The top 1 percent should watch their backs.
That's according to internet billionaire Nick Hanauer — one of the earliest investors in Amazon.com — who argues in Politico that rising income and wealth inequality is likely to become an existential threat to the lives and fortunes of the wealthiest:
If we don't do something to fix the glaring inequities in this economy, the pitchforks are going to come for us. No society can sustain this kind of rising inequality. In fact, there is no example in human history where wealth accumulated like this and the pitchforks didn't eventually come out. [Politico]
He envisages that the U.S. is by no means immune to the kind of revolutionary violence that beset aristocrats in France in the 18th century, and Russia in the early 20th. He proposes what he calls "middle-out" economics, which involves substantially increasing the minimum wage and boosting the spending power of millions of people, to avoid such an outcome.
So, is he right? Is revolution in the air?
The philosopher Aristotle was the first known thinker to argue that inequality can trigger a revolution. That was certainly the case during the French Revolution, when punitive taxes on the lower and middle classes redistributed wealth to France's aristocracy.
And, it's definitely true that the U.S. in the last few years has experienced conditions that have led to severe social and political discontent — a financial crisis, a very deep recession with a slow recovery, mass unemployment, and large numbers of home foreclosures. Trust in just about every American institution has plummeted. And most worrisome of all: Economic inequality in America today is worse than it was in 1774, just before the American Revolution.
So it's no shock to see that this era has already seen two movements — Occupy Wall Street and the Tea Party — that have channeled, to varying degrees of success, the kind of anti-establishment zeal and revolutionary rhetoric that fired the original American revolution.
But here is where Hanauer's warning fails: A sour economic situation alone is by no means enough for a revolution. Research suggests that aside from economic inequality, mass institutional corruption is necessary to galvanize the anger necessary for civil unrest.
And on those measures, the data suggests that the U.S. is far less ripe for a revolution than other countries. According to Transparency International's Corruption Perception Index, the U.S. is one of the least corrupt countries in the world, ranking 17th out of 177. That was better than 2012, when the U.S. ranked 19th.
And while the U.S. is one of the less equal countries in the world — ranking as the 93rd most equal out of 155 nations measured by the World Bank — the evidence shows that other countries are far closer to the danger zone. In terms of inequality and corruption, the countries judged to be most vulnerable to civil unrest in 2014 are Argentina, China, Egypt, India, Indonesia, Malaysia, Russia, South Africa, Thailand, and Venezuela.
I'd add in two more factors considered to have galvanized recent revolutions, including the Arab Spring: mass unemployment particularly youth unemployment, and rising food prices. Having nothing to do, little to lose, and no food to eat can rile up discontent like nothing else.
And, again, by those measures the U.S. appears relatively safe. Unemployment is down to 6.3 percent, a far cry from the 11 percent rate that Egypt had during its 2011 revolution, or the 25 percent levels that have in recent years triggered mass protests and riots in Greece and Spain. Youth unemployment in the U.S. is 13.2 percent, down from 18.4 percent level it peaked at in 2010, and also a far cry from the 25 percent levels experienced in countries that participated in the Arab Spring.
Meanwhile, food inflation is currently running at 2.3 percent, close to the historically normal levels of the 1990s and 2000s.
So while I think Hanauer is right to worry about rising inequality, the U.S. is still a long, long way from a revolution.
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