Does Populism Reduce Economic Inequality?

by

The above comes from a recent study of The New Populism project. This reduction in economic inequality may lead some populist supporters to feel vindicated. However, the study continues by pointing out that “the fiscal policies of populists are less progressive than non-populists. This is what we might have expected; they are not reducing inequality as a result of government taxation or welfare structures.” The mechanism remains unknown, “maybe minimum wage policies, maybe moves towards formalization of the labour force, or limits on income generation of the very wealthy (or even possibly in the case of Venezuela, the very wealthy leaving, thereby reducing overall levels of market inequality). But they do reduce overall levels of market inequality” (pg. 5).

However, this isn’t the only effect of populists:

  • Populist leaders increase indirect (regressive) taxation.
  • Populism has no real impact on corruption, despite corruption often bringing populists to power.
  • “[P]opulist chief executives are more likely to infringe on the freedom and fairness of the electoral process than their non-populist counterparts” (pg. 14).
  • “[B]oth right and left populist chief executives seem more likely to embark on a mission to cut back on civil liberties” (pg. 15).
  • “We confirm a strong, negative effect of populism on press freedom. Not every decline can be attributed to populists, but almost every strong or moderate populist registers some decline” (pg. 17).
  • “Finally, populism in government is often associated with the centralization of power under the chief executive” and the erosion of executive constraints (pg. 18-19).


So giving power over to populist authoritarians who undermine democratic institutions and civil liberties is one successful avenue to economic equality. The others, according to historian Walter Scheidel, are “mass-mobilization warfare, violent and transformative revolutions, state collapse, and catastrophic epidemics. Hundreds of millions perished in their wake, and by the time these crises had passed, the gap between rich and poor had shrunk.”