The Virtues of Public Anger and the Need for More

With lightning speed and lockstep unanimity, opinion-making elites
jointly embraced and are now delivering the same message about the
public rage triggered this week by the AIG bonus scandal: This scandal is insignificant. It's just a distraction. And, most important of all, public anger is unhelpful and must be contained or, failing that, ignored.

This
anti-anger consensus among our political elites is exactly wrong. The
public rage we're finally seeing is long, long overdue, and appears to
be the only force with both the ability and will to impose meaningful
checks on continued kleptocratic pillaging and deep-seated corruption
in virtually every branch of our establishment institutions. The worst
possible thing that could happen now is for this collective rage to
subside and for the public to return to its long-standing state of
blissful ignorance over what the establishment is actually doing.

It
makes perfect sense that those who are satisfied with the prevailing
order -- because it rewards them in numerous ways -- are desperate to
pacify public fury. Thus we find unanimous decrees that public calm (i.e.,
quiet) be restored. It's a universal dynamic that elites want to keep
the masses in a state of silent, disengaged submission, all the better
if the masses stay convinced that the elites have their best interests
at heart and their welfare is therefore advanced by allowing elites --
the Experts -- to work in peace on our pressing problems, undisrupted
and "undistracted" by the need to placate primitive public sentiments.

While
that framework is arguably reasonable where the establishment class is
competent, honest, and restrained, what we have had -- and have -- is
exactly the opposite: a political class and financial elite that is
rotted to the core and running amok. We've had far too little public rage
given the magnitude of this rot, not an excess of rage. What has been
missing more than anything else is this: fear on the part of the
political and financial class of the public which they have been
systematically defrauding and destroying.

* * * * *

These
endless lectures from sober, rational pundits about the relative
quantitative insignificance of the AIG bonuses are condescending straw
men. Nobody thinks that $165 million in bonuses for the people who
destroyed AIG is what has caused the financial crisis. Nobody thinks
that recouping those bonuses or having prevented them in the first
place would solve or even mitigate systemic collapse. The amounts are
miniscule in the context of the broader economic issues. Everyone is
aware of that; nobody needs to have that pointed out. As Armando astutely observed,
the attempt now to dismiss the anger over the AIG bonuses as the
by-product of simple-minded ignorance and/or ideological rigidity
(class warfare! crass populism!) is quite similar to how anti-war
arguments were stigmatized before the attack on Iraq : ignore the screeching pacifists and let the sober Experts make the decisions, for they know best.

The AIG scandal
is significant and has resonated so powerfully because it is a
microscope that enables the public to see what and who
has wreaked the destruction that threatens their security and future
and, most important of all, to realize that these practices haven't
ended and the perpetrators haven't been punished. The opposite is
true: those who caused the crisis continue to exert control over what
happens and continue to have huge amounts of public money transferred
in order to enrich them.

Eliot Spitzer is absolutely right that,
even at AIG, there are far larger scandals than the bonuses, such as
the undiscounted compensation of AIG's counter-parties such as Goldman
Sachs (and just by the way: it is indescribably symbolic that Spitzer
has been punished and disgraced for his acts of consensual adult sex
while the targets of his prescient Wall St. investigations, who
basically destroyed the world economy, remain protected and empowered).
But the bonus scandal is illustrative of why the crisis happened, who
caused it to happen, and the ongoing political dominance of the perpetrators. It is, as Robert Reich put it, "a nightmarish metaphor for the Obama Administration's problems administering the bailout of Wall Street."

The
financial crisis has merely unmasked the corruption and rot in our
establishment institutions that are staggering in magnitude and reach.
Just as the Iraq War was not the by-product of wrongdoing by a few
stray bad political and media actors but instead was reflective of our
broken institutions generally, the financial crisis is a fundamental
indictment on the way the country functions and of its ruling class.
What would be unhealthy is if there weren't substantial amounts of public rage in the face of these revelations.

