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Taming the Populists

MADRID – In many Western democracies, right-wing populists, energized by self-proclaimed victories over “establishment elites,” are doubling down on the claim that globalization lies at the root of many citizens’ problems. For those whose living standards have stagnated or declined in recent decades, even as political leaders have touted free trade and capital flows as the recipe for increased prosperity, the argument holds considerable appeal. So it must be addressed head on.

Of course, economic grievances alone do not fuel anti-globalization sentiment; populism has emerged even in countries with low unemployment and rising incomes. But such grievances provide the kernel of truth that populist leaders need to attract support, which they then attempt to secure with distortions and exaggerations. If the economic issues are not addressed, support for such leaders will continue to grow, potentially taking their societies backward, to a less tolerant – and less prosperous – time.

The likes of Donald Trump and Marine Le Pen did not gain a foothold in their countries’ politics – not to mention the chance of leading them – on their own. They exploited the feeling of many citizens that the political classes – which touted the benefits of globalization, while allowing inequality to rise to unprecedented levels – had abandoned them.

To be sure, globalization has reduced inequality among countries substantially. But within countries, inequality has risen sharply. The largest gains from globalization have not only accrued to the middle and upper classes in Asia, but also to the top 1% of earners worldwide. In the United States, for example, the Gini coefficient (the most common measure of inequality) increased by five points from 1990 to 2013. Inequality has also risen, albeit more slowly, in China, India, and most European countries.