The importance of inequality

Krugman posts some numbers on inequality. I’m interested in what he says about the rise of the 1% in terms of zero-sum game theory: namely, that the rise of the 1% has been enough that it genuinely has choked off gains for the rest of the economy. (And masked losses for the middle-class and lower during boom times.)

But the bigger question in my mind is historical: radical political movements and revolutionary fervor tend to start in nations where a comfortable middle-class, or an upwardly-mobile lower class, are suddenly cut off from future avenues of prosperity. It’s not the downtrodden who become radicalized; constant societal beat-downs also tamp down the ability to visualize something better. It’s when a large community is promised something better and has it taken away that folks form the Weathermen.

It’s been 50 years since we had that kind of political movement in the US. We tend to have less radical political movements than many other countries, which is generally attributed to societal and political safety valves, such as the dominant two-party system providing a moderating effect on the extremes of both parties. I think it’s fairly clear that these safety valves are breaking down.

Add to that the gasoline that’s being added to the fire by overzealous law enforcement. For some reason, Tea Party activists can bring guns to their rallies, but when populists break out the bongo drums, the police break out the econosized pepper spray. The use of violence against demonstrators who perceive themselves as law-abiding (regardless of whether they actually are) is the fastest way to make protesters think, “hey, maybe there’s something to this violence thing.”

Personally, the only thing that surprised me about Occupy Wall Street is how long it took to show up. I’m expecting to see more of the same throughout 2012–with the really interesting fireworks starting in 2013 after Obama is re-elected, if they still feel like they’re not being listened to. And the tinder won’t be set alight by the protesters: look for the opening salvos to be fired by law enforcement and federal agencies, who won’t realize that they’re attempting to put out smoldering coals with Molotov cocktails.

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