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Populism in Place: The Economic Geography of the Globalization Backlash

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A populist backlash to globalization has ushered in nationalist governments and challenged core features of the Liberal International Order. Although startling in scope and urgency, the populist wave has been developing in declining regions of wealthy countries for some time. Lawrence Broz discusses these trends across the United States and Europe, and demonstrates that populist support is strongest in communities that experienced long-term economic and social decline.

Image courtesy of interviewee. April 12, 2024

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This video video discusses the rise of populism in the context of long-term manufacturing decline and economic pressures in the United States and Europe, tracing these issues back to the 1970s. It identifies three main factors contributing to this decline:

1. **Increased Trade**: The expansion of trade with low-income countries, particularly in East Asia and later with China and Vietnam, has resulted in significant job losses and wage reductions in the manufacturing sectors of wealthier nations.

2. **Offshoring**: The practice of multinational companies moving jobs to countries with lower labor costs has further pressured domestic manufacturing jobs, leading to local economic declines.

3. **Automation**: Technological advancements have increasingly replaced routine manufacturing jobs with machinery, reducing the need for labor.

As manufacturing jobs have decreased, there has been a corresponding drop in employment in these sectors, leading to decreased economic security and trust in traditional political systems. This video video decline is compounded by the global financial crisis of 2008, which had severe impacts on communities already suffering from manufacturing job losses.

Populism has gained traction in regions most affected by these economic changes, as residents feel ignored by political elites. This video video emphasizes that the effects of manufacturing decline are not only felt by displaced workers but ripple throughout communities, exacerbating local economic challenges. This video video situation has led to increased support for populist movements, which combine dissatisfaction with economic realities and perceptions of government inefficacy.

The authors propose studying the effects of these phenomena at the community level rather than the individual level. They also explore how the support for populism emerges differently in the United States and Europe, attributing it to economic disparities and regional declines with political outcomes reflecting these dynamics.

This video video ends with a discussion on wealth inequality, emphasizing that accumulated wealth is crucial for economic stability and opportunity. Wealth, as opposed to income, is shown to be highly concentrated, and losses in wealth significantly impact future generations, nurturing discontent and an appeal for populist solutions. The authors suggest that place-based policies and efforts to revitalize declining regions are vital in addressing these issues and mitigating the growth of populism.

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X-TIMESTAMP-MAP:LOCAL=00:00:00.000,MPEGTS=900000

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The context in which we were,

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we approached this project was the, what we see as the,

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long run buildup in populist

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pressure that goes back at least to the 1970s.

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And we, we isolate, the

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decline in manufacturing employment across the,

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across both the United States

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and Europe as a source of, of,

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of building populist pressure.

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And, this, this, the context here is,

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pressure on manufacturing employment

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that's driven by three forces.

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One force is trade with low income countries.

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Uh, so since the 1970s, Europe

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and the United States have increased their trade

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with countries in East Asia, like South Korea,

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Taiwan, and Singapore.

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And then beginning in the 1980s

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with Latin American countries,

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particularly Mexico in for the us.

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Uh, and then in the, two thousands, of course, China

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enters the world market

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as a major manufacturing powerhouse, Vietnam as well.

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But, what this has meant is that,

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manufacturing in rich countries like the US

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and those in Europe, has faced increasing

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pressure from imports.

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And this has driven down employment in

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manufacturing in the US and Europe.

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And it's driven down wages in, in the, in manufac,

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in the manufacturing sector as well.

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So another aspect of globalization

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that has further put pressure on manufacturing jobs

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has been offshoring.

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So, think about, it's, it's a feature that's driven

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by, you know, supply chain productions, where,

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where multinational companies

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and others break up the production process

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and send those components of the process that require lots

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of labor to countries with, with lower wages.

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So they're moving jobs offshore

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to take advantage of low wages.

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That, of course, puts more pressure on

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the remaining workers in the manufacturing

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sector in the US and Europe.

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And then finally, so not directly related to,

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globalization has been automation

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and technological change.

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So many jobs in manufacturing, especially those

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that are more routinized, think assembly line work,

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are subject to being built, replaced by machinery, robots,

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for example, automation.

