Rise of Generation Occupy

We're seing the start of a New Progressive Movement in which social media trumps money -- and truth outpaces greed

Published May 1, 2012 5:45PM (EDT)

Jeffrey Sachs     (Wikipedia)
Jeffrey Sachs (Wikipedia)

This article is excerpted from the new collection of essays, "From Cairo to Wall Street," available today from the New Press.

Around the world, young people—students, workers, and the unemployed—are bringing their grievances to the public square. Protests have spread throughout the world, from Tunis to Cairo, Tel Aviv to Santiago de Chile, and Wall Street to Oakland, California. The specific grievances differ across the countries, yet the animating demands are the same: democracy and economic justice.

Many factors underlie the ongoing global upheavals. Protests in North Africa at the start of 2011 were fueled by decades of corrupt and authoritarian rule, increasingly literate and digitally connected societies, and skyrocketing world food prices. To top it off, throughout the Middle East (as well as Sub-Saharan Africa and most of South Asia), rapid population growth is fueling enormous demographic pressures. The protests spread from North Africa worldwide. Everywhere the fundamental concerns have been the same—political representation and the growing gaps between rich and poor—but local circumstances have of course differed.

The demographic challenge stands out in the North African protests. Egypt’s population, for example, more than doubled over the course of Hosni Mubarak’s rule, from 42 million in 1980 to 85 million in 2010. This surge is all the more remarkable given that Egypt is a desert country, with its inhabitants packed along the Nile. With no room to spread out, population densities are rising to the breaking point. Cairo has become a sprawling region of some 20 million people living cheek-by-jowl, with inadequate infrastructure.

Rapid population growth means a bulging youth population. Indeed, half of Egypt’s population is under age twenty-five. Egypt, like dozens of countries around the world, is facing the extreme, and largely unmet, challenge of ensuring productive and gainful employment for its young people.

Employment growth is simply not keeping up with this population surge, at least not in the sense of decent jobs with decent wages. The unemployment rate for young people (i.e., those fifteen to twenty-four years old) in North Africa and the Middle East is 30 percent or more. The frustration of unemployed and under-employed youth is now spilling over into the streets.

Yet the problem of high youth unemployment is certainly not confined to the developing world. In the United States, the overall unemployment rate is around 9 percent, but among eighteen- to twenty-five-year-olds, it is a staggering 19 percent. And this number includes only the young people actually at work or looking for work. Many more have simply become discouraged and dropped out of the labor force entirely: not at school, not at work, and not looking for work. They don’t protest much, but an astounding number end up in prison.

The problem of youth unemployment reflects much larger and deeper problems of inequality of income, education, and power, problems that are common throughout the world. The young people occupying Wall Street and protesting in hundreds of American cities are channeling sentiments felt very widely throughout American society. Their defining message, “We are the 99 percent,” draws attention to the way that the rich at the very top have run away with the prize in recent years, gaining great wealth and great political sway while leaving the rest of society to wallow in wage cuts, unemployment, foreclosures, unaffordable tuition and health bills, and for the unluckiest, outright poverty.

It’s not just the vast wealth at the top that they are questioning, but how that wealth was earned and how it’s being used to twist politics and the law. Around 1980, the forces of globalization began to create a worldwide marketplace connected by finance, production, and technology. With globalization came new opportunities for vast wealth accumulation. Those with higher education and financial capital have generally prospered; those without higher education and financial capital have found themselves facing much tougher job competition with lower-paid workers halfway around the world.

Yet inequality of income has also led to inequality of political power, leading to governments that simply don’t care enough about the working class and poor to make the needed investments on behalf of the broader society. We have a vicious circle instead. The rich get richer and also more powerful politically. They use their political power to cut taxes and to slash government services (like quality education) for the rest of society. Wealth begets power, and power begets even more wealth.

The world’s labor markets are now interconnected. Young people in countries as diverse as Egypt and the United States are in effect competing with young Chinese and Indian people for jobs. China’s low-paid, reasonably productive manufacturing workers and high-quality infrastructure (e.g., roads, power, ports, and communications) have set the standard for competitiveness globally. As a result, low-skilled workers in Egypt, the United States, and other countries must either raise their productivity enough to compete at a decent wage or accept extremely low pay or outright unemployment.

So creating decent jobs at decent wages is at the heart of being internationally competitive. That competitiveness requires equipping young workers with a good education, strong on-the-job training, and supportive infrastructure. While the private sector must create most of the jobs, the public sector must create the underlying conditions for high productivity. That is a tall order. It requires decent government, trying to help the many, not just the few. It requires governments that collect enough tax revenues to be able to afford education, job training, technology, and infrastructure investments.

Only one high-income region has done a reasonably good job of avoiding the wealth–power spiral, and therefore a good job of preparing its youth and its overall economy for tough global competition: Northern Europe, including Germany and Scandinavia (Denmark, Finland, Norway, and Sweden). In these countries, public education is at a high standard and the transition from school to work often involves programs like the apprenticeships for which Germany is especially famous. In other countries, notably including the United States, politics have amplified the surge in wealth of the new financial elite, and political financial elites have used that power to cut their own taxes rather than to invest in the education and skills of the broader society.

