Economic inequality and the far right
The main cause of the far-right problem - and the main solution

Richard Parncutt
May 2016, revised July 2016


A lot is being written about the far-right political movement, as it gradually (and apparently sustainably) becomes stronger. Rather than talk around in circles, I would like to try to solve the problem.

The public discussion and research on this question includes many sub-problems and corresponding solutions, some of which are explained below. Here, I wish to claim that many of these problems and solutions, while important in themelves, are subsidiary. In fact, the problem has a single main cause, and it follows that there is a single main solution.

Put another way, we might ask the following question. Why have we, the concerned left, failed so far to prevent the rise of the far right, although so many qualified, highly motivated people have put so much time and energy into this project? The reason, I wish to argue, is that we have failed to recognize the main cause of the problem.

Many of us have been involved in projects that aim to increase public awareness of the benefits of intercultural cooperation and the dangers of xenophobia and racism. But if something serious happens such as a terrorist attack in Europe and the far-right politicians blame the attack on "Others" of some kind (e.g. "Islamic terrorists"), the progress made by all those social and political projects seems to disappear instantly, and people suddenly return to their old xenophobic ways.

Evidently, human beings are, at some level, naturally xenophobic and nationalist. We like to belong to a group and distinguish ourselves from other groups. We naturally tend to think that our group is superior. For example, if I am a left-wing person, I naturally feel superior to right-wing people. As serious and irrational as this sounds, I wish to argue that xenophobia itself is not the main cause of the far-right problem.

The wealth gap

The main problem, I believe, is the rising gap between rich and poor - the wealth gap. If that problem could be solved, the others would be easier to solve, or might even disappear of their own accord. I am mainly concerned about wealth, not income - although of course the two are related. The problem is essentially the difference between the "haves" and the "have nots".

The number of billionaires, and the numbers of billions that they have to play with, is gradually growing. In a typical Western country, the richest people have tens of billion Euros, and many others have between one and ten billion Euros each. These are astronomical amounts of money. The amount of money in the hands of the rich and super-rich in a typical Western country is of the order of a trillion Euros.

In parallel with this unprecedented extravagance, the bottom half are being told to accept various forms of "austerity". At the same time, modern communication technologies such as the internet and the social media are making it increasingly clear to the "person on the street" how big the gap between rich and poor is getting, and how obviously unfair that gap is. People are also becoming increasingly aware that they have rights (human rights, moral rights) and that these rights are being infringed. No wonder people are angry.

The wealth gap breaks down into many more specific gaps. These can be found between different socio-economic levels, within specific professions, and so on. As these gaps become more visible, more people are becoming more aware of the unfairness of their situation. The most visible results is that more people are becoming interested in politically extreme "protest parties".

Anger and fear

The issue is very emotional. An increasing number of people are angry at politicians for failing to solve their economic problems. At the same time, people are afraid of losing their financial security.

Anger and fear are existential emotions. People are responding to perceived attacks on their right to exist. We must take their emotion seriously. By that I mean not only caring about the people who are angry and afraid (as far-right politicians pretend to do, but generally do not) - I also mean trying to understand the ultimate origin of those emotions.

We cannot expect people who are angry and afraid to be rational. They are unlikely to carefully weigh up arguments for and against a thesis and come to a balanced conclusion. If a far-right populist comes along and explains that minorities and foreigners are responsible for the country's problems, the angry and afraid are likely to believe them - especially if they are not lucky enough to have received a good education.

Take unemployment, for example, and the misleading ways this topic is discussed in the media and treated by politicians. Objectively speaking, it is no surprise that unemployment is rising, because technology is replacing people in so many professions. This has been going on for decades, so we should not act surprised. On the contrary, we should be celebrating the gradual reduction in the amount of work that needs to be done. This was the aim all along, and the aim is graduallly being achieved.

