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BUSINESS AND SOCIETY | 5

freshfields.com

This dynamic is driving the surge of

populism in the West. As Fareed Zakaria

wrote in Foreign affairs, populists on both

left and right see themselves as 'speaking

for the forgotten "ordinary" person' and

share a 'suspicion of and hostility toward

elites, mainstream politics and established

institutions'.

Populists also feed off the sense that

citizens lack 'control'. That was the

free-floating word via which the Leave

campaign found its way into British hearts

during the Brexit campaign. The desire to

return it, somehow, to local populations

has now become mainstream. Listen to

Mark Carney, Governor of the Bank of

England, raise the fear that society could

turn its back on open markets. Or Theresa

May outline her vision of a post-Brexit

world in which the UK is master of its

own borders. Witness Angela Merkel

- the embodiment of cautious, inclusive

politics - announce that the time

has come to reassert German cultural

hegemony and ban the niqab.

Socially, populists play on the idea that

cultural control has somehow been lost

to an influx of migrants ('globalisation

made flesh' in the words of the FT's

Martin Wolf). Indeed Donald Trump's

controversial agenda and May's Brexit

strategy both have immigration at their

core. Marine Le Pen's anti-immigration,

anti-globalisation rhetoric has shaped

debate in the French presidential election,

while François Fillon gained early success

on a hardline immigration ticket before

his campaign was beset by scandal. And in

Australia - whose visa policy was held

up by Leave campaigners as a model

for post-Brexit Britain - Prime Minister

Malcolm Turnbull recently toughened

the entry criteria to 'reduce competition

from overseas'.

The speed at which the world is changing

as a result of the populist surge is

bewildering - according to Mark Carney,

indices of policy uncertainty are now 1.5

standard deviations above their historical

average on both sides of the Atlantic.

The impact of this is already visible

- after being criticised by Trump for

shipping jobs outside the US, Ford chose

Michigan over Mexico when expanding

its production facilities - even before

the new president had taken office.

Since 2005, more than 65%

of households in the West have

experienced flat or falling wages

Data from the IMF paints a stark picture of what

effect this is having on social cohesion. Figures

from surveys in the US show that as inequality

has risen over the past 40 years, so trust towards

others has fallen. During the 1970s and 1980s

the proportion of respondents who said other

people could be trusted fluctuated wildly.

But since the 1990s the overall trend has been

downwards - particularly so since the turn

of the decade.

Inequality Trust

Source: IMF; Economist Intelligence Unit

Change of inequality index

(90/10 ratio)

% of population responding

that people can be trusted

1970

50

1.50

30

1.20

2015

1970 2015

2

Reducing trust

towards others...

Index

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