If you are neutral in situations of injustice, you have chosen the side of the oppressor. If an elephant has its foot on the tail of a mouse and you say that you are neutral, the mouse will not appreciate your neutrality.
~ Bishop Desmond Tutu
“In the wake of the global financial crisis, politicians and regulators assuaged public outrage by promising reforms that would prevent such a crisis from occurring again. But not much has improved. We haven’t even managed much of a regime change. Many of the bankers, regulators and politicians who drove the policies that led to the crisis are still in their chairs. Many of the big banks are even bigger. Too big to fail is still a major systemic threat.” I made this comment over 8 months ago as the civil unrest in Egypt was boiling over.
At the time, I wondered how long it would take before citizens in other parts of the world would grow tired of the income disparity that seems to have become a global epidemic: “How much longer will the American public tolerate government-subsidized success for large corporations while many are running out of unemployment benefits and over 40 million Americans are on food stamps? There has to be a tipping point somewhere.”
From Arab Spring to Autumn in America
The protests this spring in the Middle East seem to have given way to widespread – albeit mostly peaceful – demonstrations in more than 1500 cities across the globe this fall. Most are taking place under the auspices of the Occupy Wall Street movement. I read all the time that the movement lacks a coherent message. That may be true, but many people can identify with the pervasive sense that there’s something rotten in the halls of power worldwide, that capitalism isn’t functioning as it should and that the middle class has somehow been handed the bill for mistakes made by both ends of the political spectrum while CEOs of failed banks walked away with millions.
One OWS spokesman summed it up this way: “Does anyone really not know what the basic message is of this protest: that Wall Street is oozing corruption and criminality and its unrestrained political power—in the form of crony capitalism and ownership of political institutions—is destroying financial security for everyone else?” The chart at the top of this article illustrates just one of the reasons Wall Street protesters are angry: The top 1% of American wage earners are taking bigger percentage of the country’s total pre-tax income than at any time since the late 1920s. Their share of the national income, in fact, is almost twice the long-term average!
Josh Brown, otherwise known as the Reformed Broker, added a lot more detail in his open letter to the banks that don’t seem to get why people are mad. Incidentally, Josh is part of the 1%. He works in finance and I’m guessing he’s doing alright. That’s the thing about Occupy Wall Street. Some of its most ardent supporters actually work there, or used to. Check out the story of Josh’s encounter with Suzanne, a former Wall Streeter and current member of the 1%. She’s down in Zuccotti Park personifying the fact that not all Occupy Wall Street sympathizers are “stoners, losers and fringe elements.”
MSM Missing in Action
It’s worth pointing out that the mainstream media (especially financial networks like CNBC) have been slow to cover the Occupy Wall Street protests. When they do, they usually throw in a few winks, nods, and sarcastic jabs about the legitimacy of those involved. It’s so far been left to blogs, social media and online publications to bring the real issues to light. (Today’s chart is from online news aggregator Business Insider.)
Documentaries like the Oscar winning Inside Job offer a lot of details on how and why crony capitalism helped spawn the 2008 financial crisis. Why have none of the MSM outlets with the budgets to support it not sent armies of investigative reporters out there to find out what really happened? Maybe it’s because they didn’t know any better. Or maybe it’s because they would never again get an interview with the business and political heavyweights that draw the big ratings. Or maybe it’s because they are owned by the crony capitalists in question.
Either way, it seems like a good idea to get your information from a variety of sources. If you’re relying on the mainstream media alone, you may only be getting one side of the story. It still amazes me how some of the folks who looked so guilty in Inside Job are regularly invited to express their views in the financial media.
Middle Class Uprising?
Occupy Wall Street is often viewed as a left wing movement. Given that many powerful labour unions joined the protests this past weekend, I suppose it makes sense to think so. Many would like to write off the nascent organization as just another extremist group of wing nuts and rabble rousers. If the Tea Party is the crazy uncle of the political right, maybe Occupy Wall Street is just the crazy aunt of the political left.
I’m not sure what the right answer is, but it strikes me that this movement is trying to represent the masses in the middle. These are the folks whose taxes helped bail out the banks as well as the auto companies. These are the folks who work in the private sector, where cushy pension and benefit plans are nonexistent. They earn less than their unionized counterparts and just a fraction of the income many in the financial industry take home.
Like the classic psychological portrait of a middle child, the middle class feels overlooked, underappreciated and a little exploited. They are, by nature, more diplomatic and therefore more prone to defuse rather than invite conflict. Perhaps this is why it’s taken so long for the middle class to pipe up and have its say. Perhaps it’s also why the demonstrations have thus far been mostly peaceful.
It seems the middle class is less interested in tipping the scales to the left or the right than in simply restoring some sense of balance to our society. They’re hoping that they can avoid the violence that so often accompanies social change. Who knows? Maybe they can do it. After all, these imbalances have grown slowly and almost silently for decades. Let’s hope we can correct them without too much upheaval as well.
What do you think of Occupy Wall Street? Have we hit a tipping point?
