Social Constructs and the Financial Crisis

I really enjoyed the Schneider and Ingram article on social construction and think that it is a fairly accurate depiction. A good example of how this construction works in real life can be seen during the financial crisis. A powerful (in the sense of wealthy) but somewhat negatively viewed group, Wall Street, is in trouble. It is an important target population since it can contribute significantly to political campaigns and all politicians need money. Both President Bush and Obama help to bail them out but they have to link this bailout to a more general public policy. They say that if Wall Street was not bailed out, then the entire economy could have collapsed. They link their actions to a common good since Wall Street’s benefits were oversubscribed and the money could have possibly been spent in other sectors to help the economy. Politicians also make the point that the government will be paid back so the benefits seem less clear to the public since companies are only getting temporary help. Thus the “benefits [are] noticed only be members of the target groups and [are] largely hidden from everyone else” (p338). Still, I think that it is pretty clear that this policy is not entirely fair and many Americans feel that the average Joe was screwed over.

One way to change this policy is to punish politicians who supported the negatively construed groups. This desire to hold politicians accountable seems to be some part of the motivation of groups like the Tea Party who hate the idea of TARP and all the bailouts. They are very much against politicians who supported these measures and there are a lot of politicians in trouble. The authors do warn that “policy directed solely to the benefit of powerful groups could become a major campaign liability” (p344) and this seems to be very accurate in the 2010 elections. We’ve seen incumbent Republicans lose in primaries to Tea Party candidates and there will likely be Democrats who lose in the general election. There is more generally an anti-incumbent mood in the American population. I do think a lot of it has to do with the fact that “total Wall Street compensation is on pace to reach $144 billion for 2010, a record for the second consecutive year” (according to the Wall Street Journal) while around 10% of the American population is unemployed. The people responsible for the crash seem to be receiving the most benefits. Thus a negatively viewed group is receiving too many overt benefits and so there is backlash. This acts as a balancing mechanism where “dramatic events will often serve as catalysts for changes in social constructions” so that groups may become more negatively or positively viewed. I would say that now Wall Street is viewed more negatively like Goldman Sachs which was called a “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money” by Rolling Stone. This in turn makes it harder for politicians to give benefits to Wall Street, even if they don’t have electoral pressure. Thus, the bailouts seems to confirm Schneider and Ingram’s claims about how social construction works.