AFTER THE NEW ECONOMY. In updates to the argument over the allegedly paradoxical phenomenon of upscale populism, Jonathan Cohn and Noam Scheiber kick around the influence of the "great risk shift" on public attitudes. Missing so far in the conversation is a point that I strongly suspect is relevant -- the big technology/stock boom of the late-1990s and its bursting.

Airy forms of excitement about the rise of a "new economy" were very influential on the thinking of a broad elite at the time. Capitalism seemed to many -- especially those with college degrees -- to have all sorts of heretofore unknown liberating possibilities. So perhaps one still believed in the need for a strong state to protect the environment and help out the poor, but one was unlikely to want to go in for business-bashing rhetoric or to question the consensus view of professional economists. Then came the crash and all of a sudden the market looked a lot more like the God that sucked.

A lot of surveys indicate that, to a surprising degree, political beliefs are mediated by attitudes toward the future rather than assessments of present circumstances. People with a strong sense of personal efficacy, who believe that their future prosperity lies largely in their own hands, tend to adopt more right-wing economic views. The "new economy" era featured, for a lot of people, an almost limitless sense of possibility -- a sense that was then rapidly betrayed. The run-up in housing prices in recent years has had similar macroeconomic effects to the stock boom, but different psychological ones because home price appreciation doesn't encourage you to identify your interests with those of corporate managers in the way that stock price appreciation does. What's more, while the "new economy" seemed to open up especially awesome possibilities for young people (who are disproportionately well-educated and tend to form a disproportionately large share of upscale left-wingers), rising home prices have had the reverse impact on those who didn't buy a house before the market took off.

--Matthew Yglesias

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