Is Inequality a Bigger Threat than the Islamic State?

By David Rothkopf, Foreign Policy

13 November 2014

In the Age of Fear, the sensational always overtakes the important.

One of the hallmarks of the Age of Fear in which we live is that everywhere we turn there are not only new threats, but with the arrival of each one there is also a vast orchestra of technologies available to make it roar and rumble and make us tremble. The threats are so myriad and the cacophony of alarms and ominous analyses so loud that it becomes impossible to discern which threats should really concern us and which are less important. Minor risks rise up on the waves of our other worries until they appear just as big as some threats many times their size.

Recently, we watched as Ebola stormed into our consciousness because of one particularly unfortunate case and fatality in the United States. This is not to minimize the scale of the threat in the few West African countries in which the outbreak is primarily contained — Liberia, Sierra Leone, and Guinea. But in the United States, the threat was minimal, yet the threat amplifiers on the sound system of the country’s national consciousness (talk radio, cable news, social media) were all turned up,This Is Spinal Tap-style, to 11.

The Islamic State (IS) is another recent threat that has rocked our world — a threat so great that one acronym hasn’t been enough to describe it. A mobile, well-resourced, social-media-savvy hybrid terrorist group that is part insurgency and part blitzkrieging desert army, it warrants much of the unease it has triggered. As a modern terrorist group, however, it has been adept at using 21st-century media to put fear in the hearts of observers everywhere, whether by videotaping beheadings, tweeting out victories and taunts, or conducting a massive recruitment operation complete with slick digital magazines and online annual reports to make the group appear dangerous and entrepreneurial at the same time. The Islamic State has sought to be the Apple computing of global terrorism — choosing a black livery instead of a white one — and to a disturbing extent the group achieved its goal. Indeed, the degree to which it moved so quickly to unsettle us and the geopolitics of the region only amplified the edge it held by making us feel ill-prepared and on the defensive (because we were).

Putting the Islamic State Threat in Perspective

But the Islamic State is also an example of a threat that, if not overstated, has been largely misconstrued. It is, after all, only an organization of perhaps 20,000 to 35,000 fighters. It has very limited resources. Its hold on the cities it has claimed is tenuous and to a large degree desperate, depending more on threats than on the active support of the majority of local populations. It is not a major threat to the residents of the United States and certainly not anything like the existential threats Americans faced in the last century. We, however, have applied the transitive property of terrorism to elevate its status: We have come to see the Islamic State as the new al Qaeda, and al Qaeda, despite being a relatively small organization with limited capabilities, had previously been elevated to the role of America’s new Enemy No. 1, occupying a position once held by a real existential threat, the Soviet Union, which had inherited its root-of-all-evil mantle from the Nazis. Therefore, the Islamic State came to prematurely occupy the place of Enemy No. 1, previously held by Osama bin Laden, the USSR, and the Third Reich, along with many of the rights, privileges, and scary evening-news music licks and logos thereto appertaining.

Is the Islamic State a real threat? Yes, of course, a serious one. But it’s not as much of a threat at least for now to Americans and their way of life as it is to American interests and America’s allies in the Middle East and elsewhere. Were the Islamic State to establish a permanent radical state in the Middle East, that could be destabilizing for years. Further, such a state could serve as a petri dish for global mayhem, a place where the other real risk associated with the group — that of its growing army of foreign fighters — could be cultivated, made more dangerous, and released on different corners of the region or the world. Also, as happened with al Qaeda, the Islamic State’s success is already breeding the sincerest form of flattery among the world’s really bad guys — other terrorist cells are rebranding themselves as Islamic State chapters or followers. Just this week, one such group in Egypt proclaimed its ties to Abu Bakr al-Baghdadi’s men and goals, and this too could prove to be deeply destabilizing if it goes unchecked. That’s why the efforts of the United States and its coalition partners are warranted and why it is so important that they are successful.