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And, you know, even in the context of,

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little globalization, these pressures would be ongoing,

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as, as a technological change is a,

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is a fundamental component of, of, of all economies.

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And, and those te new technologies allow firms

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to lower their labor costs.

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And, as a result, we've seen manufacturing employment

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as a share of total employment as a result

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of all these forces has fallen dramatically since the 1970s.

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Um, in Europe, Germany long, the economic,

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the manufacturing powerhouse of the region

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has seen its share of manufacturing jobs fall from 40%

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of total employment to less than 20% in the two thousands.

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Uh, and similar trends in the us,

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Netherlands, uk, you name it.

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So this is a generalized, process.

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Manufacturing employment has fallen in

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rich countries around the world.

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Um, so we've, we think

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that this has been a continuous process.

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And in the context of little

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or no countervailing government action, it's led

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to an erosion in trust in government,

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and other institutions

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and to the belief that normal political

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alternatives are not gonna work.

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And we think that populism with this idea that,

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that the system is corrupt, it's broken, it needs

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to be overthrown, has built on this economic decline,

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this manufacturing decline.

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Um, another component of this,

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contextual component is the global financial crisis of 2008.

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What the patterns we find, are that the places

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where the financial crisis were,

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had more severe effects and more lasting effects.

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Long-term effects are also the places

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that have been experiencing long-term manufacturing decline.

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This is not surprising these places would recover more

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slowly, that the effects would be more severe.

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And so we think this shock

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because it was a shock

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to wealth destroyed people's equity in their homes.

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Many people use as a, a nest egg

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for income shocks in retirement.

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This is, and the,

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and the government's reaction to the crisis, you know,

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bailing out the banks and very, doing very little for the,

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the people that were hurt and the regions that were hurt.

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Um, you know, again,

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catalyzed this long run buildup in, in, you know,

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in opposition to, the main mainstream parties,

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mainstream politics,

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and the, the quest for a solution, a, an extreme SLU

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solution provided by popula.

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One of the things that we do that's novel in this paper is

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that we think populism affects whole communities,

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these manufacturing regions,

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and we study the effects at the community level

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rather than at the individual level.

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Right? And you can think about it this way, when the,

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when there's a, when globalization

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and other pressures like the financial crisis hit an

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individual, the individual effects spill over

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to other individuals in the same region.

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When the factory closes

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and the workers are laid off, the workers are directly

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and immediately affected. But because

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They no longer have the income

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to continue their purchases at in services

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and buying cars, appliances, all the local,

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all the other local nearby businesses are negatively

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affected as well.

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And this, this process of decline continues

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as home values fall.

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Property taxes fall, which means public services decline.

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Governments can no longer afford,

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local governments can no longer afford to provide policing

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and education at previous levels since their

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revenue has has declined.

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So it's a, it's a, it's a, it's triggered

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by the factory closure,

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but it lay leads to a downward spiral

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that affects the entire community.

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So when we think, when we study populism in this paper,

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we study it, the effects at the, at the

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subnational regional level, right?

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Some, some regions,

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because of economic specializations in manufacturing were

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extremely hard hit.

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Other re regions were less.

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So, in fact, other regions have boomed.

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If you think about the booming urban

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sector, service oriented, high tech, high skilled regions

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of these countries and re of, of Europe

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and the United States, we find very little support

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for populism in those places.

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In fact, the opposite. These are the main beneficiaries

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of globalization and, and technological change.

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Uh, but it's in the places where manufacturing has declined

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and the global financial crisis had, an,

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an a particularly hard effect that,

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populism has grown.

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I can talk about how we measure and,

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and some of our results, these,

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these effects in a moment.

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So rather than looking at populism at the level

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of the individual to measure populous support,

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we adopt a subnational regional approach that,

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for, in the US case examines populous

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support at the county level.

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This is because we think the decline of manufacturer

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max manufacturing ripples through the entire local economy,

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opposing costs on residents,

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even if they're not directly employed in the,

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in the manufacturing sector.

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So in the US we analyze as our outcome variable,

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the county level change in the Republican party vote share

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between 2016 and 2012.

