Recession = populism.

[Beet]

Recessions always lead to populism, of one sort or another. We have already begun to see this in a few things in recent years-
1) The astonishing grassroots movement for oil drilling 2007-mid 2008 despite the fact that it was a campaign pushed for by oil companies at a time when the country was supposedly moving left. This happened entirely under the radar of the Democratic establishment and independent of the 'netroots'.
2) The massive opposition to the $700bn bailout bill (from both right and left, but mostly from the right) which blindsided the establishment. Its particularly interesting, given that this was a bailout of the left's favorite villain (Wall street fat cats), that the torch & pitchfork opposition was mostly coming from the far right. Even more remarkable is that the Executive branch was controlled by the GOP and the Democrats were running a change campaign. Yet it was far right Republican districts that rebelled the most from the establishment's plan to bail itself out. Furthermore, the political donations coming from employees of these investment banks were 50-50 or better for the Democrats; and certainly better than that at Freddie and Fannie. This is telling about a portion of the modern Democratic constituency.

It is also telling that after the financial crisis broke out, Obama did not ramp up his populist rhetoric significantly or put out significant new populist proposals; rather the crisis benefited him largely because the Democratic brand had associations with non-status quo and with middle class economics that his campaign did nothing to create and rather inherited from the party. In fact; as The Vorlon pointed out, McCain was running a far superior campaign up until mid-September, dominating control of the news cycle. Thematically, Obama campaign essentially just coasted the entire way from February 5 to November 4-- and because it worked, they look smart for having run a "steady" campaign. But was it really smarts or just luck?

On the other hand perhaps I am underestimating Obama; that certainly wouldn't be a first.

However, deep economic downturns always result in bouts of populism, and generally not the kind of "let's get together/inspirational/Kennedy" type populism that Obama inspired in his fans. Bitter, angry populism. I am afraid that Obama has neither the temperament nor the advisers (yes, folks like Summers, Volcker and the Chicago boys reassured me earlier in the year, and they certainly reassured the Economist crowd, but... they essentially represent the intellectual economic establishment... one that seems to be on its shakiest ground in potentially 70 years) to tap into that kind of populism, and as a result it may come to be directed against him. One thing is for certain: ignoring the vein of popular opinion as Bush did in his last 5 years or so is poison.

On the other hand perhaps I am underestimating Obama; that certainly wouldn't be a first.

The 2008 election caps a 44-year cycle in which the Democratic party gradually abandoned its New Deal populist-roots and the Republican party gradually abandoned its aristocratic roots. During this era, really the entire era from 1945 to now, populism was either right-wing (Reagan), or a lost cause (Perot), belittled as the refuge of uneducated small minds by the intellectuals in command at the heights of the economy... who guided the country towards globalization and liberalization. During this period power shifted between Social Liberals (the Values/Progressive side of the Old Republican Party) and Economic Conservatives (the Small-Government/Pro-Business side of the Old Republican Party). Successful demands for reform were constricted to the social realm because the economy was, for the most part, gradually expanding; and when it failed, those failures were easily pinned solely on government, not private enterprise. This success allowed anti-populists in academia and on the editorial boards of magazines and newspapers to deride and dismiss populists as with impunity. So long as things were good, the Ron Pauls and Dennis Kuciniches of the world would always remain on the fringe.

If the current downturn is really the worst and most paradigm-challenging since the 1930s, it may shatter old centrist notions about the economy in unexpected ways.

The political genesis of President Obama and his success predates all of this. His Blue State/Red State message is a response to a very different time... a time when all we had to worry about was the negative tone of politics or partisanship in Congress over social issues (certainly more serious problems than whether the President had a blowjob in the Oval Office, but a far cry from wave after wave of bankruptcies of major US industries). The challenges he will face as President will be very different. Can Obama respond to this time, the challenges of the now and future? That will be his largest test. Obama: Don't flub it.

[Sam Spade]

Excellent essay, Beet.  My macrotrends thread (which I will finish one of these days) shares a lot of similarities with what you're seeing.

[Storebought]

I'm coming closer and closer to the conclusion, unthinkable even just two or three years ago, that the best option for electoral viability for the GOP is just to cut off the Wall Street wing completely. Not only are Democrats the party of the rich, their lingering association with them prevents them from making economic arguments favorable to Main Street, American industry, and that group that can be called the declasse' middle class. Not that it should be an excuse for protectionism, which hurts everyone, and a return to pork politics and fiscal insanity of the past GOP Congresses (in which case it would be better just to kill the party off entirely).

It makes me mad, thinking about about how these parasites used the GOP during the 1980s for their tax cuts (since tax rates of +50% for any group are just confiscatory), but then dropped them during the 90s and today so that they could go to the Democrats' nightclubs and cocktail parties.

You can't change history, but you can do things to change history as its written. It's high time the GOP abandon these people as yet another of the Democrats' special interest groups. But that leads to the question: will they?, since the GOP rump needs sugar daddies to underwrite their pork.