Magazine

Year of the Fist


By historical measures, there’s really not all that much to be angry about. Since 1981, the proportion of the developing world living in extreme poverty has fallen from 50 percent to less than 20 percent, according to the United Nations. Infant mortality is down across the board; the number of girls in school is up. Terrorists and tyrants get their comeuppance with toe-tapping regularity. The chances of dying in war have never been lower. In 2011, the 7 billionth person was born into a world that’s richer, healthier, and safer than at any time in history.

None of which kept a sizable portion of the planet from open revolt. The uprisings that rippled from Cairo to California and back again were linked not by a common enemy but by a common emotion. We should have anticipated (though few did) that rage would boil over in the Middle East, a region at once the world’s youngest and its least free. But who envisioned throngs marching down Broadway holding signs that read “Turn Wall Street into Tahrir Square”? What distinguished the anger of the past 12 months was its comprehensiveness, the rate and intensity with which expressions of discontent spread across the planet. The last comparable outburst of people power, in 1989, transformed Europe but stopped at its borders. In 2011, volatility went viral.

The protests highlighted the gap between this era’s advances and the sense, at least in the developed world, that we’re out over the edge of the cliff, legs spinning frantically before a humiliating cartoon fall. In the U.S., the financial crisis that birthed the Great Recession is now the Long Slump. In 2011 the economy grew at over 2 percent and unemployment ticked below 9 percent. The state of Michigan added more jobs than it has in 10 years, thanks to a resurgent automobile industry. Still, just 58.5 percent of the population can say they’re gainfully employed; a decade ago that number was close to 65 percent. As Nobel laureate Joseph Stiglitz noted in Vanity Fair, “The Depression was the last time in American history that unemployment exceeded 8 percent four years after the onset of recession.” Americans might take comfort in the knowledge that Europe—hurtling toward a recession and a possible monetary crack-up—is in even worse shape, except that a collapse of the euro in 2012 would wreak havoc on the U.S. financial system, too.

It was a good year for those in the business of chronicling the decline of the West and the rise of the rest. That Used to Be Us, the title of one of many books in this new subgenre, captured the despairing mood of American elites. (The authors, Thomas L. Friedman and Michael Mandelbaum, borrowed the phrase from Barack Obama himself.) A dysfunctional Congress and the passing of the generation’s great innovator, Steve Jobs, further dimmed the U.S.’s outlook. But even the so-called BRIC countries—fetish objects for those who place growth above all virtues—appeared to be running out of miracles.

India’s failure to contain inflation and graft, and the government’s U-turn on allowing foreign retailers to open stores there, has sown doubts among investors and caused growth to sputter. Expansion in China—responsible for 40 percent of global growth since 2008—is widely expected to drop below 8 percent in 2012, from 9.3 percent in 2011. Weak consumer demand, falling property prices, and the rise of a predatory shadow banking system have stoked concerns of a hard landing. No wonder Beijing reacted nervously to public pressure for more transparent and accountable governance. In the last year, there have been 180,000 “mass incidents” against local and national authorities across China, according to the government-run Research Center for Social Contradictions, suggesting the country might not be as stable as it looks. The West may be on its way to becoming, in Michael Lewis’s words, “the new Third World,” but there isn’t anyone stepping up to inherit the First.

If globalization has leveled the playing field among nations, it’s exacerbating divisions within them. The various protest movements of 2011 had disparate agendas, but their grievance flows from the same source: historically high rates of youth unemployment (25 percent in Egypt, 40 percent in Greece, 18 percent in the U.S.); frustration with cronyism and its byproduct, inequality; and the loss of faith in an established order. “I can’t believe my eyes!” one Bahraini blogger wrote after the January revolution in Tunisia. “An Arab nation woke up and said enough!!” When the people of Egypt, then Bahrain, then Yemen, and then Libya and Syria did the same, the Old Guard attempted either to co-opt or crush the rebellions—with astoundingly little success. Despots like Syria’s Bashar Assad can buy time by resorting to force, but that’s only going to mean a messier, bloodier end.

The world’s major powers will have less influence over the new Middle East than regional actors such as Turkey, Iran, and Qatar. The Western model of democracy may be in store for its own overhaul. In Europe, the debt crisis caused the collapse or electoral defeat of governments in Greece, Italy, and Spain. Germany, the euro zone’s richest and most powerful member, insisted that its more profligate neighbors swallow the medicine of austerity as a condition of Berlin’s assistance. To German eyes, that’s only fair. But the people of Southern Europe blanch at a prescription that augurs years of hard times, imposed by a foreign power and administered not by elected officials but by the technocrats who have replaced them. Whether or not the euro survives in its current form, Europe’s citizens may soon run out of patience with leaders who deliver more pain than hope.

In the U.S., the Occupy Wall Street movement started a national conversation about the concentration of wealth: According to a December Pew Research Center poll, some 77 percent of Americans, including 53 percent of Republicans, say there is “too much power in the hands of a few rich people and large corporations.” The One Percent retorted that its share of total income had fallen from 23 percent to 17 percent since the start of the recession, and found at least some politicians willing to come to its defense. “Americans, and Occupy Wall Street in particular, need to wake up,” Michele Bachmann said in Iowa on Nov. 3, “and stop blaming job creators for the failures created by selfish politicians.”

Maybe the blame lies with both. In 2011 three corporate blowups—the News Corp. (NWS) phone hacking scandal in Britain, the collapse of MF Global in the U.S., and the exposure of accounting fraud at Olympus in Japan—laid bare the rot that persists at the highest levels of public companies. (And those are just the ones we know about.) The inability of governments to effectively supervise the machine of global finance increased the likelihood that a 2008-style meltdown could happen again.

Russia, China, and France will choose new leaders in 2012, though it’s a measure of the U.S.’s pre-eminence that its Presidential campaign will overshadow all. The conventional wisdom is that little of substance gets done in an election year, as the two parties each chart narrow paths to victory. But politicians would be wise not to stall until Nov. 6, 2012. Because if the past year has taught us anything, it’s that anger doesn’t care about kingdoms or calendars.

Ratnesar_190
Ratnesar is deputy editor of Bloomberg Businessweek.

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