The Menace of “Populism"

I notice that the media have started labelling the anger of people at bankers and the existing financial system, as “populism”. This is an interesting manoeuvre. The implication seems to be that the ignorant “populace” is succumbing to visceral and unfounded rage against its masters. According to the Economist magazine, people have been “seized by a spasm of fury” and there is a disturbing “storm of outrage”. Most horrifying of all there is a new political disposition that “tries to return power to ‘the people’” (note the inverted commas around "people"). Is this “just a storm in a teacup?” asks the Economist, hopefully. According to the Financial Times, there is a worrying “McCarthy witch-hunt” against bankers that could “send the country back to the stone age”. One senior banker told the FT that recent taxes aimed at bankers were “the most profoundly anti- American thing I’ve ever seen”. He objects to such anti-free-market measures. But presumably he does not object to the anti-free-market multi-billion dollar bail-outs of all the world’s banks?

“A recent Harris poll” the Economist observes with dismay “shows that 85% of Americans believe that big companies have too much influence on politicians and policymakers”. If only the irrational masses understood what was really going on, seems to be the argument, they would not be surrendering to their base emotions. But even Martin Wolf, chief economic commentator of the Financial Times, says his “blood boils” at some of the bonuses that bankers have recently received. But he hastens to reassure his readers: “I am no populist”. Phew!

In recent decades, the Economist magazine notes with satisfaction, “economic populism was trumped by cultural populism. The Republican Party championed the interests of the ‘silent majority’ against bra-burning feminists, civil-rights activists and effete liberals who were more interested in protecting the rights of criminals than preserving law and order. The Democrats made desultory attempts to revive economic populism in 2000 and in 2004”. But unfortunately this Republican tactic may no longer be working - trembles the oracle of the powerful “Economic populism is returning to the heart of American politics” .

The chief economic correspondent of the London Times says that “the only way to revive the system is to offer vast public subsidies and support to the banks. Who owns the banks and whether bank shareholders or managers benefit unfairly from public subsidies are irrelevant … What politicians must now do is to persuade the public that the time for quibbling about the precise rules of bank rescues is over”. He says that the BBC should play its part in performing “a priceless national service by distracting the British people and the media from throwing tomatoes at pilloried bankers”.

So what exactly is unfounded about this “populist” rage? The rage is, in fact, entirely justified – and its source is precisely the fact that people can clearly see, for once, what is “really going on”. The system is profoundly unjust. The rage is a function of this awareness of injustice. We live in a world where some people get slapped in prison for minor thefts, or taking drugs or whatever, and where other people work hard in order to earn modest wages. Meanwhile, people in charge of financial institutions earn millions, and when they lose billions, they are supported by the rest of us. Many of these charitable donations to bankers have simply been pocketed by them in the form of massive wages, bonuses, and pensions. The credit crunch was one of those moments where the essence of the state capitalist system is revealed for all to see: socialism for the rich, free-markets for everyone else.