QUADRANT 1 - CAPITALISM
Private Gains and Private Losses - this is the essence of capitalism. Capitalism rewards an individual or business for putting their capital at risk - and it provides penalties for mismanaging those risks. Capitalism proclaims free markets can and will manage and price themselves. This is the reason why capital gains are taxed at a lower rate than ordinary income tax. Michael Moore vilifies the capital gains taxation rate in his movie suggesting that someone who works hard for their money everyday shouldn't have to pay a higher tax rate than the individual who sits back and harvests gains from investments. As a filmmaker, he can skew that idea however he likes but what he fails to point out is that the capital gains taxation rates are designed to ENCOURAGE those with money to PUT IT AT RISK in exchange for more favorable taxation should they actually get a return on the risk they're taking. Income from many Municipal Bond investments carry zero state or federal income tax liability. This is because while that investor is collecting tax free income from their investment, the money they have put at risk is being used to build roads and schools and water or sewer plants and many other projects for the public good. Protesters will be quick to ask, "But what about greed? Doesn't greed exist in a capitalist society?" Can greed exist in a capitalist society? I would say yes, it does and can exist in a capitalist society. BUT - does capitalism require greed? No, capitalism does not require greed to function. Capitalism requires work. Is greed beholden to any one form of economic society? I doubt it. Would another form of economic society (ex. socialism) guarantee the elimination of greed? Capitalism may not be pretty but neither capitalism nor socialism is a form of vaccine against moral compromise.
QUADRANT 2 - PUBLIC ANGST
This is where we are now - if we (protesters/non-protesters alike) are honest about the cause of the public angst - which is more objectionable…the privatized gains or the socialized (borne by the public) losses? I would argue it is the public absorption of the losses that is causing the public angst. In the current economy, the angst from the public losses is multiplied in the context of the private gains (ex. banker bonuses) but I do not believe the private gains are the genesis of the "occupy" angst. In other words - you don't see the occupy protests outside of businesses that are paying massive paychecks to employees which are NOT taking government bailouts. EXAMPLE 1 - there is a lockout in the NBA right now over pay (as of this writing)...in a nutshell, the players are demanding their collective AVERAGE pay be increased from ~$5million to ~$8million. Their whole season is in jeopardy of being cancelled and they are not being paid their salaries. Does "Occupy" care? Does "Occupy" care if they don't get paid? What if the team and arena owners start to lose money? Will "Occupy" shift their focus? What if, however, the government stepped in and offered protections to the owners' losses? EXAMPLE 2 - why don't we see any protests outside of Solyndra - the California solar energy company which recently declared bankruptcy after taking a $535 million loan secured by the Department of Energy. Where/who absorbed that loss? Solyndra is not a Bank...raises the question - when your taxes are used as bailout, who do you loathe more, the recipient of your taxes or the distributor of you taxes?
QUADRANT 3 - ANY VOLUNTEERS?
Who/what group of society will go for public gains and private losses? How long are private losses sustainable, and who will be privatizing these losses? In other words, who is willing to accept the risk of a private loss in exchange for the possibility that the gains from taking such a risk will be socialized among the general population. Is this not the essence of the occupy movement? Is this not what they are asking for? Are they not asking for the wealthy 1% to narrow the income/wealth gap between themselves and the 99%? Are Occupy protesters asking for the wealthy to come down from their lofty 1-percent-dom and start writing out checks or paying off student loans? That is kind of what it sounds like when you hear people shouting about the wealthy paying their fair share. If there are 2 individuals in a society and one paid $0 in taxes and the other paid $1, who has a greater argument about paying a "fair share"? Search "Peter Schiff visits Occupy" on YouTube.com. More relevant than the 99 vs 1, I think the "Occupy" movement has actually exposed the massive number of Americans who pay ZERO income tax.
QUADRANT 4 - SOCIALISM
"The problem with socialism is that you eventually run out of other people's money." - Margaret Thatcher (Former conservative Prime Minister of the United Kingdom). Is this what we're really going for anyway? Who out there really enjoys or prefers to subject themselves and their daily efforts to the loss-producing potential of other people's decision making abilities? Happens everyday, I know but what if it was government mandated? Would it change the way you view risk? No one seems to have a problem with the idea of a personal, voluntary decision to socialize success (charity, job creation, giving, etc.). And we all understand taxation. But how would you really, really feel about the GOVERNMENT MANDATING how or where your success is socialized or shared? Socialism is not a seemingly innocent expansion of social programs like welfare which TARGET needs and AIM to help those needs. No, Socialism in contrast TARGETS success and AIMS to socialize that success AWAY from the engine creating that success and REWARD those who may have had nothing to do with the creation of that success (or the management of risks required to achieve that success).
