Is party politics broken?An essay on the changing state of party politics.

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The Conservative party’s attempts to tear itself apart over the self-inflicted EU referendum are a far cry from its triumph in last year’s general election. Labour’s heavy defeat then had appeared to herald a decade or more of Tory government. In addition, the implosion of the Liberal Democrats was near total, retaining just eight of 57 seats.

Labour’s demise was largely attributed to the SNP’s establishment of a one-party state in Scotland (SNP won 56 out of 59 Scottish seats, 40 of which were from Labour), despite having lost the 2014 referendum on independence. In Labour’s post-election leadership contest, Jeremy Corbyn was swept to an improbable victory by grassroots support.

Some saw Mr Corbyn’s victory as a return to an older, more honest politics, far removed from the New Labour era of spin and the centre ground. Months later, he is struggling to control the Parliamentary Labour Party and to deal with allegations of anti-Semitism from his supporters, and has little in common with Labour’s new mayor of London, Sadiq Khan.

While politics is clearly in a state of flux, I believe such questions (as that on the left) are too negative. The first mistake is to see these various developments as unique to the UK.

Party representation by constituency

Source: Ch1902, based upon map data from the BBC

What is wrong with party politics? Are the old parties (Conservative, Labour and Liberal Democrat) no longer fit for purpose or is the system itself broken?

Written by Julian Chillingworth, Chief Investment Officer At home

2010 2015

ConservativeLabourLiberal Democrat Green PartyScottish National PartyPlaid CymruDemocratic Unionist PartySinn FéinAlliance Party (Northern Ireland)UKIPIndependent

This essay was written before the EU referendum outcome was known.

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In Spain, which has had majority governments since democracy was reintroduced in 1982, Podemos, a new leftist anti-austerity party, and Ciudadanos, a new centre-right pro-EU party, have disrupted the status quo. One or the other was expected to form a coalition with the old guard, but after months of negotiations no agreement has been reached and a second election was held on 26 June.

In Greece, which has endured repeated imminent debt defaults, humiliating bailouts, austerity and widespread civil unrest, the prime minister is Alexis Tsipras of Syriza (the Coalition of the Radical Left), even though it was formed as a party of protest in just 2004. He was re-elected as prime minister in September 2015, despite backing down in debt renegotiations with the EU.

Similarly, in Germany, right-wing votersare flocking to the populist Alternativefür Deutschland. Founded just threeyears ago as a Eurosceptic party in favourof EU membership, but opposed to theeuro, the bailout of weaker countries andimmigration, it has gained representationin eight German state parliaments with5-10% of the vote (as of March 2016).

When FN made a historic breakthroughand took nearly 28% of the vote in the firstround of the 2015 regional elections, it was yet another moment in which the party wasranked as “the most popular in France”.Even if FN has failed to win overall controlof a region, its broad trajectory is on the up.

Traditional party politics is apparently under pressure in many western democracies, whether in: 1) the rise of nationalist parties or new populist movements

on the right and left; 2) the struggle of mainstream parties to remain relevant; or 3) the rise of unlikely ‘men of the people’.

It may be unusual that the UK has experienced all three in fewer than two years, yet they are closely linked.

Political parties have been forming, growing or fragmenting across Europe over recent years. As well as UKIP, which apparently represents disgruntled right-wing Tories, yet is remarkably appealing to a traditionally-Labour northern working-class demographic, the French National Front (Le Front National — FN) has re-emerged.

www.theguardian.com/world/2015/dec/13/front-national-held-back-in-france-but-its-trajectory-is-on-the-up

On the continent

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Of course, the biggest election of 2016 will be for the US presidency. It will be an old-fashioned contest between the Republicans and Democrats, and a Clinton will again feature, making it eight elections out of the last 10 with either a Bush or a Clinton (or both) on the ticket. Yet much has also changed.

America has its own ‘new party’, albeit within the Republican party. Formed in the aftermath of the global financial crisis to oppose Barack Obama’s plan to give financial aid to bankrupt homeowners and his wider social programme, the Tea Party is really a decentralised movement without a uniform agenda, although small government and political activism are core principles.

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Across the pond

Polls suggest that just over 10% of the US electorate identify as Tea Party members. Its activist approach succeeded in voting out more moderate congressmen. The effect has been to shift the Republicans sharply to the right, characterising many of President Obama’s policies as ‘socialist’.

It also helps to explain the rise of Donald Trump.

While he may not fit the traditional Republican template, the party’s grassroots has responded to Mr Trump’s populist pot pourri of small government, nationalism, anti-immigration and protectionism. This billionaire has emerged as an unlikely man of the people, benefiting from the same disillusionment with the mainstream political elite as Nigel Farage and Jeremy Corbyn.

