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Tuesday, March 2, 2010

Anger at Unfair World Sparks Political Shift

It may be said that the world -- or our class consciousness -- has changed in the last three years since the Credit Crunch (following the Great Housing Bubble) morphed into what even the Associated Press officially calls The Great Recession.

Less recognized is the growing realization that the institutions we believed would ensure a basic sense of justice and fairness have failed and are failing still.

Segments of the electorate are angry in a way not seen in this country since the Sixties and more common in other countries.


(1)  Americans are told to support its major financial institutions via TARP. People recognize their taxes today, and their kids' tomorrow, will go to pay the extravagant and sometimes totally undeserved bonuses of the same bankers whose risk-taking and bad judgments played a role in the current economic troubles.

(2)  Americans see health insurance premiums skyrocket over the past decade, along with rising co-payments, increasing exclusions of coverage and growing costs for "charity care" to cover the costs of the undocumented. When reform is proposed, Americans read about "death panels" (which would exist in the form of bureaucrats deciding on the efficiency of certain procedures) and mandatory insurance with the real potential for incarceration for noncompliance. But the mandatory provisions have an exclusion guessed it...undocumented aliens.

(3)  Americans in the private sector have saved for their own retirement and invested in various funds. They don't have loss insurance and bear all the risk of loss. But before they pay one dime towards their own 401k, they are required to fund the defined benefit plans of public employees, who generally work less, work less efficiently, get paid significantly more than a comparable private-sector job, retire much earlier and, in many cases, show a disturbing sense of entitlement and propensity to engage in corruption, graft and other illicit behavior.  

(4)  Americans save for down payments and take conservative fixed rate mortgages, only to see new neighbors take outsize risks to buy bigger houses, home equity loans to buy bigger SUVs, and then claim victim status when they fall into foreclosure, leaving their responsible neighbors to pay their burden in the form of having to bail out the banks.

(5)  Americans have been conditioned to be risk-averse and to take out various forms of insurance policies as an additional safety net.   But increasingly, insurance carriers seek to deny these claims or make claimants go through waves of litigation to overturn "bad faith" denials of claims or "cutbacks" where claims may be paid only partially or after additional conditions are arbitrarily imposed and made intentionally difficult to satisfy.   Litigation for such "bad faith" denials or other tactics by insurers is sure to increase, as consumers increasingly realize that contracts are worth little more than the paper they are printed on. 

Americans are becoming an increasingly economically rational people.   They are putting less and less faith in institutions, whether they be government (increasingly viewed as corrupt, incompetent, ineffective or flat-out inept), the law enforcement authorities (increasingly viewed as incompetent or corrupt after the politicization of the Bush Administration Justice Department), insurance companies (which are cutting back coverage while increasing premiums, co-payments, "red tape" procedures and, of course, their profits and executive compensation), the banks (see all of the above), and even religious institutions (after most major denominations have endured at least one scandal involving illicit sex or criminal behavior).  

The growing trend towards abandoning "underwater" houses even when borrowers can pay the monthly payments shows that the old stigmas of foreclosure and damaged credit mean little (or nothing).   After all, a good credit score doesn't mean much when there's no credit to be had.

Let us hope that the remaining stigmas against criminal, pathological behavior don't become similarly weakened.   Such a trend will have our society careening towards a lawless, "Mad Max" post-apocalyptic society.

You still wonder why people are angry?   They are very, very worried.

All of the above is prompting a huge political realignment.   The old divisions of liberal vs. conservative, Republican vs. Democrat, are old school and rapidly decaying.   The new divisions may be private sector employee vs. public sector beneficiary (whether employee or benefit recipient), taxpayer vs. ward of the state, subsidizer of benefits for others vs. recipient of those benefits. 

When society becomes one big tug of war between the haves and the have-nots, it is time to watch out.

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