Wall Street financiers have been complaining a lot about Sen. Elizabeth Warren lately, including her Medicare-for-all proposals. And economist Paul Krugman, in his latest New York Times column, cites these criticisms as a glaring example of Wall Street’s hypersensitivity.
“Let’s talk about the rational reasons Wall Street is worried about Warren,” Krugman asserts. “She is, of course, calling for major tax increases on the very wealthy, those with wealth exceeding $50 million, and the financial industry is strongly represented in that elite club. And since raising taxes on the wealthy is highly popular, it’s an idea a progressive president might actually be able to turn into real policy.”
Warren has stressed that she considers herself a “capitalist to my bones” and that she doesn’t consider herself anti-Wall Street. But she does believe in a tough love approach, and Krugman asserts that Wall Street can’t even handle mild criticism.
“Warren is also a big believer in stricter financial regulation,” Krugman explains. “The Consumer Financial Protection Bureau, which was highly effective until the Trump Administration set about gutting it, was her brainchild. So if you are a Wall Street billionaire, rational self-interest might well induce you to oppose Warren.”
Hypersensitivity on Wall Street, Krugman notes, is nothing new: they were equally thin-skinned when Barack Obama was president.
“Obama treated Wall Street with kid gloves,” Krugman observes. “In the aftermath of a devastating financial crisis, his administration bailed out collapsing institutions on favorable terms. He and Democrats in Congress did impose some new regulations, but they were very mild compared with the regulations put in place after the banking crisis of the 1930s.”
Krugman wraps ups his column by stressing that given Wall Street’s history of fearing even mild regulations, one must take their response to Warren with a grain of salt.
“You should beware of Wall Street claims that progressive policies would have dire effects,” Krugman advises. “Claims don’t reflect deep economic wisdom; to a large extent, they’re coming from people with vast wealth but fragile egos, whose rants should be discounted appropriately.”