Inequality and the Rise of Populism

Abstract

After two centuries of growing global inequality, faster growth in Asia compared to the West has seen this trend start to recede. Inequality within countries, however, has generally risen, though perhaps more in perception than in fact. The allocation of responsibility for this, between technology, growing monopoly power, and the surge in labour supply due to globalisation and demography, is complex and uncertain. One might have expected such rising within-country inequality to benefit left-leaning political parties (and it did in Latin America). But in North America and Europe, it has led to rising support for right-wing, populist parties. Goodhart and Pradhan attribute this largely to the public’s distaste for large-scale immigration. Immigration is an issue that sharply divides the views of mainstream economists, who mainly welcome it, and the public at large, who want it to be restricted.