It’s too early to say whether the Occupy Wall Street movement will have long-term legs. A group of a few hundred people has spent the last two weeks or so occupying Wall Street day and night. They are protesting many things they do not like about that street and the moneyed class that inhabit it. Yesterday, they moved uptown to the Brooklyn Bridge, occupied it, shut a span down and over five hundred protesters were arrested. However, the protest has mostly been lawful, if not more than a bit noisy, and mostly centered on Wall Street. Some on Wall Street look down from their balconies in bemusement and brazenly raise glasses of champagne at the protestors, while other traders try to tune out the commotion on the street.
Occupy Wall Street looks like a new phenomenon, but it is but the latest and it is spreading. It’s not hard to trace its roots to protests earlier this year in Madison, Wisconsin. The Occupy Wall Street movement seems more amorphous, less structured and lacking much in the way of central authority. Occasional lists of concerns dribble out of various alleged spokespeople and they seem to be a laundry list of complaints. However, they picked Wall Street for a reason. It is emblematic, even more so than Washington, of America’s problems. In a nutshell, protestors are seeing wealth being sucked up by Wall Street like they have a Hoover vacuum in our pockets and houses. They perceive that Wall Street has largely not suffered, and indeed has profited from the suffering of others. This has the inconvenient fact of being absolutely true.
In truth, some people on Wall Street (principally office workers) did suffer from the Great Recession. Brokerage houses laid off a lot of people and a few institutions like Lehman Brothers went belly up. Mostly though the politicians Wall Street had bought off with many campaign contributions came through for them when they badly screwed up. The gates of the U.S. treasury were opened and capital flooded into Wall Street firms to keep them solvent and to weather the crisis. Both Republican and Democratic administrations decided doing so was in the country’s best interests.
If Wall Street were more politically savvy perhaps it would have shown some humility. However, it was soon back to business as usual which included a phenomenal amount of arrogance. Had the United States not interfered in the stock markets, most likely many of these firms would no longer be in business. However bad stock prices are today, they would be valued much less. However necessary the bailout turned out to be, it exacerbated engrained bad habits on Wall Street.
It’s a little early to characterize exactly who is protesting but it appears to be principally the downsized, the educated but under or unemployed, and younger people feeling that Wall Street is pulling the rug from the expectations of the lifestyle they expected in adulthood. In reality, the 2000s were a lousy decade for almost everyone except for the rich. 2011 and 2012 are merely extending this lousy decade and the frustrated have had enough.
To start, they want justice. They see no justice when income is taxed higher than capital gains. They see no justice when their houses are foreclosed from under them while those who sold them shoddy mortgages escape and civil and criminal penalties. They see no fairness when Wall Street quickly starts awarding itself obscene bonuses and they, if they can get a job at all, make some fraction of their previous income. Why do they have to scramble and depend on charity (if they can find it) when Wall Street is coddled by Uncle Sam and, indeed, soon feels free to raise a finger at Uncle Sam? Many on Wall Street are tsk tsking the federal government for deficit spending, while depending on its largess when times get tough. In short, they are perceived as arrogant and out of touch hypocrites. More importantly, they are financially successful arrogant hypocrites, because with power and influence bought and paid for their world is hardly the risky one they purport it to be. In fact, it’s pretty comfy in there, at least among those of a certain class.
I think this movement will only continue to gain stature and size. It is already spreading to cities across the country, like Asheville NC, Spokane WA and Chicago. It’s not like a lot of these people have much else to do. They are already miserable and unemployed. Many are also homeless. How is it much worse to stand around day and night in front of Wall Street and scream about the injustices between rich and poor when every day you experience injustice, poverty and misery?
It is not coincidence that America grew so prosperous when wealth was shared broadly because tax rates were much higher. The extra revenue collected generally went to good use: for VA benefits, including paying for college for veterans, for highways that connected us, for student loans that allowed ordinary people to aspire to the middle class, and for basic research that provided vaccines and the Internet. The rich were never seriously impacted by these higher taxes because they were rich, but taxing more of their wealth did allow many ordinary people to get a leg up and allowed our nation to grow prosperous.
For all their riches, Wall Street pointedly ignores that their wealth and our national wealth is dependent upon the people, and how well they prosper. The more the ordinary people prosper, the more the rich are likely to prosper, because with all that new education and energy new markets will open up, and America will be primed to exploit them. In short, more taxes on the rich are not evil for society as a whole. They enable general prosperity, they promote the general welfare, and in the long term they raise all boats. Of course any tax rate can eventually turn regressive if high enough, but with tax rates lower than they have been in fifty years, there is plenty of room to increase revenues, which will be redistributed through a democratic process for arguably more productive uses than feeding the balance sheets of Wall Street bank accounts.
The dynamics of the movement will play out over time, but the movement could be pivotal in the 2012 elections. We do need a strategy that lifts all boats. Cutting taxes hasn’t done it. Supply side economics hasn’t done it. Deficit spending hasn’t done it. However, redistribution of income through the tax system from those who have more of it has worked quite well for the decades it has been tried. It’s time to try it again.