Populism Run Amok
Posted on March 19, 2013
First published in The Hill.
Andrew Jackson was our nation’s first populist president.
He ran against the moneyed Eastern Establishment and abolished the Second Bank of the United States.
Jackson also was the only president to pay off our national debt. Soon after erasing the debt and squashing the national bank, an early version of the Federal Reserve, the American economy went into a severe depression.We have never paid off our national debt again.
Jackson, of course, didn’t run as a populist. He ran as a Jacksonian. But the Jacksonian philosophy wasn’t far different than the philosophy espoused by William Jennings Bryan of the 1890s, running as the head of the People’s Party.
Bryan gave perhaps the most famous convention speech in history when he too attacked the moneyed Eastern elites, condemning monetary policy that nailed his voters to a cross of gold. Bryan thought that a tight fiscal policy was bad for his farmers and favored rich New Yorkers by keeping inflation down.
Both Jackson and Bryan were Democrats, the same party that Richard Fisher, the Dallas Federal Reserve Bank chairman, calls home. It is also the same party of Elizabeth Warren, who recently beat Scott Brown for the Senate.
Last week, Fisher was invited to address the Conservative Political Action Conference, the annual gathering of conservative activists. His message was not that much different than the messages espoused by Jackson, Bryan and Warren.
Fisher’s populist message was that we must break up our big banks.
His point is that banks have too much power and too much influence, and that the government has too much at stake to allow them to fail. He argues that because the banks are so large, they have an unfair advantage over smaller banks in the marketplace.
It all sounds so very convincing — except that it really isn’t.
If Fisher were talking about one or two banks that held all of the power, he might be on to something. But there is plenty of competition among the top financial institutions to provide customers with plenty of choices.
Bigger financial institutions also provide marketplace stability that simply cannot be provided by smaller regional banks. They are the bankers to our biggest companies, and without their size, our economy wouldn’t be able to compete with the Chinese or the Europeans or other emerging economies.
Breaking up the banks makes as much sense as breaking up Wal-Mart or breaking up Microsoft or taking a whack at Google. It might make the politicians feel good, but the long-term impact would hurt consumers and the American economy in general.
That being said, the siren call of populism can be overpowering.
Populism is the principle that somebody somewhere is screwing me, and that only by using the government to level the playing field can I get a fair break.
Populism pines for a more nostalgic age, when things were less complicated, when those elites got what was coming to them, before there was an establishment.
But populism can be self-defeating. When Jackson succeeded in destroying the national bank, the American economy went into a deep depression. While Bryan electrified his audience with his 1896 speech, he failed to win in his three bids for the White House.
Fischer wasn’t the only populist featured at CPAC. Sarah Palin expertly melded her disdain for the Republican elite with her brand of Bible-belt politics to offer an almost perfect female impression of Bryan. Sen Rand Paul’s (R-Ky.) hatred of the Federal Reserve echoes Jackson’s hatred of the national bank.
Brent Bozell’s final address at the conference was a virulent cry of defiance against the political reality that the party must do better with younger voters and a more diverse population if it ever wants to be competitive in presidential elections. For Bozell, the only correct political solution is for conservatives to be more conservatively populist, more anti-corporate and less compromising.
At CPAC, populism ran amok. Let’s hope it doesn’t infect the rest of the party.