The Politics of Fear Is Really the Economics of Insecurity

One of the easiest ways to misunderstand contemporary politics is to begin with politics.

Start somewhere else.

Start with the apartment.

The job contract.

The supermarket receipt.

The pension projection.

The school.

The hospital appointment.

The monthly payment.

The fear that your children will not live as well as you did.

Then look at politics.

The picture becomes rather different.

Across democracies, analysts spend enormous energy trying to explain why voters are angry.

Immigration.

Identity.

Nationalism.

Globalization.

Social media.

Russia.

China.

Trump.

Brexit.

Populism.

The far right.

The radical left.

All of these may matter.

But I suspect we occasionally confuse the language of political anger with its economic origin.

People often discuss politics using cultural vocabulary while experiencing insecurity through their bank account.

Fear rarely arrives wearing an economics badge

Imagine a 52-year-old worker.

His salary has barely kept pace with prices.

His house has increased in value, but his children cannot afford one.

He worries that technology may eventually change his job.

His parents need care.

His pension seems less secure than expected.

His town has changed.

Public services appear stretched.

Then someone asks him:

“What worries you about immigration?”

Perhaps his answer really is about immigration.

But perhaps several anxieties have been placed into the same psychological container.

Economic insecurity rarely introduces itself politely:

“Good evening. I am declining confidence in future household purchasing power.”

It arrives as fear.

And politics supplies the nouns.

The trust numbers are extraordinary

The OECD’s 2024 Trust Survey found that only 39% of respondents across participating OECD countries reported high or moderately high trust in their national government, while 44% had low or no trust. (OECD⁠)

More revealing is the relationship with economic insecurity.

Among people concerned about their household finances and future economic well-being, only 35% reported high or moderately high trust in national government.

Among those with fewer financial worries, the figure was 52%.

A 17-percentage-point difference. (OECD⁠)

And perceptions matter.

The OECD notes that self-reported financial vulnerability can have a stronger association with low institutional trust than income itself.

That is extremely important.

Politics is shaped not only by how poor you are.

It is shaped by how easily you believe you could become poorer.

The fear of falling may matter more than poverty

Traditional politics focused heavily on poverty.

Modern populism often operates among people who are not poor.

They own homes.

They have jobs.

They possess cars.

They go on holiday.

They may therefore look economically secure.

But they fear downward mobility.

This is a different emotion.

Poverty says:

“I have little.”

Status insecurity says:

“I could lose what I have, and my children may get less.”

The second can be politically explosive.

Because human beings do not judge prosperity only in absolute terms.

We compare.

With neighbours.

With colleagues.

With previous generations.

With expectations.

And most importantly, with the future we thought we had purchased by following the rules.

The global numbers should worry anyone in politics

The United Nations’ World Social Report 2025 describes a world that has made extraordinary material progress while suffering from declining trust and widespread insecurity.

More than half of the world’s population has little or no trust in government.

More than 2.8 billion people live between $2.15 and $6.85 per day — above the extreme-poverty threshold yet often only one economic shock away from severe hardship. (UN Social Portal⁠)

The UN also cites global polling in which around 60% of people are described as “struggling” and another 12% as “suffering.” (United Nations⁠)

Those numbers coexist with decades of enormous global economic progress.

Once again:

the statistics are not necessarily contradictory.

Then politics offers a culprit

Economic anxiety is complicated.

Supply chains are complicated.

Productivity is complicated.

Housing supply is complicated.

Demographics are complicated.

Central banking is complicated.

Technological disruption is complicated.

“Your problem is that group over there” is wonderfully simple.

This is the great competitive advantage of populist economics.

It transforms systems into villains.

The immigrant.

The billionaire.

Brussels.

Washington.

China.

The bankers.

Globalists.

Corporations.

Elites.

Foreigners.

Depending on which populist you purchase your explanation from.

Sometimes these actors genuinely contribute to the problem.

But complex societies almost never have one culprit.

Unfortunately, “there are multiple interacting structural causes” has never been an especially successful campaign slogan.

Immigration is the perfect political example

Immigration illustrates the mechanism beautifully.

It can produce genuine economic benefits.

It can also create genuine local pressures.

Both statements can be true.

Migrants can expand labour supply, support ageing economies, pay taxes and fill shortages.

Rapid population growth can simultaneously increase demand for housing, schools, transport and healthcare in areas where supply is constrained.

A serious debate would measure all of these effects.

Political debate often prefers one of two children’s stories:

Immigration solves everything.

Or immigration causes everything.

Neither is economics.

Both are branding.

The important question may instead be:

Why do societies with sufficient aggregate wealth repeatedly fail to expand housing and public infrastructure fast enough to absorb economic and demographic change?

