Written by Jack Martin | 03 April 2009

I believe firmly there is always a pendulum swinging back and forth in terms of public policy, government and politics, and that the public is usually in some type of transition over the long haul.

According to a March 12 Gallup poll, at this time, a majority of the public (53%) is still looking to government to solve our economic problems. But I see the distinct possibility that as the economy continues to show signs of improvement — and we have recently seen a few more encouraging indicators — the pendulum will begin to swing back, and the public will begin to look more to our business leaders for economic solutions.

In the irony of all ironies, the standing of President Obama and those in Washington who currently are the ultimate authority to fix these problems will likely diminish while this economic improvement gains steam.  

As the pendulum begins to swing, a vacuum will emerge for someone to step in and lead us through the next chapter.  There will be a significant opportunity for someone in business to establish a leadership position.

It’s easy to be skeptical about my theory in the current populist climate.  The Obama administration is navigating a difficult political balancing act.  It must assure Americans that it recognizes their legitimate anger while, at the same time, not politically impede its necessary cooperation with the very institutions the public blames for the economic turmoil.  (According to a March 30 Washington Post/ABC News poll, 80 percent said banks, financial institutions and corporations share responsibility for the meltdown.)

The administration has made some missteps in its efforts to channel populist outrage in support of its solutions, fanning the flames in some instances to the point where it has made its task harder by hurting the very institutions whose help it needs to facilitate a recovery.   

We clearly saw a course correction with the rollout of the toxic asset plan and the president’s recent meeting with 15 bank CEOs, stressing the mutual interests of Main Street and Wall Street.  The president’s action on GM also helped him get back in front of the outrage by demanding accountability.

Nevertheless, one thing you can count on with Washington is conflicting agendas, too many messages and the blame game, which leads to increased partisanship and, eventually, public fatigue. While the numbers still favor the president and his party, we are seeing evidence of an increasing partisan divide, with declining GOP approval of President Obama, according to several polls.  A sign of that pendulum swinging, perhaps?    

We should all watch this over the next month or two, as this hunch of mine might begin to show some sign of being an actual trend.  

Another dynamic in this unfolding narrative is that, unfortunately, it will be some time before many Americans experience even the remotest sign of an economic recovery.  

Many people have lost their jobs and homes, and are having a hard time making ends meet.  For these individuals, the recent encouraging economic news is mostly an abstraction.  This morning’s unemployment figures are a case in point. Unemployment and consumer confidence are lagging indicators — meaning it is going to take time for many Americans to feel secure again.  Right now, they don’t see much reason to celebrate a better-than-expected report on demand for durable goods, or news that orders for non-defense capital goods rose by 6.6%, or that existing-home sales advanced last month.

The recession also has amplified what, according to Pew Research, has been a growing public view that our country is divided into two groups, the “haves” and the “have-nots.”  Twenty years ago, only a quarter of the American public felt this divide. In 2007, half of the public did, with the number of people identifying themselves as “have-nots” doubling during this period.

And we know that the health of both financial institutions and larger companies will improve before many “have-nots” feel any relief.  
Since polling shows the public mostly blames Wall Street for the economic downturn, folks on Main Street will likely see Wall Street get better and wonder: I didn’t do anything wrong, I played by the rules, when will it get better for me?

So there is almost certainly going to be another backlash — possibly worse than what we’ve seen thus far — as people watch these institutions recover while their own hope for relief remains out of reach. When you add to this the plight of less prosperous countries around the world, we could see a potentially violent backlash against global inequality.

So, managing public anger and actively addressing the perceived economic divide, as well as the perceived divide between the values of Main Street and Wall Street, will be as important during our long recovery as it has been during the downturn.  

This could be part of what is motivating the administration and others in Congress to push for longer-term proposals on health care and education  — policies intended to ease the gap and address long time social inequities.

Again, there is an important role for business to play in easing this anger and tempering a populist backlash in the midst of the recovery.  The public is a powerful force and will play a central role in the policies pursued and adopted in the next phase, just as it has during this one.  Our wise business leaders have a real opportunity to influence this dynamic by paying close attention to this gap, as well as taking bold steps to assure the public that Main Street and Wall Street are not only inextricably linked, but also on the same team.