What if the perennial assumption that “Wall Street” is of the Right was always wrong?
“A funny thing has happened within the world of Big Money,” writes Alex Yablon at Business Insider: “A small but growing number of finance professionals have begun talking like leftists.”
“Weird Left Finance Twitter” is the focus of this piece, and it’s an interesting phenomenon — left-wing economists who have the ears of traders and all talk about Polish economist Michal Kalecki.
But the premise here is a bit hoary. It’s a stretch to cast Wall Street as the longtime archenemy of the Left that is just now finding a fondness for big government. Specifically, “Left Finance World” supports more federal spending that is not “paid for” by tax hikes — larger federal deficits, that is. And this is not at odds with Wall Street’s preference.
Yes, you often see debt and deficit doomsday talk from investors worried about inflation. But Wall Street and investors are hardly fiscal conservatives or small-government types. Consider the examples Yablon gives in the article of spending that didn’t trigger inflation or higher interest rates: “Periodic expansions of the federal deficit (the War on Terror, the Bush tax cuts, the post-2008 bank bailouts and stimulus, the Trump tax cuts, the CARES act).”
If you’re old enough to remember the Iraq War, President George W. Bush’s tax cuts, and the Wall Street bailout, you know that Wall Street was hardly #resisting these things. All of the examples of deficit-stimulating government action had Wall Street’s support.
So, it’s not much of a mystery when the article asks, “Practically speaking, how might Wall Street and the American Left work together?”
The writer, Yablon, points to green energy financing. Indeed, John Kerry (Joe Biden’s climate czar) has long lobbied for a federal “Green Bank,” whereby the federal government gives guarantees or other financial backing to private banks. New York’s private bank, for instance, went into business six years ago “providing financial products to [private] lenders, such as credit enhancement, loan loss reserves and loan bundling.”
This state-bank collusion is nothing new. Think of bailouts or of Fannie Mae and Freddie Mac or of the Export-Import Bank. It’s all government leveraging its ability to create money or borrow at low or no cost in order to help banks profit in pursuit of some political agenda. Hardly the stuff of Milton Friedman.
“There’s nothing that a commercial bank loves more than guaranteed financing,” Citigroup Managing Director Michael Eckhart said at the 2015 Ex-Im conference. “That’s a good thing!”
And Wall Street may not be typically thought of as Left, but it’s just as often more Left than Right. Biden raised $13 million from Wall Street, according to the Center for Responsive Politics, more than four times what Trump raised. Wall Street’s three favorite Senate candidates and seven of its top eight were Democrats. The only Republican in that group was Susan Collins, the most liberal Republican, who has an F (17%) from the National Taxpayers Union and who supported the 2009 stimulus bill.
Biden winning the Wall Street cash haul was hardly a shock. The top ten recipients of Wall Street money in 2018 were all Democrats, and Wall Street favored Hillary Clinton by nearly 10-1 in 2016 and favored Barack Obama in 2008.
I don’t mean to pick on the Business Insider story. It’s informative and a decently interesting tale about this cadre of young econo-types. It’s just that the framing — “Oh, my, it seems Wall Street and the Left may finally have something in common” — is a tired canard based on false premises.
