In crowding, flankers impair target perception. For example, Vernier offset discrimination deteriorates when the Vernier is flanked by parallel lines. Pooling models explain crowding by averaging neural activity over both Vernier and flankers. Recently, however, it was shown that adding flankers can reduce crowding almost to baseline levels, contrary to predictions of pooling models. Here, we show that a Wilson-Cowan type model can explain both classical, local and recent, global aspects of crowding. The key feature of the model is spread of inhibitory neural activity across similar elements. For example, crowding strength decreases with more long flankers because these similar, long flankers inhibit each other dynamically and, thus, reduce inhibition on the dissimilar Vernier. Since the Vernier is similar to the equal-length flankers, it is inhibited. For this reason, and in accordance with psychophysical data, crowding does not vary with the number of equal-length flankers.