The solution is not to try to "create jobs", as politicians claim to be able to do, but to distribute wealth more fairly - for example by introducing an unconditional basic income. If this obvious solution is not implemented (or not even considered), and politicians constantly talk about other options based on economic theories that don't work (economic growth, for example, is no longer a reasonable solution for environmental reasons - not to mention the "trickle-down theory", which is mere voodoo), it is no surprise when voters start to get angry and search for new explanations and solutions. If they can see lots of foreigners coming into the country, they are more likely to blame them for unemployment than to talk about abstract economic theories.


We who are lucky enough to have a good education tend to perceive far-right voters as stupid. Why, for Christ's sake (we think), do they vote against their own own self-interest? Time and again far-right politicians have demonstrated their incompetence. The people who voted for them were the ones who had to pay the bill! Why do people vote for politicians who seem hell-bent on destroying their own voters' futures?

Voting for the far right may seem stupid, but perhaps we lefties have been equally stupid. We have been trying for decades without success to solve the far-right problem, but it has only got worse. That does not make us look very smart.

There are different kinds of stupidity. You would have to be stupid to believe that unemployment is the fault of minorities and foreigners, as the far right claims. But it is surely equally stupid to believe that the solution is to "create jobs" for everyone, as the centrist parties claim. The whole idea of technology has always been to reduce the amount of work we have to do.

The problem is not the reduced amount of work. The problem is the unequal distribution of wealth. It follows that the solution does not lie in "creating jobs". Digging holes and filling them in again is not the answer. The answer is to redistribute some of the wealth.


The wealth gap is getting bigger. We know this, and we know that the problem is very difficult to solve. What can we do about it?

Perhaps we should try to make the widening wealth gap less visible? Would people then be less angry or afraid? This solution is evidently neither practical nor desirable. One could argue the opposite - we should be aiming for more transparency, not less. It would surely be a good idea if basic information on the income and wealth of every person was publicly available - just two numbers per person, how much they earn per year and what they are worth altogether (as declared every year to the tax office). Apparently the Swedish taxation system allows in part for this kind of transparency. It can be done.

So what can be done? If the problem is mainly about wealth (and not income), the solution must also be about wealth (and not income). The simplest and most obvious solution is to redistribute some of the wealth. Like Robin Hood, we should somehow take some money away from the rich and distribute it among the poor.

This should be done in a fair and orderly fashion, of course. We need new wealth taxes, and they should be globally harmonized so that the rich cannot evade them by moving from one country to another (capital flight).

It is not easy to introduce wealth taxes, because the rich have the power to prevent them - a classic case of oligarchy blocking democracy. But logically there is no better solution to the far right problem, and many other problems besides. So as responsible citizens we have no choice, I believe, but to advocate globally hamonized wealth taxes, and try to build up the required political clout. As the Bernie Sanders campaign in the USA shows, it is possible to turn an idea of this kind into something that is politically realistic if enough people have the courage to talk about it.

The new cold war 

Let's stand back for a moment and take a look at the broader context.

There is a new cold war developing between Russia and the West, and between China and the West, which is not the topic of this article (although it may be related). This article is about another new cold war. This cold war is brewing in countries with strong far-right political parties, and like global climate, it is gradually heating up.

On one side of this war is the far right, which is threatening to take over mainstream politics. On the other side is just about everyone else: the centre right, the centre left, the far left, and the greens. These other parties differ from each other in many significant ways, of course. But there is a general consensus among them that the far right is both dangerous and incompetent. In a nutshell, they are dangerously incompetent.

These widespread attitudes make the far right feel they are being treated unfairly. They forget that they are getting a dose of their own medicine. They are constantly and outrageously attacking innocent minorities and migrants, so they should not be surprised if they are attacked themselves in return. What goes around, comes around. 

Far-right politicians attract voters with xenophobic and racist advertising. They invite voters to hate foreigners and minorities by attracting attention to and exaggerating negative attributes of foreign cultures, conveniently forgetting or underestimating the negative attributes of their own culture. They claim that immigrants are taking our jobs and diluting our culture, they are sexist and impolite, and they don't want to learn our language. In fact, immigrants are enriching our culture (just think of restaurants and the arts), doing jobs the locals don't want to do (cleaning toilets and so on), and often paying more into the system than they get out (paying taxes like everyone else and emigrating before getting a pension).

