The economic crisis that has stifled the global economy for the past six years has taken its largest toll on working- and middle-class Americans across the country. In December of 2007, US unemployment was at 4.9 percent. By October of 2009, the rate had skyrocketed to 10.1 percent. Millions of working-class Americans, both employed and unemployed, lost their homes through foreclosure and suffered massive hits to their savings.
Let’s briefly review what caused this catastrophe. The Great Recession involved complex conditions. In essence, a series of banks and Wall Street investment firms irresponsibly bought perilous, mortgage-backed securities from lenders and sold them to investors. These dangerous transactions ignited the sub-prime mortgage crisis and the subsequent recession. For the firms, these practices were low-risk and high-reward; in fact, investment banks encouraged them. For the global economy, however, the stakes were much higher.
Despite these historical and statistical realities, many of the wealthiest Americans, often referred to as the 1%, claim that they are in fact the true victims of the post-recession climate. They feel unjustly demonized for their financial success, and believe that they should be celebrated for their role in stimulating the economy. Many feel threatened by the anti-1% rhetoric that is growing across the country. Some, such as Tom Perkins, even fear that the resentful language directed towards wealthy Americans could transform into physical violence.
Perkins is a Silicon Valley venture capitalist and a founding member of the investment firm Kleiner, Perkins, Caufield and Byers. In a letter to the editor published in the Wall Street Journal on January 25th, Perkins voiced his fear that the public animosity towards the “1%” in the United States could lead to a “progressive Kristallanacht.” “The Night of Broken Glass,” as it is known in English, was Hitler’s final resolution in which 91 Jews were murdered and over 30,000 were sent directly to concentration camps. In his letter, Perkins explains that the ongoing protest of the Google buses in San Francisco—during which protestors broke the windows of the high-end vehicles that transport employees to Google—evoked images of the fateful night in which Nazis shattered the windows of Jewish storefronts.
One would hope that Perkins’ attitude is simply an anomaly. Yet sadly, he is far from alone on this front. As early as August 2010, Steve Schwarzman, a billionaire executive of the private equity firm Blackstone, equated Obama’s tax plans to Hitler’s Nazi advances. In a board meeting, he stated, “It’s war. It’s like when Hitler invaded Poland in 1939.”
This claim suggests dire straits for America’s most affluent demographic. Although Perkins’ example is accurate in that the protests have led to vandalism, his comparison is irrational. The 1% does not face conditions that are even remotely similar to those of the Holocaust. Josh Marshall of the political news website Talking Points Memo explains this fallacy by saying, “The extremely wealthy are objectively far wealthier, far more politically powerful and find a far more indulgent political class than at any time in almost a century—at least. And yet at the same time they palpably feel more isolated, abused and powerless than at any time over the same period and sense some genuine peril to the whole mix of privileges, power and wealth they hold.”
The most glaring hole in Perkins’ logic is that unlike the powerless Jews of Nazi Germany, Wall Street as a financial sector is more powerful than it has ever been. However, his nonsensical comparison is grounded in actual sentiment. Members of America’s most affluent percentile genuinely fear that their country and its political leaders, specifically President Obama, are out for their blood. But the basic history of Obama’s presidency and policies reveal that the extreme fear of the 1% is not based in reality. In other words, unfounded paranoia has caused their perceived victimization
Although he maintains a progressive stance on many issues, Obama has let Wall Street—and the closely related 1%—off the hook. In 2001, President Bush implemented a tax policy known as the “Bush tax cuts.” These cuts significantly lowered the federal income tax on the wealthiest Americans. President Obama did not repeal this policy, but in fact extended the tax cuts for two extra years, until they finally expired in 2012.
Obama also took direct action to save Wall Street from its own mess. The Emergency Economic Stabilization Act of 2008, also known as “the Wall Street bailout,” authorized the United States Department of the Treasury to spend 700 billion dollars on distressed assets and directly supply cash to banks. Sure, President Bush signed the bill into law, but Obama not only voted for it as a senator, he also saw it through as the newly elected president only a few months later.
In addition, both liberals and conservatives have criticized Obama for being too soft on Wall Street. To this day, the Department of Justice under the Obama administration has not prosecuted a single Wall Street investment firm for what have been widely regarded as illegal, fraudulent actions.
It is often forgotten that Obama received more fundraising donations from Wall Street than John McCain did in the 2008 election. He had no incentive to fundamentally change Wall Street’s practices because he benefited from them, a reality that his policies reflect.
So if Obama’s actions have clearly allowed for Wall Street to thrive as usual, why are members of the 1% so defensive? The only tangible change in Obama’s America is that the president publicly condemns gross economic inequality in a way that Wall Street is certainly not familiar with. This ongoing criticism, from within the public and political arenas, clearly resonates with the hyper-affluent.
The financial sector has long benefited from an unchecked cultural and political power over the rest of the country. The post-recession critique of the 1% terrifies them precisely because it threatens to reshape this dominance. Those on Wall Street are not dim-witted—they know they made enormous mistakes that catalyzed the Great Recession. They are unapologetic but nonetheless aware that their illegal actions have provided the country with a rare opportunity to reevaluate the role of Wall Street in American society.
Members of the Wall Street elite have accepted, although not publicly, their undeniable culpability in the economic disaster of 2008, which explains their unreasonable fear of persecution. Think about it—if someone is aggressively defensive, they probably know that they are guilty of wrongdoing. They are aware of, and cannot escape, what they have done. Thus, when the culprit is accused, he not only asserts his innocence, he also shifts his guilt onto the victims themselves, claiming that their accusations are unjust and discriminatory.
Tom Perkins’ comments are, therefore, just another product of this psychological defense mechanism known as stubborn denial. This tactic allows greedy and irresponsible Wall Street investors to equate themselves with Holocaust victims, while declaring that working-class Americans—still recovering from the damage of the Great Recession—are modern day Nazis. This is the strategy of illogical, verbal warfare. And it is Wall Street’s desperate attempt to hold on to the unregulated power that the American public is finally challenging.