The Wealth Effect
How the Great Expectations of the Middle Class Have Changed the Politics of Banking Crises

Shows how the politics of banking crises has been transformed by the growing 'great expectations' among middle class voters that governments should protect their wealth.

Jeffrey M. Chwieroth (Author), Andrew Walter (Author)

9781107153745, Cambridge University Press

Hardback, published 21 March 2019

596 pages, 103 b/w illus. 18 tables
23.5 x 15.5 x 3.6 cm, 0.96 kg

'A fascinating and novel argument about the politics of finance before and after the Great Recession. Tracing the development and effects of a an enlarged 'bailout' constituency, involving both wealthy and middle class citizens, this book offers valuable lessons about finance, class politics and the workings of democracy.' Nancy Bermeo, University of Oxford and Princeton University

The politics of major banking crises has been transformed since the nineteenth century. Analyzing extensive historical and contemporary evidence, Chwieroth and Walter demonstrate that the rising wealth of the middle class has generated 'great expectations' among voters that the government is responsible for the protection of this wealth. Crisis policy interventions have become more extensive and costly - and their political aftermaths far more fraught - because of democratic governance, not in spite of it. Using data from numerous democracies over two centuries, and detailed studies of Brazil, the United Kingdom and the United States, this book breaks new ground in exploring the consequences of the emerging mass political demand for financial stabilization. It shows why great expectations have induced rising financial fragility, more financial sector bailouts and rising political instability and discontent in contemporary democracies, providing new insight to anyone concerned with contemporary policy and politics.

Part I. Banking Crises and the Rise of Great Expectations: 1. Great expectations, banking crises, and democratic politics
2. Great expectations: banking crises, policy responses and politics
3. Household wealth and financialization in the United Kingdom, the United States and Brazil since the nineteenth century
4. The emergence of great expectations in the United Kingdom, the United States and Brazil
Part II. Evolving Policy Responses to and Political Consequences of Banking Crises since the Nineteenth Century: 5. Changing expectations and policy responses to banking crises
6. Banking crises and voters over the long run
Part III. Banking Crises, Policy and Politics in the United Kingdom, the United States and Brazil since the Nineteenth Century: 7. Banking crises in the United Kingdom in an era of low expectations
8. A banking crisis in the United Kingdom in an era of great expectations
9. Banking crises and politics in the United States before 1945
10. The 2007–2009 crisis and its aftermath in the United States
11. Banking crises in Brazil in an era of low expectations
12. Banking crises in Brazil in an era of rising expectations
13. Conclusion.

Subject Areas: Economic & financial crises & disasters [KCX], Political economy [KCP], Monetary economics [KCBM], Macroeconomics [KCB]