In his book, Parliament of Whores, P.J. O’ Rourke has a chapter called "The Whiffle Life"--no matter what we do, we can often save ourselves from the consequences of our actions. In this weekend’s Wall Street Journal, the influential financial writer, Jim Grant has a fine essay arguing that the recent bailouts of Bear Stearn’s creditors (though not Bear itself) and of Fannie Mae and Freddie Mac suggest that that attitude has hit our financial markets. Why? Because the Populists won the 20th century:
Wall Street is off the political agenda in 2008 for reasons we may only guess about. Possibly, in this time of widespread public participation in the stock market, "Wall Street" is really "Main Street." Or maybe Wall Street, its old self, owns both major political parties and their candidates. Or, possibly, the $4.50 gasoline price has absorbed every available erg of populist anger, or -- yet another possibility -- today’s financial failures are too complex to stick in everyman’s craw.
I have another theory, and that is that the old populists actually won. This is their financial system. They had demanded paper money, federally insured bank deposits and a heavy governmental hand in the distribution of credit, and now they have them. The Populist Party might have lost the elections in the hard times of the 1890s. But it won the future.
I dunno. My understanding was that the original populists were for the "working man". The recent bailouts are bailouts for the wealthy. We have free market capitalism in this country, for the poor and middle class. And we have socialism for the rich, who get to privatise their profits and share their losses with the taxpayers.
Or maybe Wall Street, its old self, owns both major political parties and their candidates.
You raise an interesting question: should parties be defined by the policies they support or the people they claim to represent?
This is an absurd claim. The Populists lost, and resoundingly. They sought to minimize the influence of banks and industrial powers, and to shore up the institutions that allowed greater local self-governance. Yes, at times this meant agreeing to more power to the Federal government in order to police those large scale private institutions, but toward the end of shoring up local self-governance (doubtlessly flawed, but maybe not fatally so). For instance, William Jennings Bryan supported the creation of the Fed, but with the stipulation that on its Board of Governors would serve a farmer, a small businessman, a working stiff - and ONE banker. Try to find all of the former on the current Board.
Populism was certainly many things, but we decidedly do not have any of the varieties of populism. Those political moments that are now called "populist" are preposterously and inaccurately described: populism isn't just "voter discontent" or "anger," but a broader program of restricting centralizing State, financial and industrial power and encouraging small scale ownership of land and family businesses. To call the bailout of Bear Stearns a populist moment shows how much misuse that term now receives.
I like Jim Grant generally. His diagnosis of our recent financial shenanigans (starting with the wails from Wall Street for the Fed to lower rates as this financial collapse began, in spite of scads of evidence that this would drive up inflation) was to call the system for what it really is: "Socialism for the Rich." Now THAT'S a good populist sentiment.
For the record, I didn't see Dr. Pat's comment before posting mine. We're obviously more in agreement than not on this.
To the extent that the current credit crisis is the result of federally insured mortgages, easy credit, and paper money, Grant has a point. Wall Street made itself rich by using those federal policies. Socialism for the Rich was built upon a broader foundation. If you read Grant's whole piece, he makes that point.