Hillary Clintonvs. Donald Trump

Bill Clintonvs. Bob Dole

Barack Obamavs. Mitt Romney

Bill Clintonvs. George H.W. Bush

Barack Obamavs. John McCain

George H.W. Bushvs. Michael Dukakis

George W. Bushvs. John Kerry

Ronald Reagan (George H.W. Bush VP)

vs. Walter Mondale

George W. Bushvs. Al Gore

Ronald Reagan(George H.W. Bush VP)

vs. Jimmy Carter

1980

2000 2004 2008 2012 2016

1984 1988 1992 1996

Democrat win

Republican win

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Electorates everywhere are fed up with politicians who claim to be on their side, yet fail to stand up for them. Nearly a decade after the start of the financial crisis, global economic growth remains lacklustre and many working- and middle-class voters feel that their standard of living has fallen: earnings haven’t kept up with inflation, job security is a thing of the past and spending cuts are having a clear impact on local services and infrastructure.

After years of being told that globalisation and free markets are ‘a good thing’, many are questioning the political orthodoxy. You don’t have to be a steelworker in Middlesbrough or Port Talbot to feel angry that the dumping of Chinese steel is destroying British industry — people are fed up with hearing that politicians care, but can’t or won’t do anything to help.

Immigration is a closely-related issue. Economic migration supports economic growth, yet voters look at the wave of migrants from Eastern Europe or Mexico and, more recently, refugees from the Middle East and Africa and wonder why something can’t be done to limit the flow. Only a decade ago, it was often characterised as racist to raise such concerns, yet is now a mainstream issue for the right and left.

Disillusionment with conventional politicians, economic weakness and a perceived threat to our way of life make it easier to understand the appeal of Donald Trump, Jeremy Corbyn and Nigel Farage. All may be personally flawed and lack the polish of their mainstream peers, but that is exactly the point. They offer alternatives to the platitudes of the political class — restrictions on immigration, tariffs on imports, a reduced gap between rich and poor, etc. Their policies may be incoherent or economically unviable, but they speak to voters — populism can be remarkably popular.

If globalisation, free trade and economic migration are on the whole good for us, then mainstream politicians need to make the case for them, otherwise opportunists like Mr Trump and Mr Farage will find it easy to propose populist, but misguided, alternatives.

The second mistake is to see this as a new thing. There have been waves of political populism in previous times and history offers an ideal benchmark for a period of sustained economic weakness and the rise of nationalism. Eight years after the 2008 global financial crisis, most political systems have survived. In comparison, by 1937, eight years after the Wall Street Crash, the world was heading for war — Germany and Italy were single-party Fascist states, Spain was in the middle of a civil war, Britain had a cross-party National Government that favoured appeasement over rearmament and the US was determinedly isolationist.

In recent years, the near-collapse of the global banking system was averted by the efforts of politicians and central banks — had they failed, we might have seen what a breakdown of politics really looks like. Greece has been through a difficult period to try to resolve its debt crisis and is still not out of the woods: likewise, the shutdown of non-essential federal government in the US in 2013 hardly filled the electorate with hope.

Crucially, however, both happened without politics itself breaking. Politics is about the organisation of society economically and socially, such that key issues around law and order, foreign policy, trade, taxation and government provision can be decided. A breakdown in politics is often signalled by a breakdown in civil order, rather than by the decline of political parties and rise of new ones.

Disillusionment with conventional politicians

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Michael Sandel, the renowned philosopher and professor of government at Harvard University, argues that the public is fed up with politicians who either speak in technocratic language or simply argue with each other. There is frustration that they don’t address the big issues of the day and often leave ‘the market’ to decide such issues: in effect, letting economics triumph over politics.

The low point in post-war British voting came in 2001, although voter turnout has been rising since. It is interesting that the low was during the period of Tony Blair and New Labour, which was characterised by spin and media management. Again, this was not new, but highly-controlled ‘sound bite politics’ is closely associated with that period.

Media coverage, particularly in the fast-moving, low-attention era of 24-hour rolling news and Twitter’s 140 characters, is necessarily reductive, so it is difficult for politicians to engage in deeper, more complex debates. However, as the EU referendum debate showed, voters are tired of this and want politicians to make their cases better. Voters still care and politics is still relevant, but we want to be treated like adults. The alternative will not be the death of politics or political parties, just frustration with a system that otherwise isn’t broken.

Reports of the demise of the UK’s big parties are greatly exaggerated. Labour’s share of the popular vote actually rose in 2015 and it retained 232 seats — it has regained the mayoralty of London and remains more than viable. Indeed, in being elected mayor of London, Sadiq Khan received the biggest direct mandate in British political history with over 1.3 million votes.

Large political parties are always grand coalitions around key issues — if these change, then the parties will evolve and recoalesce around them or decline and be replaced by new ones. Plus ça change.

General election turnout since 1945

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For further information and updates on this discussion, please visit: rathbones.com/is-party-politics-broken

About the author

Julian ChillingworthChief Investment Officer

Julian is Rathbones’ chief investment officer and plays a key role in the ongoing development of our investment process. He joined Rathbones in July 2001 as deputy chief investment director and was appointed board director of Rathbone Unit Trust Management in October 2001. He has over 35 years’ investment experience in organisations such as James Capel, Global Asset Management, Bankers Trust and Investec Asset Management.

This essay was written before the EU referendum outcome was known.

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