Those pushing deep austerity measures, either the debtors or those funding the bailout in the European Union, for troubled member nations may want to pay particular attention to the recent Slovian election, which shows the kind of impact forced austerity can have on near-future voting patterns.
It was only two years that Robert Fico and the center-left Smer party were driven from office in favor of a center-right coalition that promised some rational responses to problems with Slovak finances. Just a little more than two years later, Smer and Fico are back as the population bristled at the austerity regime that Iveta Radičová promised she would put in place. Fico rode to the biggest vote total that any party in Slovakia has managed since the country’s independence in 1993.
The campaign was easy enough: it was almost pure populism with vague promises of taxing the wealthy as opposed to demanding the austerity measures. It seems to have escaped the notice of the Slovaks that when the wealthy faced that threat a few years ago they simply fled Slovakia and, in their wake, left an even bigger financial crisis.
Analysis: This is the object lesson that is being learned in every state that faces a debt crisis. It may sound logical and compelling to address the issue with austerity budgets and deep cuts, but the population invariably rebels and they then put those in power who will reverse the hated austerity plan. It is likely to happen in Greece soon and is happening to some degree in France and Italy. The point is that people will find some way to shift that pain to someone else if they possibly can. The Slovak election of Fico puts the entire plan for a new European treaty in that much more jeopardy.
Chris Kuehl, PhD, NACM Economist