The Social, Political, And Economic Effects Of Income Inequality

Across the globe, citizens are witnessing the rise of increasingly authoritarian and nationalist governments. This phenomenon is not limited to a particular region, but is instead a widespread trend. Just as the United States has grappled with “America-first” nationalism and the rise of Trump, the United Kingdom has dealt with insularity of its own and the rise of figures such as Boris Johnson. Nationalist sentiment and authoritarian tendencies have been on the rise virtually everywhere— Bolsanaro in Brazil, Modi in India, Erdoğan in Turkey, Orbán in Hungary. However, these leaders do not simply seize power, instead capitalizing on existing discontent to support their policies. In an economy where the top 1% of earners control nearly half of the world’s wealth, there is certainly an abundance of discontent. History demonstrates that dissent springs from material inequality, and modern data supports a strong correlation between higher levels of income inequality and levels of support for authoritarian and nationalist viewpoints. Economic inequality not only reduces citizens’ quality of life, but it also encourages the proliferation of nationalist and authoritarian beliefs.

Not only does data show that nationalism is an effect of income inequality, but many political scientists hypothesize that states deliberately foment nationalist beliefs in their citizens as a diversion from material inequality. One such expert, Frederick Solt, writes:

States often respond to higher levels of inequality with more nationalism. Nationalism then works to divert attention from inequality, so many citizens neither realize the extent of inequality nor demand redistributive policies. By prompting states to promote nationalism, greater economic inequality removes the issue of redistribution from debate and therefore narrows the scope of democratic politics. (Solt, “Diversionary” 829)

In the same research paper, the author provides figures that demonstrate the strong correlation: “When income inequality is at its lowest observed level, the predicted probability that a typical person in typical circumstances will be ‘‘very proud’’ of their nation is 47 ± 9%; at inequality’s highest observed level, this probability increases to 83 ± 7%” (Solt, “Diversionary” 828). This research provides a deeper explanation for the current state of international politics. A nearly 40-point jump in demonstrated nationalistic beliefs shows a clear link between nationalism and inequality. In turn, this link provides insight into why underprivileged citizens may vote directly against their own economic interests. Often, voters who could benefit the most from certain policies are those policies’ most vocal opponents. Solt’s research partially explains this phenomenon: nationalism provides comfort from economic inequality, frequently causing voters to value national identity over economic identity. Research demonstrates clear evidence that nationalism is a direct effect of income inequality, and this link provides valuable insight into certain voting behaviors and governing strategies.

In addition to cultivating nationalistic tendencies, economic inequality provides a fertile environment for authoritarianism to develop as well. However, the reasons for this link may be more complex than those that explain the presence of nationalism. Excluding economics, certain cultures have remained greatly authoritarian throughout history (e.g. China) and there is substantial support for the idea of authoritarian beliefs springing from a hierarchical culture. Solt argues that inequality, like history, creates an ingrained hierarchical mindset in a society. Solt postulates, “As differences in condition increase, so does the relative power of the wealthy. As a result, regardless of their incomes, individuals’ experiences are more likely to lead them to view hierarchical relations as natural and, in turn, to hold greater respect for authority. Multilevel models of authoritarianism in countries around the world over three decades support this relative power theory” (Solt, “Social Origins” 703). Again, in addition to an underlying explanation for the correlation lies a robust set of data points. To summarize his findings, Solt says, “Moving from the lowest to the highest observed level of inequality… was predicted to increase the probability of an authoritarian response to [a given question] by 21 ± 19 percentage points” (Solt, “Social Origins” 708). Despite the large margin of error, a clear and strong correlation exists between authoritarian beliefs and income inequality. In addition, various questions used in Solt’s research showed that authoritarian beliefs pervade all aspects of life: not just the government, but the workplace and the household. A lack of equality creates an authoritarian society, and authoritarian societies tolerate a lack of equality, leading to a self-perpetuating cycle of authoritarianism. The presence of economic inequality creates support for the protection of a strong authoritarian, whether that figure is a politician, a manager, or a parent.

A final effect of income inequality is an unexpected one: it stunts economic growth. While some may regard economic inequality as a necessary evil to promote growth, research demonstrates that the opposite is in fact true. Research compiled by Teresa Burns elaborates on this relationship. Burns’ findings indicate that “a more equal distribution of income has a positive and significant effect on growth” (iv) and “income inequality, initial GDP per capita, and inflation levels have a negative effect on economic growth” (31). This research shows that in addition to hurting workers and political discourse, inequality actually negatively impacts the economy as well. Income inequality produces a host of negative effects with little benefit for anyone, making redistributive policies a reasonable proposal. Burns’ dissertation expresses this view as well, stating, “because economic growth does not lead concurrently to an equal distribution of the spoils of an economic boom, governments must step in and take action, initiating policies that will lead to a more equal distribution of income. Only in taking such action can democracy become consolidated and economic growth become sustainable” (Burns 66). Burns points out that while extreme levels of inequality and worker exploitation may create short-term profit, this strategy hurts all involved by preventing the development of a truly democratic political system, by stunting long-term economic growth, and by simply hurting workers. Profit without any public service or redistribution of resources is not conducive to progress, but simply enriches a handful of individuals. In addition to spurring volatile political trends, income inequality often inhibits economic growth, providing an alternative cause for combating it.

On its own, many would agree that severe income inequality in a nation hurts citizens. However, this inequality creates deeper issues as well, including the growth of nationalist and authoritarian ideologies. Understanding this correlation is vital to comprehending the rise of these extreme beliefs globally. However, not only would reducing economic inequality curb the growth of these beliefs, but it would allow for more rapid economic growth. Research demonstrates, therefore, that reducing economic inequality would both reduce the presence of severe ideology while also providing economic benefits for all. The widespread negative effects of income inequality are not solely economic, as they permeate global politics and cripple democracy.