The far right correctly criticizes the centre right and the centre left, and their grand centrist coalitions (at least in Austria) that seem to guarantee that nothing changes. But the arguments are misleading. The main problem is the growing gap between rich and poor, which is causing a cascade of economic, social and political problems. The centre right is helping the rich to evade or avoid taxation. The centre left is failing to force the rich to pay reasonable amounts of tax. These are the main reasons why social services are getting worse, wages less equitable, and unemployment higher. Without tax, there is no budget.

By comparison, immigration is merely a diversion. The petty crimes of asylum seekers are minute by comparison to the massive white-collar crimes of the natives, which in Austria, to take one example, reached their triumphant climax in the Carinthian Hypo bank affair. That will ultimately cost every Austrian thousands of Euros each. This financial scandal, incidentally, was enabled and possibly caused by the far right, which was in power in Carinthia at the time. And it is just the tip of the iceberg. Austrians are hiding enormous amounts of money in offshore tax havens, and Austria itself is one of those tax havens.

But the media are not neutral. The crimes of "foreigners" are constantly in the news, and the far right are constantly referring to them and failing to see the more important connections.

The far right also forgets (or pretends to forget, or suppresses) that xenophobia was one of the foundations of National Socialism and the Holocaust - the worst crime ever committed. They do not seem to have understood that unique combination of premeditation, brutality, organisation, collaboration, and industrialisation that made the Holocaust possible. It hasn't yet clicked in their minds that this ultimate crime was committed collectively by everyday people like you and me, and that the country in which they live today made a major contribution. Nor do they seem to realise that the Germans caused the Nazi disaster - the self-destruction of Germany, and the destruction of so much else besides - by supporting the Nazi party in 1933, and that this pattern can be repeated in any country if enough people vote for the far right.

People don't seem to make these connections, and they seem especially unaware of the victim mentality that lies behind them. People with victim mentality complain about situations to which they actively contributed, refusing to take responsibility for their own actions. In future, today's far-right voters will complain bitterly about what the government is doing to them, forgetting that they elected it: in a democracy, one gets the government that one deserves. Those far-right voters are already victims now - they are victims of an unfair economic situation, just as the Germans were in 1933 - but rather trying to solve the problem, they are making matters worse by voluntarily victimizing themselves, perpetuating their victimhood.

The other political parties do not always understand these problems, either. To the extent that they do understand them, they are generally opposed to the far right. Those many people who understand these problems clearly, and are deeply concerned about them, are often angry about the far right. What else can they be, when their fellow countrypeople are risking a return to National Socialism (or something similar)? How else can one react when millions of innocent people are being stigmatized and scapegoated, simply because they are recognizably foreign?


The wealth gap.  Allow me to explain in more detail why I think the wealth gap is the main cause of the far-right problem, and hence the main key to a solution. Since Reagan and Thatcher launched neoliberalism into the global economic mainstream into the 1980s, the gap between rich and poor has been steadily growing. This can be seen as today's main economic problem, and it is evidently causing many other problems. The growth of the far right is just one example, and it works like this: lower economic classes - people who traditionally vote for the centre left (which is supposed to represent their interests) observe the higher economic classes getting increasingly rich, while their situation is either stagnating or getting worse. It is getting increasingly difficult, or it seems increasingly difficult (which is the main thing), to get a job with reasonable financial security or buy a house. In this situation, people are looking for scapegoats, and the far right politicians offer possibilities; the foreigners (immigrants) who are apparently taking our jobs and benefiting from our social welfare, and the centre-right and centre-left parties that are not solving this problem. The real scapegoats, who are only mentioned indirectly (or not at all), are the rich and megarich, and the political parties that support them - mainly the centre right, but (paradoxically) also the far right. The centre right and far right have been promoting the gradual expansion of the wealth gap for decades by preventing normal, sensible projects to stop it, as regularly proposed by the far left, and greens. The centre left has increasingly sided with the rich in preventing such projects (consider for example Tony Blair's "New Labor", which was a thinly disguised form of conservatism). Strategies to reduce the wealth gap include globally harmonized wealth taxes and other taxes that primarily affect the rich, such as transaction (Tobin) taxes and environment (carbon) taxes. The wealth gap is the first and most point in the list of causes. It is more important than all other points in this essay. Strategies to solve this problem are therefore more important than all other strategies.

