Europe: The genie is out of the lamp
Times have changed since the Society for the German Language chose Alternativlos (without alternative) as its Unwort (literally ‘unword’ or ugliest word) of the year for 2010. The choice reflected the frequency with which Angela Merkel and other German politicians suggested there was no alternative to the policies they preferred.
Up to a point the word reflects Margaret Thatcher’s favourite dictum that “there is no alternative”. But for the former British prime minister the reference was primarily about the market system being the only viable way to manage the economy. She exemplified the view that there is no alternative to capitalism as the Cold War came to an end.
For Merkel and many other western politicians the concept has taken on a broader meaning. Essentially it is that there is no alternative to their pragmatic and evidence-based way of making decisions.
This perspective helps to clarify the significance of the Brexit vote and the election of Donald Trump as US president. Although the two events differed in important ways, they both epitomised a sense that there is a different way of doing things. Many voters are tired of what they see as a complacent political class. In the British case it meant voting to leave the EU, while in the US it meant rejecting Hillary Clinton, widely seen as the arch-establishment candidate.
A similar trend is apparent in continental Europe. Whatever the results of the upcoming elections there is also a feeling that the days of Alternativlos are coming to an end. Those that appear to offer a genuine alternative, whether associated with the left or right, often succeed in gaining public support.
Indeed, despite the welcome electoral rejection of Geert Wilders and his far right Partij voor de Vrijheid (Party for Freedom), the trend seems apparent in the recent Dutch elections too. The big winners on the day were the GroenLinks (GreenLeft) party, which more than tripled its seats from four to 14. Whatever the desirability of its politics its success also represents a shift away from the consensus.
The challenge for mainstream politicians is to convince the public that they do offer genuine alternatives. They need to show they are not simply technocrats with as much passion as an Excel spreadsheet. Simply asserting that they know best will no longer do.
Certainly labelling voters as “deplorables” and the like will only alienate voters further. Appealing to the public is much more difficult than insulting it.
For investors it means that geopolitics cannot be so easily dismissed as a tail risk. A period of greater instability lies ahead.
Once the mystique of Alternativlos is broken the results can go in all sorts of unpredictable directions. When the genie is out of the lamp it cannot easily be returned.