The Bitter Politics of Stagnation

Noam Scheiber says a kind of naivete about politics helps explain why many of Barack Obama’s former Wall Street backers have turned on him in a way that’s reminiscent of “a lot of the young liberals who flocked to Obama in 2008 but have since fallen out of love too.”

To me an awful lot of this just comes down to the fact that thanks to the weak recovery, the economic pie is much smaller than where reasonable people expected it was going to be during the high campaigning season of 2008. Steep recessions and sluggish subsequent growth have a really negative impact on the wealth and incomes of a wide range of people. That includes wealthy finance guys and jobless young people and underwater middle class homeowners and everyone. And the natural human instinct when you wind up with less pie than you thought you could reasonably expect is to assume that the people in charge gave your pie to someone else. So Wall Street feels that run-amok populism has impoverished them (relative to expectations) for roughly the same reasons that Obama’s liberal critics feel that his constant succor of the banksters has impoverished them—everyone is poorer than they thought they were going to be. Instead of a politics dominated by divvying up the gains of economic growth we’ve had a politics dominated by allocating massive losses of wealth. Nobody is a sufficiently skilled politician to play that game without alienating lots of people.