Saturday, May 14, 2011

Palin vs. Wall Street

Josh Green has a good article in the Atlantic Monthly about Sarah Palin’s tenure as governor of Alaska. Near the end, Green wonders what would have happened if, after the collapse of Lehman Brothers, Palin had led the anti-Wall Street charge:

What if history had written a different ending? What if she had tried to do for the nation what she did for Alaska? The possibility is tantalizing and not hard to imagine. The week after the Republican convention, Lehman Brothers collapsed, and the whole economy suddenly seemed poised to go down with it. Palin might have been the torchbearer of reform, a role that would have come naturally. Everything about her—the aggressiveness, the gift for articulating resentments, her record and even her old allies in Alaska—would once more have been channeled against a foe worth pursuing. Palin, not Obama, might ultimately have come to represent “Change We Can Believe In.” What had he done that could possibly compare with how she had faced down special interests in Alaska [i.e., the oil industry]?
This would’ve been a sight to see — especially if McCain and Palin had won. I think I can say with a high degree of confidence that Wall Street would not have taken kindly to this. (And by “Wall Street,” I’m primarily referring to the big sell-side banks.)

Unlike the oil industry, which is used to the rough-and-tumble of partisan politics, Wall Street is generally unaccustomed to being broadly vilified by mainstream politicians (as the thin-skinned reactions to financial reform from the likes of Jamie Dimon can attest). Much of Wall Street’s self-image is tied up in the idea that they occupy a higher intellectual plane than everyone else — especially all those poli-sci majors and journalists down in DC.

Having that idea openly and vigorously attacked by any VP would be a huge blow to the Street’s ego, but if it had come from Vice President Palin, I think some heads would have literally exploded in lower Manhattan. Because Wall Street is famous not only for its culture of arrogance, but also for its culture of sexism. Having a proudly unsophisticated, female politician like Palin leading what would undoubtedly have been a ham-fisted, populist-driven effort at financial reform would have been too much for Wall Street to handle.

What’s more, Wall Street would not have known how to respond. Whereas the oil and tobacco industries are used to winning legislative battles by essentially paying off key politicians through campaign contributions, Wall Street, pre-Lehman Brothers, derived the vast majority of its vaunted political power from its ability to convincingly tell politicians and their staffers that “this is all very complicated, and you shouldn’t worry your pretty little heads about it.” (This is a very underappreciated point.) The Street was going to lose its ability to play that card regardless of who won the election, but it would’ve been worse if McCain and Palin had won, because Palin would almost certainly have taken that argument and used it against Wall Street — much in the same way that she turns the tables on the “lamestream media” when they condescend to her. And since Wall Street is practically a market-maker in condescension, the condescension directed at Palin would have reached epic proportions.

Of course, if McCain and Palin had actually won the election, there’s a 0% chance that Palin would’ve been allowed to lead any sort of anti-Wall Street charge. Treasury Secretary Phil Gramm — a hall-of-fame Wall Street sucker — would never have allowed it.

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