Take Note America: The Public is Angry

Moisés Naím / Financial Times

Being stuck in traffic is more bearable if the other lanes are moving. If all lanes are jammed for a long time, tempers flare. And if the police eventually arrive and let a few selected cars get out of their lanes and move through a special path, a riot is likely to ensue. This in short is the sentiment that propels the Occupy Wall St protests. We should take note.

The traffic jam metaphor for the political consequences of economic mobility was originally proposed by Albert Hirschman, the noted economist, in 1973 to explain changes in tolerance for income in equality in poor countries. The idea was as simple as it was powerful: even a modicum of social mobility – sparked by economic growth – buys patience and political stability in developing countries. As people see their relatives and neighbours improve their lot they are willing to wait for their turn.

This idea, which was offered to explain the tolerance for inequality in poor countries, is now in theory applicable to some of the world’s wealthiest nations – except that the Occupy Wall Street crowds, the protesters in the City of London, or the Italian and Greek protesters are getting out of their “cars”, and clashing with the police not just because they see their “traffic lane” horribly jammed. It’s also because they are moving backwards.

They are also paying more attention to the fact that others are advancing thanks to what they perceive as tricks, special privileges and corner-cutting. This is not about hopes sparked by others doing well, but about the collective rage at an elite doing obscenely well while the rest backslides.

Over a century ago Alexis De Tocqueville wrote that Americans’ higher tolerance for inequality relative to Europe’s was the result of more social mobility in the US.

This is over; at least for now. The long, peaceful coexistence with income and wealth inequality is ending. Americans are now infuriated by the fact that chief executives at some of the nation’s largest companies earned around 340 times more than a typical American worker.
 

While the numbers are unnerving and US income disparities are growing even more unequal, this is not new. What is new is the intolerance towards the hoarding by the “few” of unfathomable wealth, and also towards their profiting even in the midst of the crisis. The rich are seen to be either benefiting from bail-outs and other stimulus measures, or to be immune to the fiscal austerity that governments in many countries have had to adopt to stabilise their economies.

Nothing makes people take to the streets in protest like public budget cuts. In a recent study, Jacopo Ponticelli and Hans-Joachim Voth, professors at Pompeu Fabra University in Barcelona, looked at a large data base that tracked political violence in 26 European countries between 1919 and 2009. They found that “expenditure cuts carry a significant risk of increasing the frequency of riots, anti-government demonstrations, strikes, political assassinations, and attempts at revolutionary overthrow of the established order.” While such events have a low probability in normal years, they concluded, they become much more common as austerity measures are implemented.

We know we have entered new political territory when Mitt Romney, the leading contender for the Republican party presidential nomination, who initially called the Occupy Wall Street movement “dangerous”, is quoted as saying: “I look at what’s happening on Wall Street and my own view is, boy I understand how those people feel …The people in this country are upset.” Yes, they are. They will stay that way until their lanes start moving again. Or, at least, those of their friends and neighbours.