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Is Today's New Investor Tomorrow's New Populist?
By JIM YARDLEY
The New York Times
IMAGINE that the cryonics lab that took custody of the deceased baseball slugger Ted Williams last week had also managed to keep William Jennings Bryan on ice. The famous populist, who failed three times as a presidential candidate, might like his political chances if he could somehow wake up right now.
The bane of big business and the moneyed class in 1896, Bryan would find much to shake his fist at in 2002: Accounting practices that seem to distort corporate earnings like a hall of mirrors. Thousands of people left jobless by scandals at Enron and WorldCom, even as top executives made fortunes. A sinking stock market that threatens the retirement accounts of millions of new investors who had been persuaded to place their faith in Wall Street rather than a savings account. And a sinking feeling that there is a new class of have-nots — outsiders, cut off from the inside information that allowed top executives to cash in while ordinary shareholders lost their shirts.
The ingredients for an old-fashioned populist political appeal would seem at hand. Yet during a week in which President Bush and members of Congress competed to stake out political ground as business reformers, no one was certain whether the public had grown angry enough, and would stay angry enough, to vote their pocketbooks in November and, if so, who they would punish.
"People are upset with the individual scandals," said Reggie Bashur, a Republican political consultant here in Texas, where Enron's bankruptcy filing last December cost 4,500 people their jobs and became the opening act in this season of corporate malfeasance. "How it plays politically is yet to be seen. If we end up in a double-dip recession, and the public believes there's a connection between a recession and these corporate shenanigans, then I think it is a powerful political issue."
Judging from activity in Washington, elected officials and political consultants are already preparing. The Democratic Congressional Campaign Committee has a new Web site, investorsbillofrights.com, and has said all Republican candidates are vulnerable. Republicans point to ties between many Democrats and big business and say Democrats hardly hold the high ground. President Bush's speech on corporate governance last Tuesday failed to soothe the Dow, which lost 695 points last week. But it underscored the administration's efforts to blunt the issue, particularly as the president's own past business dealings — and those of Vice President Dick Cheney — are again under scrutiny.
One reason for the anxiety in the political class is the potential for the sort of populist anger and resentment that historically has made for a potent wedge, particularly when the masses (i.e., the little guy) feel wrongly abused by the elite (the big guy).
Populism has taken many different forms, some of them dark and demagogic , since Bryan's "Cross of Gold" speech in 1896, but in the last two decades politicians from Ronald Reagan to Ross Perot to Jesse Ventura have managed varying degrees of success by tapping the us-versus-them vein.
OFTEN, though, a populist appeal is built on the resentments of an aggrieved class, with the definitions of the "us" and the "them" shifting. Bryan and later Franklin D. Roosevelt campaigned against the bigness of business, a mantle often taken up by more contemporary Democrats to appeal to working people. Mr. Reagan campaigned against the bigness of the government, a theme still echoed by Mr. Bush, to galvanize taxpayers and small business owners.
"Most Americans are suspicious of big business and big government and don't trust anyone who's too close to either," said Bruce Reed, domestic policy adviser under President Bill Clinton and is now president of the Democratic Leadership Council
But the aggrieved class in the current corporate scandal is not a class at all but thousands of fired employees and millions of investors who cross ideological, racial and economic lines. And neither Republicans nor Democrats can claim total immunity from the issue, though Democrats believe they will be helped significantly.
Roughly 60 percent of American households are now in some way invested in the stock market — an economic shift encouraged in recent decades by both parties. If these people are unified by anything, it is the fact that their quarterly statements from retirement funds and investment accounts are likely to reflect large losses. Since the market's peak in March 2000, stocks have lost $6 trillion in value.
Kevin Phillips, the author of "Wealth and Democracy," (Broadway Books, 2002) has long predicted a populist political reaction to corporate excess. He said last week that the state of the economy during the next few months will determine the depth of dissatisfaction among voters in November. If the tepid recovery now underway sinks back into recession, he said, the public could come looking for retribution at the polls.
"Have your in-laws lost their nest egg so that they have to move in with you?" he asked, posing the sort of kitchen table concern that could inflame voters. "Has the money saved for your kid's college gone down the Wall Street drain?"
Sarah Teslik, executive director of the Council of Institutional Investors, which represents 250 of the largest pension and retirement funds, is not convinced that people will get angry, even if she thinks they should. Her group has long lobbied for corporate reform but the public, she said, is often confused by complicated business reform issues and suspicious of changing an economic system that they hope can help them achieve the American dream. "We've tried," she said, describing efforts to focus attention on corporate reform. "America is too wealthy. There's a lot of fat in the system now, and people don't revolt until they're hungry. We are not hungry yet."
People were hungry in the 1890's, or at least the farmers and skilled craftsmen who felt threatened by the Eastern business elite were. The populist movement grew after the Civil War from those agrarian concerns about the wealth and political influence of business monopolies. It reached critical mass in the 1890's, as the Populist Party fielded presidential candidates and Bryan emerged among the Democrats.
"These people in the 19th century would have viewed the concentration of wealth as a threat to democracy," said Robert C. McMath, a history professor at the Georgia Institute of Technology and the author of "American Populism: A Social History." These days, the bigness of business is taken for granted in a culture where corporate mergers are commonplace and usually applauded. In the late 1800's, the populist movement coalesced through organizing bodies such as the Grangers and the Farmer's Alliance. Today, by contrast, few unifying structures exist for investors and others hurt by the business downturn; few people look to their pension administrators as political advocates.
Bryan became the unexpected Democratic presidential nominee in 1896 after he assumed many of the positions held by populists. Many business reforms that Bryan advocated would eventually be adopted, and he would be instrumental in helping Woodrow Wilson attain the presidency, but he would never win the office.
Today, few political figures seem capable of marshaling any public disgust into broad electoral support, as much as some wish they could. Jesse Jackson has tried with little success for years to forge a powerful populist coalition between labor unions and minority groups. The once fervent support for the billionaire Ross Perot has long since petered out, and the bloom also seems off Mr. Ventura, Minnesota's governor.
THE seeming wild card is Senator John McCain, the Republican from Arizona, who has called for business regulations beyond those sought by President Bush and Democratic leaders while calling business leaders "morally challenged." Earlier this year, the initial public outcry around the Enron scandal helped push into law the campaign finance reforms long advocated by Mr. McCain.
It is that tone of populist moral outrage dating back to Bryan that could most resonate in 2002. Michael Kazin, a history professor at Georgetown University and author of "The Populist Persuasion: An American History", said the classic populist paradigm pitting those who produce things (farmers and craftsmen) against those who move money (the financial class) no longer exists because a majority of American play the stock market and want it to succeed.
But he and others note that while the public does not want to fundamentally restructure business, it wants executives to play by the rules. The growing impression of corporate executives abusing the trust of employees and investors could spark real outrage, particularly in a sinking economy.
In his Wall Street speech, Mr. Bush acknowledged the moral dimension of the scandals and sought to position himself on the high ground. There is a danger, however, that such a stance could backfire because of his own closeness to big business and his past dealings as a business executive.
And somewhere, some politician may already be working on a "Cross of Stock Options" speech for the fall campaign. |
