Washington, Wall Street, and Populism

After reading <i>Throw Them All Out: How Politicians and Their Friends Get Rich Off Insider Stock Tips, Land Deals, and Cronyism That Would Send the Rest of Us to Prison</i>, by Peter Schweizer — a book that he calls “the most offensive and disturbing thing I’ve read since sampling the oeuvre of the Marquis de Sade” — Kevin Williamson wrote:

Congress has effectively exempted itself from insider-trading rules, not that the SEC would have the guts to go after a Senator Schumer or a Speaker Pelosi for these exploits. And that — not campaign contributions, not lobbying — is the really stinky petri dish of festering corruption at the nexus of Washington and Wall Street. You want a case for limited government? That’s it. And Wall Street is on the wrong side of the argument, which is one reason free-market conservatives should not romanticize the lords of finance.

That dynamic makes for some interesting politics:  In theory, the force that a representative democracy places in opposition to a limited few big-money interests would be popular sentiment. Will.i.am’s in-kind campaign contribution video from 2008 “We Are the Ones” comes to mind, particularly the pitch from one of the pictured celebrities that “the thing that inspires me most about Barack Obama is that he really is going to be the President of the United States.  He’s not going to be the president of the top 10% or the president of the most powerful corporations or the president of the most powerful lobbyists.  He’s going to be our president; he’s going to speak for us; because we put him there.”

Big-government types (who are especially numerous among Democrats) have been binding up populist votes for decades with entitlements and identity politics.  When the populists are also in cahoots with the moneyed interests, the dynamic shifts, making the electorate less the body whom officials represent and more the leverage that officials use as they negotiate terms with their co-conspirators.  Even something as clear as campaign finance reform can become corrupted:  If the real payoff to politicians comes through investment tips and lucrative second careers among those whom they’ve served, then campaign contributions are, at best, only one source of corrupting revenue.  (And restraining them disproportionately harms non-incumbents.)

This perspective sheds some light on the differences between the two populist movements that have captured the public imagination, of late: Occupy and the Tea Party.  With their emphasis on individual freedom and smaller government, the latter would be a messier group to co-opt into the government-finance scheme.  As Williamson notes:

Wall Street wants an administration and a Congress — and a country — that believes what is good for Wall Street is good for America, whether that is true or isn’t. Wall Street doesn’t want free markets — it wants friends, favors, and fealty.

Just as government wants the economy that serves its own ends.  The critical principle behind both American democracy and capitalism is the same:  spreading out power (through structured democracy) and wealth (through free market competition) creates an environment in which forces oppose each other in every direction because collective interests remain relatively small and intricately interwoven.  The urge to consolidate focuses increasing amounts of power in fewer hands and gives them a destructive gravity.

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