What lies behind the surge in populism?

An article authored by Lubos Pastor and Pietro Veronesi of the University of Chicago, however, argues that it is inequality rather than poverty that generates support for populism.

This explains why populist political measures have gained favour even in rich countries during economic recoveries. In 2016, when Americans elected Trump and the British voted for Brexit—two acts of populism—both the economies were performing well, the authors point out.

When the economy is strong, everyone fares well but the rich fare better, the authors argue.

The rich own stocks and businesses whose values tend to rise in good times, and this fuels inequality. The growing wealth of economic elites fuels resentment and leads to an anti-elite backlash, which generates electoral support for populist leaders and political parties.

The 2008 financial crisis may have exacerbated this resentment by making voters feel that the bankers responsible for the crisis were earning unfairly high bonuses even as they pushed the global economy into a recession.

The anti-elite backlash is more widespread in richer countries because the demand for equality increases as a society becomes wealthier, the authors argue. Even if populist measures hurt everyone, they are expected to hurt the rich more. As the country grows richer, voters become increasingly willing to forsake their own consumption for greater equality, the authors argue.

So, populism wins when the country grows richer and unequal.

Also read: Populism: Why in rich countries and in good times

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