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The Virtues of Public Anger and the Need for More

With lightning speed and lockstep unanimity, opinion-making elites jointly embraced and are now delivering the same message about the public rage triggered this week by the AIG bonus scandal:   This scandal is insignificant.  It's just a distraction.  And, most important of all, public anger is unhelpful and must be contained or, failing that, ignored.




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These endless lectures from sober, rational pundits about the relative quantitative insignificance of the AIG bonuses are condescending straw men.  Nobody thinks that $165 million in bonuses for the people who destroyed AIG is what has caused the financial crisis.  Nobody thinks that recouping those bonuses or having prevented them in the first place would solve or even mitigate systemic collapse.  The amounts are miniscule in the context of the broader economic issues.  Everyone is aware of that; nobody needs to have that pointed out.  As Armando astutely observed, the attempt now to dismiss the anger over the AIG bonuses as the by-product of simple-minded ignorance and/or ideological rigidity (class warfare!  crass populism!) is quite similar to how anti-war arguments were stigmatized before the attack on Iraq :   ignore the screeching pacifists and let the sober Experts make the decisions, for they know best.

The AIG scandal is significant and has resonated so powerfully because it is a microscope that enables the public to see what and who has wreaked the destruction that threatens their security and future and, most important of all, to realize that these practices haven't ended and the perpetrators haven't been punished.  The opposite is true:  those who caused the crisis continue to exert control over what happens and continue to have huge amounts of public money transferred in order to enrich them.

Eliot Spitzer is absolutely right that, even at AIG, there are far larger scandals than the bonuses, such as the undiscounted compensation of AIG's counter-parties such as Goldman Sachs (and just by the way:  it is indescribably symbolic that Spitzer has been punished and disgraced for his acts of consensual adult sex while the targets of his prescient Wall St. investigations, who basically destroyed the world economy, remain protected and empowered). But the bonus scandal is illustrative of why the crisis happened, who caused it to happen, and the ongoing political dominance of the perpetrators.  It is, as Robert Reich put it, "a nightmarish metaphor for the Obama Administration's problems administering the bailout of Wall Street."

The financial crisis has merely unmasked the corruption and rot in our establishment institutions that are staggering in magnitude and reach.  Just as the Iraq War was not the by-product of wrongdoing by a few stray bad political and media actors but instead was reflective of our broken institutions generally, the financial crisis is a fundamental indictment on the way the country functions and of its ruling class.  What would be unhealthy is if there weren't substantial amounts of public rage in the face of these revelations. 

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Matt Taibbi's new Rolling Stone article perfectly summarizes what the AIG scandal reveals about our political and economic system, and should be read in full.  In sum:  financial elites own the Government and both political parties.  Their money drowns Washington and their lobbyists control it.   They used that ownership of Government to abolish decades-old legal and regulatory protections which previously constrained what they could do.  In the lawless environment which they literally purchased from our political leaders, they were able to pillage and pilfer and steal without limit.  And even now that everything has come crashing down, they continue to dictate what the Government's response is, to ensure that they -- the prime authors of the disaster -- are the prime beneficiaries, at the public's expense, of the "solutions," solutions which preserve their ill-gotten gains and heighten even further their power and influence.  Taibbi:








The story of Goldman Sachs -- its tentacles entrenched in every aspect of the Government and the blindingly favorable treatment it therefore continues to receive -- demonstrates, just standing alone, how pervasive the oligarchical decay is.

Atrios has been writing a version of the same key observation virtually every day for weeks -- that almost every plan to "solve" the financial crisis involves nothing more than transfers of enormous amounts of public money into the pockets of the same unchanged system and the same people who caused the collapse in the first place:

The issue is that [Geithner] and friends never distinguished between bailing out the system and bailing out the players. There was a way to do that, and they didn't do it.

In condemning Geithner's "bank rescue" plan, Paul Krugman notes that -- yet again -- it enables great benefits for the richest investors, with the public protecting them from the risk of losses (privatize gains; socialize losses), and concludes: "The Obama administration is now completely wedded to the idea that there's nothing fundamentally wrong with the financial system."   When it comes to its primary challenge, the administration elected on a platform of "change" is, above all else, viciously devoted to preservation of the status quo.  Read John Cole's summary of expert reaction to Geithner's banking plan.

That is why the AIG scandal, rightfully so, is producing so much public outrage -- because it demonstrates what the political and economic system really is, a system which the Government continues to prop up and embrace.  Brian Beutler put it this way:

It's not that the success of the bailout depends on what happens to these $160 million, but that these $160 million strongly suggest that some very rich, and, perhaps, very bad men have leveraged their way into control of the whole bailout process and the government's now following their lead. And their incentives are, to say the least, not in line with the best interests of the vast majority of taxpayers. . . .

It's simply not the case that Geithner and other high-level economic officials were so concerned with the bigger picture that they outsourced the question of compensation to Congress entirely. On the contrary, they were extremely involved in resolving that very question. They were opposed to strict compensation limits. . . .

But clearly they also thought that letting executives take home big fat piles of government money was either a matter of expedience or a matter of necessity. And either way it has huge implications for the success or failure of one of the most expensive and urgent government programs in the country's history.

The AIG scandal vividly reveals how corrupt and self-interested are the people who are still exerting primary control over this process, which is why our establishment class is so eager to demand that everyone look away.  For months, Americans have been told that they must sacrifice and trust the Government to engage in extraordinary actions if they want to stave off another Great Depression, only to watch as hundreds of billions of dollars fly to the very people who are the prime culprits.  As Jane Hamsher put it:  "The 'populist rage' that the pundits find so unseemly is actually the appropriate response."

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We saw this week the benefits which unbridled and intimidating public rage can produce.  The retroactive, confiscatory tax on bonuses imposed by the House is, to be sure, a crude and troubling (and arguably unconstitutional) response.  But the virtues of that episode easily exceed its vices:   Congress sought to seize those bonuses because, for once, they were afraid of simmering public fury and responded to it rather than to the dictates of the corporate and lobbyist class that owns them and which they serve.  Whatever marginal "unfairness" that tax might produce pales by many, many magnitudes when set aside the decade-long (and ongoing) pillaging of America's financial security and the future of its middle class by the financial owners of our political system.


Obviously, mass rage can entail its own excesses and, and if unchecked, can lead to mob rule, a form of majoritarian tyranny (as Armando notes, its isolated, unrepresentative excesses (death threats!) are already being exaggerated to discredit the underlying anger itself).  But we are far, far, far away from the point where unchecked public sentiment plays too great of a role in how our political institutions function.  Rather:  we're a country that, for the last decade, acquiesced meekly and quietly as our Government transferred huge amounts of national wealth to a tiny elite; launched a devastating war based on purely false pretenses; tortured, spied on us and literally claimed the right to invalidate law and the Constitution; and turned itself over to the highest bidders. 

The overarching question is not:  why is there so much public rage?  The overarching question is:  why has there been so little?  A political establishment that can function without any fear of the citizenry will inevitably trample on its interests.  That is what has been happening more than anything else.  And it is why we need far more public outrage, and fear of that outrage more deeply implanted in the minds of our political and financial elites.

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