Occupy Wall Street Is the Tip of the Iceberg

But for the housing bubble that temporarily camouflaged our "winner take all" economy, the resentments that produced Occupy Wall Street might have themselves bubbled to the surface many years earlier. Published back in 1998, my book, The Future in Plain Sight, contained a chapter on the wage gap, which argued that the ever-widening gulf between executive pay and the incomes of the rest of the workforce was one of the intractable problems that portended future instability. Every metric I cited in that chapter as evidence that the wage gap had reached crisis proportions has only widened in the intervening years.

Here's a snippet of what I wrote back then:

...The growing pool of modem-accessible workers may act as a cap on wages and job availability in the U.S. for years to come. A substantial percentage of America's white-collar workers face an indefinite future of limited prospects.

This means that a large pool of voters will have more reason to remain angry and dissatisfied, becoming fertile ground for radical and xenophobic causes. The danger to society comes not so much from extreme events such as the 1995 bombing of the Alfred P. Murrah Federal Building in Oklahoma City... as from even-wilder oscillations in political positions, in which moderates lose influence and the more passionate extremists take control of the political agenda.

This is one reason why the widening gap between the top and the bottom income groups cannot continue to widen indefinitely. The few can maintain their wealth only with the permission of the many. If the middle continues to stagnate in the developed countries while the top prospers, the majority will demand action, and politicians, being politicians, will give it to them...

Well, here we are in 2011, and we may be approaching that point where the wage gap cannot continue to widen. Will these protests continue to swell and force politicians to act? If they do, what will they give the voters?

On the first question, I think that if the protests coalesce around the 99% meme -- the conviction that system is rigged, and that the middle class is being asked to suffer to preserve the privileges of the very rich -- OWS will continue to gain traction. Indeed, it's not inconceivable that this movement might co-opt some of the anger that has supported the Tea Party (which, since its inception, has had the delicate task of asking the middle class to vote against its own interests).

What might politicians toss to the 99%? Easy -- a tax increase on the wealthy (anti-tax posturing notwithstanding). They've done it before, several times in fact. If pressure builds much more, Congress will do it again.

Of course, OWS might peter out as the weather chills, and if the offensive actions of a few protestors continue to dominate the media coverage. Regardless, the genie is out of the bottle: more and more of the middle class are coming to the conclusion that the system is unfair. There is no reason to expect that this anger will dissipate, even if OWS fades, if only because the endless cycle of layoffs, benefit cuts, and pay reductions, will continue to remind the middle class of their economic pain.

The lucky few might well ponder the voting power of the 99%, and consider whether they really want to continue to reap everything on their wish list. There are teasing suggestions that some may be thinking along those lines. Consider OWS's favorite villain, Goldman Sachs. The bank could have reported a profit in the third quarter, but instead showed a loss, mystifying some observers. Is it possible that the clever minds at the financial giant realized that yet another quarter of big profits was not the message they wanted to send, given the merciless economic context -- and the chanting crowds just a few blocks from their headquarters?