The notion of a populist outburst raises an archaic vision of soot-covered industrial workers waving placards. Yet populism is far from dead, and represents a force that could shape our political future in unpredictable ways.
People have reasons to be mad, from declining real incomes to mythic levels of greed and excess among the financial elite. Confidence in political and economic institutions remains at low levels, as does belief in the future.
The critical issue facing the new administration is finding useful ways to channel this disenchantment. We know popular anger can also be channeled in unproductive ways. It can serve to further a narrow political agenda—for example, Karl Rove's cynical exploitation of the "culture wars"—or stir up a witch hunt against both real and perceived "threats," as occurred during the McCarthy era. If this were Russia, there would be show trials and executions. We do not and should not do that—but we can still use populist anger to reshape our nation and make it stronger.
In this respect, the Obama administration, criticized justi- fiably as too radical on some issues, has been far too timid. It has squandered much of the stimulus effort on maintaining fundamentally corrupt, even sociopathic, institutions like AIG or Citigroup. By taking direction from establishmentarians like Treasury Secretary Timothy Geithner, one of the original architects of the Bush financial bailouts, the current administration has seemed as complicit in condoning and even rewarding Wall Street's transgressions as the last one.
Populist rage creates the political support for taking far bolder steps against Wall Street. A good first step would be to allow the TARP-backed giant banks to come under some sort of federal control, or bankruptcy process, effectively wiping out the holdings of the financial malefactors and decimating any hopes for future bonuses. The public could then sell the remaining assets to the many well-run community and regional banks that invest in local businesses as opposed to the arcane paper favored by the Masters of the Universe.
Radical financial reforms represent only part of the opportunity. China is using its stimulus to increase its competitiveness globally. So far, the Obama administration's economic strategy, if it has one, has been selling the public on the chimera that highly subsidized "green jobs" and good intentions will save the economy. It has also rewarded what my old teacher Michael Harrington called "the social-industrial complex," the massively growing education, health and social-service bureaucracy. President Obama needs to spend less time in photo ops at "green" factories and figure out how to drive the transformation of whole industries, like autos, steel, electronics and aerospace.
In this sense, of course, the New Deal—particularly the Works Progress Administration and the Civilian Conservation Corps—provides some models. These programs used the unemployed to create new dams, electrical-transmission systems and bridges that boosted the nation's productive power. Critically, such a program would target blue-collar workers—mostly male and heavily minority—hardest hit in the recession. As conservatives rightly note, the New Deal construction projects did not end the Depression, but they did give people purpose and skills as well as hope, while leaving us with a remarkable legacy of productive structures that inspire us with their affirmation of our national destiny.
Sadly, the political operatives running the White House today may prefer to use the popular mood primarily to service their key political constituencies and boost their poll ratings. If they do so, they will have squandered a unique opportunity to implement changes that would benefit both the country and the middle class for decades to come. Public outrage is a terrible thing to waste.