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Now, the idea here is that Donald Trump campaigned

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as a populist intent on restoring manufacturing

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to its former glory via trade barriers

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and restrictions on offshoring

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and all kinds of anti-globalization stuff.

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And what we're doing is comparing the vote chair

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for Donald Trump to the previous Republican

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candidate in the 2012

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Election. That was Mitt

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Romney

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and Mitt Romney ran

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as a traditional pro-globalization Republican.

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So our measure of popular support at the county level,

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takes advantage

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of the difference in these two Republicans We're capturing

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just Republican, sentiment here,

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or vote voting behavior here, that,

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that leverages the fact that Trump was a very different kind

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of Republican than Romney a populist through, through

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and through,

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and very anti-globalization in his platform.

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Um, and then

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to measure our key explanatory variable,

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we look at the county level change in manufacturing

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employment since, since 1970.

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So the change between 1970

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and 20, I think our data end in 20, in

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and in 2010 or 2012, I forgot.

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But it's that long run change in manufacturing

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that we're capturing with that, with that measure.

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And our expectations are that we're gonna expect

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to see a stronger tilt toward Trump over Romney in places

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that saw much, larger

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drops in manufacturing employment,

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and now in Europe, we do something different.

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We measure the regional, again, it's sub-national regional

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vote share for right-wing parties as our measure of

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popula support a regional measure.

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Um, now why do we look at po at, right wing parties?

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Well, this reflects a difference in electoral institutions

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between the United States and, and Europe.

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European systems operate under proportional representation,

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which means that even small, extremist parties

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can win seats in the legislature, in the parliament.

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And so, we, we note in our paper

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that right-wing parties have been growing

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for many years all the way back to the 1970s.

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Uh, but our expectations in this analysis is that

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that growth will be, will be stronger in regions

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that have experienced long run manufacturing

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employment declines.

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So our key finding in the US context is

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that support for populism as measured

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by this change in county support for Trump relative

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to Romney in 2012, is, is, is, we find

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that that is strongly associated with long run decline

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as in manufacturing, as measured

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by the change in manufacturing employment since 1970

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in, at the county level.

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In counties that lost more manufacturing jobs since 1970,

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Trump did much better than Romney did in 2012,

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to the effect of an 11%, change in manufacturing,

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decline in manufacturing employment leads

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to a 0.5% increase in Trump's vote share over Romney.

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So it's both a highly significant

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and a substantively important effect in Europe.

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We, we again, we looked at,

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the change in right-wing populist,

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vote share at the regional level across countries in Europe.

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Uh, and we find that, those, those regions

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that had the, that suffered the largest decline in

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manufacturing employment since 1970

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also have seen the largest gains in right-wing populist,

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support, which translates directly into

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seats in the legislature.

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Now that's consequential in Europe

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because it, it means that right-wing parties,

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although never large enough to be a majority on their own,

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can be crucial to forming coalitions

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and have an outsized impact on public policies.

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As a result, electoral institutions

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and the differences across rich countries, US

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and Europe, they, have an impact on

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how populism manifests itself

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in the us It took since we have a majoritarian system,

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it, which leads to two major parties,

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it took an internal revolution.

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One of the parties had to be overthrown by populists

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before it became sort of obvious to everybody

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that populism had become full-blown.

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In Europe, the rise of right-wing populist parties has been

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gradual and growing since the 1970s in lockstep

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with the, with the decline in manufacturing jobs in,

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in specific regions around Europe.

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If populism is a function of

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industrial decline,

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that's region specific, what can you know?

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And that people are really angry in these regions

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because they feel the government has ignored them

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and that parties have ignored them.

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Um, and that we've seen the rise in regional inequality,

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booming coastal urban areas, declining,

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stagnant manufacturing heartlands,

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you know, what do we do about this?

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Well, one approach recognizes the regional basis of populism

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and targets resources to the blighted communities.

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These, this is known as, a, identified

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as place-based policies, which provide incentives

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and subsidies for firms, especially those that have a lot of

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positive spillover effect that generate other jobs,

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generate, skills that, cause,

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local concentrations of highly,

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Productive economic activity, incentives to,

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to, to produce those things.

