30 years ago in 1989, the Berlin Wall fell. East and West Germany were united. The fall of the Berlin wall was a symbolic end of Communism, eventually leading to the dismantling of the USSR. Western European and American models emerged triumphant. The trickle down economic model, that had lifted so many to a stable and productive middle class in the post-war societies of Western Europe and the United States, promised to do the same for the people who lived behind the iron curtain.

The Western European model in the last three decades has accelerated overall global growth, has lifted millions out of abject poverty, has made trade easier, and has provided easier access to goods to populations around the world.

And yet, in the last 5 years, the world has, and continues to see a sweeping wave of disenchantment in the way societies have evolved since the fall of the Berlin wall. At ground zero of the Berlin wall, in a unified Germany, the right wing Alternative for Germany (AfD) is the largest opposition party. AfD was officially formed just 6 years ago in 2013. Its ultra nationalist, xenophobic agenda has resonated with a large swath of Germans, particularly those who live in the East Germany before the Wall.

Along with Germany, the United Kingdom has been grappling with the mess of Brexit created after the historic referendum to leave the EU in the summer of 2016. Since then, the divisions among the Conservative and Labor parties and their electoral populations have become increasingly incisive and deep. Neighboring France, has also seen a resurgence of right wing parties and leaders such as Marine Le Pen of the National Front. The three economic giants of the EU – Germany, the UK and France are all in the throes of a strong anti immigrant sentiment. The smaller EU economies such as Hungary, Austria and other Eastern European countries are faring much worse. They have seen extreme right wing parties come to power, on the platform of fervent nationalism and protectionist economic policies.

Crossing the Atlantic, the United States also saw a victory of the nationalist and protectionist policies over open trade and welcoming borders, in electing Donald Trump in the fall of 2016. Anti immigrant and ‘America First’ trade policies have since been on the rise and continue to remain popular.

In South America, Brazil elected an extreme right wing leader, Jair Bolsonaro as its President in January 2019. He also won on a nationalist and populist platform. The emerging economies of Peru, Chile, Ecuador in South America are witnessing their populations rising up against the real or perceived failures of their respective governments.

Asia has not been spared from this populist and nationalist wave. India – the world’s largest democracy elected a right wing populist leader Narendra Modi twice – in 2014 and then with a landslide victory in 2019. In a way, India has been riding the wave of nationalism prior to any of the other nations above.

If one evaluates the causes of this rise of nationalism in various countries, the micro causes may seem distinct but yet there is a common unifying cause – it can be linked to a real (or perceived) feeling of Income Inequality. The same promise of trickle down economics which was supposed to create equity of opportunities has left huge populations grappling to make even basic ends meet. The unrest that is seen in the working class sector of both the developed and emerging economies have been disillusioned by the economic models that came after the fall of the Berlin Wall. While global growth soared, the gap between the haves and have-nots has been widening at an alarming rate. However, this is in stark opposition to the data that shows that income inequality has been on a steady decline since the Industrial Revolution. So it begs to ask the question – is the sentiment of income inequality real or a mere perception? The answer is much more complicated. Indeed, more people at the bottom of the income pyramid have seen steady upward economic mobility in the last three decades. At the same time, the wealth accumulation of those at the top of this pyramid has risen at an exponentially higher rate. As a result, the perception of the gap in economic power has grown exponentially. To lay it in a crude and simplistic term – I made 10 cents three decades ago, and now I make 10 dollars,  those at the top were making 100 dollars to my 10 cents (a 1000% gap) and now they make a million dollars to my 10 dollars (a gap of 100,000 %). Everyone has more, but the accumulation gap has widened to a level that seems unreachable. This feeling is at the root of the growing discontent among the working class. The way the working class has retaliated to this discontent has been different in different economies – the Occupy Wall Street movement in the US, the yellow vests protests in France, the recent protests for a minimal increase in the subway fares in Chile, the riots in Ecuador over abolishing energy subsidies, the paralyzing of Hong Kong, the rise of right wing leaders in Eastern Europe, Brexit, and many others. Adding fuel to this fire is the manufactured fear of religious and racial majorities being persecuted by either religious minorities, or immigrants. These conditions have created a potent mix for the rise of nationalism and populism.

How does one combat this? Where do we even begin? Unfortunately, there isn’t any one answer to this. But, one thing is certain – a combative approach is not going to work. Macroeconomic policies take years to show their effects, as is evident by where we are today after the fall of the Berlin wall. The optimism it brought has eroded. It doesn’t matter that the data compiled by the macroeconomic think tanks show that global inequality has been steadily declining. It matters, how people feel about it in their day to day lives. The signs are clear – perception matters more than reality. So how does one bridge the gap between perception and reality?

That I think goes back to how the macroeconomic policies are further refined. Focusing on mere growth won’t do, financial inclusion will need to be the focus. The general idea that growth and market forces will somehow uplift everyone has failed. Mere, financial growth is a false indicator of economic well-being of any society – how the fruit of that growth is shared by every member in that society has to be re-envisioned. This does not mean stonewalling economic growth. The engines of growth have been largely functioning quite well since the end of the second world war. It’s the access to the outcomes of this growth that have fallen by the wayside since the fall of the Berlin Wall. As a result, a new invisible wall has been rising steadily. Breaking down a physical wall was a step forward for humanity 30 years ago, breaking down this new invisible wall will require a very different collective will. How we go about razing this invisible wall will define the state of our existence three decades from now.