## LSE’s Andres Velasco on Identity Politics and Economics ## Source details **Canonical URL:** [LSE’s Andres Velasco on Identity Politics and Economics](https://www.imf.org/en/publications/fandd/issues/2020/06/andres-velasco-lse-identity-politics-and-economics) ## Other formats - [Markdown version](/en/publications/fandd/issues/2020/06/andres-velasco-lse-identity-politics-and-economics/index.md) - [Structured JSON version](/en/publications/fandd/issues/2020/06/andres-velasco-lse-identity-politics-and-economics/index.json) - [Bundle manifest](/en/publications/fandd/issues/2020/06/andres-velasco-lse-identity-politics-and-economics/bundle-manifest.json) ## Bibliographic details - Authors: Andres Velasco - Published: June 1, 2020 --- ### Executive summary - Broadly shared identity can be the basis for the sense of shared destiny that is at the core of good politics. - Populism is better understood as a style of politics that manipulates and exacerbates identity divisions for political gain, distinct from “economic populism.” - Identity politics helps explain why populism can thrive both where economic distress exists and where strong economic performance prevails. - Policy responses should acknowledge identity, pursue place-based remedies for communities harmed by deindustrialization, and practice a form of inclusive identity politics that builds shared national purpose. ### Definitions and conceptual distinctions - Classic economic definition of populism (Dornbusch and Edwards 1991): “an approach to economics that emphasizes growth and income redistribution and deemphasizes the risks of inflation and deficit finance, external constraints, and the reaction of economic agents to aggressive nonmarket policies.” - Political/populism (Müller 2016; Mudde and Rovira 2017): a style of politics centered on conflict, where a homogeneous “people” is pitted against “the elite,” minorities, immigrants, or foreigners; moralistic interpretation of politics (people = moral; others = immoral). - Triad characterizing populism: denial of complexity, anti-pluralism, and a personalist approach to political representation. - Populism as identity politics: “a way of doing politics in which conflict takes center stage” and “a kind of identity politics” — i.e., always us against them. ### Empirical puzzles and evidence - Rich-country narrative: populism driven by economic stagnation, worsening income distribution, and those left behind by technological change and globalization. - Cultural-backlash thesis: Inglehart and Norris (2016) find “the most consistent evidence supporting the cultural backlash thesis” in 31 European countries. - Emphasis on emerging-economy anomalies: right-wing populism has thrived in countries with strong economic performance, contrary to an “economic insecurity” narrative: - India, the Philippines, and Turkey have grown at rates between 6.5 and 7 percent since 2010. - Poland: average per capita growth rate of more than 4 percent since 1992. - Czech Republic: unemployment is only 2.3 percent, the lowest rate in the European Union, and the economy grew 4.3 percent in 2017; nevertheless, populist parties attracted four of every ten voters in the most recent election — a tenfold increase in two decades. - Right-wing populism’s success is notable even where redistribution demand would predict left-wing surges; some populists’ policies may worsen income distribution while still attracting middle-class and working-class voters. ### Identity theory and economic behavior (Akerlof and Kranton insights) - People are willing to pay steep financial and nonfinancial costs to buttress their identity (example: US high schools; Akerlof and Kranton 2002). - Identity exhibits increasing social and political returns: as group share rises, social pressure to conform rises and individuals minimize distance from group norms. - Identity-driven politics enables non-economic weapons: toxic and divisive speech is used strategically by populists to mobilize bases and alter the size of competing identity groups; populists