The Left has created the swing to the Right – some reflections

The last several decades of what is termed the neoliberal era has led to some fundamental changes in our social and economic institutions. It was led by the interests of capital reconfiguring what the polity should be doing, given that most of the significant shifts have come through the legislative or regulative capacity (power) of our governments. In turn, this reconfiguration then spawned shifts within the political parties themselves such that the traditional structures and voices have changed, in some cases, almost beyond recognition. The impacts of these shifts have undermined the security and prosperity of many citizens and redistributed massive wealth to a small minority. The anxiety created as the middle class has been hollowed out has been crying out for representation – for political support. Traditionally, support for the socio-economic underdogs came from the Left, the progressive polity, which, after all was the Left’s raison d’être. But that willingness by the Left politicians to to give voice to the oppressed has significantly diminished as it surrendered the macroeconomic debate to the mainstream and go lost in post modernism. As a consequence, the ideological balance has demonstrably shifted to the Right, and the former progressive parties have been abandoned. My thesis is that the Left has created a burgeoning return of the Right which a daring and resolve that we haven’t seen for decades. The election and aftermath of Donald Trump’s elevation to presidency demonstrates the situation. Last weekend’s general election in Germany demonstrates the situation. And today a poll was released in Australia that suggests the current Labor government, which slaughtered the conservatives in the last election just 3 years ago are now facing a clear loss to the Opposition – that is advocating Trump-style radicalism. As the saying goes – you get what you deserve.

It is hard to imagine how Alternative für Deutschland (AfD) could garner around 21 per cent of the vote in Germany’s national election yesterday.

It wasn’t surprising that the SPD lost to the CDU/CSU given how appallingly weak the previous coalition has been.

But while the polls has been predicting a surge in AfD vote, the fact that it came second, not that far behind the CDU/CSU (which garnered around 29 per cent of the vote), and that the voter turnout was relatively high (a record of 83.5 per cent), is fairly shocking.

A leading AfD official has even used the illegal (but more importantly repugnant) phrase ‘Alles für Deutschland’ while campaigning in the past.

But given that Post-WW2 Germany has been playing catchup for years to become a legitimate part of the global community after its WW2 behaviour, it is extraordinary how a party like AfD can actually exist.

As I wrote in this recent blog post – Germany’s sectoral decline and its obsession with fiscal austerity (February 3, 2025) – the economic future of Germany is clouded because its economic model built on government austerity, suppression of domestic demand via wage suppression, and poor judgement with respect to its industrial policy vis-a-vis China, is finally breaking as those forces combine.

But that decline has, in no small part, been overseen and pushed along by the SPD when in government.

And it is well documented that when a community is in decline in economic terms antagonism towards issues like immigration become amplified.

The SPD was in power with Gerhard Schröder has boss when the first major attacks on workers’ rights and security began (the Hartz policy).

It also agreed to being a junior partner in a CDU/CSU coalition after it lost office in 2005.

That coalition spanned the GFC and its aftermath, which saw the rabid obsession with the ‘Schwarze Null’ elevated to such a place in German policy under Finance Minister Wolfgang Schäuble that the government left itself virtually no discretionary capacity for investing in public infrastructure, which had progressively become degraded under this coalition.

Bridges, transportation, education and health systems, etc deteriorated and eventually those impacts are felt by the population.

The Coalition also devised the so-called ‘debt brake’ which they embedded in the nation’s Basic Law (Constitution), meaning that neoliberalism was no longer just a political flavour but had transcended into the very legal structure of the nation.

In the September 2021 election, the SPD triumphed with Olaf Scholz assuming the role as Chancellor but that coalition (with Greens and Free Democrats) effectively continued the same restrictive policies as the plight of German workers intensified.

So what started life as a ‘Marxist’ party in 1875 is now a soft-Right party with no direction and rapidly diminishing electoral support, which has left the door open for the Right to assume power.

The swings in the 2025 vote are quite stark.

The preliminary results from the – Die Bundeswahlleiterin (Federal Returning Officer) – show:

1. CDU/CSU +4.4 per cent

2. AfD +10.4 per cent

3. SPD -9.3 per cent

4. Greens -3.1 per cent

5. Left Party +3.9 per cent

6. BSW (Bündnis Sahra Wagenknecht) – Left Party +5 per cent

7. FDP (Freie Demokratische Partei) – Right, neoliberals -7.1 per cent

According to the DW analysis – German election results explained in graphics – the SDP “recorded not only its worst result in a federal election but also its largest loss of votes compared to previous elections.”

DW also presented an interesting graphic showing the ‘Voter migration: How did voters move between parties?’

In terms of the SDP votes in the last election:

1. 560 thousand abandoned SPD for the Left Party.

2. 440 thousand to the BSW.

3. 100 thousand to the Greens

4. 2 million to CDU/CSU.

5. 720 thousand to AfD.

In 2021, the SPD won 11,901,556 votes.

So about 23 per cent of its 2021 vote went to the Right or Extreme Right in the 2025 election.

Its overall vote slipped from 25.7 per cent in 2021 to 16.4 per cent (preliminary) in 2025.

The Greens slipped from 14.7 per cent in 2021 to 11.4 per cent in 2025..

It will be difficult for the CDU/CSU to actually form a workable government given the so-called ‘firewall’ preventing it from formally coalescing with the AfD.

But the CDU/CSU leader Friedrich Merz has already (before the election) been echoing AfD policies when he presented two motions to the Bundestag which would see Germany adopt a highly restrictive migration approach.

The ‘firewall’ might only be alive in formal terms rather than policy terms.

The most likely Coalition will be with the SPD, which will further entrench the old ‘Marxist’ party in the neoliberal mire.

