Wall Street: From Protest to Politics

The Wall Street protests are heartening -- but also a measure of the utter failure of the usual machinery of democracy to remedy the worst pillaging of regular Americans by financial elites since the 1920s.
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"There go my people. I must find out where they are going so I can lead them."
--Alexandre Auguste Ledru-Rollin, French politician (1807-1874).

When elected leaders largely ignore a disgrace like the financial collapse of 2008, sooner or later popular protest fills the vacuum. The Wall Street protests are heartening -- but also a measure of the utter failure of the usual machinery of democracy to remedy the worst pillaging of regular Americans by financial elites since the 1920s.

For three years, we have been wondering, where is the outrage? For a time, it was co-opted by the Tea Parties -- a faux populism, attacking government, financed by billionaires, delivering nothing to the 99 percent of Americans not represented by Wall Street. Now authentic protest directed against the real villains is finally here.

The ingenuity of occupywallst.org, its spread to other cities, its blending of internet-organizing with on-the-ground protest, is inspiring. The New York protests, in which more than 700 people were arrested over the weekend, are likely to draw more activists, especially if police keep bungling the choreography of peaceful protest and deliberately leading demonstrators into traps.

But sooner or later, protest will need to turn to politics.

And God knows, we missed the rendezvous we were supposed to have with democratic politics in January 2009. With a newly-elected president who inspired great hope for change, politics failed us in that first phase of the crisis. Barack Obama installed a Wall Street-friendly team that resisted fundamental changes in the financial model that caused the collapse and the deep recession that followed.

The 2010 Dodd-Frank Act, despite heroic efforts by progressives, stopped just short of separating financial speculation from ordinary banking. Most of its pro-consumer measures were added by relatively junior legislators over the objection of the Federal Reserve and the Treasury. The law's strong provisions are being relentlessly gutted by a combination of industry lobbying, Republican obstruction, and lack of enthusiasm for tough regulation from Tim Geithner's Treasury Department.

The depth of the continuing recession can be traced back to the failure to radically reform the banks in the spring of 2009. Interest rates today are at record lows, but Wall Street banks still make their money from merger deals, complex securitization packages, and trading for their own accounts, while community banks are too traumatized to make loans to any but blue-chip customers.

Meanwhile, nobody has gone to prison for the systematic frauds that brought down the economy, consumers are getting gouged by new fees that the banks dream up to compensate for their own losses. And the mortgage foreclosure crisis continues to fester and drag down the rest of the economy.

So the Wall Street protestors have plenty to be angry about. But what kind of reform will the system deliver?

In many ways, these demonstrations have a lot in common with events around the globe, from the protests that toppled dictators in Egypt and Libya to the spontaneous street protests in Tel Aviv, Madrid, and Athens. In every case, protest was organized outside regular political channels, because politics as usual wasn't delivering. New people were drawn in, rightly skeptical of the system's capacity to deliver real change.

As a sixties kid, I can't help comparing today's situation with the two great causes of that tumultuous decade -- ending the Vietnam War and delivering civil rights. In that era, reform was also blocked by mainstream politics.

In the case of the antiwar protests, radicals led, liberals came later, and Congress came even later (with the exception of a few early heroes like Senators Wayne Morse of Oregon and Ernest Gruening of Alaska).

In the civil rights movement, freedom rides, sit-ins, civil disobedience, the deaths of voter-registration workers -- all these acts of heroism only bore fruit when protest achieved its rendezvous with politics, weirdly enough via the same President Lyndon Johnson who was prosecuting the same calamitous Vietnam war that led to his own downfall.

In each case, it took several years for street protest to produce durable reform. These two great protests had happy endings (or beginnings), with great pain along the way. But history doesn't guarantee happy endings.

As Wall Street has finally engendered the kind of outrage that it so thoroughly deserves, democratically-elected officials are still light years away from embracing the kinds of drastic reforms that the system so desperately needs.

In a democracy, once grassroots protest takes off, you never know what course it will take. Nobody at the time of the early sit-ins and freedom rides could have predicted three great civil rights acts within less than a decade.

Bankers have immense power, until public opinion turns decisively against them and democratically-elected leaders decide to lead. These protests were a long time coming; I fear that it will take far longer for the system to deliver the drastic reforms that we need.

Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His latest book is A Presidency in Peril.

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