* * * * *

Matt Taibbi's new Rolling Stone article
perfectly summarizes what the AIG scandal reveals about our political
and economic system, and should be read in full. In sum: financial
elites own the Government and both political parties. Their money
drowns Washington and their lobbyists control it. They used that
ownership of Government to abolish decades-old legal and regulatory
protections which previously constrained what they could do. In the
lawless environment which they literally purchased from our political
leaders, they were able to pillage and pilfer and steal without limit.
And even now that everything has come crashing down, they continue to
dictate what the Government's response is, to ensure that they -- the
prime authors of the disaster -- are the prime beneficiaries, at the
public's expense, of the "solutions," solutions which preserve their
ill-gotten gains and heighten even further their power and influence.
Taibbi:

The real question from here is whether
the Obama administration is going to move to bring the financial system
back to a place where sanity is restored and the general public can
have a say in things or whether the new financial bureaucracy will
remain obscure, secretive and hopelessly complex. It might not bode
well that Geithner, Obama's Treasury secretary, is one of the
architects of the Paulson bailouts; as chief of the New York Fed, he
helped orchestrate the Goldman-friendly AIG bailout and the secretive
Maiden Lane facilities used to funnel funds to the dying company.
Neither did it look good when Geithner - himself a protege of notorious
Goldman alum John Thain, the Merrill Lynch chief who paid out billions
in bonuses after the state spent billions bailing out his firm - picked
a former Goldman lobbyist named Mark Patterson to be his top aide.

In fact, most of Geithner's early moves reek strongly of Paulsonism.
He has continually talked about partnering with private investors to
create a so-called "bad bank" that would systemically relieve private
lenders of bad assets - the kind of massive, opaque, quasi-private
bureaucratic nightmare that Paulson specialized in. Geithner even
refloated a Paulson proposal to use TALF, one of the Fed's new
facilities, to essentially lend cheap money to hedge funds to invest in
troubled banks while practically guaranteeing them enormous profits.

God
knows exactly what this does for the taxpayer, but hedge-fund managers
sure love the idea. "This is exactly what the financial system needs,"
said Andrew Feldstein, CEO of Blue Mountain Capital and one of the
Morgan Mafia. Strangely, there aren't many people who don't run hedge
funds who have expressed anything like that kind of enthusiasm for
Geithner's ideas.

As complex as all the finances are, the
politics aren't hard to follow. By creating an urgent crisis that can
only be solved by those fluent in a language too complex for ordinary
people to understand, the Wall Street crowd has turned the vast majority of Americans into non-participants in their own political future.
There is a reason it used to be a crime in the Confederate states to
teach a slave to read: Literacy is power. In the age of the CDS and
CDO, most of us are financial illiterates. By making an already
too-complex economy even more complex, Wall Street has used the crisis
to effect a historic, revolutionary change in our political system - transforming a democracy into a two-tiered state, one with plugged-in financial bureaucrats above and clueless customers below.

The
most galling thing about this financial crisis is that so many Wall
Street types think they actually deserve not only their huge bonuses
and lavish lifestyles but the awesome political power their own
mistakes have left them in possession of. . .

Actually, come
to think of it, why are we even giving taxpayer money to you people?
Why are we not throwing your ass in jail instead?

But before
you even finish saying that, they're rolling their eyes, because You
Don't Get It. These people were never about anything except turning
money into money, in order to get more money; valueswise they're on par
with crack addicts, or obsessive sexual deviants who burgle homes to
steal panties. Yet these are the people in whose hands our entire
political future now rests.

The story of Goldman Sachs -- its tentacles entrenched in every aspect of the Government and the blindingly favorable treatment it therefore continues to receive -- demonstrates, just standing alone, how pervasive the oligarchical decay is.

Atrios has been writing a version of the same key observation virtually every day for weeks
-- that almost every plan to "solve" the financial crisis involves
nothing more than transfers of enormous amounts of public money into
the pockets of the same unchanged system and the same people who caused
the collapse in the first place:

The issue is
that [Geithner] and friends never distinguished between bailing out the
system and bailing out the players. There was a way to do that, and
they didn't do it.

