Part 2 of 4

Summary

This scenario describes a spiral of gradual decline, with a weak economy and growing socio-economic chasms feeding and mutually reinforcing each other. This is an America building walls and drifting apart, under the leadership of a populist, isolationist government. A deep recession leads to increased unemployment and stagnating wages. At the same time, technology’s promise — economic and social — goes unfulfilled. Technology adoption rates correspond to socio-economic divides. No longer the great equalizer, technology becomes the great divider. These two forces drive increased social fragmentation, amplified by ideological polarization, residential segregation and weakening economic opportunity.

How We Got There — Key Drivers

Domestic and Global Economy

Between 2016 and 2026, anemic growth in the U.S., fueled by rising unemployment and falling wages, together with stagnation in the eurozone and a substantial slowdown in China produces a global economic downturn. This negative cycle weakens and eventually reverses the post-2008 U.S. recovery as new jobs are of lower quality and security than in the past. The nation falls into a state of economic malaise, not unlike the late 1970s.[2]

While the wealthiest Americans also suffer significant losses in the financial markets, they continue to own the lion’s share of wealth. Over time, the promise of mobility begins to evaporate for the lowest earners, as falling incomes make it nearly impossible to save and accrue assets. Negative wage growth also discourages global opportunity seekers, and immigration falls close to net zero, resulting in a dearth of new and diverse talent to fuel economic growth. The global context exacerbates this malaise as flagging economic conditions and increased insecurity come together in repeating patterns, dragging many leading nations into a bunker mentality. Europe’s major centers­ — Brussels, Frankfurt, London, Paris — continue to serve as home for a growing immigrant underclass that feels neglected amid limited economic opportunity. This fuels periodic waves of homegrown, low-tech terror attacks in Western Europe, and occasionally in the U.S..

This recurring cycle of violence leads to a permanent state of insecurity and anxiety, as people fear for their physical safety and, at the same time, feel economically precarious and vulnerable. U.S. and European societies grow more divided, and fear of perceived “outsiders” feeds simmering social tensions and distrust.

Politicians in leading economies react by pulling inward, undermining commitments to free trade and multilateral cooperation. Other European states follow the UK in leaving the eurozone, and states began to erect “walls” via import and export restrictions on labor, goods, and money. Trade agreements unravel, borders go on lockdown, and all but a few states retreat from global affairs.[3]

State-to-state conflict morphs into cyberattacks intended to create and exploit an economic edge. This further divides the globe, as many governments have built “cyber moats” to insulate their economies from digital interlopers. Yet, this approach restricts global data and information flows, worsening economic weakness.

Technology

Despite global economic lethargy, major technological advances push forward, including: “smart” technology to improve consumer convenience, automation in transport (self-driving cars), enhanced telecommunications and connectivity, augmented reality, improved automation and machine learning tools for myriad industrials sectors, and such medical breakthroughs as automated diagnostics, improved therapeutics, and advances in organ and tissue regeneration.

But, increasingly, these advances are inequitably distributed across society due to cost and to stagnating incomes for middle and lower earners. At every stage, the growing ranks of those at the bottom of the socio-economic ladder have less access to breakthrough technology. As a result of growing automation, these segments of society suffer disproportionately from labor displacement.

In the years leading up to 2026, divides in access to — and adoption of — technology begin radically shaping the divergent experiences of rich and poor. Many poorer citizens lack functional access to the “smart” technology that is transforming life for those who can afford it. And the affordability crisis among lower-income populations allows technology companies to exert a strong influence over content by offering subsidized mobile devices. These devices provide for cheap internet access, but at the cost of privileging limited content offerings controlled by major technology companies.

Access to these devices means acquiescing to pervasive private data collection and identity tracking. Each day, companies create multiple personas and correlate them in massive databases to track, entice, and manipulate individuals. These data increasingly inform everything from credit scores to insurance rates, further dividing experiences and opportunities based on socio-economic status. Everyone is swept into the “nudge” economy, but people at the margins are the most vulnerable. Those providing services — from goods to insurance — move to risk-based pricing, which results in adverse selection, further disadvantaging low-income and vulnerable people in the marketplace.

Impacts on Core Areas of Concern

Communities

The economic malaise has exacted a significant toll on communities. Widening socio-economic divides due to stagnant incomes spur increasing economic segregation in communities, such that different neighborhoods and areas — even in close proximity — now experience vast differences in quality of life. Those who can afford to do so move to gated communities that allow them to live a life fully separate from those less well-off. In relatively poorer communities, violence and crime rise in proportion with growing social isolation and crumbling infrastructure and services.

Demographic shifts exacerbate these divides. As the U.S. moves toward majority-minority composition, community fragmentation and the worst economic effects largely fall along ethnic and racial lines, engendering further animosity and distrust within communities. The critical institutions that once promoted cohesion and stability diminish significantly. Religious affiliation continues to decline, especially among the young, and few civil society organizations have the resources to step in and fill the void left by religious and community associations.

