Warning to those who will heed

 By a Brit, but this could just as well be about America and the 1% vs. the rest of us:

Wracked from end to end by riots and looting, the country is now starting to admit the existence of the hidden faultlines that lie quivering beneath the humdrum everyday blandishments of society as we live it.

Underneath the surface chatter about police brutality and parental responsibility is a deeper fear, and a not unfounded one: that a social contract's been torn up. If you accept the possibility that there are many kinds of violence — not merely physical, but emotional, economic, financial, and social, to name just a few, then perhaps the social contract being offered by today's polities goes something like this:  "Some kinds of violence are more punishable than others. Blow up the financial system? Here's a state-subsidized bonus. Steal a video game? You're toast." (To be painfully clear, I don't think any form of violence is justifiable, excusable, or acceptable.)

There are many kinds of looting. There's looting your local superstore — and then there's, as Nobel Laureates Akerlof and Romer discussed in a paper now famous among geeks, there's looting a bank, a financial system, a corporation...or an entire economy. (Their paper might be crudely summed up in the pithy line: "The best way to rob a bank is to own one.")  The bedrock of an enlightened social contract is, crudely, that rent-seeking is punished, and creating enduring, lasting, shared wealth is rewarded and that those who seek to profit by extraction are chastened rather than lauded. Today's world of bailouts, golden parachutes, sky-high financial-sector salaries — while middle incomes stagnate — seems to be exactly the reverse.  Perhaps, then, our societies have reached a natural turning point of built-in self-limitation; and this self-limitation is causing a perfect storm to converge.

An enlightened social contract is not built on subsidies or "handouts" — whether to the impoverished, or to the pitiable welfare junkies formerly known as "the markets."  It's built on a calculus of harm and benefit not just accepted by a plurality of its citizens (versus a tiny Chalet-owning, caviar-gobbling minority at the top) — and also a calculus that can be said to meaningful in the sense that it results in real human prosperity.  Without such a bargain to set incentives and coordinate economic activity, even the mightiest, proudest societies will find themselves as bent old men on an endless plateau, searching for a lick of shelter as the typhoon bears down.