Democracy Recession: USA under Trump and Hungary under Orban Become Autocracies

There aren't many liberal democracies left on the planet. Only 12 percent of the world's population will live in countries deserving of this label by 2024, according to the V-Dem Institute at the University of Gothenburg. Germany is one of the most important remaining countries in this category, especially now that the United States has been under constant attack on independent institutions, academia, and journalistic media since January.

The center is shrinking. By the next federal election, the majority of the governing parties could be gone. The AfD is currently leading in the polls, even though its loyalty to the constitution has long been in question, not just since the wrangling over its classification by the Federal Office for the Protection of the Constitution as "certainly right-wing extremist" and a possible party ban.

Public unrest remains limited. Many citizens are apparently no longer particularly concerned about the prospect of the AfD gaining power—nor, incidentally, are some members of parliament in the conservative-red coalition, otherwise they would have behaved differently in the chancellor election.

At least, Germany has so far bucked a global trend. There's talk of a democratic recession. The V-Dem Index shows that liberal democracy as a form of government relative to population has plummeted to its lowest level since 1985. At the same time, Swedish political analysts are observing a "truly global wave of autocratization."

This year's Democracy Summit, initiated by former NATO Secretary General Anders Fogh Rasmussen , will take place in Copenhagen starting Tuesday . This is the eighth time the community of foreign policy experts, activists, and academics is meeting. As is often the case with such events, the primary focus is on mutual self-assurance. The future course of world history will be decided elsewhere.

There is room for debate over the details of the V-Dem study, particularly the classification of some countries. According to the Gothenburg categorization, Great Britain and Canada now belong only to the group of "electoral democracies," i.e., countries where voting takes place, but the social underpinnings of the liberal order are eroding, for example, in terms of the absence of intimidation of dissent or politically motivated violence. Taken together, almost a third of the world's population still lives in democracies. Twenty years ago, it was half.

"Electoral autocracies" have progressed further down the path of depriving people of their freedom. Ruling circles have brought institutions under their control to such an extent that pluralism is merely a facade concealing the invasive rule of a clique. Hungary, India, and Russia all fall into this group, which seems, to put it mildly, bold.

Nonetheless, the V-Dem researchers have compiled an impressive amount of data and condensed it into a wealth of indicators. (The full report can be found here .) Their findings reveal many facets of a disturbing trend: Civil liberties and participation rights are in decline. And the citizens who are denied these rights are not taking to the barricades.

How can this actually be? What's going on in Western countries? Are we tired of democracy, bored, chronically distracted? Or have democratic parties and institutions truly failed?

The political scenario may, at first glance, be reminiscent of the 1920s and 1930s. Back then, too, political extremes were gaining strength. Democracies proved unstable and tilted toward fascism or Leninist-style socialism. The Great Depression of the 1930s hit many countries hard, exacerbated by a trade and currency war unleashed by the United States.

Unemployment and existential fears spread. Trust in democratic institutions was shattered. The practices of reasonable and civilized reconciliation of opinions and interests withered. Societies withdrew into themselves and viewed the rest of the world, in various forms, as enemy territory. The zeitgeist was characterized by isolationism and nationalism.

Even if there are some parallels, the economic and social conditions today are so different that they are not suitable as an explanation for the international rise of right-wing populists and extremists.

It is true that economic growth in many countries, especially in the southern eurozone countries, has been meager since the financial crisis of 2008/09. Real incomes have fallen in many places and have only partially recovered after the price shock of 2022/23. Inflation has further damaged confidence in government institutions, following the unsettling effects of the coronavirus pandemic and the associated coercive measures. Even in Germany, which still enjoyed solid growth in the 2010s, economic output has stagnated for the past five years.

And yet, hard indicators show that people in Europe are still doing quite well. Life expectancy has been rising for decades, even in countries with stagnating per capita incomes. General life satisfaction is high. Income distribution has been largely stable since the 2010s.

However, these results are not reflected in the assessment of the overall social situation. Dissatisfaction, pessimism, and at times, a frightening aggressiveness dominate the mood. Populists are gaining traction with the claim that the elites of the "deep state" (Trump) or the "old parties" (AfD-speak) are working against the majority of the population. Globalization, European integration, and migration are sinister projects that harm ordinary citizens.

