Watch carefully the Arab Spring. It may soon be our turn.

The grassroots anti-government protests in "rich" European nations have begun. That upheaval may spread to the U.S.

These disruptions will not be different in kind. Neither nationalism nor religion is back of the Arab Spring. The protest movement that so far has toppled governments in Tunisia, Egypt (the most populous country in the region) and has Gaddafi under seige have been driven entirely by economics - chronic high unemployment and soaring living costs, notably for food - and pent-up resentment at the extreme comfort of a tiny affluent ruling class. I'm not sure if you ran that description of conditions past a native of Wheeling, West Virginia you'd get an argument about the similarites between the economic adversity in Cairo and Appalachia. Or South Central LA and East St. Louis.   

 
 
Anti-austerity protests in Madrid (top) and Syntagma Square, Athens. (AFP, Reuters)

Rejection of the status quo among rich nations traces back to Iceland in the past two years, where the general population vociferously opposed bailing out the country's feckless banks, and also balked at making whole British depositors in the failed Icelandic lenders. Who could blame them? The failed banks' lossses amounted to 1,000% of the country's GDP.

You would not want to be a Greek parliamentarian today, Athens having just plaintively announced it needs a second huge bailout - roughly equal to the first one, last year - of 111 billion euros. So that's more than 200 billion euros to bail out one of the eurozone's smallest economies. That amount is more than one-fifth the total 1.1. trillion euros the EU and IMF set aside for eurozone bailout candidates.

The harsh austerity measures that accompanied that first Greek bailout triggered the same kind of populist street rioting we've seen this year in Tunis, Cairo and Alexandria, Tripoli, the de facto Saudi protectorate of Bahrain, and Damascus as only the most promient of Syrian cities beset by social unpheaval.

Now multiply by five. Greece and Ireland have eaten into the bailout fund, and negotiations on a Portuguese bailout have long been underway. Cassandras fret that Spain may be next - and Spain is vastly larger than the bailout recipients preceding it. I shouldn't tag the fretful "Cassandras" because what worries them is very real: Spain experienced the very same disastrous housing bubble as the U.S.

So, of course, did Britain, which is imposing austerity measures more severe than anything since the Second World War. Foreign Policy describes these nations, fittingly I think, "the undeveloping world" and describes the contagion effect that fiscal woes and resulting political upheaval in one country are having on their neighbors:

[Among the Greek public, there is] a general lack of confidence in the government's ability to handle the crisis. In a recent poll, 77 percent of Greek respondents said they did not trust the prime minister to solve the problem; 80 percent said they did not trust the finance minister. Massive protests have at times turned violent. In one incident, several people were killed in clashes with police, during which protesters set fire to a bank in Athens. In Portugal, Prime Minister Jose Socrates resigned in the midst of the crisis there.

Yet what is perhaps most alarming about the eurozone crises is that they have spread like wildfire, a contagion that also shows up in the Failed States Index. Spain, for example, which has not yet received a bailout, shows serious signals of decline. Its indicators for state legitimacy -- that is, the degree to which the population views the government as acting in its interest -- and economic performance have deteriorated since 2006, by 0.5 and 1.1 points, respectively. Unemployment has soared to 20 percent, and approval ratings of Prime Minister José Luis Rodríguez Zapatero have plummeted.

The weekend brought out about 100,000 protesters against unemployment and social-service cuts in Madrid and other Spanish cities. And that's ahead of any Spanish bailout and accompanying bailout measures. Recall that the Arab Spring began with just one Tunisian dissident setting himself ablaze earlier this year.

Be assured that as these austerity campaigns sweep the Continent and Britain and Ireland, there will be social upheaval and topping of governments. The only question is whether the underlying issue of decades-long income inequality will be transformed from a rallying cry to a sustainable movement that destroys the underpinnings of the political establishment.