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Also targeted retraining

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and workforce programs, education programs

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to improve the skills of, of local workers.

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So we've actually seen some of this in action,

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in the Biden administration.

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Um, several of these major recent

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policies like the Inflation Reduction Act, the Chips Act,

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the American Rescues Plan Act,

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and the Infrastructure Investment

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and Jobs Act have place-based components to them.

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They're aimed at revitalizing these declining regions by,

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by, by bringing resources

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and investment to those regions.

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It's too early, early to tell whether they're gonna work.

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I, I think, you know, there's questions about their,

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their effectiveness both at the economically,

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at the economic level, do they actually lead

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to the revitalization of these regions?

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And also at the political level,

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even if they did revitalize the regions,

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it's not entirely clear that

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populist anger would be ameliorated by this, by this.

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Uh, so there's a lot of research to be done in that, in

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that respect, both political and economic research.

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Um, one of the things we're doing as a new project,

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a future project that my co-authors

16:09.955 --> 16:13.955
and I, is to focus on patterns of wealth inequality.

16:15.025 --> 16:16.445
Um, what is wealth? Wealth?

16:16.445 --> 16:20.125
Wealth is, you know, the, the, the equity in your home,

16:20.555 --> 16:23.165
your retirement accounts, your, the savings

16:23.195 --> 16:25.205
that you've accumulated in the bank.

16:26.215 --> 16:27.995
Um, we think this is important

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because wealth is far more unequally

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distributed than income.

16:33.165 --> 16:36.795
We've heard a lot about the, the 1% and how they've gone,

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and the top one 10th of 1%

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and how the incomes of those, that small group has exploded

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relative to the rest of us in recent years.

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But wealth is even more concentrated, far more concentrated.

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The wealthiest 5% in the United States, for example, own 70%

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of all national wealth, which is more than twice their share

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of national income, which is about 32%.

17:02.305 --> 17:03.885
So it's a, so that's a,

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that's a really important effect.

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We think wealth, wealth is also unequally distributed across

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space, across across geography.

17:11.585 --> 17:14.925
Um, it's heavily concentrated in these booming,

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thriving industry, sorry, urban service centers,

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focusing on finance, business services, technology,

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and biotech and well

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below average in these declining manufacturing regions.

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So why should this matter to populace?

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The, the argument that we're pursuing is

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that wealth is a crucial ingredient to

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economic security.

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When, when households have money in the bank and,

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and, own a home

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or have pension savings, the people in those households can,

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can withstand spells of unemployment, right?

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They have a nest egg that they can rely on

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to help them through hard times.

18:00.765 --> 18:03.425
Um, so this accumulated wealth source is a kind

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of an insurance for economic shocks.

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Um, so when a household

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or a region is hit by a negative wealth shock, this is

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where the Glo we, we think the global financial crisis

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really played out, had a big impact.

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It's gonna reduce their ability to ride out the shock.

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And we think this is a, can be a, a source

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can generate a lot of resentment and, fuel populism.

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Another mechanism by which wealth is important is

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as a source of economic opportunity.

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When health, when households accumulate wealth,

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it improves the labor market trajectories of family members.

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Uh, and perhaps more importantly, the finances.

18:47.765 --> 18:50.785
It, it finances the socioeconomic attainment

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of following generations.

18:52.735 --> 18:54.945
Household wealth is strongly associated

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with the next generation's educational attainment and event

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and eventual wealth accumulation.

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These things are highly persistent.

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You can, you see how,

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wealthy families finance college educations

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for their children, and this, is a source

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of their children's continuing prosperity, and it goes on

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and on through the generations.

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Therefore, when a household

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or a region is hit with a large negative wealth shock,

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like the financial crisis, the impact will continue

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through successive generations by harming

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economic opportunities for those households and regions.

19:36.235 --> 19:39.255
And again, I think that's a, a factor that can make a lot

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of people angry with the system.

19:41.515 --> 19:46.255
You know, their, their entire, plan for,

19:46.875 --> 19:48.615
for passing down the wealth

19:49.395 --> 19:51.015
and providing opportunities

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for their children has been torn away.