Of course, every development has its downsides. This can be addressed. Democracy and the market economy are imperfect systems—how could it be otherwise!—that must constantly be developed and rebalanced.

Unfortunately, the reform mechanisms have lost popularity. More and more citizens are evidently willing to trust self-appointed leaders, including unscrupulous scoundrels and reckless scoundrels, and to surrender their civil liberties in exchange for illiberal forms of government.

Disruption instead of debate? Despotism instead of deliberation? False alternatives lead down dangerous paths.

Long, controversial public debates and the mutual checks and balances within the democratic institutional system are a good thing. In the US, we can currently observe what happens when these rules are undermined. There, Trump prefers to make decisions by decree – often based on a momentary whim, without careful consideration, based on false assumptions, and ignoring side effects and consequences. Usually, all of this comes to light in the legislative process and is taken into account accordingly. Trump, on the other hand, has to repeatedly backtrack simply because his decisions clash with reality – see the back and forth in tariff policy.

Illiberal leaders are bad for economic prosperity. The longer they remain in office, the more corruption, nepotism, and restrictions on freedom of expression become apparent: State institutions erode, growth suffers, and inflation rises, according to a study by a team of authors from the Kiel Institute for the World Economy .

It is therefore absurd to believe that populism could point the way out of the current economic stagnation. Yes, we need growth, also to prevent society from sliding into the logic of zero-sum games. Persistent income stagnation is incompatible with the promises of progress made by the liberal social order. Challenges such as high immigration numbers and stricter climate protection measures, which are easier to bear in a growing economy, create uncertainty in a state of persistent stagnation. Conflicts intensify, and struggles over distribution become more intense.

Democracies produce better, fairer outcomes in the long run. A fundamental prerequisite for this, however, is that citizens are engaged and interested in their respective communities—that they form well-founded opinions and are not satisfied with quick answers.

Democracy, wrote US Supreme Court Justice Louis D. Brandeis more than 100 years ago, can only function if citizens “take it upon themselves to inform themselves of the facts they need to make correct decisions and then have those decisions notified by casting their votes.”

The rule of the people must be anchored in factual knowledge about the social issues facing us and their possible solutions. If people fail to fulfill this civic duty, the system risks disintegrating from within – disinterest weakens democracy.

For a long time, this deal between citizens and governments worked reasonably well: The people elected technocratically oriented politicians who administered their respective countries more or less competently. Ultimately, the Western model of democracy thrives on seriousness and boredom. That may sound boring. But there are worse things.

Monday

Reporting season I – business figures from Evonik, 1&1, United Internet, Adesso, Salzgitter, Hochtief, Unicredit.

Tuesday

Washington – America's Prices – Release of the US inflation rate for April. Consumers expect a rapid rebound in price increases, one reason why the US Federal Reserve is still keeping interest rates high.

Reporting season II – business figures from Munich Re, Bayer, Deutsche Wohnen, Hannover Rück, KWS, EnBW, LEG, Fraport, Vorwerk, ACS, Carl Zeiss Meditec, Springer Nature, Jenoptik, Sixt, Dürr, De Longhi.

AGM Season I – Annual General Meetings of SAP, Rheinmetall, Freenet, BNP Paribas.

Wednesday

Wiesbaden – Details – The Federal Statistical Office has released details on inflation trends in April. Overall, the price index rose by 2.2 percent compared to the same month last year.

Reporting season III – business figures from Eon, Bilfinger, Daimler Druck, Renk, Porsche Automobil Holding, Tui, ABN Amro, Telefonica, Alstom, Pirelli, Euronext.

AGM Season II – Annual General Meetings of Traton, Bilfinger, K+S, 1&1, Holcim, Crédit Agricole, Swiss Life, AIG, AMD, Harley-Davidson.

Thursday

Luxembourg – Start of the year – Eurostat publishes its first estimate for gross domestic product development in the first quarter of 2025 for the euro area and the EU as a whole. Reporting season IV – Business figures from Allianz, Merck, and RTL.

AGM Season III – Annual General Meeting of Commerzbank.

Friday

Brussels – How's it going, Europe? – The EU Commission presents its spring forecast for the member states and the Union as a whole.