What the Rise of Far-Right Politics Says About the Economy in an Election Year

As more than 50 countries hold elections in 2024, far-right politicians and policies look poised to gain ground, continuing a years-long trend evident in Europe, the United States, and South America.

These movements often stoke grievances about international trade, immigration, fiscal policy, and the size of government and amount of state services. Paula Rettl spoke to Working Knowledge
about her research examining these trends in Italy, Brazil
and around the world.

A native of Brazil, Rettl is an assistant professor at Harvard Business School whose expertise includes comparative politics, political economy, and behavior. This conversation is lightly edited for clarity and length.

Rachel Layne: What draws you to the economy and politics of the far right?

Paula Rettl: I’m from a country that has huge inequality. And then I spent some time in Denmark. And for me, it was very shocking to see how many things [Denmark has] in place to redistribute income and wealth. I was curious to understand how we got to this point, and how do we build a society that can redistribute more and have such a robust safety net. This led me to the question of why some voters who would benefit from more redistributive policies and a stronger welfare state support parties that have the opposite political agenda.

“This is a factor that has led to the erosion of the link between economic need and support for left wing parties.”

Layne: Your research in both Italy and Brazil point to economic dissatisfaction. In Italy, it’s a matter of scarce resources. In Brazil, it is the perception of or actual corruption. How do both create openings for far-right movements?

Rettl: In the Italian case, there is a perception that you can’t increase the amount of public spending because debt is high and the EU limits how much debt Italy can hold. So, the [far right] solution of limiting access to public services by excluding immigrants becomes more appealing to many voters. That helps explain why weak public service provision can lead to higher support for the far right and heighten concern about immigration.

In Brazil, [there is] widespread sentiment that the government is corrupt, or that the government is not present in several areas of the country. Because of that, many citizens do not trust the state to provide a safety net. As a result, these voters may rely on other types of formal or informal institutions in times of need, such as organized crime, churches, and family networks. In my research, I find evidence that when these non-state institutions are politicized, such as is the case with many Evangelical churches in Brazil, economic crises can increase the persuasive power of Evangelical leaders. This is a factor that has led to the erosion of the link between economic need and support for left wing parties.

Layne: What role does globalization play in the rise of the far right?

Rettl: It’s related to widespread dissatisfaction with economic volatility and decline. For example, there is evidence that increased competition from Chinese imports contributed to the rise of far right parties in Western Europe. Some of my research explores similar dynamics in Brazil. I have found that decreased international demand for Brazilian exports contributed to the election of Jair Bolsonaro in 2018. While in these cases globalization led to the rise of the far right, there are examples of globalization leading to the rise of left-wing parties as well. This was the case with the rise of the Labor Party in the UK, when trade competition with Germany was on the rise. Why globalization sometimes leads to a shift to the left and other times to a shift to the right is a puzzle that we are still trying to understand. Context and the role of political entrepreneurs are important pieces in this puzzle.

“I found that the prospects of young people and their hopes about the future were quite gloomy, even if Europeans are on average much wealthier than Brazilians, of course.”

Layne: You have Biden’s policies reinvesting in infrastructure, all that takes time. And you had Trump’s protectionist tariff policies. There is a shift away from the globalization trend in both. What explains this cycle right now?

Rettl: In the Global North, it comes from the slowdown of economic growth and a sense that there is very little upward social mobility. It is related to the idea that we are basically not going to have increases in our standards of living, and maybe we will even see regression backward. And this, I think, is very frustrating for many people.

I grew up in Brazil in the 2000s, in an economy that was growing a lot. I then moved to Europe. I found that the prospects of young people and their hopes about the future were quite gloomy, even if Europeans are on average much wealthier than Brazilians, of course. This shows that trends matter, not only overall levels of wealth.

Layne: How big a factor is culture versus economics?

Rettl: Culture and economics are intertwined. For example, in [Brazil], some say that attachment to religious communities is a cultural feature, but religious communities also provide economic security to their members. To give another example, in our study on Italy, my collaborators and I show how attitudes toward immigrants are also related to economic insecurities that people have.

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