The Paradox of the Populist Shift to the Right

On Fareed Zakaria GPS today, Zakaria's panel discussed the debt ceiling, the deficit, and the downgrade. One thing that caught my eye was this exchange Zakaria had with Ariana Huffington:

FZ: Ariana, how can you explain this: that you have had the biggest financial crisis and recession one would argue, in some part caused by the irresponsibility of the private sector, and the response not just in the United States but across Europe, has been that the right has been strengthened and the left has been discredited?

AH: I think the reason is that the public mistrusts government because government has bailed out major financial institutions that brought us to the brink of collapse, that basically government now is providing welfare for many entrenched interests. Government is not there any longer to support the weakest among us or the most vulnerable. I mean, you see this sort of intersection of lobbyists, big corporations, and Washington is really what people are turning against. If somebody--

FZ: And they think of the left as the party of government, so--

AH: Exactly, even though, in truth, government has bailed out many more powerful [financial] institutions...

I think the exchange encapsulates the paradox of the populist shift to the right and its underlying cause:

- The government reduced oversight of the financial industry

- Deregulated financial institutions destabilized the economy and caused the recession

- The recession dispossessed citizens of their homes, jobs, and wealth

- Government bailed out financial institutions with taxpayer money

- Government can't be trusted with our money

- Government must be smaller: Vote Conservative!

- Smaller government will lead to reduced oversight of industry

- Repeat democratic death spiral