Can Inequality Fuel Revolutions?

So says John Githongo in the New York Times:

Across the world, as growth has spread and accelerated, so has inequality. It is clear that growth is often not enough to guarantee stable, cohesive societies. Rather than create a rising tide that lifts all boats, it can actually increase inequality in a society. And inequality, unlike poverty, is far more easily politicized, ethnicized and militarized, especially in African countries with heterogeneous populations and weak judicial and regulatory institutions. It is also far more combustible because it creates an identifiable enemy — a class that benefits disproportionately because of its unfair access to those who wield power. Mismanaging it can be catastrophic.

Steady economic growth and urbanization, combined with high levels of youth unemployment and conspicuous consumption on the part of the corrupt ruling elite, create a situation in which growth exacerbates political volatility instead of quelling it. China, with its highly centralized system of economic management and ruthlessly efficient security machine, has been able to keep a lid on the contradictions thus far.

But as African countries grow, despite the unevenly shared benefits of that growth, the expectations of the poor and the aspiring middle class will continue to advance — aided by social media — and both groups will only become more angry and predisposed to protest as they perceive the stark inequalities surrounding them.

Not only in Africa are people getting fed up with their leadership catering to the interests of the rich and powerful. I think Alan Beattie sums it up nicely in the FT:

Much of the traditional analysis of inequality focuses on the relationship between those towards the middle and those towards the top of the income range. But in recent years the most dramatic widening, at least in the US, has been between the very top and everyone else. [emphasis mine]

Jeff Sachs just penned a good piece for the Huffington Post in which he discusses how the United States has essentially been hijacked by corporate interests. My friend Clem Landers, who always offers clear-eyed analysis, recently said that we should accept is as fact that corporate and commercial interests reign supreme in the United States – the question is, how do you align the interests of the moneyed elites with the interests of the people?

As I cleared my Google Reader feeds over the weekend, I saw similar ideas about how growing inequality and income disparity – as well as growing perceptions of inequality, fueled by globalization – are potent triggers for unrest. Americans are probably too lulled by a (precarious) sense of wealth to take to the streets and demand real change – for a while, the ability to purchase a home even if you had no money whatsoever to pay for it was part of this collective illusion. The pervasive culture of conspicuous consumption is powerful in the U.S., and helps keep a lid on any unrest – why risk what we have? Frankly, though, in my opinion, Americans – not just the poor, but also the middle class, or “everyone else” as Beattie says – should be outraged by the way in which their elected officials are gambling with their future for political gains.

In a column entitled “Middle-class uprisings pose a global threat“, John Paul Rathbone presents the example of Chile, where 100,000 students took the streets last month to demand changes to the education system. He writes:

Their country [Chile] is often held up as one of the most economically successful, best managed and politically stable countries in the world. It also has a middle class that has continued to grow and prosper. And yet huge middle-class street protests have become a recurring problem for the centre-right government of President Sebastian Piñera.

This is a variant on the argument presented by Githongo in the NYT, where he writes:

A country can experience economic growth and get all the hardware of governance right (education, health, infrastructure, sanitation) while getting all the software wrong (basic freedoms, leadership, mitigating inequalities, addressing the youths’ demands). Eventually the system crashes.

We’re talking about vastly different countries here – Chile, the United States, Tunisia, Malawi – but at the heart of it I think there is a notion that brings it all together: at some point, people will no longer bear to watch their economies grow, the rich get richer, while they are unable to afford an education, housing, basic healthcare. Meanwhile, it seems that, for too long, we’ve been willing to give up the software for the hardware – as faulty as it is. I’m thinking of a place like Rwanda, where Paul Kagame has presided over unprecedented economic growth and human development indicators have climbed (literacy, employment, maternal health) – yet freedom of expression exists only in theory and legitimate opposition is silenced. Globally, inequality is growing while economies are getting bigger. The World Bank estimated that 44 million people were thrown into poverty during the latest cycle of food and commodity price increase. Meanwhile, the rich get richer.

Basic, human aspirations: financial and physical security, a sense of control over their own lives, decent (and representative) governance. We need to challenge the assumption that economic growth = development = poverty reduction. It does not. Not without good leadership. Not without making sure that society’s most vulnerable are taken care of. Not with corrupt and selfish elites. Take a look at a country like Equatorial Guinea. Its GDP per capita is over $10,000, putting it squarely in the “middle income country” category. Yet, the country performs very poorly on the Human Development Index, and has the worst possible rating from Freedom House in terms of freedom and civil liberties. Equatorial Guinea has experienced huge swings in growth, fueled by natural resource exploitation, but the profits have been captured by the country’s corrupt leadership. At what point does the situation become untenable? Recent demonstrations in Malawi, Uganda, Gabon – and, of course, the bravery of people all across the North Africa and the Middle East during the Arab Spring – show that eventually, in an interconnected world, something’s gotta give.

I agree with Githongo that inequality, rather than poverty, is fast becoming the number one challenge in the developing world. I think his argument that the “youth bulge” in Sub-Saharan Africa will be the driving force behind any kind of “revolution” is also applicable elsewhere – in the West, where it looks like the youth of today is on track to be less educated and less wealthy than their parents, and in places like Chile or Brazil or China, where – as Rathbone puts it – people will want not more, but better.

Photo credit: Chili pepper processing factory in rural Peru. Personal collection.