Usually I would not—especially not here—but for once I cannot resist. For all those who have not seen the Austrian government’s (fake) message to the recently elected president of the United States, please enjoy the following link:
The NY Times connected, if only loosely, surging populist movements in Western Europe to the election of Donald Trump in this article yesterday. While not explicitly stated, I would argue it creates the impression Trumps’s election acts as a catalyst for their cause. In my opinion, Austria’s presidential election from Sunday suggests quite the contrary may be true as well. The idiosyncratic social environment of (in particular Western) European countries and the political positioning of the political parties in questions seem to be factors substantially contributing to whether the outcome of the US presidential election supports or weakens the populist movement’s chances for success.
Critics denounce the Austrian presidential election as irrelevant and of no importance, since the president of Austria is not a “head of government” comparable to the United States or France. On the other hand, however, he is responsible to uphold the balance between the executive, legislative and judicial powers and is enabled to do so by a number of constitutional rights. Once elected, the Austrian president temporarily suspends his party membership to serve as an independent bridge builder. In other words, the Austrian president is definitely more than a figurehead or welcoming clown (the German “Gruss-August” is a frequently seen defamation of the German president who is not equipped with similar constitutional powers).
The recent Austrian presidential election last Sunday was initially supposed to take place at the beginning of May of this year. And it did. Since none of the candidates achieved the necessary absolute majority on the fist ballot, a run-off two weeks later saw the former university professor and political representative of the Green Alternative party (according to their charter driven by direct democracy, nonviolence, ecology, solidarity, feminism and self-determination), Alexander Van der Bellen, come out on the top against Norbert Hofer, candidate for the Freedom party of Austria, a national conservative, anti-immigration and Eurosceptic party.
A novelty in Austrian history, the run-off did not feature a candidate from either of the two (former) major parties, the social democratic and the people’s party, who basically led the Austrian government since the country’s inception as a republic (and do so currently). While Hofer won 50% more votes than Van der Bellen on the first ballot, the latter won the run-off by the thinnest of margins (50.35% to 49.65%) as many moderates and traditional voters of the major parties united behind the former university professor to oppose a major right shift in Austrian politics.
The results of this run-off, however, were annulled after the constitutional court of Austria found that Austrian electoral law had been disregarded by counting over 77,900 votes improperly too early, however without any indication of votes having been fraudulently manipulated. The second round re-vote was planned for October, but embarrassingly had to be postponed to December 4th 2016 due to faulty glue on the voting envelopes.
Although neither candidate was a member of either of the two reigning parties, Norbert Hofer was much more perceived as an anti-establishment candidate, in particular after Van der Bellen received endorsements by member of of both major parties. This fact, coupled with infrequent but persistent accusations of fraud had more than a few experts and many Austrians contemplate that Hofer was going to win the re-vote quite comfortably. Polls conducted after the annulling supported this stance. Then, however, things turned out quite differently from what was expected. Alexander Van der Bellen also won the second run-off and, this time around, with a margin as significant as unexpected 53.79% to 46.21%, i.e. by more than 7%.
Donald Trump did not win the US presidential election because he and his supporters mobilized voter types he was not supposed to attract. The forecasts rather got the numbers of people showing up at the urn horribly wrong. The turnout among Trump supporters was significantly underestimated whereas the opposite held true for Clinton supporters. Austrian voters, many of whom closely followed the US election, learned their lesson from the events in the US. Overall voter turnout was about 75%, a very decent outcome when compared to recent trends. In particular, better educated Austrians, the majority of which tends to vote more around and even left from the political middle are more likely to follow international news. The other force which potentially made a difference were anti-establishment protest voters getting cold feet the second time around. Without knowing the exact numbers, this could explain why the absolute number of votes Norbert Hofer received decreased, although overall voter turnout rose by 2%. These voters may haven been discouraged by the uncertainty and the controversial choices for public office in the aftermath of the Trump election.