are “nasty by design.” ### Policy implications and recommendations - Democratic politicians and policymakers must acknowledge that identity matters and that its effects can be harmful. - Place-based policies are essential: - Deindustrialization and outward migration weaken local communities and shared identities; advising individuals simply to move overlooks community and identity costs. - Place-based responses can help sustain communities, businesses, and shared identity. - Practice identity politics constructively: - Leaders should cultivate broadly shared identities grounded in inclusive, universal values rather than exclusionary or racially superior narratives. - National identity is “a continual contest about who belongs to the national we” (Michael Ignatieff); democratic politics should foster a shared sense of belonging based on noble universal values. ### Key quotations and notable lines - “Populism is a way of doing politics in which conflict takes center stage.” - “Identity politics is everywhere a struggle for the recognition of dignity.” - “Populists are not nasty by mistake; they are nasty by design.” - “National identity is a continual contest about who belongs to the national we.” ### References cited in the piece - Akerlof, G., and R. Kranton. 2002. “Identity and Schooling: Some Lessons for the Economics of Education.” Journal of Economic Literature 40 (4): 1167–201. - Dornbusch, R., and S. Edwards. 1991. “The Macroeconomics of Populism in Latin America.” In The Macroeconomics of Populism in Latin America, edited by R. Dornbusch and S. Edwards. - Inglehart, R., and P. Norris. 2016. “Trump, Brexit, and the Rise of Populism: Economic Have-Nots and Cultural Backlash.” HKS Faculty Research Working Paper Series RWP16-026, Harvard Kennedy School, Cambridge, MA. - Mudde, C., and C. Rovira. 2017. Populism: A Very Short Introduction. Oxford: Oxford University Press. - Müller, J.-W. 2016. What Is Populism? Philadelphia: University of Pennsylvania. *LSE’s Andres Velasco on Identity Politics and Economics — IMF F&D* --- ## Content in this bundle - **LSE’s Andres Velasco on Identity Politics and Economics – IMF F&D** - [LSE’s Andres Velasco on Identity Politics and Economics – IMF F&D (Markdown version)](/-/media/files/publications/fandd/article/2020/june/andres-velasco-lse-identity-politics-and-economics.pdf.md){rel="alternate" type="text/markdown"} - [LSE’s Andres Velasco on Identity Politics and Economics – IMF F&D (PDF)](/-/media/files/publications/fandd/article/2020/june/andres-velasco-lse-identity-politics-and-economics.pdf){rel="external" type="application/pdf"} - **الاحتفاء بالهوية الإنسانية** - [الاحتفاء بالهوية الإنسانية (Markdown version)](/-/media/files/publications/fandd/article/2020/june/ar/velasco.pdf.md){rel="alternate" type="text/markdown"} - [الاحتفاء بالهوية الإنسانية (PDF)](/-/media/files/publications/fandd/article/2020/june/ar/velasco.pdf){rel="external" type="application/pdf"} - **Embanderados con la identidad ● Finanzas y Desarrollo ● Junio de 2020** - [Embanderados con la identidad ● Finanzas y Desarrollo ● Junio de 2020 (Markdown version)](/-/media/files/publications/fandd/article/2020/june/es/andres-velasco-lse-identidad-compartida-constituye-la-esencia-de-la-buena-politica.pdf.md){rel="alternate" type="text/markdown"} - [Embanderados con la identidad ● Finanzas y Desarrollo ● Junio de 2020 (PDF)](/-/media/files/publications/fandd/article/2020/june/es/andres-velasco-lse-identidad-compartida-constituye-la-esencia-de-la-buena-politica.pdf){rel="external" type="application/pdf"} - **接受身份 - 《金融与发展》 2020年6月号 - 国际货币基金组织季刊** - [接受身份 - 《金融与发展》 2020年6月号 - 国际货币基金组织季刊 (Markdown version)](/-/media/files/publications/fandd/article/2020/june/zh/velasco.pdf.md){rel="alternate" type="text/markdown"} - [接受身份 - 《金融与发展》 2020年6月号 - 国际货币基金组织季刊 (PDF)](/-/media/files/publications/fandd/article/2020/june/zh/velasco.pdf){rel="external" type="application/pdf"} --- _Source: https://www.imf.org/en/publications/fandd/issues/2020/06/andres-velasco-lse-identity-politics-and-economics_