The economic situation in East Germany cannot explain the rise of right-wing populism, says economist Reint Gropp. At least not with the local economic reality. Nevertheless, the traffic light coalition and its economic policy share responsibility for radicalization, said the President of the Leibniz Institute for Economic Research in Halle.
ntv.de: What entrepreneurs, managers, associations and even economists have been warning about for years has now happened: the right-wing extremist AfD is the strongest force in Thuringia and in Saxony only narrowly in second place in the state elections. What consequences do you expect for the economy now?
Reint Gropp: You have to differentiate between the election results in Saxony and Thuringia. In Saxony there is at least a majority, albeit very narrowly, for a possible coalition of democratic parties. In Thuringia, however, it is currently not possible to foresee how a government coalition can be formed against the election winner AfD. From an economic perspective, things look even more problematic.
What kind of problem does the economy specifically have with the AfD?
The biggest problem facing German companies in almost every industry and every region is the shortage of skilled workers, caused by demographic change, i.e. the fact that hundreds of thousands more people are retiring every year than younger people are coming. The AfD not only has no answer to this most pressing economic problem. It even reinforces it by rejecting labor migration and the integration of refugees, both of which we urgently need. This not only means that urgently needed workers are not coming here. I strongly expect that highly qualified people, including entrepreneurs, who reject the policies and rhetoric of the AfD, will leave. So we not only lose employees, but also investors and companies.
Are these fears in the event that the AfD now takes over the state government in Thuringia, or are such developments already triggered by the success of the right in the elections and its dominance in the political discourse?
The influence of the AfD is noticeable even without government responsibility, as it pushes the other parties ahead of them and shifts their positions. This is visible in Saxony, where Prime Minister Michael Kretschmer of the CDU said things during the election campaign that were not the majority opinion in his party, especially about the war in Ukraine. In general, strong populist parties lead to more populist politics even when they are not actually populist.
Right-wing extremism and right-wing violence are not new phenomena in parts of Saxony and Thuringia. Shouldn't this feared migration have occurred long ago?
Empirically, it is difficult to clearly demonstrate why people migrate from certain regions or why they do not come in the first place. But I believe that we now have a new situation, that Thuringia in particular has crossed a Rubicon with the AfD's election victory. This is a signal that people in the USA, France or Great Britain perceive. At least in Thuringia we are at the point where many foreign skilled workers will consider whether they still want to go there. That will cause problems.
In addition to the issue of migration and skilled workers, are there other AfD positions that are problematic for the economy?
The second major issue in the coming decades, alongside demographics, will be climate change and the question of how we reduce CO2 emissions. It doesn't help at all when a large party spreads the claim that there is no climate change and that we don't need to do anything. This reduces the willingness of some in the population to bear certain burdens that will definitely come. It is likely to increase the costs of the adaptation process to climate change if one does not see the opportunities of this transformation, but only the costs. This issue can also cause a lot of damage at the local level, for example by preventing investments in renewable energies.
Not only is the economy suffering from the rise of right-wing extremism, but conversely, economic discontent among the population is repeatedly cited as a cause for the rise of populists. Is this valid in the case of Thuringia and Saxony?
If you look at how the average East German is doing today compared to 20 or 25 years ago, there is no reason at all for anyone to vote for right-wing populists. People are doing dramatically better today. Instead of mass unemployment, we have full employment. Wages are slowly aligning with western levels.
Nevertheless, many people in East Germany apparently feel left behind or disadvantaged.
These people do not compare themselves with their own situation 20 years ago, but with a completely unrealistic idea of how others are doing. Empirically, there is hardly any connection between the local economic situation and the proportion of those who vote for right-wing populists. The local economic situation explains the two or three percent vote share of right-wing parties, but not over thirty percent. However, there is a strong connection between how one obtains information and whether one votes for right-wing populism. People who vote for right-wing populists get their information disproportionately via social media. They move in bubbles with a distorted representation of reality.
How should you imagine this exactly?
An example: On social media you constantly see videos of people who claim that they just sit at home, work for two hours and earn a million euros a year. Someone in Hoyerswerda sees this and says: I work eight hours or more a day, pay taxes and only earn 40,000 euros. This makes me feel really bad, I stay behind this imaginary, super-successful group. This is not an East German phenomenon. The exception is the West Germans, where there is less of this kind of discontent and populists are less successful. The East Germans behave similarly to the population in most other countries. This applies to Hungary as well as to Austria, Italy and France. It's not that difficult to explain why East Germans vote populist. It's much harder to explain why the West Germans don't do it.
Does that mean the economic dissatisfaction in East Germany is based on imagination or distorted perception?
It is based on false or distorted comparisons that are fueled by populists. Many people think that especially marginalized groups, refugees for example or recipients of citizens' benefits, are treated far too well, that the state has everything thrown at them while they have to work hard for everything themselves. This is a distorted perception of reality.
What does this mean for economic policy? Can this even be part of a strategy against radicalization?
Economic policy is actually less relevant in this regard than some people think. But economic policy is very important in another way: the traffic light coalition's inconsistent economic policy, consisting of a lot of piecemeal work, no coherent communication and no recognizable strategy, has created great uncertainty in recent years. I think this uncertainty is felt more strongly by people in East Germany due to their historical experiences with the fall of communism and has a greater impact on voting behavior than in the West.
What is important is less individual economic policy decisions – such as highly subsidized individual industrial projects – than a stringent, clearly communicated strategy?
Exactly. I hope that this election result is a wake-up call for the traffic light coalition in Berlin to use the one year it still has until the next federal election to become better in this regard, i.e. more consistent, coherent and strategic. That would really be an important contribution in the fight against right-wing populism.
Max Borowski spoke to Reint Gropp.
