Inequality breeds populism---economic insecurity and political distrust

Most democratic societies have experienced a rapid increase in income inequality over recent decades. Across OECD countries, the average share of disposable income earned by the top 10% has increased and is about 9.3 times higher than the income of the bottom 10%. Income inequality has probably further increased during the Covid-19 pandemic. What does this unequal allocation of economic resources imply for liberal democracies?

In the last couple of decades, liberal democracies have found themselves contested by populist parties. These parties separate society into two homogeneous groups – “the pure people” versus “the corrupt elite” – and aim to implement the general will of the people irrespective of existing liberal democratic institutions. While mainstream parties have suffered dramatic electoral losses, right-wing and left-wing populist parties are on the rise all over Europe. More than one in four voters cast their vote for an authoritarian populist party the last time they voted in a national election.

Is there a connection between rising levels of inequality and support for populist parties? Public discourse would certainly suggest that rising economic inequality is a likely root of populism. In a recent interview, the political scientist Michael Zürn noted that “the cultural division of society and growing inequality form a background that serves the rise of these authoritarian populists”. Scholarly articles further reveal that rising inequality can go hand in hand with support for authoritarian populist parties.

But how does this chain of events work? Inequality can only be understood at the macro-level when comparing the distribution of income in the population. Yet support for populist parties is an individual decision. It is difficult to see why a voter should be more likely to support a populist party when the top 10% in society earn say, 30% of net income rather than 22%. Arguments that attempt to connect these two elements are obliged to outline how macroeconomic conditions influence voting decisions. For this reason, there have been several attempts in the academic literature to propose a set of channels to explain how increasing inequality might lead to support for populist parties.

The link between inequality and support for populists

One of the most prominent arguments is that income inequality leads to economic risks and insecurities. In one sense, this relationship is almost mechanical as an increase in inequality implies that the share of people who earn relatively little will also increase. However, the argument is that next to actual income, what especially matters is perceived economic insecurity. People who have fallen behind or that fear they may do so are more willing to turn their backs on mainstream politics and embrace populist parties’ offers to put their interests first. The relationship between economic insecurity and support for authoritarian populist parties is well-established, but it can be just as important for left-wing populist parties that offer strong redistributive platforms.

Another related mechanism emphasises the importance of trust in political elites. Rising inequality levels can distort trust in representatives from mainstream parties – either because voters directly observe unequal outcomes and question the integrity of political elites, or because they experience increasing economic risks and hold mainstream parties responsible for it. Declining trust in political elites may therefore explain the attraction of both left-leaning and right-wing populist parties.

The debate about the roots of populism sometimes distinguishes between cultural and economic explanations. Inequality is often described as a pure economic cause. This is not necessarily true, as rising inequality can also have cultural consequences. According to another argument, rising income inequality leads to social stratification and social marginalisation. Voters that feel marginalised are receptive to populist rhetoric blaming elites for not representing the “true people”, making them more likely to support populist parties. Similarly, rising inequality levels can also affect identities – another cornerstone for proponents of cultural explanations. This argument states that unequal incomes make it more attractive for low-income voters to identify with the nation-state, rather than the working class, and hence an increase in income inequality can draw people towards authoritarian right-wing populist parties.