But there are other threats beyond those that dominate the nightly news or are seemingly permanently plastered on your Facebook wall. The threat of the Islamic State is only a subset of the growing, globally spreading threat of militant extremism. Indeed, that threat is made more complicated for many of America’s allies because today it takes multiple forms — that of the Shiite extremism of the Iranian revolutionary regime and that of the Sunni extremists such as the Islamic State, Hamas, Ansar al-Sharia, al Qaeda in its multiple regional incarnations, al-Nusra Front, the Muslim Brotherhood, Boko Haram, etc. Indeed, a greater danger lies with thinking we “solve” our problems by turning back the Islamic State when doing so may actually empower some of these other groups and won’t deal with the massive, long-term problem that the spread of such extremism represents.

The Geopolitical Risks on the Horizon

Other threats that are real and easy to underestimate given the challenges to our bandwidth range from the deterioration within Pakistani politics that has made that nuclear power more susceptible to extremist takeover than ever before (it’s not imminent, just closer than it has been), to the potential risks associated with how falling oil prices might squeeze a Russian economy that is already in bad shape, thus potentially provoking threatening behavior from that country’s already aggressive regime. On top of which there’s also the upheaval that might be associated with regime change that could go awry in Saudi Arabia as well as the potential for military conflict were Iran to prove yet again to be unreliable with regard to its promises to stop its nuclear weapons program.

But unsettling as these risks are, there is another tier of threats that are even more pernicious because they come with few headlines, approaching gradually, silently, without benefit of television logos, Internet memes, or shouting matches among worried TV pundits. These include those associated with gradually rising powers such as China that gain influence and then exert influence subtly. Or those associated with climate change and the potentially huge upheavals that shifting weather patterns may cause in coastal societies and to global food supplies, water resources, and other vital underpinnings of life on the planet. Or those associated with another global economic crunch or the growing risk of cyberconflicts, the consequences of which we barely understand and are ill-prepared to grapple with. In each case, these threats are simmeringlike that proverbial frog sitting in a pot of increasingly hot water. They may reach a boiling point before we know it and can jump out to save ourselves.

But Closer to Home, the Trends Are Even More Unsettling

But beyond these international risks, there are risks closer to home for Americans, profound threats that are plain to see and, to my mind, are ignored to a remarkable, almost unfathomable degree. These are problems that already impact the lives of hundreds of millions in a deeply negative and life-changing way. Yet few herald them, and those who do essentially do little more than wave their hands about them. They write op-eds. They lament. And their words fall on deaf ears because it is so clearly not in the interest of any of those in power to hear them.

These are urgent challenges that do not involve armies or terrorists but touch every one on either side of Main Street. Indeed, whatever we may say right now based on today’s headlines, it is these issues that will be absolutely central to the 2016 U.S. presidential race. They are the sticking points of the new American economy, the disturbing realities that have made the recent economic recovery unlike any other. Indeed, they are the reasons that a U.S. president who has an immense amount to be proud about in his domestic and international economic agenda — from engineering an overall recovery to health-care reform, from financial-services reform to tapping into an energy revolution, from driving export growth to overseeing a recovery in the housing market — has not been able or willing to tout those very real gains.

They have to do with the fact that despite steady job growth rivaling the gains of the Clinton years, and despite a booming stock market and a rising GDP outstripping those of the world’s other major developed economies, wages are not rising and the quality of the jobs being created is disturbingly low. We are, in fact, seeing America’s first major post- recession recovery that has bypassed its middle class. Ninety percent of the gains have gone to the top 10 percent of the population. Something is broken. Something is badly wrong.

The most grotesque element of this existential threat to the American dream, to America’s sense of itself and to its fundamental social cohesion, is growing inequality. In fact, it is inequality at historic levels. As reported in the most recent issue of the Economist, the top one-tenth of 1 percent of America’s population is about to achieve a level of wealth equivalent to that of the bottom 90 percent. That’s just over 300,000 people with holdings equal to that of some 280 million. Those wealthy few will control 22 percent of the wealth. The bottom 90 percent, everybody essentially, will also have 22 percent. This in turn means that the top 10 percent of the U.S. population will control 78 percent of America’s wealth. Almost eight out of every 10 dollars of net worth.