That question is less emotionally satisfying because it requires policy competence rather than an enemy.

Housing is political dynamite disguised as real estate

Consider European housing.

Between 2010 and 2024, house prices across the EU rose 53%. In 2024, nearly 10% of people living in EU cities were in households spending more than 40% of disposable income on housing. (European Commission⁠)

Housing does something politically dangerous.

It divides society into groups whose economic interests increasingly diverge.

Rising property prices make owners wealthier.

The same rising prices make entry harder for non-owners.

One statistic can therefore represent prosperity to a 65-year-old homeowner and exclusion to his 30-year-old daughter.

Then we wonder why generations perceive the economy differently.

The intergenerational trust problem

The UN’s data are particularly striking here.

Its World Social Report finds declining institutional trust across successive generations.

Among people aged 25-34, the share reporting no trust at all in government rose from roughly 17.5% for the cohort born in the 1970s to around 25% for those born in the 1990s in the countries covered by the analysis. (DESA Publications⁠)

This should receive much more attention.

A democracy can survive disagreement.

It becomes much more fragile when younger citizens stop believing the system is working for them.

And perhaps the issue is not simply social media radicalization.

Perhaps they are looking at the arithmetic.

The middle class is psychologically more important than economists sometimes recognize

The middle class has historically offered something greater than consumption.

It offered a narrative.

Work hard.

Improve your position.

Buy a house.

Educate your children.

Retire securely.

Expect the next generation to do better.

That narrative created political stability because it transformed capitalism into a future promise.

You tolerated inequality partly because mobility seemed possible.

You tolerated today’s sacrifice because tomorrow looked larger.

But what happens when that expectation weakens?

Politics becomes less about expanding the pie and more about defending your slice.

That is when immigration feels more threatening.

Trade feels more threatening.

Technology feels more threatening.

Taxation feels more threatening.

Other generations feel more threatening.

Other regions feel more threatening.

Fear is economically competitive.

Populism may therefore be downstream

This is the inversion I find most interesting.

We often say:

people encounter populist messages → become frightened → vote differently.

Sometimes.

But another sequence may be equally important:

people become economically insecure → seek explanations → become receptive to politicians who give their insecurity a target.

If so, fighting populism solely with fact-checking will have limited success.

You cannot fact-check someone’s mortgage payment out of existence.

You cannot lecture a young worker into believing housing is affordable.

You cannot publish a chart proving GDP growth and expect a family whose real wages have fallen to applaud the axis labels.

This is not an excuse for extremism

Explanation is not justification.

Economic anxiety does not excuse racism.

Housing shortages do not excuse xenophobia.

Fear does not justify attacks on democratic institutions.

Understanding a political mechanism is not the same as endorsing it.

But democracies make a dangerous mistake when they refuse to investigate why messages resonate.

Calling voters stupid may provide emotional satisfaction.

It has a rather poor electoral track record.

The left and right make symmetrical mistakes

Parts of the right pretend every insecurity can be solved by borders, tariffs and national sovereignty.

Parts of the left pretend material insecurity can be neutralized with better vocabulary and moral instruction.

Neither is sufficient.

A worker worried about housing, wages and retirement does not become economically secure because someone explains inclusion to him.

Nor does he become economically secure because someone deports his neighbour.

At some point somebody must build the houses, increase productivity, finance pensions, provide energy, improve schools and make public services function.

The boring part of politics eventually returns.

It is called governing.

The economic roots of political confidence

The most successful democracies of the coming decades may therefore not be those that eliminate disagreement.

That is impossible.

They may be those that restore a credible sense of economic progression.

Not necessarily spectacular wealth.

Progression.

The belief that:

work improves your position;

your children can become independent;

housing is attainable;

illness does not destroy you financially;

retirement is plausible;

and tomorrow is not primarily a threat.

These things sound like household economics.

Collectively they become political legitimacy.

The final inversion

We keep asking why politics has become so angry.

Perhaps we should ask why ordinary economic life has become so anxious.

Because fear rarely begins in parliament.

It begins much earlier.

At the kitchen table.

When a family calculates the mortgage.

When a young couple calculates childcare.

When a worker wonders what AI will do to his job.

When parents realize their children cannot buy nearby.

When retirement moves another year into the future.

Then eventually someone arrives with a flag, an enemy and an explanation.

Perhaps populism does not begin at the ballot box.

It begins when ordinary people stop believing that tomorrow will be better than today.

Roberto Balbino
Founder & CEO, Fintech SCB
Independent analyst of finance, economics, geopolitics and global markets
www.fintechscb.com

Principal data sources: United Nations World Social Report 2025; OECD Survey on Drivers of Trust in Public Institutions 2024; Eurostat Housing in Europe; OECD Employment and social indicators.