This is a worry for America, where similar austerity will soon kick in. The austerity measures - the cutbacks - will be comparatively mild, since the U.S. reactionary forces lack the will to go as far as David Cameron and the besieged PM of Greece. They will take the form of stalled efforts to begin closing the yawning gap between rich and poor, a crisis Candidate Obama identified and pledged himself to remedy as early as 2007. And that would begin with a second stimulus package that has zero chance of passage in the now-GOP-controlled Congress, even though every credible economist says further massive stimulus is required to jump-start consumer demand at a time when 55 million Americans face foreclosure on their homes or are underwater on their mortgages.

The context, of course, is the flat-lining of U.S. middle-class incomes over the past three decades, while average CEO pay has leapt. And the fiscally ruinous Bush tax cuts that make the new austerity necessary were skewed almost entirely to those CEOs, to the top 1% of American income earners. What exactly is the contribution to U.S. society of these folks, compared with that of the legions of beneficiaries of the post-war G.I. Bill? What do the Walton heirs do for their $84 billion in net worth, apart from being spared each year from billions of dollars in foregone tax revenues? (No one named "Walton" has run Wal-Mart since the death of founder Sam Walton.) At least the Koch brothers, worth a combined $40 billion or so, run a diversified industrial empire and do yeomen service financing right-wing causes that have as common purpose shrinking government - especially an IRS that taxes Koch Industries and imposes "death taxes" (GOPspeak for estate taxes) on the likes of David and Charles Koch.

America is quite de-sensitized to the crisis of making ends meet by a MSM media with above-average incomes, and a Congress and Senate overstocked with millionaires. Even the president is a millionaire, thanks to his book royalties ($4 million in one year alone). The mayor of New York has a net worth of $18 billion. Is it reasonable to conceive an FDR-style "spreading of the wealth," a rope-line response Candidate Obama gave "Joe the Plumber" as a remedy to that fraud's stated grievances?

Tracy Chapman had a hit with a song warning that someday people left out of the American Dream "will rise up, take their share." This is the current nightmare for European politicians. Remember that the Tea Party movement began as outrage over bailouts of fat-cat bankers on Wall Street, and only later morphed into anger about Obamacare, once the movement was co-opted by the GOP.

From Shay's Rebellion in 1786 to New York industrial riots during World War II to the sitdown strikes in Detroit to the California tax revolt in 1978 led by Howard Jarvis, Americans haven't been shy about taking matters into their own hands. I would describe socio-economic conditions in America today as a powder keg. Not since the Gilded Age has so much national wealth been concentrated in the hands of so few. That imbalance is untenable. That's not an observation on morality. It is a fear, well-ground I think, that Americans will rise up in a series of violent upheavals between now and decade's end. The vast majority left out of the American Dream, and an MSM that rubs the wealth of the richies in their faces every day, a tipping point will come.

Dispatched to northern Massachusetts to assay the causes of Daniel Shay's rebellion, Henry Knox, a confident of George Washington, summed up the insurrection as class warfare. "[The rebels] feel at once their own poverty, compared with the opulent." Washington himself adduced that "Commotions of this sort, like snowballs, gather strength as they roll, if there is no opposition in the way to divide and crumble them." 

Thus Washington's preference for a stronger central government than many of his co-Founding Fathers wished was realized with the adoption of the Constitution in 1787. A stronger central authority than that originally contemplated by many of the state delegations seemed necessary in the wake of Shay's Rebellion.

One would not today look to Washington to redress such grievances, being so obviously en thrall to special interests. A revolt is coming, and a latter-day Washington would warn of its unpredictable consequences given the lack of a credible authority to crumble the "snowball."  

 

Comments

[Darwin O'Connor]

I'd say confiscate past earning from those who benefited from the whole bubble, but the amount would be small compared to the damage they did. When people risk billions to get a million dollar bonus, clawing back the bonus is insignificant.

Even if the bonus was only ten thousand and they knew it could be clawed back, I think they would still risk billions for it. That's just human nature. I just goes to show how flawed capitalism is.