Mean St. replaces Main St.

Thursday’s vice presidential debate and the legislative stutter that forced the House of Representatives into a needless -- and incalculably expensive -- second vote Friday on the financial rescue plan have something in common: Both were influenced in important ways by a Main Street versus Wall Street dichotomy that no longer is relevant to America’s economic life.

It’s a misleading formulation, first of all, because it has been overtaken by the demographic changes that transformed postwar America. If you summon a mental image of “Main Street,” what comes to mind is a small city or town surrounded by open spaces, a place in which local businesses and financial institutions meet local needs according to their own standards.

There are a tiny handful of such places still scattered across the continent, but the fact is that 70% of all Americans -- about 210 million people -- now live in what the census calls “urbanized areas.” Slightly more than seven of every 10 of those people reside in the suburbs. Just 8% of our people live in small cities (with populations of 5,000 to 49,999, according to the U.S. Census’ taxonomy); another 1.6% reside in towns with populations under 5,000.

About 20% of Americans still live in rural areas, but this is hardly Main Street, as most of us think of it. Like Sarah Palin’s Alaska, where people receive far more in federal subsidies than they pay in taxes, today’s farm economy is about as close as we get to socialism in this country.

Just as globalization has turned the American economy into part of an intricately interconnected international financial system, so the urbanization and suburbanization of daily life in the U.S. has created a national economy in which states, counties and municipalities are all involved in and dependent on the same credit, equity and bond markets -- in other words, Wall Street.

Today, commercial banking is almost completely a national industry. Computerized credit reporting pretty well pushed into extinction the clear-eyed, warmhearted Main Street banker who took the measure of his customers, one at a time. Similarly, all of our suburbs -- from Palin’s Wasilla to John McCain’s chic Phoenix neighborhood -- compete for the same retail chains, big-box discounters and franchised restaurants to boost sales-tax revenue, with all those businesses rooted not on Main Street but in the ability of Wall Street’s stock market to raise and distribute capital.

What’s interesting is that the moral connotations persist in the Main Street/Wall Street juxtaposition. It’s become a kind of shorthand. Main Street translates as small and rural, virtuous and without guile. Wall Street means urban, greedy and devious. Palin invoked it Thursday, when she proudly labeled herself a “Main Streeter.” So did Joe Biden, in recalling his hardscrabble Scranton roots and the talk at his local Wilmington diner.

The obvious political implication of all this historical symbolism -- and that’s really what it is, at this point -- is that essentially decent Main Street will prosper if only it is liberated from the oppression of fundamentally venal Wall Street. The problem is that no one is willing to admit honestly that there’s no way to punish Wall Street without punishing everybody else.

Tens of millions of Americans have been victimized by Wall Street’s malfeasance because the financial markets long ago began to reward companies that treated their employees as disposable parts, making layoffs commonplace not only in hard times but also in any quarter that didn’t quite meet expectations. And, once the bond of employer-employee loyalty was severed, why make any provision for workers’ futures in the form of a pension? Let them invest in the stock market and take care of themselves.

In fact, make the so-called portability of 401(k)s and IRAs a selling point, because people can take them along on their periodic search for a new job. Over the last two decades, tens of millions of Americans have been drafted into the capital markets because there’s no place else to put the money that may or may not secure their futures.

The proliferation of dubious financial instruments meant to obscure the real dangers of bad loans is only one of the ways Wall Street has mismanaged risk. Far more threatening is the massive transfer of financial risk onto the shoulders of working men and women whose most critical assets, home and pension, now are painfully vulnerable to market fluctuations.

When Congress and the next administration begin the hard work of re-regulating our capital and credit markets, that’s the injustice that needs to be addressed, not an imaginary antagonism between Main Street and Wall Street.

--

timothy.rutten@latimes.com