Populist leaders convince working-class voters that job security, competition from trade and immigration, loss of culture are more treacherous than inequality.
By Pranab Bardhan*
It is now commonplace to blame rising economic inequality for working-class anger and the gravitational pull toward right-wing populism all over the world. But the relation between these two phenomena is actually more complicated.
As the recently released World Inequality Report 2018 observes, over the last three decades the richest 1 percent in the world reaped 27 percent of the world income, while the bottom 50 percent of the population received 12 percent. The same report indicates that the income share of the top 1 percent peaked just before the financial crisis, and went down a little or stabilized since then. Yet the right-wing eruptions happened mostly in more recent years. Is this just a delayed reaction? Going into the trends a little deeper, one finds more complex processes.
No matter what the “Occupy” proponents may say, most workers do not express much concern about the increasing income share of the top 1 percent. They worry more about their jobs threatened by cheaper imports facilitated by global integration and by the inexorable advance of automation and digital technology. Even when their own jobs are not directly threatened, they worry about their children’s future. And they worry about the perceived threat to their local cultural and community life that immigrants in sizeable numbers may represent. In contrast with the United States, in Europe where there is the assurance of a relatively strong social safety net and facilities for retraining, the job insecurity is less worrisome than the cultural insecurity. Take the example of the Netherlands. There the safety net is sturdy and the income share of the top 1 percent hardly changed over the last three decades, and yet right-wing anti-immigrant populism is raging. Even though Geert Wilders, often called the Dutch Donald Trump, did not do as well in the March 2017 elections as was earlier expected, the country’s political mainstream has absorbed his extremist message.
So when the demagogues tell the workers about the callousness of the political establishment to their economic and cultural plight, they enthusiastically rally to their banner and do not care that these leaders often belong to the top 1 percent – as in the case of multi-millionaires like Donald Trump in the United States, Nigel Farage in the United Kingdom, Vladimir Putin in Russia, Viktor Orbán in Hungary, Andrej Babiš in the Czech Republic, or Recep Tayyip Erdoğan in Turkey. Sociologist Arlie Hochschild in her book Strangers in Their Own Land reports from her field survey in Louisiana that the poor white workers there are more resentful of the minorities and immigrants than of the large petrochemical companies that have poisoned their land for decades. In India, Narendra Modi’s Hindu fanatic supporters are more resentful of the usually much poorer Muslims than the crony capitalists that Modi seems cozy with.
The blue-collar workers are sometimes more alienated from the middle-class liberals who may be generally, if somewhat condescendingly, supporting their causes. There is a growing cultural gulf between the two classes, as the liberals insulate themselves with residences in gentrified cities, assortative marriage patterns and cosmopolitan professional occupations. Sociologists often point out that the part of inequality that is salient to us is the contrast between our own lifestyle – and housing and school choices – and that of those who may be just above us. The inequality with the billionaires is too distant.
This does not mean that the plutocrats may not be harming the working class. Their money buys them political influence to block pro-worker welfare and health policies or regulations to control environmental damage that may boost profits while ultimately hurt the poor most. But for workers in many countries these long-run political issues are not immediately salient.
If economic insecurity is a burning issue for workers in weak welfare states, as say the United States or developing countries like India, we may have to orient our policies appropriately. For example, a generic proposal that has come up for discussion worldwide in a slightly different context becomes particularly relevant: A universal basic income supplement can provide some minimum economic security to workers, allowing them to look for better jobs and entrepreneurial opportunities or for retooling and retraining. This has the added advantage of providing a common platform for a labor movement currently divided between formal and informal workers, or between insiders and outsiders. Whether a country can afford such a supplement, of course, depends on its fiscal resources and the existing state of its public safety nets. According to a recent International Monetary Fund estimate for eight countries – United States, France, United Kingdom, Poland, Brazil, Mexico, Egypt and South Africa – a universal basic income calibrated at 25 percent of median per capita income will roughly cost between 2 to 7 percent of GDP, depending on the country.
In rich countries looming rapid technological advances may make the need for such supplements more imminent, but they are also fiscally more costly. In poor countries where most workers do not have a safety net and where the official poverty line is extremely low, a reallocation of substantial government subsidies that currently go to the better-off sections could fund a decent basic income supplement for everybody. In addition, some measures to stop corrupt under-assessments of property values, not to speak of off-shore tax shelters, could raise substantial revenue for funding an income supplement.
Similarly, there are constructive proposals around to diffuse the anti-immigrant tension. Take, for example, the proposal for a Global Compact whereby rich countries would identify particular skill shortages at home, say, certain kinds of nursing, and start funding training centers for nurses located in poor countries, equipping them with technology and then allowing a controlled number to join an immigration permit system whereas the other trained nurses at those centers would serve their home country hospitals and clinics. Two causes are served this way: both relieving specific skill shortages in rich countries – at a lower cost than training them in rich country locations – and mitigating the impact of skill drain from poor countries. One can think of many such global skill partnerships.
As for the cultural insecurity, worker organizations like trade unions, instead of just being narrow wage-bargaining platforms, may try to take an active role in the local cultural life, involving the neighborhood community and religious organizations, as was once done in some European and Latin American countries. In this way, unions enabled workers to tame and transcend their parochial nativist passions and prejudices against minorities and immigrants. All over the world today young people seek community and purpose – in the absence of leadership, alternative cultural visions, paid community service or civic programs of various kinds. Instead, some often stray into absolutist mission-led ventures like the Alt-right in the United States or Germany, jihadists among Muslims or Hindu militants in India. Labor movements and other community organizations must play a constructive role in this ominous cultural void.
In general, those who want to confront right-wing populism must first decide if inequality or insecurity is the immediate concern.
*Pranab Bardhan is an economist and professor at the University of California, Berkeley. He is the author of 14 books including Globalization, Democracy and Corruption: An Indian Perspective and Awakening Giants, Feet of Clay: Assessing the Economic Rise of China and India.