[THS] Economy: The World Teeters on the Brink of a New Age of Rage

[The Harder Stuff in news and commentary]

http://www.informationclearinghouse.info/article25616.htm

The World Teeters on the Brink of a New Age of Rage

By Simon Schama  -  The Financial Times 

June 03. 2010 "FT" -- May 22 2010 -- Far be it for me to make a dicey situation dicier
but you can't smell the sulphur in the air right now and not think we might be on the
threshold of an age of rage. The Spanish unions have postponed a general strike;
the bloody barricades and the red shirts might have been in Bangkok not Berlin; and,
for the moment, the British coalition leaders sit side by side on the front bench like
honeymooners canoodling on the porch; but in Europe and America there is a
distinct possibility of a long hot summer of social umbrage. Historians will tell you
there is often a time-lag between the onset of economic disaster and the
accumulation of social fury. In act one, the shock of a crisis initially triggers fearful
disorientation; the rush for political saviours; instinctive responses of self-protection,
but not the organised mobilisation of outrage. Whether in 1789 or now, an incoming
regime riding the storm gets a fleeting moment to try to contain calamity. If it is seen
to be straining every muscle to put things right it can, for a while, generate
provisional legitimacy.

Act two is trickier. Objectively, economic conditions might be improving, but
perceptions are everything and a breathing space gives room for a dangerously
alienated public to take stock of the brutal interruption of their rising expectations.
What happened to the march of income, the acquisition of property, the truism that
the next generation will live better than the last? The full impact of the overthrow of
these assumptions sinks in and engenders a sense of grievance that 'Someone Else'
must have engineered the common misfortune. The stock epithet the French
revolution gave to the financiers who were blamed for disaster, was "rich egoists".
Our own plutocrats may not be headed for the tumbrils but the fact that financial
catastrophe, with its effect on the "real" economy came about through obscure
transactions designed to do nothing except produce short-term profit aggravates a
sense of social betrayal. At this point, damage-control means pillorying the
perpetrators: bringing them to book and extracting statements of contrition. This is
why the psychological impact of financial regulation is almost as critical as its
institutional prophylactics. Those who lobby against it risk jeopardising their own
long-term interests. Should governments fail to reassert the integrity of public
stewardship, suspicions will emerge that, for all the talk of new beginnings, the perps
and new regime are cut from common cloth. Both risk being shredded by popular ire
or outbid by more dangerous tribunes of indignation.

At the very least, the survival of a crisis demands ensuring that the fiscal pain is
equitably distributed. In the France of 1789, the erstwhile nobility became regular
citizens, ended their exemption from the land tax, made a show of abolishing their
own privileges, turned in jewellery for the public treasury; while the clergy's immense
estates were auctioned for La Nation. It is too much to expect a bonfire of the bling
but in 2010 a pragmatic steward of the nation's economy needs to beware relying
unduly on regressive indirect taxes, especially if levied to impress a bond market with
which regular folk feel little connection. At the very least, any emergency budget
needs to take stock of this raw sense of popular victimisation and deliver a convincing
story about the sharing of burdens. To do otherwise is to guarantee that a bad
situation gets very ugly, very fast.

So we face a tinderbox moment: a test of the strength of democratic institutions in a
time of extreme fiscal stress. On the one hand, we should be glad that the
mobilisation of public energy inelections can channel mass unhappiness into change.
That is what we must believe could yet happen in Britain. Elsewhere the outlook is
more forbidding. In the sinkhole that is the Eurozone, animus is directed at unelected
bodies - the European Central Bank and International Monetary Fund - and is bound
to build on itself. Those on the receiving end of punitive corrections - in public sector
wages or retrenched social institutions - will lash out at their remote masters. Those
in the richer north obliged to subsidise what they take to be the fecklessness of the
Latins, will come to see not just the single currency, but the European project as an
historic error and will pine for the mark or franc. Chauvinist movements will be
reborn, directed at immigrants and Brussels dictats, with more destructive fury than
we have seen since the war.

The same kind of pre-lapsarianromanticism targeted at an elitist federal authority is
raging through the US like a fever. The best way to understand the Tea Party, which
has just scored its first victory with the libertarian Rand Paul defeating the choice of
the official Republican party, is to see it as akin to the Great Awakenings and the
Populist furies of the end of the 19th century. There are calls to abolish the Federal
Reserve or in some cases Social Security, fuelled by the conspiratorial belief that it
was an excess, not a deficit, of government regulation that brought on the financial
meltdown. Claims that Washington has been captured for socialism are preached on
right-wing talk radio as gospel truth. As they did in the 1930s with Father Coughlin,
the radio demonisers are pitch-perfect orchestrators of hatred for listeners in
bewildered economic distress.

Against this tide, facts are feeble weapons. When Senate Republicans succeed in
briefly blocking financial regulation by representing it as an infringement on liberty
not as a measure minimally needed for the security of the commonwealth, you know
the mere truth needs help from the Presidential Communicator-in-Chief. He is back
on the stump, but as with the case for healthcare reform, his efforts are belated and
cramped by misplaced obligations of civility. But if his government is to survive the
November elections with a shred of authority, it will need Barack Obama to be more
than a head tutor. It will need him to be a warrior of the word every bit as combative
as the army of the righteous that believes it has the Constitution on its side, and in its
inchoate thrashings, can yet bring down the governance of the American Republic.

The writer is an FT contributing editor and author of Citizens: A Chronicle of the
French Revolution