An Economic Recipe for Backlash

Abstract

A populist backlash has seized a number of Western democracies. Two broad sets of explanations have emerged to address the sources of this backlash, with credible empirical evidence for each. The first focuses on economic drivers, and specifically on global economic integration, and exposure to trade competition. The second turns instead to cultural explanations, arguing that the shifting political winds are due to strictly nonmaterial considerations, like status threat and racial beliefs. How might we reconcile two apparently conflicting conclusions in the scholarly work examining this backlash? The question comes down to the particular interplay of these factors. I argue that the most promising approach may lie in tweaking our ideas about the relevant group that individuals use to make assessments about general welfare and the role of political entrepreneurs in manipulating these relevant groups. This, in turn, might explain why right-wing political parties appear to consistently gain from the ongoing backlash. I end with a consideration of the policy means that governments have to curb the political effects of economic grievances, and what explains the success or failure of such efforts. An economic recipe for backlash suggests the existence of an antidote.