March 24, 2023 - 1:10pm

The rescue of Silicon Valley Bank and its large depositors has drawn together unlikely bedfellows. Both the Right-wing Free Beacon and the Leftist Stranger magazine, to give two examples, have denounced this federal largesse as “socialism for the rich”.

Whether this is true or not lies in the eye of the beholder, but one thing is for sure: this is a crisis that could reshape the 2024 election.

Americans, particularly progressives, no longer see the Silicon Valley elites as “enlightened plutocrats” eager to create a better world. Now they view these same people as sinister far-Right figures, as evidenced by the treatment of Elon Musk since his takeover of Twitter. Indeed, the vast majority of Americans now also fear the tech elite, and the industry’s approval dropped dramatically in the years before the pandemic.  

It is in this context that the rescue of SVB and Signature presents Biden with a serious dilemma. 

Not only does this crisis cut across his party’s odd mixture of gentry progressives and more traditional Leftists, there are economic concerns too. Increasingly, high-tech firms and venture capitalists play a powerful role in financing progressive causes. Silicon Valley Bank, like FTX before it, was unabashedly progressive, embracing climate change, gender rights and other social justice issues. Prominent Democrats dominated the board as well as counting among many of the big depositors, including California Governor Gavin Newsom. Almost all contributions from Silicon Valley tech owners and employees in the 2016 and 2018 elections went to Democrats. In 2020, five of the top eight donors to Joe Biden came from tech firms. Any big push to tighten regulations in these industries may therefore result in a shortfall in donations.

Money from the tech world’s expanding lobbying operations might buy the support of some Democrats, but it is likely to cause unrest on the Left. Bernie Sanders has denounced the bailout, while conservatives like Nikki Haley, Vivek Ramaswamy and Ron DeSantis have also weighed in with criticism. It seems to be driving down Biden’s already anaemic approval levels even further.

The President thus has much to lose from this rescue. But for populists like Donald Trump, it could be a potential windfall. For it completely fits in with the assertion, common to both Right and Left, that the system is indeed “rigged” in favour of the politically connected rich. Establishmentarians may need to take some deep breaths: the folks with the pitchforks are likely to get a lot angrier and more numerous as the details of the bank bailouts continue.

Joel Kotkin is the Hobbs Presidential Fellow in Urban Futures at Chapman University and author, most recently, of The Coming of Neo-Feudalism: A Warning to the Global Middle Class (Encounter)