The Loss of Trust: The Impact of the 2008 Financial Crash on Global Politics

When thinking about politics, and the importance certain ‘moments’ have had on the political climate, it important to work backwards, rather than to project from certain events. Speculation, especially when studying politics at degree level, is never a good idea, and leads to a guessing game based on assumptions of what certain current events could mean for the future, if they’ll mean anything at all. Often something that seams like a turning point is not one, but rather illustrative of the political climate, and one that would not change the upcoming events, but was a product of its circumstances. The attack on the World Trade centre, the shooting of the Arch Duke Franz Ferdinand, and the French Revolution (the effects of which, as Zhou Enlai observed to Henry Kissinger, were too soon to tell) have all been cited as significant turning points in history and politics, and yet were their supposed results not products of a wider circumstance? And in fact, these moments and events were the symptoms, and not causation. Therefore, in offering advice to future politics students, it is important to look at current situations, the world we live in, and work backwards to look at the factors which could have caused it.

What defines the society that many of us live in today? What is the common trend among both politicians and the people, and what caused it? Coming from a ‘Western’/ Eurocentric perspective, I would go so far as to assert that both the West and many areas of the Global South have undergone a similar political shift in the past ten years – or longer – towards nationalist-populism, directed by a growing mistrust of the political and economic elite. Looking backwards from this mistrust, from Brexit and Trump, the Umbrella Revolution, the re-election of Uhuru Kenyatta, and President Rodrigo Duterte, I assert that a key moment that shaped our political climate was the 2007/8 global financial crisis.

The financial crisis sent a shockwave of economic and political disaster across the world and was the moment which turned the tide on the people’s trust in the banks, and in politicians. In brief, through deregulation of the investment banks, and subprime mortgages that led to a housing bubble in the US at the beginning of the century, banks became too big to fail. And then they did just that. When Lehman Brother’s was allowed to go bust it prompted the loss of the one invisible glue that holds the entire global financial system in place: trust. The institutions which held many peoples lives together suddenly no longer worked as they had promised people they would. Thanks to decades of deregulation since the 1980s, it has long been the policy of politicians when the economy is going well to let it be, a fundamental belief of the neoliberal political economy being that there needs to be as little government involvement as possible. With the banks left to their own devices, often buying off politicians in the US in the form of campaign finance donations (for example Texas Senator Phil Gramm, Chairman of the Senate Committee on Banking, Housing, and Urban Affairs who listened to energy company Enron, which lobbied for greater deregulation), politicians in the US turned their back on the economy, becoming responsible for the crisis which followed.

In 2016, during the height of the Brexit campaigning in the UK, Michael Gove – then Justice Secretary – accurately summed up the mood of the times when he said that “the people have had enough of experts”. In the years of slow recovery, many politicians have sought to rebrand themselves, shift further to the right or left, abandoning the centre entirely, to wash off their scent of expertise and mark themselves out as ‘one of the people’. Populism should not be confused with pure, direct, democracy. Donald Trump cannot be seen to be on any level as ‘one of the people’, but his campaign managed to hook on to very real concerns of his voters. Trump beat Hilary Clinton in 2016 by winning in the ‘rust belt’; states like Michigan which had formally been the home of General Motors and the US car industry but took an extreme hit in 2008 leading to the city of Detroit, for example, becoming a ghost town as many people were forced to move out of their homes. Trump’s discourse and demeanour, regardless of any readers’ political opinions, cannot be denied as being as far from professionalism as possible. Clinton, by contrast, was vilified for being part of the Washington elite, with strong ties to Wall Street. Eight years after the crash and still the people were unwilling to trust a professional politician for President, opting for a man who claimed to be one us, not one of them.

[the] banks became too big to fail. And then they did just that.

This loss of trust in mainstream politicians can be seen replicated across the world and exacerbated in the ten years following the global financial crisis. This can especially be seen in the shift towards populist-nationalism, whereby many countries in the wake of 2008 no longer wished to place their trust in global legal or financial institutions but rather manage their counties without international intervention. An interesting example of this is Rodrigo Duterte, the incumbent President of the Philippines. Duterte can be described as a nationalist-populist, claiming during his presidential campaign that he was willing to withdraw the Philippines from the United Nations should it continue to challenge his human rights record. It is perhaps a long shot to suggest that the nationalist-populist policies of Duterte are a result of the 2008 financial crash, but it is not wrong to look at the global political climate, where so many people have become disenfranchised with status quo politicians who put blind trust in the banks, to understand how a man like Duterte – who shares many similar characteristics with Trump – can be elected. Across the world people have become frustrated, and no longer have faith in their institutions, to the extent that the nationalist-populist shift over the past ten years should not have come as much of a surprise.

It will be interesting to see how long the shockwaves of the 2008 financial crisis are felt, and how long populism and nationalism is the political movement of choice, with professionalism still regarded with mistrust. Perhaps the cracks are beginning to show, with failing Brexit plans and Trump’s record low popularity rate. Regardless, in looking at our current political context, at the societies that so many people are living in around the world, the global financial crisis can be seen to have changed the way that the people interact with politics, and how politics interacts with the people.

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