By James Kwak
As Simon has previously discussed, “populist” has become a smear, epitomized by David Brooks’s frankly offensive attempt to classify populism as an “organization of hatreds” akin to racism and sectarianism. Brooks asserts, without support, that populism amounts to “simply bashing the rich and the powerful,” “class war,” “random attacks on enterprise and capital,” and a “zero-sum mentality” — proving that ideologies are easy to bash when you assume their properties.
“Populism” has been rolled out repeatedly over the last year to marginalize people who criticize Wall Street and the financial oligarchy as angry, know-nothing, Luddite, Trotskyist, ungrateful, envy-filled people who don’t understand the modern world and would return us to a barter economy. A search for “Krugman populist” returns 1.7 million hits. (“‘Simon Johnson’ populist” returns 180,000. ) So I was pleased to read Louis Uchitelle’s New York Times article that begins with this clever introduction:
“Put aside for a moment the populist pressure to regulate banking and trading. Ask the elder statesmen of these industries — giants like George Soros, Nicholas F. Brady, John S. Reed, William H. Donaldson and John C. Bogle — where they stand on regulation, and they will bowl you over with their populism.”
The substance of the article is that these prominent financial industry veterans — a billionaire hedge fund manager, a former Republican treasury secretary (and investment banker before that), a former Citigroup CEO, a former Republican head of the SEC (and investment banker before that), and the founder of one of the largest mutual fund companies — all support financial sector reforms that go at least as far if not beyond those proposed by Paul Volcker (another reform advocate that few columnists dare to call a populist). Brady, for example, is open to the idea of not just banning proprietary trading by government-insured banks, but banning securities trading altogether by such banks. This should come as no surprise — he was saying similar things a year ago.
Of course, one could argue that these distinguished (and very rich) men are not actually “populists” — they are sensible, experienced advocates of reform who seek closer regulation of the financial industry because they want to create a stable financial system that promotes economic growth. Since “populist” has no independent meaning, you can reserve it for the people you don’t like and find another word (“reformer”?) for the people you can’t easily write off.
Whatever. The more hedge fund legends, former senior government officials, and financial sector titans come out against the modern version of Wall Street and in favor of reform, the harder it becomes to equate criticism of Wall Street with “random attacks on enterprise and capital.”