"People Are Pissed About the Economy."
AIG's use of taxpayer money to reward "the best and the brightest" who bankrupted the company is just this week's outrage. Next week there will be another theft to learn about, and then another, and another.
People are pissed indeed--rightfully and righteously so. And it's not going to subside over night. We can no longer pretend that all the economic crimes we hear about are separate, unrelated cases of "bad apples." If every other apple is bad, then something is wrong with our tree. I don't think the Obama administration has fully grasped this yet.
Public outrage is swelling against an economic system that has failed. This is playing out the way it always does: The public is looking for something to smash. Something is going to be torn down and stomped to pieces; we just don't know what it will be yet. Over the next few years, the politics that arises victorious from this situation is going to be a populist politics one way or another. If progressives delay, the right wing will provide their own freshly polished faux-populism to steal the next couple of decades--a new What's-The-Matter-With-Kansas judo strategy to take our anger at "the system" and redirect it against one another and against the very social cooperation that provides our best hope. "It's big government's fault! It's the minorities! The immigrants! The atheists! The lazy poor!" ...all over again.
Do we need to replay the last 30 years? We will, if we're not careful.
Instead, the Left needs to offer some honest-to-God progressive populism as an alternative. I think the public is more receptive now to bold new ideas than at any time since the Great Depression.
But we shouldn't underestimate how difficult it will be to break the spell of the Religion of Capital. Even as people lose their homes and watch their futures blow away, the old-as-money arguments of the wealthy class are still so deeply ingrained in us. We know we could build a country where everyone who wants to work can, everyone has access to quality healthcare, and every senior has a pension that affords a decent retirement, but we hesitate because we feel like doing those things would break some holy and exalted law. It's a religion that we've been taught since we were young, and the deepest parts of it we dare not question--that is, until things get so desperate that we're willing to explore the alternatives.
If you're just joining us, welcome to one of those desperate times. Obama still has the political momentum to break the spell and do something big. He can ride this wave of public outrage and direct it toward something constructive. He can begin to tear down the giant pillars of wasteful greed in our economy and begin to build up the things that will improve people's daily lives.
If he doesn't start to do this, and cedes populist energy to the Right, then he will not win re-election. (Other than some random sexy scandal, this is his biggest threat to re-election.) The nastiness of our economy will be hung around his neck--and rightfully so. He may not have created it, but if he is seen as enabling it, then it becomes his own.
Right now, there are some hopeful signs but the Obama administration is not yet showing the bold leadership we need to bring about a fundamental change in our economy. I think this is partly because the two biggest economic voices in the administration are 90s-style neoliberals: Larry Summers (Obama's chief economic advisor) and Tim Geithner (Treasury Secretary).
Back in February, I predicted that these free-marketeers would either
1) evolve into progressives,
2) be overpowered by progressives in the administration, or
3) lose their jobs.
Larry now looks like he's heading down path #2, if by "progressives in the administration" we mean President Obama himself. Summers went on TV trying to make us believe the government should do nothing about AIG paying lavish bonuses with taxpayer money, before Obama contradicted him the next day, saying the government would move to block the bonuses. Geithner is probably closer to path #3, losing his job. He has the wrong instincts (like he's serving as Treasury Secretary 15 years too late), which bring him down on the wrong side of these bailouts-n'-bonuses issues.
What does all this mean? Obama can either ride the wave of public outrage or he can stand against it and be crushed by it. By jettisoning Summers and Geithner now and replacing them with progressive economists who don't pretend it's still the 1990s, Obama would signal that he will not stand against the rising tide for change. Holding on to these guys will lead Obama to his own "Heckuva job, Brownie" moment and could very well make him the new owner and latest defender of our failed economic system.