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AIG Fallout Angers Working Class

Adam R.'s picture

Posted April 3, 2009

As much as advocates, policy researchers, regulators, and bankers are sensitive to the perceived issues surrounding the ongoing investment in AIG, it probably understates the  public's reaction to this issue.  Moreover, while their understanding is probably given nuance if they have an understanding of credit default swaps, this is largely limited to a small ecology (the "chattering classes" of like-minded people.

For a lot of regular people, though, it's not that complicated.  It is just a confirmation of all that is wrong with our system, at least in the minds of people who don't buy any derivatives and don't get the welcome mat rolled out when they walk into their friendly banker.

Case in point, our office has an exterminator service. She comes about once a month.  Yes, that's a lot, unless you live in the South, and then it is just appropriate and necessary.

Well, the AIG thing is on her mind today.

"They are just a bunch of crooks!" she says.

Her gloved hands swing up in the air.

"They just want to give their people more bonuses.  Let the xxxx people go," she says, "and hire a bunch of people who are cheaper. "

As she left, she shouted "they should go to prison!"

I want to ask her about the needs of all those counter parties.

It reminds me of another conversation I had about two years ago, about our political systems, in one of the more unexpected environs for such a conversation.

I was speaking with a man who was living out of an unheated mobile home, in an abandoned mobile home park in rural North Carolina.  He had to carry his water.  He was running a hot plate (and a tv to watch the Panthers) off of the battery on his Aerostar.

He was pretty aware of what economic class he belonged to.  Right away, this is unusual.  Studies show that most people place themselves above where they belong, out of optimism or pride.  Working class people identify as middle class, and middle class folks see themselves as "upper middle class." This makes many of the ideas propagated by liberals fall on deaf ears.  Many of the very recipients who would benefit from less regressive taxes, for example, assume that they would not have anything to gain.

That was not true with him.

"Us people at the bottom," he said, "we get nothing.  The politicians are so worried about the middle class.  They ain't got nothing for people like me."

I think that only a few issues are able to capture the ire of many non-political types. For many, I think that the basis for assessing our leaders is driven not by the wisdom of decision-making, but by the power of symbols. It is about the icebergs:  Enron, Willie Horton, and perhaps the Titanic of them all:  WatergateBernie Madoff could be next.  How many people could tell you about John Kerry's view on pay-go, compared to his arguable status as a flip-flopper?

I say non-political for a few reasons:  Newspaper readership is highest among people with college degrees, or older folks.  The man in North Carolina that I spoke with did not believe in voting. Actually, in my tours around mobile home parks, not voting is a constant characteristic.

Only a relative few events resonate.  More significantly, they are not easily forgotten.  AIG is one of them.  So, if you have mixed feelings about AIG (and you are reading this finance-related blog) then rest assured that many others are even more irritated.