In condemning Geithner's "bank rescue" plan, Paul Krugman notes that
-- yet again -- it enables great benefits for the richest investors,
with the public protecting them from the risk of losses (privatize
gains; socialize losses), and concludes: "The Obama administration is
now completely wedded to the idea that there's nothing fundamentally wrong with the financial system."
When it comes to its primary challenge, the administration elected on
a platform of "change" is, above all else, viciously devoted to
preservation of the status quo. Read John Cole's summary of expert reaction to Geithner's banking plan.

That
is why the AIG scandal, rightfully so, is producing so much public
outrage -- because it demonstrates what the political and economic
system really is, a system which the Government continues to prop up
and embrace. Brian Beutler put it this way:

It's
not that the success of the bailout depends on what happens to these
$160 million, but that these $160 million strongly suggest that some
very rich, and, perhaps, very bad men have leveraged their way into control of the whole bailout process and the government's now following their lead. And their incentives are, to say the least, not in line with the best interests of the vast majority of taxpayers. . . .

It's
simply not the case that Geithner and other high-level economic
officials were so concerned with the bigger picture that they
outsourced the question of compensation to Congress entirely. On
the contrary, they were extremely involved in resolving that very
question. They were opposed to strict compensation limits. . . .

But
clearly they also thought that letting executives take home big fat
piles of government money was either a matter of expedience or a matter
of necessity. And either way it has huge implications for the success
or failure of one of the most expensive and urgent government programs
in the country's history.

The AIG scandal vividly
reveals how corrupt and self-interested are the people who are still
exerting primary control over this process, which is why our
establishment class is so eager to demand that everyone look away. For
months, Americans have been told that they must sacrifice and trust
the Government to engage in extraordinary actions if they want to stave
off another Great Depression, only to watch as hundreds of billions of
dollars fly to the very people who are the prime culprits.
As Jane Hamsher put it: "The 'populist rage' that the pundits find so unseemly is actually the appropriate response."

* * * * *

We
saw this week the benefits which unbridled and intimidating public rage
can produce. The retroactive, confiscatory tax on bonuses imposed by the House
is, to be sure, a crude and troubling (and arguably
unconstitutional) response. But the virtues of that episode easily
exceed its vices: Congress sought to seize those bonuses because, for once,
they were afraid of simmering public fury and responded to it rather
than to the dictates of the corporate and lobbyist class that owns them
and which they serve. Whatever marginal "unfairness" that tax might
produce pales by many, many magnitudes when set aside the decade-long
(and ongoing) pillaging of America's financial security and the future
of its middle class by the financial owners of our political system.

And
that's the point: only this true, intense, and -- yes -- scary public
rage can serve as a check on ongoing pilfering by the narrowed monied
factions who control our Government for their own interests and who
otherwise have no reason to stop. Who else is going to impose those
checks? The bought-and-paid-for, incomparably subservient, impotent
and inept Congress? The establishment-loyal, vapid political press?
An executive branch run by the very people who are most vested in,
dependent on, and loyal to the financial system that produced these
disasters? Only a healthy fear of the populace -- exactly what has
been missing -- can achieve that.

Obviously, mass rage can entail
its own excesses and, and if unchecked, can lead to mob rule, a form of
majoritarian tyranny (as Armando notes,
its isolated, unrepresentative excesses (death threats!) are already
being exaggerated to discredit the underlying anger itself). But we
are far, far, far away from the point where unchecked public sentiment
plays too great of a role in how our political
institutions function. Rather: we're a country that, for the last
decade, acquiesced meekly and quietly as our Government transferred
huge amounts of national wealth to a tiny elite; launched a devastating
war based on purely false pretenses; tortured, spied on us and
literally claimed the right to invalidate law and the Constitution; and
turned itself over to the highest bidders.

The overarching
question is not: why is there so much public rage? The overarching
question is: why has there been so little? A political establishment
that can function without any fear of the citizenry will inevitably
trample on its interests. That is what has been happening more than
anything else. And it is why we need far more public outrage, and fear
of that outrage more deeply implanted in the minds of our political and
financial elites.