There are other reasons for the rise of the far right, each of which should be independently addressed. But my hunch is that the far-right problem will not be solved until the wealth gap is under democratic control.

Academic education. Supporters of the far right often did not get a good education, which is a failing of the state. For decades, the history of the Second World War was not taught in many schools, although it was officially included in the teaching program. Presumably, teachers in countries like Austria were afraid of complaints from parents who did not like open criticism of National Socialism. Sad but true: Nazi ideology did not suddenly die in 1945. Instead, many people continued to hold onto their Nazi ideas for decades after the war. The national denazification program was impeded by Austria's official postwar status as the first victim of Nazi aggression. In fact, as later became clear, during the war the average Austrian-born person supported National Socialism more or less as much as the average German-born person.

Moral education. In Catholic countries, the Catholic church has traditionally been responsible for moral (ethical) education, and it still plays an important role in caring for the poor, sick, unfortunate and discriminated. In Austria, it does that through Caritas Austria, a Catholic charity that is also the leading national charity. But in recent decades the church has been losing members and power, and in many quarters it is no longer regarded as a source of moral wisdom. Quite the contrary: it is hard to believe an organisation that proclaims that a virgin had a baby, and puts its members under constant pressure to share such fantastically ridiculous beliefs. The Catholic church could solve this problem if it wanted to,  focusing on Christian morality rather than Christian beliefs, but its internal conservative forces are too strong. Many Austrians went through the motions of joining the church as children, but did not take much notice of its moral teachings, which are rightly and admirably based on the teachings of Jesus as documented in the gospels. If those Austrians had respected the moral teachings of the church, they would have become more benevolent attitude toward foreigners and minorities.

Time to reflect. The increasing gap between rich and poor has increased the focus on individual competition. Consider education for example. Grades that students receive at school are increasingly similar to money, or reward for work, doing what one is told. Teachers and researchers are constantly being evaluated. Competition is good if it motivates people to work to improve their situation and thereby to improve society, which is often what happens. But what if competition no longer improves society? Evidently there is an optimum amount of competition, and modern neoliberal society has surpassed that optimum level. Technological progress should have given people more leisure, but instead they seem to be working more and leisure is reserved for the unemployed. The result is a reduction in quality of life for both employed and unemployed. Far-right voters are frustrated with this situation and blame their problems on innocent scapegoats. If they had better quality of life and more time to think and reflect, they might not make such grave mistakes.

Given that both the schools and the church have failed to reach so many people, and people are so tied up in their struggle to survive (or obsessed with increasing their income) that they don't have time to think, we should not feign surprise when countless indignant far-right voters fail to understand why xenophobia and nationalism are so problematic. Given the failure of the state to explain the background  properly, far-right voters are understandably offended when "lefties" and "greenies" accuse them of xenophobia and nationalism. In their anger, they insist on their right to promote their own culture (however defined) at the expense of other cultures, believing that they are acting in the best interests of their homeland. In fact, they are doing the opposite: in a mobile, multicultural world, favoring one's own culture above other cultures is a recipe for disaster, as the Second World War and many wars since then have so amply illustrated.


