"The OECD’s Growth Prospects and Political Extremism"

Right-wing extremism is more common when economic growth is lower. That doesn't surprise me, but the effect isn't all that large. A one percent change in growth only translates into a one percent change in vote share. But why does this result get stronger when income is more equal, i.e. why does the vote share for extremists double when societies are more equal? Is this a proxy for highly interventionist policies that produce a backlash when growth falls? Or is something else behind this result?:

The OECD’s growth prospects and political extremism, by Markus Brückner and Hans Peter Grüner, Vox EU: Will the global crisis lead to a rise in political extremism just as during the Great Depression? ... Is political extremism always likely to be marginal in rich economies? Will changes in growth promote support for right-wing or left-wing parties, or both?

Benjamin Friedman has argued that GDP per capita growth is a key factor for the development of a political system (Friedman 2005). His analysis ... points out that only a continuous improvement of individual living standards provides the ground for the development of what he calls a more “open” society. Accordingly, it is not so much the level of GDP that determines the way in which a democracy develops but the growth rate. ...

In our recent CEPR Discussion Paper (Brückner and Grüner 2010), we examine the question of how GDP per capita growth is linked to the support for extreme policy platforms for a panel of 16 OECD countries. ...

Our main finding is that higher per capita GDP growth is significantly negatively linked to the support for extreme political positions. While estimates vary between specifications, we find that roughly a one percentage point decline in growth translates into a one percentage point higher vote share of right-wing or nationalist parties. Moreover, we find that the amount of income inequality in a country affects the role that growth plays. Highly unequal countries display a lower growth effect than more equal countries. For countries with a more equal distribution of income, a one percentage point drop in the growth rate may increase the vote share of far right parties by up to two percentage points. ...

Our results lend support to Benjamin Friedman’s view that economic growth determines the direction in which a democracy develops. ...