The economic slowdown also strains local finances. The cities hardest hit, where the regional economy actually shrinks, get caught in waves of Detroit- or Puerto Rico-like bankruptcies and restructuring. In the worst-off communities, basic services decline in consistency and quality — garbage sits for days uncollected, and street lights are left off in neighborhoods. Worsening conditions lead to an outflow of citizens who are able to abandon struggling regions for those that are relatively more prosperous.

Government retreats from its role as a basic service provider in these communities, and those who can afford to fill the gap do so. Wealthier enclaves invest in their own infrastructure, including private police forces in affluent areas that are proximate to civil unrest. Major corporations create new versions of “company towns” that offer housing, basic services and community amenities to their employees, but they then become effectively walled off from the broader community.

The decline in economic security for those in middle- and lower-income brackets causes many individuals to lose faith in the ability of public and private institutions to serve people and communities. This spurs new forms of civic engagement. The most frustrated are polarized and loud, making local politics divisive and combative. As communities become further segregated along racial, cultural and economic lines, there are periodic outbursts of significant social unrest.

Those who remain hopeful turn away from traditional institutions, which they do not believe can deliver. Younger people, in particular, create new and vibrant movements — many of them online­ — the connect people across shared beliefs, interests and concerns.

Such virtual communities have a positive effect on civic engagement in some areas. But they also contribute to a decline in public sector institutions: as older workers retire, a new generation does not step in to work in downsized bureaucracies perceived as inflexible, stodgy, and largely irrelevant. This age chasm becomes a source of significant conflict, as generations grow to resent each other and compete for diminishing resources and influence.

Arts

Economic pressures have depleted both household budgets and public coffers alike. Many would-be patrons of the arts, particularly in the middle and working classes, find themselves with less time and financial resources to devote to cultural experiences and annual support so crucial to many arts organizations’ bottom lines.

Similarly, communities find themselves faced with choosing between providing basic services and cultural investments and assets. As state and local budgets are slashed, arts and cultural education fall more and more to the wayside, while major arts and culture institutions are thrown into crisis. Many regional museums, symphonies, and theaters simply shutter. Even brand-name institutions are threatened, forced to reduce services and offerings while raising prices, further excluding all but the affluent.

Those institutions that survive become fully dependent on wealthy patrons, and these patrons in turn exert ever more influence over artistic content. Because so much of society is now excluded from cultural life, programming choices are perceived by most alternately as dated and irrelevant or inscrutable and elitist. Arts excellence is defined by what is perceived as “safe” or interesting to a select set of decision-makers, which often does not include or represent the full diversity of the community.

But bleak societal conditions provide inspiration for a new generation of emergent artists at the fringe. Counter-cultural artistic movements grow and, indeed, thrive during this period. These young artists often lack formal training, but having grown up in the age of image-based platforms like Instagram and Snapchat and widespread access to global musical trends through Spotify, they possess an almost innate aesthetic sensibility. Their often experimental work explores the perceived economic, social, and environmental injustices plaguing a society that has grown apart. With little financial support, it is hard to make a living, but the cultural relevance and legibility of their work enables artists to find niche audiences, both locally and virtually, in these challenging times.

Figures reproduced courtesy of Foundation Center. Grantmakers in the Arts, “Public Funding for the Arts: 2015 Update,” Grantmakers in the Arts Reader, Volume 26, №3 (Fall 2015). Available at: http://www.giarts.org/article/public-funding-arts-2015-update.

Journalism

The global recession is the last straw for many local and regional news organizations. After a wave of closures, only select major national outlets remain. This carnage occurs as audiences continue to fragment across media channels. The “news” becomes the province of a small cadre of vertically integrated, content-aggregating conglomerates that carefully curate information to reach niche audiences at the lowest cost, optimizing revenue.

The business model of these media giants — all of them major internet content platforms — feeds audiences personalized content, which, in an era of deep social divides and ideological polarization, means further politicization and segmentation within smaller and smaller echo chambers, reinforcing narrow views and interests.

Without an economic model that can support traditional newsgathering, reporting deteriorates into a numbing ubiquity of “breaking news” and “soft news” (such as entertainment) over high-quality investigation, storytelling and explanation. These ascendant content aggregators also rely heavily on native advertising (content purchased by advertisers that masquerades as independent news), further muddying distinctions between verifiable facts and opinion.


Informed and Engaged

Our goal is to foster informed and engaged communities, which we believe are essential for a healthy democracy.

Knight Foundation

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Supporting transformational ideas that promote quality journalism, advance technology innovation, engage communities and foster the arts. KF.org

Informed and Engaged

Our goal is to foster informed and engaged communities, which we believe are essential for a healthy democracy.