Will we have a K-shaped recovery?

A K-shaped recovery is when the holders of financial assets do very well, and wage-earners don’t.

The recovery from the Great Recession of 2008 was a K-shaped recovery.  The Obama administration bailed out the financiers who helped cause and deepen the recession, and left mortgage-holders to fend for themselves.  

The political result was a decline in the Democratic vote, which made possible Donald Trump’s victory in 2016.  During the pandemic recession of 2020, the response of both Democrats and Republicans was to bail out the financial institutions and Fortune 500 corporations, while giving very limited help to the unemployed, front-line workers and small-business owners.

Evidently President Biden and Democrats in Congress realize that the government needs to do more now than it did then.  That’s good.  But will they do enough?

Here’s what Matt Taibbi has to say:

This is a fascinating moment in American history. On the one hand, generations of elite-focused politics have left a tiny oligarchical minority not only in possession of massively increased wealth, but also political power. Since 2008, we’ve seen increased disparities in income, but also criminal justice outcomes, regulatory attention, access to tax loopholes, political influence (through decisions like Citizens United), vulnerability to surveillance, and rights to transparency, and, lately, speech. With the corporate-friendly Biden administration in office, there’s a clear opportunity for his backers to continue the K-shaped influence distribution if they wanted.

But we may be at the end of the era where even the most rapacious interests feel they can get away with such policies. Between the 2016 election of Trump, the near-nomination of Sanders in 2020, and widespread unrest on both the left and right, it sounds like the Washington consensus is inching toward the realization that they finally have to deliver something significant for ordinary people, if they want to keep their cushy DC sinecures, to say nothing of staying pitchfork-free.

Is the right move simply spreading the Fed largesse to more working people, in the form of more direct checks and/or unemployment benefits?  God knows, but the question that interests me is how America’s political elite views the situation.

For decades now, we’ve watched our politicians continually make decisions that widened wealth and influence divides, while blowing off possibilities of backlash from below.  For a long time, there was a rationale behind this, because the big-money capture of both parties left the Volk without obvious avenues for revolt.  The two parties didn’t need to govern with the bottom half of the country in mind, so they didn’t.  They continued their myopia even through disasters like the Trump election.

Is it possible those days are over?  Did Biden learn from the Obama/Summers experience, even if just on a cynical political level?  I’ll believe it when I see it, but we’re at least hearing politicians sound like they recognize the days of being able to sell a “K-shaped recovery” are probably over.

I don’t expect President Biden to renounce his big-money donor base.  The question is how many of the donor class recognize that it is in their self-interest to do something to appease the rising discontent in the country, and how far they are willing to go.

LINKS

Are The Days of the ‘K-Shaped’ Con Finally Over? by Matt Taibbi for TK News.

How a ‘K-Shaped’ Recovery Is Widening U.S. Inequality by Catarina Saraiva for Bloomberg News.

The K-Shaped Recovery Is Now Undeniable by Anthony Pompliano for The Pomp Letter.

Biden campaign promises head for the Senate graveyard by Rachael Blade, Ryan Lizza, Tara Palmeri and Eugene Daniels for POLITICO.

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Click to enlarge.  Source: The Pomp Letter

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