This is one of the most insightful things I’ve read all week. Free registration is required; but I’ve pasted three of the most salient paragraphs below:
As recently as the Democratic primaries, economic inequality did not seem to work as a central campaign theme. Americans’ reluctance to vote according to their apparent class interests became a truism of politics and a source of considerable hand-wringing on the left. In What’s the Matter with Kansas? Thomas Frank attributed it to the right’s skill at playing up cultural issues. George Soros, the hedge fund manager and active Democrat, says it was because Americans, unlike Europeans, did not envy the super-rich – they hoped to emulate them.
The credit crunch exposed a more hard-nosed reason for the political quiescence of the stagnant middle class. As is now being discovered, the era of cheap money allowed families to consume far more than they produced. All of those home equity loans, vendor-financed car deals and credit card purchases may have masked the reality that real incomes were falling behind.
The financial crisis has turned that old political logic upside down. As the recession deepens, cultural issues pale in significance next to economic ones. Public anger towards Wall Street — late-night comedians have taken to calling for Chinese-style public executions — has transformed the Masters of the Universe from heroes to villains. The end of cheap credit seems meanwhile to have shattered middle America’s illusion that it too was partaking in the prosperity of the second Gilded Age.
