The MasterBlog: Welfare bums vs crony capitalists - Chrystia Freeland
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Monday, November 7, 2011

Welfare bums vs crony capitalists - Chrystia Freeland

COLUMN-Welfare bums vs crony capitalists - Chrystia Freeland

Chrystia Freeland | Analysis & Opinion |

03 Nov 2011 19:19

Source: Reuters // Reuters

(Chrystia Freeland is a Reuters columnist; any opinions expressed are her own)

By Chrystia Freeland

WATERLOO, Canada, Nov 3 (Reuters ) - Paul Martin and Ernesto Zedillo are members in good standing of the global elite. Martin is a former Canadian prime minister, finance minister, deficit hawk and, in his life before politics, multimillionaire businessman. Zedillo is a former president of Mexico, holds a doctorate in economics, directs Yale University's Center for the Study of Globalization, and serves on the boards of the blue chips Procter & Gamble and Alcoa.

Yet when I interviewed the two of them in a wide-ranging public conversation last week, hosted by the Center for International Governance Innovation, an independent, nonpartisan Canadian research organization, they sounded an awful lot like the people camped out in Zuccotti Park in New York.

Neither Zedillo nor Martin had sympathy for the complaint that Occupy Wall Street lacked a clear agenda. As Zedillo put it: "These criticisms - 'Oh, they don't have an agenda, they only pose problems and provide no solutions' - well, they are citizens and they have earned the right to express a very serious, real problem."

The truth, the two statesmen agreed, was that the protesters were articulating a real, important and global concern.

"I have yet to talk to anyone who says they aren't reflecting a disquiet that they themselves feel," Martin said. "I think really the powerful thing is that Occupy Wall Street has hit a chord that really is touching the middle class - the middle class in Canada, the middle class in the United States, the middle class right around the world - and I think that makes it actually very, very powerful."

In fact, Zedillo thought the Occupy group should widen its sights - "I could argue as an economist it's not only about Wall Street. They should have an Occupy G-20" - a possibility his successors at the Group of 20 table are sufficiently worried about that protesters are being confined to Nice while the heads of state meet in Cannes this weekend.

Martin and Zedillo would be welcome at any corporate dining room on Wall Street or financiers' dinner party, but it was striking how strongly their view of Occupy Wall Street differed from the conventional wisdom among American business elites.

That dissonance was not lost on Martin. He started out diplomatically - "I think that most people have basically given them a fair amount of credit," he said of the protesters - but then could not resist adding: "I don't want to pick on U.S. bankers, but the reaction, the one that really got me was the banker who basically said, 'You know, these are just a bunch of welfare bums. What we've got to do is cut welfare.' A New York banker saying we've got to cut welfare is staggering to me. Why doesn't he just look in the mirror? I think that actually what's happened is that the inability of some people to defend their position has become so manifest that it's actually added to the power of Occupy Wall Street."

The welfare bums critique is a familiar elite response to populist rage, particularly from the left, and it is not confined to the United States. Some of the German reaction to protesting southern Europeans had a similar flavor, as did some of the British push-back against the riots there in the summer.

What is interesting about the United States is that the first burst of grass-roots anger came from the right. Although the policy prescriptions of the Tea Party could not differ more radically from those of Occupy Wall Street, the movements share an anti-elite sentiment. That may be why some agenda-setting thinkers on the right are putting forward an analysis of America's ills that deftly combines the anti-welfare-bums riff of the country's beleaguered upper crust with conservative grass-roots anger against many of those same elites.

This was the elegant pivot of Representative Paul D. Ryan, the Wisconsin Republican, speaking at the Heritage Foundation last week. The "true sources of inequity in our country," Ryan argued, were "corporate welfare that enriches the powerful and empty promises that betray the powerless." In Ryan's analysis, the problem with America's political economy is "a class of bureaucrats and connected crony capitalists trying to rise above the rest of us, call the shots, rig the rules and preserve their place atop society."

What is striking is how similar that dyspeptic vision is to the Occupy Wall Street consensus that the U.S. economy has been hijacked by bankers and the lobbyists and politicians they bankroll.

There is a reason "crony capitalism" is the common target of political movements that differ over nearly everything else. At a time when governments have spent billions bailing out banks even as they cut pensions and social services, and when income inequality is soaring worldwide, it is hard to deny that the 1 percent are getting a pretty terrific deal.

But taking the diagnosis of crony capitalism as the first step toward a cure for the Western world's ills is a little more complicated.

Economic growth is the most pressing problem for everyone today, and no matter how fierce your animosity toward the 1 percent, it is hard to see how reining them in more effectively right now will goose the gross domestic product (indeed, in many countries the rise of the 1 percent has coincided with strong economic growth).

The second complication is that your crony capitalism may well be my meritocratic democracy. A general charge of crony capitalism is easy to make. But dividing the "bad" crony capitalists from the "good" innovative entrepreneurs is much harder to do. And sorting them out without creating a new group of crony capitalists may be the hardest thing of all. (Editing by Claudia Parsons)

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