Matthew Yglesias has a post up that Andrew Sullivan links to (approvingly it would seem given the context?) that adds to the articulated outrage of millions of Americans over the AIG bonuses,

If the folks running Citigroup and Bank of America and AIG were good at their jobs, we wouldn’t be in this situation in the first place. That’s the point. But they weren’t good. They lost staggering sums of money. Their companies went broke. They had to beg for taxpayer dollars. You don’t get to do that and then turn around and “go Galt.”

Right. So I understand the sense of outrage that is coursing through the country right now and I’m disinclined to argue against it, per se. But populist outrage is a tricky thing and I worry about the long term impacts of having the country go beyond cathartic bloodletting and settle into a deep seated and entrenched position of malcontent.

First of all, I’m not a fan of populism, personally. Not so much because populism represents the unvarnished opinions of the people, but because I think that common view of populism tends to be a romantic mischaracterization. To my mind, while populism might have a salt-of-the-earth, rustic, common sense hue to it in theory, in practice it tends to cash out as an appeal to the lowest common denominator.

The higher up one goes in terms of analysis on any set of issues/ideas, the more disagreement one is likely to encounter because the parsing of numerous variables gets finer and finer and the inflections of interpretation get more and more varied. This is in many ways why I can’t but help seeing the constructive debate and dissent of modern democracies as a healthy and encouraging thing (to a point). Conversely, the more consensus one seeks on a particular issue, lower down in analysis one needs to climb. That is, of course, not universally true, there are some issue that have become so hashed out that a functional consensus has resulted due to a high level of analysis. But when it comes to populist outrage and populism in general, that kind of careful analysis tends not to be the case.

People are angry about the AIG bonuses and so they should be, much of the country is hurting and it’s insult to injury to watch the folks who caused that harm get effectively rewarded. Obama getting out in front of that outrage also makes a certain political sense, such outrage can be put to good use in galvanizing support for a particular course of action. But populist outrage turned support is a bit like hiring berserker mercenaries for your army: good at laying waste to all that stands in your way, difficult to control throughout the entire process.

So what worries me about everyone piling on is that at some point we have to shelve the outrage and start looking what is to be done to fix the mess that the country is in. That’s going to be difficult task if everyone has fanned the flames to the point that a “They’re all AIG, now” attitude has set in about the financial sector.

If listening to essentially any economist over the past few months has told us anything, it is that the prevailing wisdom about the collapse of the market is that the missing element is trust. Trust between financial institutions themselves, trust between stock buyers and the market, trust between consumers and the whole system. You might be able to pull release lever on the build up of frustration felt by millions over their current woes through appeals to populism, but in many senses that approach is anathema to building trust.

And the fact of the matter is that for all the righteousness of peoples’ indignation, not ever financial institutions is an AIG. Further more, many of those perfectly legitimate institutions are going to play a key role in figuring out how the country and it’s limping economy are to move forward. In short, we’ll have to come back to a place of at least moderately qualified trust.

Regardless, that horse has left the stable and there’s little point to trying to close the door now. And in reality, it was likely both inevitable and necessary that people be given the opportunity to rage for a while, it’s a tough thing to get over the kind of job losses and economic hardships that people are currently facing without someone to blame and some time in which to blame them. But the momentum of that outrage means that the process of slowing and eventually stopping it will be a great deal more extended than the realization that its time to move is likely to occur.

So pulling up on the reins should probably start sooner rather than later if we’re going to hit a stopping point that is even remotely close to accurate. And the further off we are in our aim, ultimately the more pain that we ourselves wind up feeling as a result of our delays. So looking around, the question that gives me cause for concern is: who’s prepared to start that pulling?