The Looting Classes
By Arnold Kling
Consider the California Teachers Association…Soon after Proposition 13 became law, the union launched a coordinated statewide effort to support friendly candidates in school-board races, in which turnout is frequently low and special interests can have a disproportionate influence. In often bitter campaigns, union-backed candidates began sweeping out independent board members. By 1987, even conservative-leaning Orange County saw 83 percent of board seats up for grabs going to union-backed candidates.
The clearest beneficiaries of the financial bailout and the stimulus are the financial firms that designed and implemented sub-prime mortgage securitization and the public-employee unions that are bankrupting state governments. Christina Romer praises the former by saying,
The Federal Reserve had taken dramatic actions when the crisis began, and continued to find creative ways to unfreeze credit markets. The TARP legislation, though deeply unpopular, provided crucial ammunition for dealing with the panic.
For the latter, she speaks of the “devastation of state and local government budgets.”
Of course, there are many who share her framing these issues. However, perhaps it is not so crucial to bolster a financial sector that was misallocating capital or to bolster a state and local government sector that has been captured by unions. Perhaps these heroic efforts undertaken in the name of saving the economy only served to reward the looting classes. Perhaps we have arrived at a point in this country where looting is the most rewarding economic activity. In that case, it will not take many years before the wealth available to loot starts to shrink.