19:54.295 --> 19:57.115
And, again, that's a, a can can lead them

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to give up hope on current governments, current parties,

20:01.515 --> 20:04.715
current elites, and look to the easy answers

20:05.275 --> 20:06.235
provided by populace.

00:00 - The context in which we were, we approached this project was the, what we see as the, long run buildup in populist pressure that goes back at least to the 1970s. And we, we isolate, the decline in manufacturing employment across the,

00:23 - across both the United States and Europe as a source of, of, of building populist pressure. And, this, this, the context here is, pressure on manufacturing employment that's driven by three forces. One force is trade with low income countries. so since the 1970s, Europe and the United States have increased their trade with countries in East Asia, like South Korea,

00:51 - Taiwan, and Singapore. And then beginning in the 1980s with Latin American countries, particularly Mexico in for the us. and then in the, two thousands, of course, China enters the world market as a major manufacturing powerhouse, Vietnam as well. But, what this has meant is that, manufacturing in rich countries like the US and those in Europe, has faced increasing

01:18 - pressure from imports. And this has driven down employment in manufacturing in the US and Europe. And it's driven down wages in, in the, in manufac, in the manufacturing sector as well. So another aspect of globalization that has further put pressure on manufacturing jobs has been offshoring. So, think about, it's, it's a feature that's driven by, you know, supply chain productions, where,

01:42 - where multinational companies and others break up the production process and send those components of the process that require lots of labor to countries with, with lower wages. So they're moving jobs offshore to take advantage of low wages. That, of course, puts more pressure on the remaining workers in the manufacturing sector in the US and Europe. And then finally, so not directly related to,

02:10 - globalization has been automation and technological change. So many jobs in manufacturing, especially those that are more routinized, think assembly line work, are subject to being built, replaced by machinery, robots, for example, automation. And, you know, even in the context of, little globalization, these pressures would be ongoing, as, as a technological change is a, is a fundamental component of, of, of all economies.

02:42 - And, and those te new technologies allow firms to lower their labor costs. And, as a result, we've seen manufacturing employment as a share of total employment as a result of all these forces has fallen dramatically since the 1970s. in Europe, Germany long, the economic, the manufacturing powerhouse of the region has seen its share of manufacturing jobs fall from 40% of total employment to less than 20% in the two thousands. and similar trends in the us,

03:17 - Netherlands, uk, you name it. So this is a generalized, process. Manufacturing employment has fallen in rich countries around the world. so we've, we think that this has been a continuous process. And in the context of little or no countervailing government action, it's led to an erosion in trust in government, and other institutions

03:43 - and to the belief that normal political alternatives are not gonna work. And we think that populism with this idea that, that the system is corrupt, it's broken, it needs to be overthrown, has built on this economic decline, this manufacturing decline. another component of this, contextual component is the global financial crisis of 2008. What the patterns we find, are that the places where the financial crisis were,

04:17 - had more severe effects and more lasting effects. Long-term effects are also the places that have been experiencing long-term manufacturing decline. This is not surprising these places would recover more slowly, that the effects would be more severe. And so we think this shock because it was a shock to wealth destroyed people's equity in their homes. Many people use as a, a nest egg for income shocks in retirement.

04:42 - This is, and the, and the government's reaction to the crisis, you know, bailing out the banks and very, doing very little for the, the people that were hurt and the regions that were hurt. you know, again, catalyzed this long run buildup in, in, you know, in opposition to, the main mainstream parties, mainstream politics, and the, the quest for a solution, a, an extreme SLU solution provided by popula.

05:14 - One of the things that we do that's novel in this paper is that we think populism affects whole communities, these manufacturing regions, and we study the effects at the community level rather than at the individual level. Right? And you can think about it this way, when the, when there's a, when globalization and other pressures like the financial crisis hit an individual, the individual effects spill over to other individuals in the same region.

05:48 - When the factory closes and the workers are laid off, the workers are directly and immediately affected. But because They no longer have the income to continue their purchases at in services and buying cars, appliances, all the local, all the other local nearby businesses are negatively affected as well. And this, this process of decline continues as home values fall.