The above mentioned NYT article lists European populists and does not differentiate between those positioned on the left from those on the right side of the political spectrum. An interesting (untested) hypothesis is that the outcome of the recent US presidential election may, however, influence populist movements in Europe differently, depending on their political position. Trump’s election may well act as a catalyst for anti-establishment movements in general. On the other hand it might induce hesitation of anti-establishment protesters to vote for the right and a higher voter turnout among liberals. As a consequence, Trump’s triumph ironically may well halt or at least slow down some of the nationalist tendencies observed in recent elections across Europe and potentially swing the pendulum towards liberals in particularly hard fought and tight elections.
Lastly, dedicated to my economist friends: To the best of my knowledge, Austria is now the first and only country ever, whose president published an article in Econometrica.
On Sunday, November 30, Joseph Stiglitz advertised his new book “The Great Divide” at the Vienna University of Economics and Business Administration (WU). Neither did I attend the lecture nor do I have access to any recording. My only record of his words is a German article in the Austrian daily newspaper “Der Standard” (which can be accessed here). That means, Stiglitz has been first translated into German and in what follows I re-translate into English. Given this sounds like an instance of the children’s game telephone, there might well be content lost in translation.
Nevertheless, I was quite surprised by what I read. According to the article (as objectively translated as I could) Stiglitz said:
“Demanding solidarity is not easy in good times. It becomes, however, politically dangerous if poverty and unemployment are on the rise since [in this case] it generates breeding grounds for right wing extremist parties. This also holds true for countries like Germany and Austria. Society should not only solidarize with refugees but also with low-income (and low-skill) workers. Those should be increasingly supported by the wealthy elites in these countries by re-distributional policies to avoid social tensions. Necessary funds could be generated by “wealth taxes” [private capital or equity taxes].”
There certainly is a deeper truth to this statement anywhere in the world. Also, it hardly comes as a surprise. However, I was somewhat startled to see it applied to Germany and Austria, admittedly the two countries with the biggest refugee influx per capita recently, but also two countries among the world-leading in equality and the extent of tax funded social services.
I have written a commentary in the Austrian newspaper “Der Standard” about recent events around the Austrian Institute of Advanced Studies (IHS),
a leading European educator of graduate students in Economics, where I completed my Master’s degree before attending Northwestern. Since the article is written in German, please find my translation below (The original in German can be accessed here) :
The Economic research division at the institute faces hard times. Termination of the Master’s degree program has already been confirmed
The Vienna Institute of Advances Studies has most definitely already seen better days. After a successful period under former head Bernhard Felderer, the institute, or at least its Economic research division fears closure during the spell of current interim director Sigurd Hoellinger.
The institute was founded in 1963 by world-leading Austrian researchers Oskar Morgenstern and Paul Lazarsfeld with financial assistance of the Marshal plan. Initially, it set out to revive Austrian Social and Economic Sciences which lacked competitiveness internationally after WW2. Ever since its foundation the institute has been organizing a two year graduate program in Economics (nowadays graduates are awarded a Master’s degree upon completion).
Reorganization at the expense of science
Astonishingly, the current interim board – with apparent support by local politicians – plans to disestablish the current department structure (Economics, Political Science, Sociology) in order to regroup researchers into interdisciplinary areas. This appears to initiate the end of an era of successful research in Economics at the institute as there is hardly any successful example of such an act of restructuring in fundamental research in Economics. It seems natural to assume that a downgrade of Economic research and the cessation of graduate education will significantly diminish if not destroy any appeal of the institute to leading researchers. The current events reinforce the suspicion that restructuring is the politically smoother idiom for downgrade.
Argument 1: Questionable financial hardship
The motivation for those measures appears to remain a mystery. An argument recurrent in the Austrian media landscape is insufficient funding, which seems ridiculous. Whereas it is per se questionable to require fundamental research to fund itself the Austrian Institute of Advanced Studies is in general externally funded to a larger degree than comparable institutions in the German speaking world.
