Stop Saying We Only Bailout the Rich
In wake of massive pandemic spending, it's inaccurate economics - and it's also dumb, terrible political messaging
We aren’t bailing out Silicon Valley Bank and Signature Bank for the sake of their shareholders and bondholders. They have largely lost their investments.
We aren’t even primarily doing it for the sake of their depositors, except in so far as those depositors employ large numbers of people, who won’t get paid this week if their employers can’t make payroll.
But the real reason to save those depositors is to avoid the chaos and panic that bank runs spreading across the economy could have, the impact both economic and psychological that large numbers of people being fired could have.
Stopping chaos and crisis in the economy is a progressive value.
Chaos is bad for working families and terrible for progressive politics.
Chaos is where fascism breeds and vulture capitalists consolidate power. Until the New Deal, every economic crisis was a time of opportunity for the urberwealthy and rightwing politicians.
Nathan Rothschild reportedly said to buy when there is blood in the streets.
In the Shock Doctrine, Naomi Klein updated this story with the way crises from coups to wars to natural disasters become a chance for predatory capitalists to consolidate their wealth, whether privatizing public schools post-Katrina to dictators like Pinochet seizing power in Chile.
In the current crisis, vulture capitalists were lining up to profit from the failure of Silicon Valley Bank. As companies with deposits at Silicon Valley Bank wondered whether they could make payroll in the coming week, there were reports that "Hedge funds are offering to buy startups’ deposits stranded at Silicon Valley Bank for as little as 60 cents on the dollar."
Mass bankruptcies among firms losing deposits at SVB would have been a massive opportunity for hedge funds and dominant firms to scoop up assets at fire sale prices, further consolidating economic power and profits in fewer hands.
There is a reason that the GOP rightwing is lining up against bailing out SVB, for the same reason they are threatening default by the US via opposing raising the debt limit.
An economic crisis and chaos would be good for the predatory capitalists that fund their political campaigns and good for their politics of hate and division.
They oppose this bailout for the exact same reasons they opposed pandemic relief for the unemployed.
The progressive movement scored a singular success during the pandemic in demanding the largest government program of unemployment relief in our history, a tool that meant for the first time in any economic crisis, the working class of this country was not completely devastated by an economic crisis. I wrote about this in detail in this post on How Dems Saved the Economy. As I noted there, economist JW Mason captured the fact of how much better off the lowest-income earners have done coming out of this recession compared to the last
And what’s notable is how much BETTER the US response was than in Europe. As this article details, strong government action meant the U.S. has recovered far better than other countries.
Yes, this is a bank bailout to stop economic crisis, just as the pandemic spending, which included trillions of dollars to help the unemployed, keep our schools open, fund local governments and cover student loan payments during the pandemic, was a bailout to stop an economic crisis.
It is just outmoded language to keep saying the “US only bails out the rich” when we just went through the largest action in support of the working class in US history.
And it’s terrible politics to feed that rhetoric since at this point it just supports MAGA talking points that regular people aren’t helped by the government, and that it’s only “them” getting help. The point of the pandemic is that we helped everyone and the result was a stronger economy coming out of the pandemic.
And the GOP hates it because workers are feeling a new sense of entitlement and power leading them to demand higher wages, better working conditions, and even unions in a wide range of workplaces that never saw labor organizing in the past.
There is a faction of the left that thinks chaos and economic pain creates political opportunity for the left, largely over decaying memories of chaos in WWI leading to a successful Bolshevik revolt in Russia. Aside from the dubious gains of that regime, the next century has rather seen such chaos opening up opportunities for the fascist right far, far more often than for the left. In 1931, the German Communist party declared "After Hitler, Our Turn" in the mistaken belief that they could build on the chaos, only to see themselves liquidated by Hitler.
You can see this in the MAGA response to the train derailment in East Palestine, Ohio, a disaster largely created by Trump deregulation, but that MAGA politicians are trying to use not to demand tougher corporate regulation but to stoke racial resentment that “their people” are not being helped.
This is not accidental but part of a pattern. Trump also removed pandemic preparation regulations and delayed climate change preparation regulations, with the assumption they can stoke anger and resentment among their own voters – even the ones they screw over with these policies, as they blame “woke elites” and brown people for their suffering. That every GOP Presidency ends in crisis (Bush Sr. S&L crisis, George W financial crisis, Trump pandemic) is not some random accident but a feature of their politics.
With the pandemic, Dems fought to make sure the Trump-facilitated pandemic crisis would not feed fascist reaction but demanded an unprecedented level of support for families. And the result was the largest vote for a Democratic candidate for President in history in 2020.
We just had a pandemic where minimum wage workers were bailed out with the most generous unemployment compensation in history. A great thing.
Instead of trashing this bailout, let's talk about making sure everyone is always helped when unanticipated disasters befall them.
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