Christopher Caldwell argues in the Weekly Standard that neither political party is serious about financial reform. And he wonders why.
Caldwell appears to adopt the explanation offered by Simon Johnson and James Kwak, two men of the left, in their book 13 Bankers. Johnson and Kwak contend that the U.S. has become a kind of oligarchy, characterized by tight links between the business elite and the political elite. The business elite consists of the giants of the financial industry.
Johnson and Kwak argue that the bankers gained control of the levers of power during the Clinton administration. They call it a “historical curiosity” that “this shift happened within a Democratic administration, headed by a president elected largely because of middle-class economic insecurity.”
Here, Caldwell disagrees. Noting that the upper reaches of the investment banking industry are overwhelmingly Democratic, Caldwell argues that “there is nothing ‘curious’ about a president seeking to arm his most reliable supporters with political power.” Indeed, according to Caldwell “the intermarriage of financial and executive branch elites could only have happened in the Clinton years, simply because there is not sufficient Republican manpower in New York’s investment banks to permit it.”
Looking beyond Wall Street, Caldwell again finds that the Democrats are the party of the oligarchy. He shows that, of the 20 zip codes that pour the most money into the political system, all but one give the majority of it to the Democrats. And most of them give overwhelmingly to the Dems. Thus, Caldwell concludes, “the Republicans have been paying a high price in both public opinion and political coherence to defend the prerogatives of a class that despises them.”
Portions of Caldwell’s thesis strike me as questionable. For example, I doubt that President Bush pushed for tax cuts, at the expense of a balanced budget, solely to defend the prerogatives of the rich. More likely, Bush believed, reasonably, that the tax cuts would benefit all Americans by stimulating the economy. Nor did Bush – or just about anyone else – anticipate a massive recession that would throw the budget so far out of kilter.
Even so, I think Caldwell is on to something – more than one thing, actually. And to the extent that he’s right about the Republican party, we can be thankful that the Tea Party movement is in place to pressure it to resist any oligarchic impulses.
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