We are at the beginning of a great popular rebellion against those who showed no self-restraint when it came to lining their own pockets. Their entitlement mentality arose from an inflated sense of their own value, of how much smarter they were than everyone else.
The sound you are hearing in response to the AIG payoffs--excuse me, bonuses--is the rancorous noise of their arrogance crashing to earth.
Yet there is much hand-wringing that this populist fury is terribly perilous, that the high flyers who could not control their avaricious urges have skills essential to repairing the very damage they caused in the first place.
This view is wrong on almost every level, especially about populism.
Is this not an entirely appropriate reaction to elite decisions going back to the 1980s that ultimately ran our economy into the ground?
In fact, the reaction to AIG reflects a morally justified public intuition that the rewards in our society to the very wealthy are totally out of line with their contributions to the common good.
Now I am not against people getting rich or entrepreneurs reaping profit from their investments of time and energy. But there is no moral or practical justification for such levels of inequality. Capitalism worked extremely well in the three decades after World War II without such radical inequities. It's when inequalities soar that the system runs into trouble--precisely what happened at the end of the 1920s, when inequality reached levels similar to today's.
Frank also ridicules the idea that AIG can't find smart people to replace those who might walk away if they are denied their extravagant bonuses. With unemployment among investment bankers at a rather high level, "it's not like you're going to have trouble hiring good people," he said dryly.
Obama needs to do two things at the same time. The administration will have to spend piles of money to unwind the financial mess. A share of the largesse, as Frank acknowledges, may indirectly benefit some of the malefactors in this saga. Yet if the public sees this spending primarily as a reward to those who got us into this fix, and not as necessary to solving a problem that affects us all, it will revolt.
Obama can work with the populist wave or he can be overwhelmed by it. As Kazin notes, American progressives have succeeded in improving the"common welfare" only when they "talked in populist ways--hopeful, expansive, even romantic."
E.J. Dionne, Jr. is the author of the recently published Souled Out: Reclaiming Faith and Politics After the Religious Right. He is a Washington Post columnist, a senior fellow at the Brookings Institution, and a professor at Georgetown University.
By E.J. Dionne, Jr.