regime compared with other East European countries.
But what I what I think is correct about your approach is that you take the the example of Nazi Germany and you kind of, you know,
deconstructed and you see all those because it was a a very rich configuration of
circumstances that led to this kind of very extreme phenomenon in Nazi Germany.
And that was how I read it. I mean, by looking at your variables and how you deconstructed the reasons why we have this rise of of extremism.
And then the other thing is that whether it makes it relevant for today,
because we do see many references as to, you know, what's happening today with with the economic crisis.
Most of them are actually from an interesting perspective.
I mean, we we were discussing the other day there was an article in the in the Financial Times
that was quite provocative by saying whether Greece reminds us of Weimar Republic.
And that is actually, you know, is there a truth to it or is it just for sinister reasons that we have this discussion?
Well, I'm among those who believe that, you know, you can take lessons.
I mean, you know, everything is unique,
but you certainly can take lessons from from Nazi Germany and especially that connection between cumulative growth, the connection with that,
with other variables that you mentioned, the democratic culture or the the loss, you know,
the big loss from from World War One, although that's not relevant at all today.
One could see a you know, a comparison between Greece feeling internationally defeated and that kind of Greek creates a certain resentment.
One thing that I would like to to ask and talk about, I mean, voting behaviour is particularly important, but in the context of the interwar period,
there's also this lead and in some cases it did lead to authoritarianism and dictatorship, but in others it did not.
And Cappadocia has this very interesting article about the Belgium,
Czechoslovakia and Finland who did not succumb to authoritarianism actually, and they preserved their democracy.
And that for me is, you know, as a political scientist, it's also a very interesting question.
So why why did this happen?
But it also relates to what you said about democratic culture and democratic tradition, because one thing, of course, is to see democratic transition,
tradition and culture with the longevity and having these countries, you know,
preparing what Hobsbawm said, actually preparing better defences against authoritarians.
But the other thing which is very important is also what are the short term kind of.
Responses towards the rise of extremism.
And that may not be in your analysis, but I think it's particularly important.
And the reason why those some parties did better than others and actually some outcomes were
towards dictatorship in that how the other parties responded to it was particularly significant.
And this kind of strategy and that is also relevant today because there's a lot of discussion, especially now in view of the European elections,
as to how the mainstream parties respond to the rise of extremism in in many European countries.
And then it confuses us also with this argument of democratic culture,
because we see the rise of of extremism in countries that have a very, very solid democratic culture.
And, you know, you see it in the Netherlands or in France.
And then it's interesting also that in other countries where you've got similar circumstances, like the south of Europe, you see it in Greece,
but then you don't see it in Spain or you don't see it in Portugal or Ireland where you've got similar kinds of pressures.
So that violence actually is particularly significant to look at.
And then when you talk about the issue of growth and you mentioned, you know,
this related to unemployment, but I was just wondering whether it's also the issue of inequality.
I mean, inequality. So one should definitely see how a growth or at times of peak of a big recession or depression actually where,
you know, the whole output is how the output is distributed, whether it loses for the winners.
And that sense of inequality in particular, I think is very,
very important because that leads the the voting the extremist vote is on the right because there is this there is actually a reality of inequality,
but also the perception and imagined inequality in many ways that that leads.
And that is also connected with the fact that there are many variables that cannot be measured quantitatively, especially in phenomena like this,
because there's a lot of of emotion when voters actually go and vote for a party which is anti-system,
which is out of the of the mainstream kind of space.
And that is something that also affects voters at the time of voting.
I mean, how they feel about that's why it may be it's important that the the issue of the losing of
World War One is particularly important because this is how it plays into the minds of people.
And to this day, I was I you know,
I also believe that one of the most important factors in the German case and the German the rise of Nazism and also going into the war was that,
you know, sense of injustice that, you know, that was from the so that they could never I mean,
they had to to set the record straight with possibly with a victory in the Second World War.
So this is you know, what I have to say. One final question that I wanted to ask is why don't you include Turkey in this in your group of countries?
Because there are many, you know, comparable kind of variables there in terms of loss of one with one non-democratic tradition.
And yet this is a country that didn't experience an extreme right and rising extremism, but a different kind of political reaction.
Yeah.