Monday, October 03, 2011

The Tea party and Occupy Wall Street

It's hard to have much sympathy for the Occupy Wall Street movement. They were originally organized by socialists (really) and most of the protesters have no idea what their goals are. Some are for an end to war or to inequality. Many of them are against college debt (theirs). The main thing that they have in common is that they are fed up with Wall Street.

Some of their grievances overlap with the Tea Party. Both groups are upset with the billions in bailouts and the tight relationship between President Obama and Wall Street.

After reading the book Confidence Men, I'm tempted to join in the protest. early on the Obama administration adopted two mantras - "Do no harm" and "Be Sweden, not Japan". The second was inspired by a column by Paul Krugman contrasting the ways that Sweden and Japan responded to fiscal emergencies. Sweden emerged quickly while Japan struggled through what is known as the "lost decade".

Unfortunately, being Sweden meant taking actions that would upset Wall Street and that ran into the primary mantra, "Do no harm." Obama's advisers convinced him that the road to prosperity lay in propping up the banks until things resumed their pre-crash status. The fact that the banks were engaging in risky behavior and are resuming the same practices was given a pass. Trying to do any serious reform would undermine the confidence in Wall Street and it would collapse into a new Great Depression.

The title of the book refers to the belief that confidence in Wall Street is paramount.

So Wall Street got multi-billion dollar bailouts and resumed multi-million dollar bonuses while the rest of the country stagnates.

While many in the Occupy Wall Street movement still support Obama, the movement itself could cause him as much trouble as the Tea Party. It is largely comprised of disappointed progressives. They had been silent for the first couple of years of Obama's administration because they expected that the most liberal president in decades would pursue a more progressive agenda.

The last thing that Obama needs now is a challenge from the Left. Many people blame Ted Kennedy for weakening Carter by entering the 1980s primaries. This overlooks the widespread discontent with Carter that allowed Kennedy to capture around a quarter of the primary votes. Even if Kennedy had not run, that discontent would still have been present.

The Tea Party is still going strong on the right and now Obama is being attacked from the left. It is hard to imagine the Wall Street Occupiers voting for a Republican but it is easy to imagine them staying home or voting for a 3rd party candidate. With both groups tapping into general outrage over the bailouts, this would be a line of attack for a Republican challenger to use to take the White House.

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