The rise of antisystem forces and populism testifies to a deep trust crisis of citizens, both towards their institutions and others, as we show in a new book “The origins of populism” (with D. Cohen, E. Beasley, M. Foucault).

The votes for antisystem parties is fueled first and foremost by a sharp deterioration of citizens’ trust in their institutions, experts and elites over the last three decades. According to the World Values Survey, the share of people who do not trust Parliament has increased from 47% to 77% in the United States, from 37% to 64% in France, and from 60% to 77% in Britain since the early 80s.

The erosion of trust in institutions seems closely linked to the deterioration of the living conditions of the middle and lower classes, hit by economic insecurity and rising inequalities, especially since the 2008 economic crisis. The financial crisis provoked an immense resentment towards the traditional parties, considered to be incapable of protecting the popular classes from the disturbances of contemporary capitalism. Beyond the financial crisis, the failure of governments and institutions to protect people from more structural risks such as the expansion of inequalities, globalization or the digital transition, has fueled distrust. As an illustration, in a series of articles analyzing the “China Shock”, David Autor, and his co-authors, highlight the effects of globalization on the destruction of employment in American industrial strongholds, leading to a strong resentment towards institutions and a political radicalization. The digital revolution and rising inequality have had the same effect in Europe and the United States.

In mass education societies, participation in primary and secondary education is quasi-universal. Hence, social inequalities are most visible in the continuation to Higher Education and in the length and quality of tertiary programmes selected by students from different social backgrounds. Therefore, it seems natural to promote educational equalization by focusing on economic and cultural barriers faced by high school seniors.

This is an optical illusion. Inequalities become visible in Higher Education, but they are generated much earlier. Secondary education is everywhere tracked into academic and vocational curricula. These often take the form of school tracks in Continental Europe, while in Anglo-Saxon and Scandinavian countries the model of subject choice prevails. But the pattern is everywhere the same: academic curricula offer much better training for Higher Education, thus enhancing the chances of enrollment in (and completion of) tertiary programmes, and into the best ones. Upper class, native students are hugely overrepresented in classes offering these curricula.

To be sure, equalization measures at the end of secondary education are important, particularly outreach interventions combining academic support with the provision of information on Higher Education. But the problem is that they arrive too late, when students differ already too much in their skills and aspirations. Late interventions can have effects at the margins, but we have now increasing evidence that earlier counseling programmes targeting curricular choice in secondary education are more effective. There are just too many students with good school performances from disadvantaged families that fail to make ambitious choices in secondary and tertiary education. They, and their parents, tend to overestimate their risks of failure in the academic path. They thus adapt their ambitions downwards and end up selecting shorter, applied programmes. Light-touch counseling interventions can correct their misperceptions and sustain their aspirations, before it’s too late.

Access to education has always been one of the main criteria for assessing levels of inequality and inclusiveness in a community. Numerous studies have focused on the topic in the past. It is interesting to highlight the impact that increased global mobility has had and is having in this field.

Due to major changes over the last two decades the resulting growth in mobility opportunities has profoundly altered the world of education, both in secondary and above all in university education. Before the mobility revolution that began years ago and which has accelerated since the beginning of the century, the option of studying abroad was limited to a small number of people. There were few exceptions to the widespread norm of cycles of studies carried out in the local area or at the furthest elsewhere within the same country.

The times we are living in have radically changed this pattern. Nowadays there is a global education market that is no longer exclusively available to small minorities or limited to individual countries. A subset of educational supply and demand has been formed on a global scale and is rapidly and continuously growing. It travels the planet breaking down the limits and barriers of the past and even provoking competition between distant and different locations. Something which was once limited to only a few people, today extends on a global scale like never before.

The multilateral trading system is now under attack by the country which has been its main inspirer, the United States. The current view of the US administration of trade as a zero sum game where some countries (with trade surpluses) gain at the expense of others (with trade deficits) marks a stark departure from previous administrations as well as from the consensus of economists. It is therefore important to have in mind the losses that a trade war would entail. A simulation of a trade war (see Jean, Martin and Sapir, 2018 and Vicard 2018) shows large permanent losses (around 3% to 4% of GDP for the EU, US and China and much larger for smaller countries) that are similar to the estimated permanent effect of the Great Recession. Benefits of trade (and losses of a trade war) should not be overestimated (there are also decreasing returns to trade liberalization) but they do exist.

This is not to say that benefits of trade liberalisation are evenly distributed. In fact, it has been known for a long time that international trade can not only increase inequalities but also create losers (be they individuals or regions inside countries).

Tax cooperation seems to be more difficult to achieve through multilateralism than any other economic issue, despite growing consensus about the detrimental effects of corporate tax competition for both market integration and economic inequalities. Repeated attempts to harmonize corporate taxation have gained momentum since the financial crisis, with important proposals made by the OECD and the European Union. Yet failure to implement or even reach agreement on these proposals shows the need for leadership of the G7 in order to address the concerns of those countries that stand to lose most from corporate tax harmonization.

Detrimental effects
In the past, proponents of tax competition have underlined its positive effects on government efficiency, which were supposed to improve the provision of public services to respond to fleeting income. This argument generally does not hold for corporate taxation, since companies are much more mobile than citizens. As a result, we can observe a “race to the bottom” of corporate tax rates. Public choices are distorted in favor of the most mobile companies, with an increasingly important part of the tax burden born by the least mobile parts of a country’s population.