This is not a uniquely American problem. The World Economic Forum, having conducted a survey of almost 2,000 global leaders, reports that they view rising inequality as the most threatening trend facing the globe in 2015. In all 44 countries polled by the Pew Research Center, majorities believe that inequality is a major problem in their countries, and in most of those countries (28 of them), they consider it a very big concern. The global numbers are pretty gut-wrenching too: Just 0.7 percent of the population controls 41 percent of the wealth. Roughly 70 percent have just 3 percent of the wealth.

But the American case is special no matter how you slice it. It is because, for example, wage disparities between average workers and CEOs are greater in the United States than in any other place in the world — by a lot, more than five times than in the next-worse nation (Venezuela). While U.S. workers, according to a recent article in the Harvard Business Review that analyzes a new study appearing in Perspectives on Psychological Science, think the difference between average wages and those of the boss should be about seven times, in fact it is 354 times. An analysis by the White House’s Council of Economic Advisers puts the situation in further relief. The top 1 percent earn almost 20 percent of the income (as distinguished from the wealth figures noted above, which refer to assets held), which is much more than in any other developed country and, as the Washington Post reports, “it isn’t even close.”

Why Inequality Will Trump the Islamic State in 2016

Worse, the trends are not encouraging. The deeper we get into the recovery, the worse many of these metrics are becoming. Wages are stuck. Inequality is creeping steadily upward. In fact, the situation has become so bad that the American political party that has in recent years been seen as the champion of Wall Street and fat cats, the Republican Party, scored many of its 2014 election victories by emphasizing the gaps in the flawed economic recovery (which the Republicans, of course, blamed on President Barack Obama.) According to a Slate article by William Saletan, “Republicans won big in the 2014 elections…. But they didn’t do it by running to the right. They did it, to a surprising extent, by embracing ideas and standards that came from the left…. I’m talking about the core of the liberal agenda: economic equality.”

This is a harbinger of things to come. Given this greatest of threats to average Americans — the threat that there is no better future out there for them and their children and that they will toil away producing profits to be enjoyed only by a privileged handful of Americans — we can count on the political debate in the United States for the next two years to turn less and less on the Islamic State or Ebola and more and more on the time bomb placed at the foundations of the U.S. economy — an economic engine of division and destruction that is gradually pulling the country apart and instilling anger and frustration in many of its citizens (especially those in the bottom fifth, those who are not only out of the money but consigned to inescapable lifetimes of struggle and subsistence).

For candidate Hillary Clinton (who will certainly be the most well-versed and competent of any in the field in terms of national security and foreign-policy issues by virtue of her tenure as secretary of state), there will be a special challenge. She will have to offer an economic approach that is seen as something new, focused more on these issues of inclusion, opportunity- and quality job creation, rather than the message of growth and placating Wall Street that marked her husband’s tenure as president. (Note: I served as a senior economic official in Bill Clinton’s administration.) She will need a new team because those associated with her husband and Obama are too closely associated with Wall Street and bailouts and policies favoring the few, even if that is, to a large degree, an unfair oversimplification. Indeed, her biggest challenge over the next year will be convening a group of new faces with new ideas to tackle this greatest of all threats to the United States.

Her competition will likely focus on the same issues — whether that competition consists of centrists like Jeb Bush or relative renegades like Rand Paul. Because at the end of the day, despite the din of media alerts and the flashing lights of government terrorism warnings, the real insecurity that haunts Americans late at night as they contemplate their futures involves not terrorists or rogue nations, but political and financial institutions at home that have been captured by the self-interested few and that are seeking to squeeze the hope out of Americans as no terrorist could do.

Featured image: copyright Mark Wilson/Getty Images