Personally, I don’t feel we have reached the tipping point, but I don’t expect these protests to just go away, either. The real tipping point will come when we sink back into recession. The argument that the rich are keeping us afloat works less well when things are going badly. While people are increasingly angry at the greediness of top executives and their boards of directors, I think the real focus of their anger will turn to regulators and politicians. Current policy and the past lack of regulation continue to favour the rich. Unless politicians want to risk being lumped into the side of self-serving, greedy, bought-and-paid-for by the rich, they will need to put some distance between themselves and their rich cronies. As if to illustrate how behind the times we, in Canada, can be, we handed our federal conservatives a majority government in the last election. It will be interesting to see the results of the Gen Y’s claiming their political power.
I see what you mean Ian. Maybe things will have to get worse before they can get better. I have to agree with your point on politicians and regulators as the focus for real change to occur. After all, it was lack of action on their part that allowed much of this fraud to occur. Also, many regulations (like Glass-Steagall) were repealed. Perhaps step one might be to re-regulate using rules that worked in the past rather than starting from scratch.
Thanks for sharing your views!
I don’t feel we have reached the tipping point either, but we’re getting closer.
These protests won’t go away, and the spirit of the 60′s is back.
Once the Dow sinks deeper, we’ll be in for some very interesting times.
I have to think that this uber-low inflationary evironment is not helping anyone.
Low interest rates are certainly not helping savers while higher commodities prices have hit consumers. It will indeed be interesting to see if a further fall in the markets causes more civil unrest.
Thanks for you comment Mark!
Societies seem to swing from extreme socialism i.e communism to extreme capitalism i.e. greed!
Politicians should NOT dismiss the protest rallies as some sort of mischief or a return of the lazy hippies. Societies which have progressed to greedy capitalism are in trouble and immediate solutions are required. Some sort of controls on capitalism must occur because Mr. Market is corrupt!
I guess most of us realize that some corruption in any system is something we just have to live with. However, if it goes too far, that’s when we eventually see social unrest. Your point about our progression toward greedy capitalism is well-taken. I don’t think the aim of the movement is to overthrow capitalism, but to restore it. Failed companies need to fail and they can’t be so large that failure causes systemic breakdown.
Thanks for your input Jon!
If the Tea Party is the crazy uncle of the political right, maybe Occupy Wall Street is just the crazy aunt of the political left.
I think this is right (I am a Tea Partier, not a OWSer). I wish that both sides would make more of an effort to hear what the other is saying and that those in the middle would be less inclined to dismiss those trying to make a case as “crazy.”
I am anti-blaming. I think it leads to too much negativity.
I don’t think there has to be a bad guy for things to go bad. I think that lots of bad things happen just because people get mixed-up ideas in their heads or get caught up in systems that are bigger than they are.
I do think the problems are serious. We all need to work up the courage to accept the need for fundamental change before it is too late.
Rob
I hope our leaders can work together to find a viable solution that results in a fresh start for the global financial system.
Thanks Rob!
I think the US government did the right thing to rescue the banks. However, I do not believe the crisis will be over in the US until all those bad mortgages are fixed. The government should insist that the banks renegotiate all bad mortgages. The government (i.e. the taxpayers) saved their butts and now it is time for them to do their part.
Will this cause bank loses? Of course, it will. But if the banks have money for bonuses (and they were extraordinary stupid to flaunt them) they can clean up this mess.
I’m not sure the government had a lot of choice on rescuing the banks. They truly are a systemic risk. The repeal of Glass-Steagall put us in that position. Not replacing or re-instituting Glass-Steagall means we’re still in that position. We’re just a lot poorer now as a result of the Federal loans granted to the big banks and funded by taxpayers.
I would love to see some bank bonuses applied to their considerable liabilities rather than cars, homes and bling that most of us couldn’t hope to buy in a lifetime.
Thanks for your comments!
Thanks for writing what is arguably the best post on the Occupy movement that I’ve come across. I’m a died-in-the-wool conservative Republican; a Tea Party sympathizer – and even I can’t completely write off what the OWS crowd has been trying to call attention too. Even when the unions (whom I loathe and feel have been doing as much to destroy liberty and wealth in America as any entity that the OWS crowd is upset with) got involved I was willing at least to listen to OWS arguments when they were advanced. Sadly, the OWS crowd hasn’t done a great job of marketing those arguments. Your post, however, has done a better job of articulating what is rotten about the state of capitalism as it exists today. When companies that should be allowed to go bankrupt are instead bailed out, and when the incompetence of so-called “talented” execs allows those execs to claim multi-million dollar bonus packages while their employees are laid off and their companies implode – things are rotten indeed. Maybe we, the middle class, haven’t reached the tipping point yet. But as long as high-pay-for-underperformance and a bailout-for-failure becomes the norm – we’re close.
Thank you. I tried to make the piece as balanced as I could. I think you may have summed up the problem as succinctly as anyone I’ve seen:
“high-pay-for-underperformance and a bailout-for-failure”
That pretty much encapsulates the extent to which we’ve strayed from free market capitalism. It seems the middle class is just now starting to connect the dots. Let’s hope that continues as peacefully as possible.
Thanks for sharing your thoughts!