Meditation on the UK Rioting

Here's a bit from a post by Umair Haque, a London-based consultant, author & economist, and a contributor (columnist and blogger) to Harvard Business Review:

Wracked from end to end by riots and looting, the country is now starting to admit the existence of the hidden faultlines that lie quivering beneath the humdrum everyday blandishments of society as we live it.

Underneath the surface chatter about police brutality and parental responsibility is a deeper fear, and a not unfounded one: that a social contract's been torn up. If you accept the possibility that there are many kinds of violence — not merely physical, but emotional, economic, financial, and social, to name just a few, then perhaps the social contract being offered by today's polities goes something like this: "Some kinds of violence are more punishable than others. Blow up the financial system? Here's a state-subsidized bonus. Steal a video game? You're toast." (To be painfully clear, I don't think any form of violence is justifiable, excusable, or acceptable.)

There are many kinds of looting. There's looting your local superstore — and then there's, as Nobel Laureates Akerlof and Romer discussed in a paper now famous among geeks, there's looting a bank, a financial system, a corporation...or an entire economy. (Their paper might be crudely summed up in the pithy line: "The best way to rob a bank is to own one.") The bedrock of an enlightened social contract is, crudely, that rent-seeking is punished, and creating enduring, lasting, shared wealth is rewarded and that those who seek to profit by extraction are chastened rather than lauded. Today's world of bailouts, golden parachutes, sky-high financial-sector salaries — while middle incomes stagnate — seems to be exactly the reverse. Perhaps, then, our societies have reached a natural turning point of built-in self-limitation; and this self-limitation is causing a perfect storm to converge.

An enlightened social contract is not built on subsidies or "handouts" — whether to the impoverished, or to the pitiable welfare junkies formerly known as "the markets." It's built on a calculus of harm and benefit not just accepted by a plurality of its citizens (versus a tiny Chalet-owning, caviar-gobbling minority at the top) — and also a calculus that can be said to meaningful in the sense that it results in real human prosperity. Without such a bargain to set incentives and coordinate economic activity, even the mightiest, proudest societies will find themselves as bent old men on an endless plateau, searching for a lick of shelter as the typhoon bears down.

For much of the previous economic boom, the bargain on offer in modern Britain could have been abbreviated something like: "Want not merely to get rich — but to get richest, fastest? Then loot, plunder, and enjoy the rewards of conquest." (Consider the eye-popping bonuses for bankers just after the economy went into meltdown.) It was a recipe not for prosperity, but for fragmentation and decline; less a social contract than a sociopathic compact. And though the rioters are guilty of much — and that deserves nothing less than the iron fist of the law — I wonder if, perhaps, the crime inside their crime wasn't perversely, insidiously following the hideous logic of this sociopathic compact through to the fatal end.

Call it the logic of opulence: a paradigm of plenitude centred on more, bigger, faster, cheaper, nastier, now. Its glittering, unattainable fever dream seems to have driven the rioters mad. As one told the Guardian, "Why are you going to miss the opportunity to get free stuff that's worth loads of money?" Indeed: why, given a poisonous compact tattooed into the deeper calculus of everyday culture, not? Hence, as many have pointed out, the mob hasn't exactly been looting bookshops, but the stuff of faux-luxe, mass-designer plenitude: plasma TVs, fast fashion, video games. The vision they seemed to be pursuing, as if their long-denied birthright, is less one of sign-waving activism, fighting against deep-seated social injustice, and more one of raiding a consumerist Disneyland to which they've long been glumly denied a ticket.

Go read the original to get more details and to access the embedded links.

I get no sense that the ultra-rich are even slightly aware of this viewpoint that their greed and their outsize "share" of the social goods is the source of these troubles. I just hope that the shakeout of the 1930s isn't our fate. That required a decade long grinding Depression capped by a half decade of global war to get the death grip of the ultra-rich off the oversize portion of the goodies generated by the economy.