We just don’t know what the rise of extremist parties means for us

In the UK, the debate over immigration is becoming nasty and underlies the rise of Ukip

 Leader of Ukip  Nigel Farage: the party determined to take Britain out of the EU.  Photograph: Getty Images

Leader of Ukip Nigel Farage: the party determined to take Britain out of the EU. Photograph: Getty Images

Fri, May 30, 2014, 01:00

‘The absence of economic growth is the most cited reason for the rise of extremist political parties – of all kinds in many, but by no means all, EU countries. Simple, single explanations of complex phenomena rarely stand up to scrutiny and so it will prove this time around. The EU, or large chunks of it at least, has been a growth-free zone for far longer than the post-Lehman era; not for nothing was the term ‘Eurosclerosis’ coined some decades ago to describe Europe’s seeming ability to stagnate for years on end. Why all of this should be annoying electorates just now is a bit of a mystery.

One possibility is the division of the spoils of growth. Historically, what little growth did take place was shared across large swathes of the population. Although the economic tide was about as strong as the not very tidal Mediterranean, it did give a gentle lift to enough people to keep them from revolting.

By contrast, the extended debate going on about rising income and wealth inequality might be suggestive of an electorate that contains too many people being left behind.

It is hard to quantify all of this, as illustrated by the furore over the data used by Thomas Piketty, the ‘rock star’ economist who says rising inequality could destroy capitalism.

The rise of the super wealthy 1 per cent corresponds to another type of 1 per cent: the number of excel spreadsheets in the world that contain no errors.

That Piketty has made mistakes will have come as no surprise to practitioners of the dark statistical arts.

But the notion that many countries, in the developed world at least, are becoming more unequal does not seem to be terribly controversial – and is not really challenged by Mr Piketty’s data problems.

In the UK, the debate over immigration is becoming nasty and underlies the rise of Ukip, the party determined to take Britain out of the EU. Those of us who point out that all of the evidence strongly suggests that immigration has been a net benefit to the UK (and most other) economies are losing the battle of public opinion.

Immigrant problems

In Britain this week it was put to me, by several people (immigrants included), that the past is no guide to the future. In London, for example, it used to be the case that many immigrants settled for a while in the East End before moving out for jobs, or forming businesses, elsewhere in the city and farther afield.

Today, according to some, immigrants still go to the East End but now stay there permanently, trapped by generous benefits on the one hand and the absence of well-paid jobs (that hollowing out of the middle class caused by the rise of the robots) on the other.

I suspect the data does not support any of this but it is a powerful narrative that has gripped the imagination of a lot of voters.

It is argued that the popularity of parties with extreme agendas will encourage the Scots to vote to exit the UK.

While that is hard to imagine, not so long ago so was the rise of the extreme right in France.

It would be wrong to conclude – as some commentators have done – that Britain’s political woes are Ireland’s economic opportunities. A British exit from the EU would have massive consequences for us, few of them good.

There aren’t many European countries that would want to sever their trading links with the UK so the argument that companies engaging in foreign direct investment will now prefer an EU-committed country such as Ireland over the UK doesn’t really stand up.

In any event, we have our own rising Eurosceptic party, Sinn Féin, for foreign investors to contemplate. Higher income taxes, capital taxes and new wealth taxes are key planks of the Sinn Féin platform.

I wonder how many of their new middle class voters are aware that 80 per cent of the value of the family home is to be included in the wealth tax calculation?

It is tempting to conclude that the rise of extremist parties will be accompanied by extremist economic polices with inevitable consequences. The truth is that we just don’t know.

Hard-line policies are usually tempered by the constraints of power. But, as we have seen here and in the UK, that usually leads to the evisceration of junior coalition parties. Parties of the hard left and right cannot have failed to notice.

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