Populism was not sparked by the financial crisis

Janan Ganesh: The crash just brought to the surface what was already extant and pumping

US president Donald Trump weaponised a popular suspicion of political elites that long predates Lehman. The root of that suspicion is not all that mysterious. Photograph: Evan Vucci/AP

US president Donald Trump weaponised a popular suspicion of political elites that long predates Lehman. The root of that suspicion is not all that mysterious. Photograph: Evan Vucci/AP

 

News of mass Floridian mortgage defaults clouded 2006. The US entered a technical recession in 2007. Unemployment reached double-digits as late as 2009.

Because a date helps to concentrate the mind, a financial crisis that was experienced as a fragmented chain of events is being commemorated as just one: the fall of Lehman Brothers, 10 years ago next month.

The arbitrariness of the decennial can be excused. The emphasis on the crash as the cause of all that has followed is harder to defend. It has become a convenient Year Zero: the supposed beginning of the political distemper that carried Donald Trump to the White House in 2016. It “lit a match”, Steve Bannon, his former adviser, and usually a taker of the long view, said last month. “And the explosion was Trump.”

If there has been a rupture or inflection point in the postwar history of the republic, it was the Vietnam war

This neat account exaggerates the centrist idyll before the crash and the centrist rout afterwards. Right-wing populists had enjoyed breakthroughs as long ago as the Republican seizure of Congress in 1994. Democrat Barack Obama sauntered to re-election as president a full four years after Lehman.

Hostile to trade

It is telling how seldom Trump invokes 2008. He was hostile to trade before the crash. He thought the US a soft touch before the crash. He saw the political elite as both fools and knaves before the crash. His voters believed these things before the crash.

We are living through the hasty promotion of an important historical event to a totally seminal one. Modern populism was not born in 2008. Like the raising of a vein, the crash just brought to the surface what was already extant and pumping. Trump weaponised a popular suspicion of political elites that long predates Lehman. The root of that suspicion is not all that mysterious.

Level of trust

The most telling chart in American opinion data tracks public trust in national government since the middle of the previous century. Compiled by the Pew Research Center, it shows the people and their rulers united in almost gooey rapport well into the 1960s. Some 77 per cent of Americans trusted the government in 1964, the year before President Lyndon Johnson sent ground forces to Vietnam. The level of trust was down to less than half that a decade later. After Watergate, it fell still lower at the turn of the 1980s and sagged to 18 per cent last year.

Through booms and busts, peacetime and war, sleaze and probity, state expansion and shrinkage, rule by Republican and by Democrat, public trust in government has never recovered to anywhere near the level of the early 1960s.

If there has been a rupture or inflection point in the postwar history of the republic, it was the Vietnam war, with its compound traumas of bloodshed abroad and rancour at home. Next to this, the crash, at least in its impact on public trust, hardly registers. The secular decline has even survived the patriotic spike after 9/11.

For a sense of the speed of the collapse, consider John McCain’s naval career. He enlisted in 1958. By the time he returned from wartime capture in 1973, the public realm had soured unrecognisably (and, it would turn out, unsalvageably). The Republican senator’s death last week deprives America of much: a one-man reason to trust politicians and a connection to a war that explains, far more than the crash, why so few do.

Financial bubble

As the regulator of Wall Street and the setter of interest rates, the US government was complicit in the financial bubble and its ruinous puncture. But as the backstop for banks and the provider of stimulus, it also softened the recession. The government’s record in Vietnam, which spanned technical incompetence and lies about the prospects of victory, was not so nuanced.

Nor does economic pain equal the loss of lives. Thus did a far-off war so poison the domestic space. The streets were aflame with clashes between counterculture and counter-counterculture. The 1970s, the decade of Badlands and The Deer Hunter, was Hollywood’s darkest. These trends came and went but the underlying disillusion with a once-trusted government has remained and intensified.

If recency bias makes us overrate the crash as the begetter of modern politics, we should turn to some older anniversaries. It is 50 years to the week since the Democratic national convention in Chicago. Violence between antiwar protesters and officers of the state seethed outside and sometimes inside the venue, or “fort”, as the writer Norman Mailer called it.

“We will be fighting for 40 years,” he wrote at the end of his coverage, declining to say if he meant the US against the North Vietnamese or Americans against their government. If the second, he underestimated by a decade and counting. – Copyright The Financial Times Limited 2018

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