If the SPD had actually stood for something approximating its roots and not bought into the neoliberal ideology and its disastrous policies, then I doubt it would have been destroyed like this.

But the decline of the progressives is not confined to Germany.

In Britain, the leading ‘progressive’ media voice, the UK Guardian continues to publish neoliberal nonsense.

For example, I read this article (unfortunately) – Consumers don’t have a debt problem. The US government does (published February 23, 2025) – which demonstrates a lack of understanding of macroeconomic reality, but is dangerous nonetheless because it feeds the sorts of messages that the far Right and the likes of Trump and his Gang are pushing.

The article was motivated by the latest Federal Reserve Bank of New York’s report – Household Debt and Credit 2024: Q4 – which was issued this month.

The report noted that:

Total household debt increased by $93 billion to reach $18.04 trillion in the fourth quarter … Aggregate delinquency rates ticked up 0.1 percentage point (ppt) from the previous quarter to 3.6 percent of outstanding debt in some stage of delinquency …

Transition into serious delinquency, defined as 90 or more days past due, remained stable for mortgages, but edged up for auto loans, credit cards, and HELOC balances. Auto loan balances saw an $11 billion increase to $1.66 trillion in the fourth quarter, while credit card balances increased by $45 billion from the previous quarter to reach $1.21 trillion at the end of December.

Part of this escalation was the extra spending during the Xmas period, so that is not the issue.

Some elements in the media though considered the increased delinquency rate to be a possible signal of an impending problem.

Several major news reports cited the lack of “emergency savings” in the household sector, or the difficulties that stretched households were facing in paying back their liabilities.

In general, there is clearly a limit to the level of debt households can sustain.

Eventually balance sheets become too precarious and overly sensitive to shifts in underlying economic conditions – such as interest rate changes, employment levels, etc – and household consumption expenditure growth declines significantly.

Then a recession looms unless government deficits respond to support the balance sheet restructuring, which is a lengthy process because paying down debt takes time.

With all the ructions associated with cuts to government spending in the US at present, the final result is yet unclear, rising household debt might become problematic.

We will see on that score.

But the UK Guardian chose to publish an author who claimed “I’m not worried about consumer debt. But as a business owner I am worried about our national debt.”

At least he didn’t pull the Greece bit about defaults, recognising that the US government debt was in US dollars.

But even so, while he considered the likelihood of default low (he might have said zero), he considered the rising interest bill to be the threat:

If 16 cents on every dollar is now being spent by the government on interest, where does that money come from? It has to be taken from somewhere. How does the government meet these obligations?

You get the drift: “where does that money come from?”

He lists three avenues:

1. Spending cuts elsewhere – which he doubts will occur.

2. Tax increases – he considers would be political suicide.

3. Last option “printing more money” – “the Fed can print money all day to meet our obligations. And that’s exactly what they’ll do.”

So we are back to this.

According to the authors the problem boils down to “simple supply and demand” such that if the Federal Reserve just ‘prints money’ it will be an “oversupply” and will “lose its value”.

Inflation.

And then the Federal Reserve, so the story goes will increase interest rates – “the same never-ending cycle”.

The prognosis – elevated inflation and interest rates which will cripple small business.

Once again I remind readers of some basic facts.

First, government spending whether it be to fund hospitals, or fuel the military industrial complex, or pay interest obligations on outstanding debt, occurs in the same way each day.

There is no printing machine in sight, except perhaps for the printers that print out regular reports for officials to take to meetings etc to discuss latest trends.

The government treasury (or whatever it is called), which initiates policy, instructs the government’s central bank, to credit relevant bank accounts.

In the case of mailing out cheques (oh, another printing has been active, daresay), the procedure ends up equivalent in accounting terms to just crediting the relevant bank accounts.

Second, tax revenue is collected by various parts of government for various reasons, none of which is to provide prior funds to allow the crediting of bank accounts to occur.

Third, government debt is issued to provide the non-government sector with a zero-risk, interest-bearing asset to add to its wealth portfolio.

The funds used to purchase that debt have come, once you really dig down and understand all the financial flows, from fiscal spending in the past, which was no fully taxed back – in other words, past fiscal deficits.

The currency-issuing government never needs to sell debt to fund its own spending.

As soon as the central bank taps the computer key to execute the crediting process the spending is funded.

So trying to segment ‘sources’ of spending as the UK Guardian author did is a basic error and reflects a lack of understanding of these matters.

Fourth, the Federal Reserve can whenever it chooses and quite separately from its role in facilitating government spending flows, credit the reserve accounts of the commercial banks that have clearing accounts with it.

That capacity is infinite minus one cent.

The Federal Reserve uses that capacity when it buys government debt in the secondary bond markets – so-called quantitative easing.

But they do not use that sort of transaction in the process where the Treasury Department (the Office of Debt Management area) pays interest flows and or redeems public debt that has matured.

So it is hard to see what the UK Guardian author thinks is the process where interest payments are made somehow by printing machines and which is separate from day to day government spending.

At any rate, the point is why is the UK Guardian continuing to publish this sort of material, given that it just feeds the sort of mad-Right trends that are now dominating across the world.

The UK Guardian doesn’t have any mandate to provide ‘balanced’ coverage.

Fox News certainly knows it is not like a public broadcaster.

Some might say that it would be censorship to not give voice to these ideas.

And they would be right.

Censoring fiction parading as fact.

The UK Guardian has certainly not shown a willingness to publish articles that I have proposed to them.

So it does discriminate along ideological lines.

Conclusion

The world is shifting rapidly to the Right because the Left has abandoned its voice and its role in given succour to the underdog.

We will all regret this era.

That is enough for today!

(c) Copyright 2025 William Mitchell. All Rights Reserved.