The Connection Between Inequality, Economic Decline, And Political Populism

The rise of populist movements around the world has prompted much consideration as to the cause of this “anti-elite” groundswell of consternation.  A new study from Princeton University suggests that the true cause is the rise in inequality and general economic decline experienced in many of the countries where populists have thrived.

The researchers developed a model that shows how group polarization soars during periods of rising inequality and economic distress.  Sadly, these divisions may endure even after economic conditions improve.  The researchers believe this underpins the importance of strengthened social safety nets to help minimize conflicts across ethnic, social, and racial groups.

“Times arise when national unity is needed, like we’re seeing now with COVID-19, but we shouldn’t wait for a public health crisis or war to bring people together,” the researchers say. “Policymakers and those in government should act now by investing in and protecting social safety nets that can prevent widening social and political divisions.”

Cultural evolution

The models were based on evolutionary game theory and cultural evolution, and aimed to understand our willingness to interact with others outside of our social group.  The model operates with a couple of key assumptions, such as our individual economic success being tied to our interactions with others and the overall performance of the economy.  The model also assumes that successful people inspire others to follow in their footsteps, and therefore create a sort of contagion of certain behaviors.

Finally, the team assumes that any interactions within social groups is less risky and have lower rewards than interactions with out-group members.  As such, when economic conditions become challenging, people tend to retreat to the relative safety of their in-group and actively avoid interacting with outsiders.  This behavior then becomes mimicked, which helps it to spread dangerously through society.

The researchers believe their model goes a long way towards explaining some of the political trends we’ve seen around the world, not least as financial crises seem to predate the rise of far-right movements that vilify out-groups.  This was evident after both the Great Depression and the Global Financial Crisis.  This reduction in cross-group interactions makes a country poorer, which further exacerbates the hold of populists over it.

“Rather than continue the unproductive debate over whether ‘economic anxiety’ or group conflict is most responsible for our deeply divided politics, scholars should spend more effort considering the debilitating feedback between economics and identity,” the researchers conclude.

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