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Could We Have Civil Unrest and Riots in the U.S. as a Result of Extreme Inequality?

Posted: 07/22/11 12:35 PM ET

Washington's Blog has a post on the possibility that: Raging Inequality May Cause Unrest and Violence In America and the Rest of Western World.

This is something that I've been wondering about for quite a while. I've been writing here primarily about the impact of technology on the job market, and I think it is clearly one of the primary reasons for the ever-increasing inequality we've seen over the past few decades. Although there are certainly other important factors, including the demise of private sector unions, globalization and perhaps the entry of millions of women into the workforce.

There is also, of course, a positive feedback loop between the concentration of income and wealth, and the concentration of political influence. Extreme income inequality allows a few wealthy members of society to effectively capture the political process and push through an agenda that is in their favor. In the U.S. this has resulted in dramatically lower marginal tax rates on the wealthy, and also an unsustainably low rate of overall taxation: The U.S. currently collects about 14% of GDP in federal taxes, as compared with a historical average of 18%.

The problem I see going forward is that there is really nothing whatsoever on the horizon to counteract the trend toward increasing inequality. The trend was reversed in the 1930s by direct government intervention. The time when policies of that type might have been implemented seems to be past -- we are now moving aggressively in the opposite direction, and austerity measures seem likely to accelerate the drive toward even more inequality.

While we can have a reasonable debate about which forces have led to the concentration of income we now face, I would argue strongly that technology will be the primary factor going forward. I believe this because of the exponential progress of information technology.

If you get in your car and gradually double your speed, so you are traveling at 5, 10, 20, 40 and finally 80 miles per hour, that would be similar to the way computing power continues to advance. And the point is that when you are going 80 miles an hour you cover far more ground that when you were just starting out.

That's where we find ourselves today: information technology has been progressing for decades and is now reaching the level where advances in areas like artificial intelligence and robotics are likely to unfold far more rapidly than most people expect. This could impact jobs at virtually all levels: from fast food workers to professionals with college degrees.

Corporate managers won't hesitate to deploy these technologies throughout their organizations, and they'll collect huge bonuses as a reward for doing so. The result may well be even more dramatic concentration of income as those who own or control large amounts of capital (CEOs, Wall Street) win big and the vast majority of people who rely on wages or salaries continue to lose out as they face higher unemployment and stagnant wages -- perhaps in the face of significant food and energy inflation.

If inequality continues to increase relentlessly, it seems likely that major social disruptions are inevitable. We see this in Europe and the Middle East already. What people should keep in mind is that -- despite conservative rhetoric about the welfare state -- the U.S. has the weakest social safety net of any advanced country. Once you exhaust your unemployment benefits and your savings, you are in serious trouble if you can't either find a job or get someone to take you in.

The current recession has now been going on for so long that one has to begin to wonder how many families out there are getting close to the brink. At the same time, huge numbers of young people are unemployed and probably see little prospect of that changing anytime soon. That has been one of the primary drivers of unrest in the Middle East.

One argument against the possibility of unrest in the U.S. is that there seems to be no clear organizing mechanism. In the past, private sector unions were heavily involved in organizing people, but their influence is now greatly diminished. In the Middle East, social media has played a key role.

Another issue is that many people seem to be confused or uninformed about what policies are in their own self-interest. A large percentage of the population does not realize (or acknowledge) that it receives substantial benefits from the government. We see Tea Party supporters -- many relying on Social Security and Medicare -- who seem to truly believe that it would be better if the debt ceiling is not raised.

Is it possible or likely that we'll have social unrest in the U.S.? Please leave a comment and let us know what you think.

Martin Ford is the author of The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future (available from Amazon or as a PDF download) and has a blog at econfuture.wordpress.com.