Robert Reich gave a speech at the Goldman School of Public Policy at UC Berkeley entitiled 'How Unequal Can America Get Before We Snap?'. He also recently commented on problem of declining real wages for most Americans in his blog. He also correctly points out that since 2001 even wages for those with undergraduate degrees have stagnated or declined (I am not counting those with grad school.)

Dr Reich talked about ‘snap back’ versus ‘snap break’ UC Berkeley speech. ‘Snap back’ being some kind of natural self correcting mechanism to the rising economic inequality operating within legal and normal political channels. ‘Snap break’ being something more radical.

I do not see people seeing a decreased value in their paycheck and somehow blaming government - at least not initially. People seem to want to blame themselves for their own failures. This is even more the case when looking at other people who have 'failed' economically.

Conversely people see the causality of success due to the individual who achieves it.

Now if the situation becomes rather more extreme I still do not necessarily see any meaningful snap back for a few reasons.

1. There is a sense that Lyndon B. Johnson's great society failed. This is now coupled with the failure of communism. This culminated in the 1990s where People saw ‘welfare’ as a black mark. The flip side of the coin on this issue is that people ironically do not have a problem with privileging rich interest groups while they are stingy to welfare mothers. Look at farm subsidies for example or the billions given to telecoms companies to build out a high speed internet infrastructure.

2. People will blame easy targets like immigrants, minorities, criminals, a lack of patriotism or a lack of social morals before dealing with a complex economic system.

3. As I said above we love to blame the individual for their own failings.

4. If we do get to 2020 and there is no change we will be faced with the following situation. We will find that all of a sudden we can’t fund Medicare and we have massive structural deficits, there will be millions more uninsured Americans, a majority of new college graduates will find themselves in crushing debt and the majority of the middle class will find themselves in significantly depressed economic circumstances.* Under such strains I am not sure that the populace will be particularly enamored by 'moderate' solutions. Such a scenario will be a platform for demagogues, not for thinking people. I see a snap break. (Of course if we get to 2030 and no such thing has occurred I will be relieved to be proven wrong.) I.e. if it gets bad enough for people to finally notice the problem we will have problems that challenge our political system as a whole.

*The paradox of such a situation is that real GDP per capita in the USA will probably be at least 25% more than what it is currently. Economic growth as a whole will not necessarily be in peril - its benefits will just be allocated to a very few.