Is Occupy Wall Street unhealthy class warfare? How should Democrats and those with center-left orientations see it? Is the conservative manta of “53%” a compelling counterargument to “We are the 99%”? These are all worthwhile questions that warrant further discussion, with many people sure to make interesting and articulate arguments on either side. Another question raised about the movement, though, does not yield such interesting responses: are these protestors targeting the right people? Many on the right have peddled this line over the past month. Instead, citizens should blame the feds, as always (unless of course, the GOP is in power). Right wingers are pushing a mishmash of tired conservative ideas to further this contention. Ample evidence suggests otherwise.
Several contend that the GSEs bear a lot of the blame for the subprime crisis, because they pushed banks to offer loans to low-income people who couldn’t afford them. The most sophisticated and thoughtful variant of this idea probably comes from University of Chicago economist Raghuram Rajan. His basic model is
Technology–> Inequality–> Political Response–> Financial Crisis
Daron Acemoglu has studied this question, and argues against it.
He contends that the growing inequality resulting from technological changes led to politicians’ lowering lending standards, wrong-headed actions by the GSEs, and so forth. These effects led to the financial crisis.
Acemoglu argues that the data are inconsistent with these claims. Firstly, inequality emerged on a different time line, too early for the financial crises.
Larry Bartels studied data on constituents’ influence on politicians, according to class. He found that politicians responded most to affluent voters, and little if at all, to low income voters. (I was fortunate enough to talk to Martin Gilens on an article I’m working on and he mentions research showing elected officials respond more to a broader group closer to elections.)
Both of these considerations are inconsistent with Rajan’s claims.