What is more, funding an Economic research group is preposterously inexpensive when compared to other research disciplines. This fact is mainly caused by comparatively low-cost equipment necessary for Economic research: A notepad, a pencil, nowadays a laptop and eventually data; with cost for the latter being rather negligible due to a rather theoretic and small research group at the IHS. Finally, wages at the institute are at most average when compared to international competitors.
In recent weeks at least scarce mentioning of the institute was observable in the Austrian media. First and foremost I would like to refer to Hanna Kordik’s article in the Austrian newspaper “Die Presse” and to former IHS researcher Alex Stomper’s commentary in the Austrian newspaper “Der Standard”. Alex Stomper, as of today professor of Finance at the Humboldt University in Berlin, Germany, mentions the IHS’ master’s class of 2011 as an example of recent success when graduates went on to pursue doctoral education at Yale, Northwestern or the London School of Economics. Mentionable instances of former successful graduates are Ernst Fehr – a recurring favorite for the Noble prize in Economics – or Wolfgang Pesendorfer, at the time of his inauguration among the youngest professors of Economics at Princeton.
Argument 2: (Insufficient) education at public universities
Another napless argument against the maintenance of an Economics research group at the institute is its substitutability in terms of education by Austrian universities. Personal experience and those of many friends and colleagues shows that demand for Economics graduates of Austrian public universities at potential top class employers is scarce. Public Austrian universities are – primarily due to chronic underfunding – incapable of regularly meeting high international standards in terms of supervision and mentoring both in terms of quality and quantity.
On occasions, contributions in the national media have questioned why an Austrian institution is indirectly funding American top universities with human capital. This perspective is unfortunately out of context. Austria does not subsidize such research institutions. It is rather the case that IHS graduates are rewarded with world-class education for their efforts as research or teaching assistants at those organizations. It goes without saying that a degree from an international top 10 university opens doors of both academia and private enterprises alike worldwide.
Three goals of economic importance
Due to the fact that a significant ratio of graduates does either not leave the country in the first place or returns after successful completion of an international doctoral degree the graduate education program at the Vienna Institute of Advanced studies ensures achievement of three long term economic objectives: (1) supply of highly educated economists for strategically significant jobs in Austria, (2) excellent networking with international decision makers in the private sector and academia and (3) attraction of Austria as research location for international scientists to consult and exchange scientific ideas (visitors to the IHS in recent years were Larry Blume, Mark Machina, Dale Mortensen, Joergen Weibull, etc.);
Relative to its size and population Austria looks back at an impressive and proud history of scientific achievements. However, the large part of those took place more than half a century ago since back then the dark era of WW2 destroyed our excellent conditions for fundamental research, which depends to such a large extent on inter-generational supervision and transmission of ideas. While rehabilitation in academia traditionally could not keep up with developments of the Austrian economy, the IHS has served Austria well for a long time producing internationally competitive research output and human capital. Conversing with non-German speaking internationally renowned economists the Vienna Institute appears to be among the most frequent topics after the Habsburg dynasty and the Vienna opera house.
No demand for excellence?
It might be suspected that the de facto closure of the Economic research division is linked to some dubious political quid pro quo pact. This raises the question whether Austrian politics understand it to be inappropriate nowadays to harbor a claim for excellence in our country. I am a fiery advocate for free access to education in Austria – as a measure to set economic impulses, increase the average quality of life and prevent a multi-level society – not necessarily in this succession. However, it appears to me that equality of opportunity ex ante is generally confused with the same ex post. Even in a country rightfully proud of its solidary statutes, merit may be rewarded and – quite more importantly – should be met with promotion.
Thomas Jungbauer is PhD candidate at the Kellogg School of Management at Northwestern University in Evanston, a northern suburb of Chicago, Illinois. Before his education at the Austrian Institute of Advanced Studies (IHS) (Class of 2011) he studied at the Vienna University of Economics and Business (WU) and the Vienna University of Technology (TU).