A huge wave of populist politicians in Europe and the United States have risen a wave of increasing popularity. Furthermore, both hard left and hard right politicians have railed against the EU and “the system” in Europe, and this has allowed their parties to gain a huge amount of seats in their respective legislature. Furthermore, in some cases, there are populist prime ministers and governments, such as Italy and Austria. Populism has increased in popularity because of economic frustration and immigration. Furthermore, the main culprit is the economy and income inequality, which often gets blamed on immigrants and refugees.
Income inequality has really ballooned in the 21st Century. Wages haven’t really moved at all, and this holds especially true for factory and manufacturing workers who have held the same job for thirty, maybe even forty years. This is partially due to a bad economy and the economic recession, but it’s also because of the way our fiscal policy has been set up. If income inequality continues at the pace it is going, I believe that the macroeconomic outlook is rather grim. Let’s look at what households do with their money. It’s been economically proven that lower income households spend a greater fraction of their money, and this includes the middle class. This is because lower income households have a much higher propensity to consume than higher income households. Now, if you look at the secular stagnation hypothesis, which states that we are in a long-run stagnating economy due to the amount of inadequate demand coupled with the fact that during times of bad economic recessions, lower income people decrease spending, it makes a lot of sense why income inequality matters to the economy. If we continue this trend, we probably will continue to see a stagnating economy with very little wage growth and only growth in the top 5%.
One country that has been affected by populism is France. While France elected the moderate candidate over the populist candidate for President, the politics of France have shifted ever since the Yellow Jacket Protests started. This was one of the largest protest groups in European history, and the protesters do not seem to have a fixed ideology.
The second country that has been affected is Great Britain, which chose to exit the EU through the Brexit referendum. However, this is currently not going well, but the consensus is that the U.K. will not try to stop leaving the EU because this is what the people voted for, and violating this would put the Democratic system at risk, which seems to be a consensus point in both the Conservative and Labour Parties.
- Fulvi, D. (2018). France shaken by ambiguous’ yellow jackets’. Green Left Weekly, (1205), 18.
