May 22, 2010 3:00 am
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
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