I do not like to act like a seer, as we often get caught up in bubbles, believing the immediate past trends will carry forward in the future. The number of uncertainties in the world are too many, to predict anything with either precision or accuracy. Anyway, if a pattern emerges that lasts a decade, you need to give it some due emphasis.
Many say the rising inequality is a problem. I agree it is, but I would say the rising inequality, in the long run, is a greater problem for the rich than the poor because it is the rich who will be the greatest losers. The financial crisis of 2008 was an unprecedented event, but the events that followed were more unprecedented. Those who were the direct actors in the creation of the storm, the finance industry, has withered the storm and even taken huge bonuses and public bailouts home, while those who were at the receiving end still struggle to get over the damaging consequences of the great recession. I will not argue the merits of either side but will provide a clinical analysis of what such an uneven growth implies - where the rich got richer and the poor struggled. We can see what it implies all around us, the Occupy Wall Street, the 2014 Ferguson Protest, all of it are fuelled by a perceived sense of injustice, that few wealthy men (mostly) have an unnaturally large level of control on people's lives. I have heard the lobbyists of the Wall Street and the City argue how such perceptions are misjudged. However, you can't change perceptions by giving fat bonuses to bosses! Even if for a moment it is agreed that the agitated public today is merely a victim of misperception, the misperception is too strong.
Maybe there exists a belief in the power circles of the Western world that such sense of injustice will calm down once some fraction of the large wealth of rich will trickle down. Some believe that we should let the 'hard working and smart' rich get very rich and then some parts of their income will eventually go to feed the 'lousy' poor. What explains this patience of the disproportionately rich with the current agitations?
In the past few decades, the social capital in western democracies has eroded. Prof. Robert Putnam in his book Bowling Alone presents this case, where he argues how the famed civic values of America are under threat. The union membership has declined precipitously in the USA in the past decades. I have my own analysis of why this is happening. I agree with Prof. Noam Chomsky that today media in the developed world closely resembles an oligopoly or even a cabal owned by a few well-connected firms. Although a paper by Mullainathan and Shleifer "The Market for News" at AER (2005), suggests the news media is driven primarily by the slant of its customers, and not producers, however, there also exists evidence how media can impact people's perceptions (see Chiang, Chun-Fang, and Brian Knight. "Media bias and influence: Evidence from newspaper endorsements." The Review of Economic Studies 78.3 (2011): 795-820.). A paper by Maja Adena et al. (see Adena, Maja, et al. "Radio and the rise of Nazis in pre-war Germany." Available at SSRN 2242446 (2013).) showed the impact of media on the rise of Nazis in Germany which provide us a chilling reminder of the power media can wield in impacting our perceptions (remember Mein Kampf?). There are sections of media that constantly attempt to 'entertain' us, or rather distract us, and attempt to mold our perceptions. The 'talking points' on Iraq War where the Bush administration had a preplanned approach on how to influence public perception in support of the war is a good and a relatively recent reminder of that. So is the media campaign to present climate change as a 'green agenda.' It isn't too outlandish to believe that a similar PR exercise is underway to alter public perceptions about inequality that how fat paychecks (even in a recession) to few is 'good' for all or at least completely normal. Such an attempt to distract public opinion, and make them feel restive but silent, has a direct impact on people's ability to come together and take a stand. Thus the elite section of society believes the general public would soon get over their anger and settle for the status quo.
However, there are new trends, the trend of social media, which is disrupting the current media oligopoly. Just recently Disney announced the acquisition of a major YouTube based production company, signaling the rising importance of internet media in the industry. As the media industry disrupts so will the zeitgeist, which leads us to an unknown territory. There is a reason to believe that as new media takes center stage, it will directly improve social capital in democracies, and spurt new civic engagement and make democracy more participative. However social capital can go the other way if in case people are unable to build cross-constituency social capital in time and amidst a zeitgeist of fear they barter freedom for security or violence. In such a setting such new media can promote radical ideas that take society towards the far left or right, directly threatening the democratic ideals of western nations. One should remember that the rise of Hitler too happened in desperate times right after the great depression of 1929-30 and was helped by the negative social capital of homogenous groups. We have also seen the rise of radical right parties in the UK in recent times. Similar is the rise of anarchist and communist movements which have become more vocal and active in the past few years which distrusts the electoral process. There is an increasing antipathy of people towards the Westminster or White House which are considered not edifices of democracy anymore but rather mouthpieces of the City and the Wall Street.
If the first scenario of positive, participatory democracy plays out, there will be redistribution, the public will benefit, and the size of the rich will be cut down and constrained. If the second scenario of fear and retribution plays out, while the public may be ecstatic at the beginning, however soon hysteria will pave the way for oppression. New power cabals will get created, and most certainly the old will be dismantled. The status quo is unsustainable in a long run because it has been here for a long time and the zeitgeist demands change, and it is important that the existing power elite wakes up to this reality. While change is inevitable, the direction is not, but the greater the resistance from the elite to regulate itself, the sharper will be the response from the public. So, it is only prudent that the elite understands this, and as a precaution repositions itself, by being open to redistribution through higher taxes. It must take the lead from figures like Warren Buffet and Bill Gates to champion fair redistribution, and not act as gatekeepers of wealth. Leaders like Obama or Cameroon have no room for future error because they need to push an agenda which does not put the liberal democratic ideals of their nations under threat. They need to reclaim their nations from plutocracy and save their nation from the possible shift towards something worse.
Leaders need to give their country back to their people.
Personal blog. Views expressed are my own, expressed in personal capacity.