What is the best way to deal with this situation? If one insists on the danger of xenophobia and nationalism, and refuses to tolerate either of them, as anyone with any idea of human rights should do, the reaction from the far right will be angry and indignant. The number of people voting for the far right will rise even further. This reaction has been observed several times in Austrian elections. If instead one tries to talk to these people, to reason with them, to understand their irrational fears, one can fall into the trap of agreeing with them that foreigners are a threat to the country. But they are not.

We need to talk about practical long-term solutions to this problem if we want to prevent a slide back in the direction of National Socialism. I can see several different paths to take, and I believe they all should  be taken simultaneously.

Reducing the wealth gap. This is the most important issue. We urgently need internationally harmonized wealth taxes, transaction taxes, and environmental taxes, to halt and slowly reverse the expansion of the wealth gap. That all three kinds of tax are not being taken seriously merely highlights the seriousness of the problem. In Austria, a tax of just 1% per year on all wealth above a ceiling of between 1 and 10 million Euros could bring the state extra revenue of ten billion Euros per year, which could be redistributed as social services. Ten billion Euros per year is 10 000 Euros per year for a million people! Suddenly, poverty would disappear, as would the fear of unemployment - and the far right. A redistribution of this kind could be done fairly and efficiently by means of an unconditional basic income; incentive to work and create could be maintained by coupling basic income with flat income tax. This reform would essentially eliminate the distinction between the employed and the unemployed, and associated stigmas. Recall that technological improvements have reduced the amount of work that needs to be done and increased the amount of leisure time that we should be enjoying. It's time now to enjoy it! The employed are working too much and the unemployed are working too little. If everyone received an unconditional basic income that was close to the poverty line, however defined, the pressure would be off the unemployed to desperately find work. They could instead choose to do what they want, without fear of falling into poverty. People would happier, more creative, and more productive. They would have more time to think about what kind of country they want to live in and what kind of government should run it, which would reduce the far-right vote. There would be less crime, which would please far-right voters. Flat income tax, in combination with basic income, would solve the welfare trap problem: if you lose welfare upon getting a job, why work? Welfare traps are a massive disincentive to work; without them, everyone could increase their income significantly by working more, regardless of their income. That would motivate everyone people to work. Contrary to popular belief, basic income would not need extra finance, because welfare is already very expensive and a lot of money is wasted checking that it goes to the right people. The solution is simply to draw a straight line through the existing graph of net income against gross income. The point at which the graph crosses the vertical axis is an initial estimate of the basic income, and the gradient of the line is an initial estimate of the flat income tax rate. In addition to income tax, wealth tax would be collected for a long string of good reasons. Among other things, wealth tax is urgently needed to pay off national debts (stabilizing the global economy), finance education, and finance sustainable energy. Most of all, it is needed to get the rising wealth gap under control and steer societies away from oligarchy and back toward good old democracy.

Public education.
We need a continuous stream of publicly visible events that promote intercultural openness and reject xenophobia and racism, from many different angles. Activities of this kind have been going on in Austria for a long time, and they have also been institutionalised in many ways. I was involved in such activities for many years, and personally initiated a number of major projects. I learned that this work is inefficient: if the goal is to reduce xenophobia in the general population, an enormous amount of input is necessary to achieve a relatively modest output. By contrast, it is easy to increase xenophobia. The recent increase in the number of people seeking asylum in Europe, combined with a couple of terrorist attacks and some more or less irrational responses from politicians, caused the number of people voting for the far right to double. Just like that. We may well ask why people are so susceptible to xenophobia. Why is fear (including fear of "foreigners") such a strong emotion?  The academic discipline of evolutionary psychology offers some interesting answers. Other things being equal (by which I mean in the absence of unusual cultural influences), it is human nature to yearn for and admire strong, father-like leaders, ignoring their shortcomings. It is also human nature to join forces to marginalize "free riders" - members of society who are taking more than they are giving; and to believe unreliable sources (gossip) when distinguishing between "goodies" ("us", the group with which we identify) and "baddies" ("them"). That is where prejudice comes from, and people are naturally xenophobic for much the same reason as they like Hollywood movie clichés. Something is not necessary good if it is "natural", of course - for example, humans are naturally violent (especially men), which in the modern world is obviously not good. All of this suggests that xenophia is partly learned and partly inborn - a mixture of nature and nurture. The implication is that public education about the dangers of xenophobia will always be necessary, just as public education about sexism will always be necessary. If we want to sustainably reduce xenophobia (or sexism) to a safe or acceptable level, we need public education, but it is not enough by itself. We also need other strategies.

