The Clark Center Economic Experts Conference was held in London in October 2026. Over the coming weeks, this column will include write-ups of the various panels and sessions. The conference was held under the Chatham House rule.
It was not too long ago, in the grand scheme of things, that financial market participants did not have to pay a great deal of attention to politics in the advanced economies. Of course, elections and economic policies did have an impact on equity, bond, and currency markets, but it was rarely all that dramatic. As one bond market veteran once told your columnist, no one went to bed in 1996 really worrying that the outcome of the Clinton-Dole contest would really impact their position in US Treasuries. Politics – and especially concerns about ‘populism’ was something which emerging markets investors had to worry about.
That world now feels very far away. Indeed, a whole session at the Clark Center Economic Experts Conference was devoted to the economics of the rule of law and populism, with the vast majority of the discussion being based around European and North American developments.
Both the US and European panels were surveyed on populism (and inequality) in 2019 and then again on populism and the economy in 2026.
In general, there was strong agreement inequality strains democracy – indeed, the results in 2019 with 93% of US respondents and 99% of European respondents either agreeing or strongly agreeing (weighted by confidence) with the proposition that ‘rising inequality is straining the health of liberal democracy’ were about as close to unanimous as the polls ever come. And, with much lower margins, the panels broadly agreed in 2019 that redistribution had the potential to limit the gains of populists at the ballot box.
The polls in 2026 showed some interesting trans-Atlantic divergences. There was clear agreement between 60 and 66% of both panels supporting the idea that populist electoral success tended to lead to a material slowdown in economic growth. But there was more division on the question of whether support for populism was driven by economic insecurity or by questions of identity and culture, and while almost half of US panel respondents believed that some ‘potentially growth-constraining policies on trade, investment and/or migration’ were ‘necessary to limit the further rise of populist movements’, only around one third of European panellists agreed with this.
It is, perhaps, no surprise that economists generally believe populists (who are not people known for their regard for the views of economists) tend to think that populist success leads to a slowdown in growth. As the conference heard, some of the earliest work on populist economics was carried out by Rudi Dornbrush in the 1980s – although it was mostly focused on Latin America.
Dornbrush and his co-authors, in a series of papers in the late 1980s and 1990s, sidestepped the issue of left vs right populism and instead focused on a definition of populism which emphasized an approach focused on questions of growth and income distribution and one which downplayed inflation constraints, the problems of external constraints, and worries about the fiscal situation. In the work of Dornbrush, populist programmes generally offer an initial boost to growth; these constraints begin to kick in, and the cycle usually ends in a form of economic crisis. Interestingly enough, Dornbrush also emphasized that the kind of policies usually identified as implemented in the aftermath of a bailout from international organizations such as the IMF had the potential to fire up worries about social inequality and risked kickstarting another populist cycle.
One problem, frequently raised in responses to polls of the experts and aired at the conference, was one of definitions. Who exactly is a populist? Is there a difference between right-and left-wing populists? Do populists necessarily have to come from an insurgent party, or can formerly mainstream political parties swing in a populist direction?
The role of inequality in the rise of populist parties was also a source of debate. The real driver, according to some participants, was not so much a rise in inequality, as conventionally measured by statisticians, but weaker real income growth in the middle and lower down the income spectrum. The timing of rising inequality – at least if looking at income rather than wealth – in the advanced economies does not track neatly onto the vote shares in populist parties.
That led to an interesting debate on the role of ‘potentially growth-constraining policies’. While policies to, say, throw up some trade barriers or reduce migration might be seen as offering some concessions to populist supporting voters, there was a potential that they could backfire. If the ultimate effect was a slowdown in economic growth and that weaker growth led to slower income growth, this had the potential to fuel rather than dampen populist support.
Another lively source of debate was on the links between populist support and migration flows, and whether reducing the flow of migration would actually move public attitudes, or whether anti-migration voters were more worried about the existing migrant share of populations than how it was changing.
There was certainly broad agreement that the conference participants believed economies would perform better with fewer populist governments – and some real concerns about the future of the European Union itself if some parties were to come to power in Germany or France – but, as ever when it comes to messy questions about political economy, there were no easy answers about the right course to take.