06:16 - Property taxes fall, which means public services decline. Governments can no longer afford, local governments can no longer afford to provide policing and education at previous levels since their revenue has has declined. So it's a, it's a, it's a, it's triggered by the factory closure, but it lay leads to a downward spiral that affects the entire community. So when we think, when we study populism in this paper,

06:45 - we study it, the effects at the, at the subnational regional level, right? Some, some regions, because of economic specializations in manufacturing were extremely hard hit. Other re regions were less. So, in fact, other regions have boomed. If you think about the booming urban sector, service oriented, high tech, high skilled regions of these countries and re of, of Europe

07:13 - and the United States, we find very little support for populism in those places. In fact, the opposite. These are the main beneficiaries of globalization and, and technological change. but it's in the places where manufacturing has declined and the global financial crisis had, an, an a particularly hard effect that, populism has grown. I can talk about how we measure and, and some of our results, these,

07:44 - these effects in a moment. So rather than looking at populism at the level of the individual to measure populous support, we adopt a subnational regional approach that, for, in the US case examines populous support at the county level. This is because we think the decline of manufacturer max manufacturing ripples through the entire local economy, opposing costs on residents, even if they're not directly employed in the,

08:13 - in the manufacturing sector. So in the US we analyze as our outcome variable, the county level change in the Republican party vote share between 2016 and 2012. Now, the idea here is that Donald Trump campaigned as a populist intent on restoring manufacturing to its former glory via trade barriers and restrictions on offshoring and all kinds of anti-globalization stuff. And what we're doing is comparing the vote chair

08:48 - for Donald Trump to the previous Republican candidate in the 2012 Election. That was Mitt Romney and Mitt Romney ran as a traditional pro-globalization Republican. So our measure of popular support at the county level, takes advantage of the difference in these two Republicans We're capturing just Republican, sentiment here,

09:15 - or vote voting behavior here, that, that leverages the fact that Trump was a very different kind of Republican than Romney a populist through, through and through, and very anti-globalization in his platform. and then to measure our key explanatory variable, we look at the county level change in manufacturing employment since, since 1970. So the change between 1970

09:47 - and 20, I think our data end in 20, in and in 2010 or 2012, I forgot. But it's that long run change in manufacturing that we're capturing with that, with that measure. And our expectations are that we're gonna expect to see a stronger tilt toward Trump over Romney in places that saw much, larger drops in manufacturing employment, and now in Europe, we do something different. We measure the regional, again, it's sub-national regional

10:22 - vote share for right-wing parties as our measure of popula support a regional measure. now why do we look at po at, right wing parties? Well, this reflects a difference in electoral institutions between the United States and, and Europe. European systems operate under proportional representation, which means that even small, extremist parties can win seats in the legislature, in the parliament. And so, we, we note in our paper that right-wing parties have been growing

10:58 - for many years all the way back to the 1970s. but our expectations in this analysis is that that growth will be, will be stronger in regions that have experienced long run manufacturing employment declines. So our key finding in the US context is that support for populism as measured by this change in county support for Trump relative to Romney in 2012, is, is, is, we find that that is strongly associated with long run decline

11:32 - as in manufacturing, as measured by the change in manufacturing employment since 1970 in, at the county level. In counties that lost more manufacturing jobs since 1970, Trump did much better than Romney did in 2012, to the effect of an 11%, change in manufacturing, decline in manufacturing employment leads to a 0.5% increase in Trump's vote share over Romney. So it's both a highly significant and a substantively important effect in Europe.

12:07 - We, we again, we looked at, the change in right-wing populist, vote share at the regional level across countries in Europe. and we find that, those, those regions that had the, that suffered the largest decline in manufacturing employment since 1970 also have seen the largest gains in right-wing populist, support, which translates directly into seats in the legislature. Now that's consequential in Europe

12:40 - because it, it means that right-wing parties, although never large enough to be a majority on their own, can be crucial to forming coalitions and have an outsized impact on public policies. As a result, electoral institutions and the differences across rich countries, US and Europe, they, have an impact on how populism manifests itself in the us It took since we have a majoritarian system, it, which leads to two major parties,

