When I read a memo from one of the most influential CEO of financial institutions around the globe Jamie Dimon, I felt a hidden sense of fear that COVID-19 is opening a mess of the previous 2008 financial crisis. Combining the fear of inevitable and crucial economic and political changes. It might be a ‘wake-up call’ not for the economy with more opportunities for everyone but the unescapable change of for decades existed economy growth model. With a condition that the elite of the world wants to keep their influence and current power.
Extreme gaps of income between developed countries and the rest of the world, disproportion of a household income in leading economies and the staggering debt situation is creating an extremely fertile soil for populism which is already showing a tendency to rise in the last decade. The future is looking even more promising for the rise of politicians who will be building on human fears and anger, especially now with an increasing black and white social tension not only in the states but all over the globe.
According to Census Bureau which is tracking income inequality in the USA by calculating Gini index where 0 stands for equal wealth distribution and 1 represents absolute inequality, inequality is recorded at the highest level since the start of records. In 1967 Gini index was 0,397 and in 2018 it reached 0,485. Moreover, the change in poverty is going simply nowhere.
Gini index in the European Union stayed stable during 16 years of tracking at around 0,3 mark. But still big differences remain on the level of separate countries.
We had an unprecedented 13 years period of public borrowing and money printing. And with these extreme efforts more or less we managed just to stand still in one place. Assets and profit mostly increased for rich and wealthy citizens and the rest just managed to keep the same quality of life. While the service of a gargantuan debt actually will be distributed to all tax payers.
An increasing economic turbulence from COVID-19 created real struggles mostly for people with lower incomes. The formula to protect jobs by overwhelmingly protecting businesses isn’t bringing dividends high enough. Here we can agree with Jamie Dimon, that we need new approach for the economy but not of his good heart but trying to avoid worst case scenario primarily for top 5% of the population. New standards of politics and economic might be applied sooner than later as these economic conditions will introduce very easily a blame game which will create an unbearable tension.
More coal will be thrown into the fire of a failing economy for all with a global worming summoned frequent storms and droughts. As once again most pain will be carried by the poorest and governments will be forced to stretch budgets even wider. Can it become the never ending story? Most of us probably doubt in that.
Economic situation alone probably wouldn’t be able to create tectonic fractures in all aspects of the governance of a country such as USA. We shouldn’t forget that this country is still a leading world economy with a high standard of living. However colors are darken with the death of George Floyd. The tragedy which is bringing other crucial part to the shake of old political and economical model – HEART. A rational financial inequality situation united with emotional humanity might create a 12.0 magnitude earthquake.
It’s no surprise that socially orientated politics was gaining some momentum in the United States already for some years. However we see a much bigger solidarity not with overall left sided politicians but with deeper lefties such as Bernie Sanders or Elizabeth Warren. Here might be the story of suppression: the more socialistic view was ignored and demonized the more it will have a tendency to reborn in extreme forms.
Important role in the socialist or any other major political move always had the timing. Probably that’s why Scandinavian nations managed to succeed in that approach. After the Second World War more or less all Europe was exhausted from the conflict in all emotional and material forms, gaps between social classes were minimal. Life seemed like the beginning of a new “tabula rasa” still partly led by the heart. Scandinavians were able to push socially responsible changes not by the anger or in the name of an injustice but with structural steps focusing on each individual and not ignoring the justice feeling. That’s why people are honestly paying higher taxes with higher incomes and don’t try to hide them in all possible ways and in the year of 2020.
However, most of the times changes are forced by quickly deteriorating circumstances and societies are stuck with extreme forms of any possible political form. Our reactions when we are hurt or angry very often are accompanied with blindness to others, who might not feel the same. We are easily glorying our truth as the only possible truth and we can be smoothly led into partial extremism by the others. That’s how socially responsible view can turn into a person’s interests humiliating communism.
Current situation the United States is forming a critical mass which was left behind for a long time. And irresponsible actions from governments for decades are encouraging people to blind themselves with despair, frustration and anger. That could lead to a selection of extremums of a political map very easily. And current ignorance of poor people by rich people have good chance to become of vice versa situation.