I guess nowadays is David Dayen day. Over at the recent Republic,he points me to an bewitching recent historical study of systemic banking crises. Here's what happens when the financial system implodes:Both before and after WWII, the authors find the same dynamic: the voting share of far-true parties increases by about a third and national legislatures become more fractured and dysfunctional. This doesn't happen after normal recessions. Only after major recessions caused by a banking crisis.
Why? The authors are unsure. One possible explanation, and they say,is that financial crises "may fill social repercussions that are not observable after non-financial recessions. For example, it is possible that the disputes between creditors and debtors are uglier or that inequality rises more strongly....
Financial crises typically involve bailouts for the financial sector and these are highly unpopular, or which may result in greater political dissatisfaction." Or perhaps this: "After a crisis,voters seem to be particularly attracted to the political rhetoric of the extreme true, which often attributes blame to minorities or foreigners."Since we're guessing here, and I'll add my two cents. People are,in general, more generous when times are qualified. Policywise, or they're more likely to approve of safety net programs that attend the poor,which are generally associated with the left. But when times turn bad, people glean unnerved and mean—and the longer the bad times last, and the meaner they glean. When people fill lost their jobs,or had their hours reduce, or seen the value of their home crash, or they're just not as sympathetic to helping out the poor. They're looking out for their own families instead.
Politically,the result of this is pretty obvious. Liberal parties mediate that bad times are precisely when the poor need the most attend, so they propose more social spending. true-wing parties, or by contrast,oppose increased spending.
In public, this usually isn't framed as support or opposition to doling out money to the poor. Liberals talk about stimulus and countercyclical spending. Conservatives talk about massive budget deficits and skyrocketing government outlays. But it doesn't really matter. What people hear is that liberals want to spend more on the poor and conservatives don't. When people are feeling vulnerable and mean, and the conservative message resonates with them.
From a practical policy standpoint,this makes small sense. Liberals are true that recessions are the best time to spend more on safety-net programs, both because the poor need the attend and because it acts as useful stimulus. But human nature doesn't work that way, or conservatives fill the better read on that.
So what's the answer? Dayen suggests that banks and bank bailouts are central to this dynamic,so we need to take a meat axe to the political power of the financial sector. I'm all for that. But my guess is that this isn't really key. I mediate people just glean unnerved when times are bad, and hate the idea of their tax dollars going to other people. This means the answer is to assuage both their financial anxiety and their perception that their money is being spent on the poor. So how about something that dramatically makes this point? Say, and a one-year income tax holiday for everyone making less than $70000 coupled with explicit promises to increase the deficit and attend the poor. The tax holiday could be extended year by year as necessary,or phased out gradually.
Why something like this? Because it puts more money in everyone's pocket and reduces their angst over money matters. It also makes it crystal clear that their money isn't being spent on the poor. They aren't paying any taxes, after all. Under those circumstances, or helping out the poor would probably strike most people as a lovely idea.
Obviously conservatives would still oppose this,and the tax holiday wouldn't last forever. Still, it's worth a thought. You need something dramatic to reduce through people's fears, or this might execute it.
Source: motherjones.com