13:17 - it took an internal revolution. One of the parties had to be overthrown by populists before it became sort of obvious to everybody that populism had become full-blown. In Europe, the rise of right-wing populist parties has been gradual and growing since the 1970s in lockstep with the, with the decline in manufacturing jobs in, in specific regions around Europe. If populism is a function of industrial decline,

13:51 - that's region specific, what can you know? And that people are really angry in these regions because they feel the government has ignored them and that parties have ignored them. and that we've seen the rise in regional inequality, booming coastal urban areas, declining, stagnant manufacturing heartlands, you know, what do we do about this? Well, one approach recognizes the regional basis of populism and targets resources to the blighted communities.

14:26 - These, this is known as, a, identified as place-based policies, which provide incentives and subsidies for firms, especially those that have a lot of positive spillover effect that generate other jobs, generate, skills that, cause, local concentrations of highly, Productive economic activity, incentives to, to, to produce those things. Also targeted retraining and workforce programs, education programs

15:01 - to improve the skills of, of local workers. So we've actually seen some of this in action, in the Biden administration. several of these major recent policies like the Inflation Reduction Act, the Chips Act, the American Rescues Plan Act, and the Infrastructure Investment and Jobs Act have place-based components to them. They're aimed at revitalizing these declining regions by, by, by bringing resources

15:30 - and investment to those regions. It's too early, early to tell whether they're gonna work. I, I think, you know, there's questions about their, their effectiveness both at the economically, at the economic level, do they actually lead to the revitalization of these regions? And also at the political level, even if they did revitalize the regions, it's not entirely clear that populist anger would be ameliorated by this, by this.

15:58 - so there's a lot of research to be done in that, in that respect, both political and economic research. one of the things we're doing as a new project, a future project that my co-authors and I, is to focus on patterns of wealth inequality. what is wealth? Wealth? Wealth is, you know, the, the, the equity in your home, your retirement accounts, your, the savings that you've accumulated in the bank. we think this is important

16:27 - because wealth is far more unequally distributed than income. We've heard a lot about the, the 1% and how they've gone, and the top one 10th of 1% and how the incomes of those, that small group has exploded relative to the rest of us in recent years. But wealth is even more concentrated, far more concentrated. The wealthiest 5% in the United States, for example, own 70% of all national wealth, which is more than twice their share of national income, which is about 32%.

17:02 - So it's a, so that's a, that's a really important effect. We think wealth, wealth is also unequally distributed across space, across across geography. it's heavily concentrated in these booming, thriving industry, sorry, urban service centers, focusing on finance, business services, technology, and biotech and well below average in these declining manufacturing regions. So why should this matter to populace?

17:33 - The, the argument that we're pursuing is that wealth is a crucial ingredient to economic security. When, when households have money in the bank and, and, own a home or have pension savings, the people in those households can, can withstand spells of unemployment, right? They have a nest egg that they can rely on to help them through hard times. so this accumulated wealth source is a kind

18:03 - of an insurance for economic shocks. so when a household or a region is hit by a negative wealth shock, this is where the Glo we, we think the global financial crisis really played out, had a big impact. It's gonna reduce their ability to ride out the shock. And we think this is a, can be a, a source can generate a lot of resentment and, fuel populism. Another mechanism by which wealth is important is as a source of economic opportunity.

18:37 - When health, when households accumulate wealth, it improves the labor market trajectories of family members. and perhaps more importantly, the finances. It, it finances the socioeconomic attainment of following generations. Household wealth is strongly associated with the next generation's educational attainment and event and eventual wealth accumulation. These things are highly persistent. You can, you see how,

19:06 - wealthy families finance college educations for their children, and this, is a source of their children's continuing prosperity, and it goes on and on through the generations. Therefore, when a household or a region is hit with a large negative wealth shock, like the financial crisis, the impact will continue through successive generations by harming economic opportunities for those households and regions. And again, I think that's a, a factor that can make a lot

19:39 - of people angry with the system. You know, their, their entire, plan for, for passing down the wealth and providing opportunities for their children has been torn away. And, again, that's a, a can can lead them to give up hope on current governments, current parties, current elites, and look to the easy answers provided by populace.

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