Our pundits worry that a populist rage is loose in the land—pitchforks everywhere! My first reaction upon hearing that was to dismiss the word "populist" as a distraction, an epithet meant to recall episodes in which mass rage made sound policy deliberation impossible. Think of dispossessed 19th-century farmers letting their righteous rage at bankers tumble easily into free-floating anger at "Jewish bankers" and then simply at Jews; of 1970s white South Boston parents stabbing busing advocates with American flags. My second reaction was to dismiss the word as inaccurate. What makes this rage "populist"? This is ordinary rage, rational and focused. The lead pitchfork bearers, after all, are people like New York Times business columnist Joe Nocera, who wrote that AIG's Financial Practices Group was guilty of a "scam" at which "we should be furious." You might more accurately call that common sense.
Casting my eye over the broader sweep of history, though, I no longer fear populism. The habit of messily dividing the world into "the people" and "the elite"—whether it's left calling out right, or right calling out left—is distinctively, ineluctably American. It's not going away. And there's much more to it than the name-calling of angry political factions. It 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.
The first Americans to call themselves populists, in the 1890s, were the first to base a political program on the explicit principle that wealth properly belongs to those who produce it. They believed farmers to be the truest "producers"; what financial speculators did was not properly "work" at all. We're past that now; those categories no longer make sense in our present deskbound world. But the moral intuition behind separating out "productive" and "unproductive" classes, while often badly abused by demagogues (bad American populists include the Ku Klux Klan and the Weather Underground), is evergreen. It was best summarized in a maxim by, ironically, a Brit, John Maynard Keynes: "Nothing corrupts society more than to disconnect effort and reward."
That has been the operative assumption of all of America's many populisms, left and right, good and bad, for well over a century. Sure, you can borrow something from an American that he believes belongs to him—so long as he doesn't feel dispossessed from the deliberations. You can't just take it. That was what happened when the anger of draft-age Americans overflowed into violence in the Vietnam years: the war they were to be sent to fight had been planned far from public scrutiny, by unaccountable "experts." Populist anger in America is the anger of dispossession.
That's how most Americans are thinking now about the bonuses paid to feckless financial engineers. AIG and its elite supporters will argue that to demand their return would violate a kindred moral principle: robbed of their reward, employees would no longer want to work—even though, according to New York Attorney General Andrew Cuomo, 11 of the employees awarded bonuses already are no longer employed at AIG. The delinking of effort and reward has become all too manifest. That always makes Americans angry. We do not like to reward those who do not produce. Here populists have the better of the moral argument.
Even more, populism has the better of the policy argument. Yes, the meltdown is complex. So will be the decision making. But if it happens only in antiseptic back rooms, government experts negotiating with corporate experts, proud to tune out the public's righteously simplifying indignation, those policies will fail. That's what happens even, or perhaps especially, when the issues are complex. Take away taxpayers' sense of ownership stake in an issue (especially, as with AIG, when taxpayers literally own the company) and their rage will not go away. It festers. Quagmires result. And that's when the "bad" kind of populism—the hateful kind; the violent kind; the demagogic kind—can flourish.