We live at a point in history where government policies, exacerbated by economic collapse, have created a dangerously wide gulf between the rich and the poor. Unprecedented indebtedness, unemployment and a widespread perception that government only works to protect the powerful, has brought people onto the streets. The most visible manifestation of this is the Occupy movement, where protesters have taken to camping in financial districts around the world to highlight the problems that rampant market deregulation has caused to ordinary people.
I can see three ways this is going to go.
Perhaps, the whole thing will fizzle out. Economic circumstances might improve; the powerful may close ranks and crush the movement using all the resources of law; people might just get disillusioned and give up. Five years from now, it may well be as if it never happened. In this scenario, the extraordinarily wealthy see no change to their earning potential while vast numbers of the impoverished continue to eke out whatever . Investment bankers and the corporate elite may continue to obtain remarkable salaries and privileges, while the less fortunate find their prospects and benefits eroded.
A second scenario is revolution. This happens where the instruments of state security are not strong enough to withstand public anger. History has shown that, where governments refuse to listen to their people, then eventually the whole political system can break down through riots and widespread violence. This is essentially what occurred in North Africa and the wider Middle East over the last year. The problem here is what comes next. Where there is a political vacuum, all sorts of ideological groups may rush in to take control. Not a pretty picture if you are looking for rational solutions and stability.
Then there is the third scenario: governments listen to the protesters, identify the root causes of the problems, and do something to address it. The core concern of the Occupy protests would be resolved by changes in policy: more equitable taxation, a widening of the safety nets, better and more comprehensive regulation, bolstering the representation of voters and lessening the influence of lobby groups. Such a scenario does not mean the end of business, it does not mean the end of innovation and entrepreneurship, it certainly does not mean socialism, but it does allow for people to air their grievances and to feel that they are being listened to. In the long run, it makes for a healthier society. What is needed are governments with enough teeth to implement badly needed reforms in the face of very well funded vested interests.
Ironically, this last option may actually not be such a good thing for our little island. One of the drivers behind the inequality in the US has been the headlong rush by global companies to outsource labour to cheaper parts of the world with more favourable corporate taxation policies. Should the critical point be reached where these protests translate into changes in government policy, this trend may well go into reverse. Large numbers of unemployed people in the US may force companies to source their labour back from within their home country, and there could be aggressive moves to repatriate taxes earned from abroad. Given our dependence on foreign investment in Ireland, this might be a very bitter pill to swallow.
Our politicians need to take close heed of what is happening, particularly with regard to events unfolding in the US. The Occupy movement, or at least what it represents, may well change the nature of global business and foreign affairs in the coming years. A swing to the left may pose challenges to Ireland, so it is something we need to start preparing for now.
Photo: “Occupy Wall Street: Day 14“, Long Island Rose, CC Licensed.