In developing countries, too, governments that emphasize excellence in education, public investment in infrastructure, and serious on-the-job training are the ones making the biggest economic and social advances. South Korea is probably the leading success story, with its superb educational attainment and strong employment of young people having taken it from developing-country status to high-income status within one generation. And South Korea has accomplished this feat in China’s intensely competitive immediate neighborhood.

The United States, alas, is a case of massive political failure. American society has everything imaginable: a huge, productive economy, vast natural resources, and a solid technological and educational base. Yet it is squandering these advantages because the rich have lost their sense of responsibility and are far more interested in their next yacht or private plane than in paying the price of civilization through honest and responsible taxation and investment. The result is an American society that is increasingly divided between rich and poor, with shrinking social mobility between the classes.

American children raised in affluence succeed in obtaining an excellent education and have good job prospects after a bachelor’s degree. But, as the rich have successfully pressed for tax cuts and reductions in government spending, children from poor and working-class households are far less likely to receive a high-quality education, and the U.S. government has failed to provide for training or adequate infrastructure. The result is a growing youth unemployment crisis among poor and working-class youth.

Vast inequality of income, combined with the sense of injustice and the loss of democratic accountability of the rich, explains why the protests have exploded not only in economies in crisis, but also in Chile and Israel, two countries doing well in economic growth and employment. Chile and Israel, together with the United States, have among the most unequal economies in the high-income world. As in the United States, a small proportion of households in both Chile and Israel hold an enormous proportion of the wealth.

Protests come to the streets when the normal political channels are blocked. In Tunisia and Egypt, the blockage was the most severe: long-standing authoritarian rulers and their families kept a tight grip on power (with the foreign policy support of the United States, it should be mentioned). In the United States the blockage is vastly more remediable but is insidious nonetheless. Americans elected a president in 2008 who promised change, but since the president and Congress fund their campaigns from Wall Street, Big Oil, and the health insurance industry, the change has been underwhelming. The Occupy movement in the United States exists because the U.S. government responds far more to powerful lobbies and interest groups than to the poor and middle class. Recent studies have shown that members of Congress are also engaged in substantial insider trading of stocks. In other words, they are dealing with corporate lobbies not only to fund their campaigns but also for immediate self-enrichment.

The political power of the rich has also led to an environment of impunity in which the rich feel that they can break the law and get away with it. In the United States, this feeling has been nowhere more evident than on Wall Street itself. The marquee Wall Street companies—Goldman Sachs, Citigroup, JP Morgan, and others—not only gambled recklessly with other people’s money but also crossed the line into financial fraud. These financial houses teamed up with hedge funds to package toxic assets to sell to unwitting investors so that the hedge funds could bet against these toxic assets while the banks took home large fees and bonuses. This kind of behavior contributed to the financial crash that has devastated much of the world economy, yet those responsible for these misdeeds have generally gotten away with it, aside, perhaps, from a mild slap on the wrist. The Occupy movement is therefore also about the return to accountability and a rule of law.

If the worldwide protests have focused on four targets—extreme inequality of wealth and income, the impunity of the rich, the corruption of government, and the collapse of public services—then the future of the protest movement also involves four types of actions. The first is social activism to raise public awareness of the threats to society from the massive inequality of wealth and power. That begun in 2011 thanks to the youth protests around the world. The second is activism to bring key economic sectors under more democratic control. Consumer boycotts, shareholder activism, and student organizers can play a role in mobilizing actions to restore democracy from the hands of unaccountable corporations and the wealthy. The third is an affirmative view of politics in which government once again takes on the challenges of quality education, science, technology, job training, environmental protection, and modern infrastructure.

The fourth is the struggle for political power itself, in which candidates for the poor and middle class will have to win elections over the representatives of the rich and well-connected elites. This may seem like an impossible task. Money speaks with a loud voice in politics. Campaigning typically relies on expensive advertising and large spending. Yet my theory is that in the age of social networking—Facebook, Twitter, YouTube, and more—it will be possible to run effective campaigns on the energies of committed people, without vast sums. In other words, in the new network age, commitment and truth can outpace money and greed.

Young people around the world are setting the globe on a new path. A new generation of leaders is just getting started. The New Progressive Movement has begun.

Copyright © 2012 by Jeffrey D. Sachs

This excerpt originally appeared in "From Cairo to Wall Street: Voices From the Global Spring" © 2012 by Anya Schiffrin and Eamon Kircher-Allen, published by The New Press. Reprinted here with permission.

By Jeffrey D. Sachs

Jeffrey D. Sachs is a world-renowned professor of economics, leader in sustainable development, senior UN advisor, bestselling author, and syndicated columnist whose monthly newspaper columns appear in more than 80 countries. He has twice been named among Time Magazine's 100 most influential world leaders.

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