Torches and Pitchforks

This is a syndicated repost published with the permission of Slope of Hope. To view original, click here. Opinions herein are not those of the Wall Street Examiner or Lee Adler. Reposting does not imply endorsement. The information presented is for educational or entertainment purposes and is not individual investment advice.

The subject of wealth inequality has been on my mind ever since I started writing Slope fourteen years ago. I’ve written countless posts on it, and even dedicated a SocialTrade page to it, but a quick summary of my disposition could be boiled down to a few personal points:

• Although I didn’t know it at the time, my childhood was in an era of relative wealth equality in the United States, pretty much the most even playing field in its history;
• Average folks like my Dad made $35,000 per year; the “rich” people in town made $50,000;
• The houses of the average and the rich were pretty much the same, although the rich had Buicks instead of Fords and could afford maids who came to clean the house each day; but that was about it.

My own adulthood, of course, is like a different universe. Normal people live in $7 million houses. Rich people live in $25 million houses and have other residences scattered around the planet. The difference between rich and poor in my youth was a short hop; in my current life, it’s a chasm.

My view is that the increasing disparity between rich and poor has, for decades, largely been non-disruptive to society as a whole, principally because the lower classes have been placated enough, by way of the proverbial bread and circuses, not to cause any waves. Sure, there have been little movements here and there, such as Occupy Wall Street, but they have attracted fringe groups and fizzled out in weeks, if not days.

The aforementioned SocialTrade page is packed with charts like the one below, which shows just how hosed the lower classes are, but again, the rich are pretty much getting away with it with no consequence.

There are rumblings going on, however, which suggest to me that the next time something like 2008 comes along, the outcome is going to be very different. And if there’s one word I want to be emphatic about with this thought, it is this one: context.

What I mean by that is we are living in an era of (ostensibly) great prosperity and extremely low unemployment. These days, whenever I see an able-bodied man on the side of the road with a cardboard sign, I’m not exactly flooded with sympathy, because virtually every retail store and food outlet I go to has signs BEGGING for people to apply for jobs. I have honestly never seen so many companies desperate for human labor.

And so when you see someone like Alexandria Ocasio-Cortez get so much attention (including, recently, her face on the cover of Time magazine) in the context of an environment when there should be so little “want” in the United States, you have to figure something is going on below the surface.

Think about the political atmosphere right now which is railing against the rich. Such things as………

• Elizabeth Warren’s widely-received proposal to have an annual tax on wealth (not income, mind you, but family assets);
• The national rage-fest against the rich and powerful caught up in the college admissions scandal;
• The strong interest in such socialist programs as Universal Basic Income and the Green New Deal

Now imagine………just imagine……….a world in financial turmoil again. Try to think about the public mindset – – already clearly primed to “soak the rich” even in the context of our current prosperity – – in which:

• Hundreds of thousands of jobs are being cut;
• The press runs more and more stories about how many hundreds of billions of dollars in taxes the rich have saved from the 2017 tax cut;
• Public interest in exposing “privilege” and “access” (a supersized version of the admissions scandal) increases;
• The whisper-thin financial cushion of the lower 40% swiftly pushes people to welfare, handouts, and EBT cards

Can you anticipate the backlash against the rich THEN? I suspect it would be absolutely enormous.

The danger, I believe, is that the political soil will be fertile and loamy for the already-planted seeds of socialism to thrive. That’s exactly what the Russian Revolution and Chinese Revolution were about. The wealth of the upper classes was utterly confiscated by the state, and rich people weren’t just subjected to unkind stories in the press – – they were imprisoned, tortured, or killed. Simply stated, the underclasses took decades of rage and resentment and went batshit crazy with it.

So here, and now, in the gentle suburb of Palo Alto, if there can be a headline story about how rich people are already afraid of having the handcuffs slapped on their wrists, just think of what they’ll be worried about when it feels the entire nation has turned against them. It seems to me the pieces are going to be in place for something very ugly to emerge, coupled with a tremendous political swing to the left.