Economic Crisis Favors Incumbent Governments

The ongoing financial and economic crisis may bring about a major political turning point. Let us just consider the following observations: the British prime minister, Gordon Brown, was judged to be politically sunk just a few weeks ago, when survey polls showed the labour party 20 percentage points behind the opposition; however, as the stock markets have fallen in recent weeks, Brown has risen in the polls up to the point to contemplate a full recovery in electoral expectations. Similarly, while banks and markets fall down, Merkel in Germany, Sarkozy in France, and Berlusconi in Italy get increasing support in public opinion in front to divided and ineffective oppositions. Also Zapatero, for one, won the election in Spain a few months ago by reaching not to talk very much about the impending economic recession, but now that it is dramatically visible the opposition is neither obtaining much benefit.

All this suggests that the relation between economic performance and governments’ accountability can be changing in an important way. Traditional political science models of ‘economic voting’ assumed that voters rewarded or punished the incumbent rulers for the country’s economic performance during the most recent period. According to observations across a wide range of countries, voters would evaluate incumbent rulers in ‘retrospect’ to make them accountable for the economy because they believed that government’s actions effectively impinged on issues such as employment, economic growth and inflation. However, greater economic interdependence may be changing voters’ perceptions. Specifically, the international scope of the current crisis may be triggering a turn in favor of incumbent governments as a consequence of both a sense of government’s impotence and a reaction to seek refuge into the hands of the sitting rulers in times of emergency –in a similar way as it tends to happen with natural disasters, terrorist attacks or external aggressions.

This hypothesis has been tested with more than 400 state-wide elections in 75 democratic countries since 1975 in a recent article by Timothy Hellwig (University of Houston) and David Samuels (University of Minnesota). The authors basically regress the change in percentage of votes received by the incumbent head of government’s party regarding the previous election on the annual percentage change in real per capita GDP and the degree of internationalization of the country’s economy in terms of trade and capital flows. The author’s findings strongly support the argument that economic internationalization reduces voters’ propensity to connect domestic economic performance and incumbent merits. In their words, “voters residing in more closed economies are likely to sanction national leaders for past performance outcomes, but voters in open economies are relatively less likely to attribute reward or blame to domestic politicians for economic performance”.

Indeed, these days voters seem increasingly aware of the limits of domestic policy makers in controlling the economy, as the examples mentioned at the beginning of this note suggest. Politicians, in turn, also tend to blame the current financial crisis on economic and policy factors beyond their control and originated in other countries, particularly in the United States. Only in America the incumbent party’s candidate, John McCain, is being significantly hurt at the survey polls by the current housing and financial crisis, in spite of his limited involvement in the economic policies of the past period, but according to the conventional model of domestic accountability.

Two major implications can be drawn from this noteworthy turn. First, if economic internationalization reduces electoral accountability of incumbent rulers, the relevance of state-level democracies may be questioned again. Second, as Hellwig and Samuels just suggest at the very end of their article, we should now inquiry whether responsibility attributions may shift onto other political actors, including especially international and local governments. At the European Union level, at least, the coming elections to the European Parliament could become a major occasion for replacing the voters’ usual domestic motivations with the capability to advance Europe-wide concerns and identification of responsibilities.

REFERENCE

Timothy Hellwig and David Samuels, ‘Voting in Open Economies. The Electoral Consequences of Globalization’, Comparative Political Studies, 40, 2007.

COMMENTS

José Fernández-Albertos said...

Very interesting. It’s not that ?I said so’ because one of the co-authors., Hellwig, has a previopus article, which I cite. But it might be interesting [see below]

IBEI, Barcelona

Does Internationalisation Blur Responsibility?

Economic Voting and Economic Openness in 15 European Countries

José Fernández-Albertos

(Published in West European Politics, Vol. 29, No. 1, 28 – 46, January 2006)

Summary

In economic voting models, the electorate punishes governments associated with bad economic results and rewards those who provide prosperity. However, citizens do not always place the same weight on economic considerations when deciding their vote. This weight, it is argued, is a function of the degree to which governments can be deemed responsible for domestic economic outcomes. More precisely, the article hypothesises that when the economy is highly vulnerable to external economic conditions (and thus less controllable by the national government), voters will value less the information they receive on the state of the economy, and, as a consequence, electoral behaviour will be less influenced by economic performance. This conjecture is tested empirically using survey data from 15 European countries. Consistently with the prediction, it is found that employment expectations matter more the greater the degree of economic closeness of the country. General economic expectations have an impact on voting regardless of the level of economic openness, and no sign of pocketbook voting is detected. Also, the evidence seems to suggest that the internationalisation of the economy plays an exonerating role only under left-wing governments.