General education should be improved, especially for disadvantaged groups. Supporters of the far right usually live in the country (rather than the city) and they usually do not have a university degree. We should be spending more money on the education of their children. I am not only talking about directly relevant subjects like history, psychology, philosophy, ethics, and education. I am talking about their entire education. Those children should be given a much better chance of attending university, so the idea of doing that becomes are more realistic and valued goal for their families. When this happens, the separation into two camps (the far right and the others) will be broken down. Things would become more diverse and less tense. To achieve this goal - to improve education in the country and in professional rather than academic schools - will require a lot of money. The money is available: it is in the pockets of the rich who are slowly but surely getting richer. The problem boils down to taxation.

Law and order. If the far right wants people to obey the law, they should do so themselves. The Austrian constitution requires an uncompromising rejection of National Socialism and similar ideologies. Xenophobia and nationalism are core elements of National Socialism. It should therefore be possible to prosecute people who publicly promote xenophobia or nationalism. This may become possible if human rights were elevated to the status of national law. The pre-election advertising of the far right often promotes xenophobia and racism. If xenophobia were carefully defined in a legal sense, its public promotion could be legally prevented. The question of where to draw the line between xenophobic and non-xenophobic could be defined by a combination of precedents and expert advice. Initially, only the most serious cases would be prosecuted, until it became clear where the limits lie. Another issue that could influence court decisions is the intention of the advertiser. If promoting xenophobia is in the interest of an advertiser, for example to attract votes, then the probability of a conviction should rise. In any discussion of these problems, one should never forget the aim of the legislation, which should always be to protect the human rights of everybody, including minority groups and the far-right voters themselves. The details of the law should be changed to increase the chance of achieving that goal; the goal is more important than the details.

To achieve goals of these kinds, all political parties need to change. Here are some suggestions:
The centre left are rapidly losing voters to the far right. Those voters are not only xenophobic - they are angry because the centre left has stopped doing its job. Back in the 1970s and 1980s, centre-left parties all over the world were improving the financial situation of workers everywhere. Today progress seems to have stopped or reversed. The centre left must return to its task of fighting for economic justice, including better wages for low-wage earners. For example, the traditional caring jobs that in a sexist society are taken by women - nursing, hairdressing, kindergarten and so on - must urgently be upgraded. The centre left must force the centre right to accept a fundamental shift in taxation away from income and toward wealth. Of course wealth has to be taxed, and of course the arguments that we repeatedly hear against this proposition are arbitrary and invalid. And of course we also need globally harmonized taxes on carbon and international transactions.  Just to drive the main points home: The main problem is to reduce the wealth gap, and the best way is to do that is through globally harmonized wealth taxes, combined with an end, slowly but surely, to tax evasion (tax havens) and the introduction of unconditional basic income. The greens, the communists, and the centre left should unite to explain this point to the general public and put politicians under pressure to discuss it seriously at international meetings such as G20.

Beyond that, there are basic changes that need to be made in all political parties. All other than the far right agree that the far right must clearly distance itself from National Socialism. But the parties also have some distancing to do. The greens must distance themselves from neoliberalism, and the far left must distance themselves from violent revolution. Once all this distancing has happened and has been institutionized, things will improve.

The centre right should also wake up to the fact that they are the main cause of this problem, because they are the main force preventing the main solution, which is globally harmonized wealth tax. Instead, they are destroying the foundations of capitalism (!) by driving forward the widening wealth gap. The centre left should wake up to the fact that their main traditional task is to stop that from happening.

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