Recent YouGov Poll. Source: YouGov.
In 1848, revolution swept across Europe. Governments fell in Italy, France, Germany, Denmark, Hungary, Poland, and elsewhere. In all, over 50 countries were affected. The uprisings were led by shaky ad hoc coalitions of reformers, intellectuals, and workers, which weren’t competent at governing They were often violently put down, but the 1848 revolutions frightened the ruling class into making significant social changes, even if they were only temporarily overturned.
This history was all-but-forgotten during the Euro crisis five seven years ago, as the Euro was roiled by a series of economic setbacks and social pressures. Greece was on the verge of leaving the common currency. Portugal saw its largest bank fail. Southern Italy remained mired in economic stagnation. Folks saw the European periphery – nick-named the PIIGS, for Portugal, Ireland, Italy, Greece, and Spain – as teetering on the brink of ruin. Memories of the financial crisis of 2008-2009 were raw.
But a funny thing happened on the way to the collapse: it didn’t happen. The European Central Bank vowed to do “Whatever it takes” to suppor the currency. A series of referenda and elections showed that the majority of various voters wanted to stay in the Euro. The biggest outlier has been the UK, with “Brexit.” The loudest critics of European integration – via the EU, the Euro, the ECB, and so on – are a small, if vocal, minority.
But there’s a limit to how much people can take. Populist parties have a definite appeal, especially for folks who feel marginalized by the current political order. Immigration and cultural integrity are at the top of people’s minds. But upending the system has significant costs, too. And the current populist leaders have so far failed to present a convincing political case that they have a viable alternative.
The European crisis isn’t over. There are still financial imbalances and pressures that stem from their common currency, its decentralized structure, and the immigration wave coming out of the middle east. More transparency and accountability are needed. If Europe’s economy turns down again, it’s likely that the populist tide will rise. And memories of 1848 – and even worse chapters in European history – will reemerge.
Douglas R. Tengdin, CFA
Charter Trust Company
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