It was, in a way, overdue. Beginning last September, when the financial sector of the economy collapsed and the markets melted down, a resurgence of American populism seemed inevitable. The haves, especially Wall Street types, were being protected (by federal-bailout money), the have-nots less so (nobody seemed interested in replenishing 401[k]s or, more urgently, in subsidizing jobs that were being lost at a rapid rate—unless you were a highflying banker). A Democratic administration was coming to power after a sustained period of Republican rule. Manifestations of the disparity between the very rich and the rest of us became more common: the automakers' flying privately to Washington to ask for taxpayer money was an early symbolic occasion for popular outrage.

And yet the tenor of the time, shaped in large measure by Barack Obama's own coolness, remained calm. The inauguration was a dignified celebration of diversity and democratic change; there was no Jacksonian mob storming the White House, nor was there even much pointed populist rhetoric in the Rooseveltian (both TR and FDR) tradition. The new president's temperament had much to do with this, I think, as did a fairly widespread sense of collective responsibility, at least at first: many people in the broad middle- and upper-middle class sensed that they had been living beyond their means. In this light, the downturn was less a creation of Wall Street than the product of a collusion between the financial establishment and parts of the rest of the country.

You might think of the period between September 2008 and March 2009, then, as a kind of economic phony war, the term historians use to describe the months that elapsed between Hitler's invasion of Poland in September 1939 to the broader outbreak of hostilities in late April and early May of 1940. In this analogy, the AIG bonuses that were revealed last week are rather like the battle for France—the point after which nothing would be the same.

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As we argue in this week's cover, the problem with populist rage—defined as the discernible public feeling that the few are unjustly profiting at the expense of the many—is that while it is cathartic, it can lead to bad decisions that may make the situation against which one is raging even worse. This does not have to happen: as Robert J. Samuelson points out, "Great reform waves often proceed from scandals and hard times." The Great Depression gave us deposit insurance; mortgage guarantees helped build the great post–World War II middle class. The test of the moment is whether our political and commercial leadership can restore credibility to the institutions of capitalism (which are the creators of wealth and a source of democratic strength) that have come to grief. The risk of the moment is that our understandable anger over the paying of publicly funded bonuses to people who self-evidently failed to perform well—if they had, they would not need public funds—could, as Samuelson writes, justify "punitive taxes, widespread corporate mandates, selective subsidies and more meddling in companies' everyday operations."

In many ways, as Rick Perlstein writes, populism is "the governing folk wisdom of a nation without an inherited aristocracy, distrustful of privilege that is not 'earned.' It is our American common sense." True—so long as the pitchforks and the torches help us reach common-sense solutions. Anger by itself can only take us so far.

© 2009