CONCLUSION - "A slippery slope" - and - "This is in fact a socially and politically complicated matter"
This "anonymous" movement we're now seeing has devolved into nothing more than disjointed expressions of localized public angst.
99% vs 1% is a lie. These protesters believe they have the power and support of 99% of the country?! It is time to think about what % of the 99 you actually represent.
This "anonymous" movement we're now seeing has devolved into nothing more than disjointed expressions of localized public angst.
99% vs 1% is a lie. These protesters believe they have the power and support of 99% of the country?! It is time to think about what % of the 99 you actually represent.
In 2008, our country witnessed a vast, wholesale and deliberate re-direction of what were otherwise inevitably dire and likely catastrophic events. The FUNDAMENTALS of Capitalism would have let these events unfold without intervention. Those who accepted the risk of loss associated with the accompanying opportunity for gains should have been left alone to bear the consequences of their actions. Right? Unfortunately nothing that happened in 2008 (or since) has been so simple. In retrospect, a frequent and obvious question raised is how we got into that situation and the attendant market manipulations (in contrast to the fundamentals of capitalism) are glaring. Capitalism, in it's best of intentions, professes that free markets are the most efficient form of a sustainable economic society. It is fair and prudent, however, to acknowledge that truly "free markets" is an ideological, not practical concept. In his book, 23 Things They Don't Tell You About Capitalism, Ha-Joon Chang writes, "...We accept the legitimacy of certain regulations so totally that we don't see them. More carefully examined, markets are revealed to be propped up by rules - and many of them." This is to say that some REGULATION, however vague, exists and is a necessary and required component of free markets. And it is in this REGULATION where the system has been perverted in the interest of the powers involved in the creation of such REGULATION. Yes, the system has been perverted in the same way a car may lose its alignment. That I believe to be true - and I believe that is where both the 99% and the 1% can agree. I don't believe our economic system is "broken" but the system has been over or under-regulated to the extent it no longer is functioning in a balanced manner.
This is the "Slippery Slope". To have let the downside mechanics of capitalism take over at the precipice of 2008 would have let economic conditions free fall until markets stabilized. However, the free fall would have carried so much downward momentum and velocity, the collateral damage was deemed to represent a "systemic" risk - a risk to our ENTIRE economic and social system. And no one in Washington, Wall St. or Main St. was prepared to accept or manage that systemic risk. This is why the government stepped in and once again provided or mandated resources beyond the scope of functional "free-markets" in order to avoid the catastrophe. So before you oversimplify the financial crash of 2008, you have to be prepared to consider how you would have felt if the overall impact to you and our society would have been even worse, much worse - and more prolonged. Just ask Japan about prolonged economic pressure. The solution at the time was not to pull away all the backstops, but the solution NOW is to critically look at what risks have been socialized, allowing artificial market conditions to exist (and eliminate them).
Protesters want to point the finger and scream (or rather sit and do nothing) at Wall Street. Could it really be so simple? So black and white? Does Wall St. have and exercise a perverted level of influence in Washington - probably yes. But is Wall St. the only interest in our society with possession or access to a perverted level of influence in Washington - emphatically NO. The "Occupy" focus (at least in NY) is so intensely trained on Wall St. that they do not see their massive blind spot - what the (#@%) has been going on in Washington?! Why were interest rates so low for so long? Because the Federal Reserve forcibly kept them there (Fed Funds rate). What if the Federal Reserve were empowered to set the price on say, the stock market - or even just one stock. How would that affect your perception of that stock and your willingness to take on risks associated with that stock? This is why you might hear someone like Ron Paul talk about eliminating the Federal Reserve - he wants to let its functions be guided by markets instead of a committee (see REGULATION in previous paragraph). Resist the temptation to make this an entirely political issue. Resist the temptation to declare a de-facto victory for your cause by identifying reasons why one political party or the other is the perpetrator. Both Democrats and Republicans have enabled the problem yet neither is now willing or able to provide the kind of leadership and conviction needed to bring things back into alignment (ex. SUPER COMMITTEE). There is a powerful gravity in this country drawing citizens to one party or another when in this case it is not so binary.
I'm not saying protesters are wrong (I'm not saying you're right) - but you're really just mad as hell and looking for someone to take it out on. Keep kicking Wall St. if you feel like it but stop pretending like Wall St. has kidnapped America unless you're prepared to give Washington a pass for having a terminal case of Stockholm Syndrome. And stop calling yourself the 99% - you do not speak for me.
This is the "Slippery Slope". To have let the downside mechanics of capitalism take over at the precipice of 2008 would have let economic conditions free fall until markets stabilized. However, the free fall would have carried so much downward momentum and velocity, the collateral damage was deemed to represent a "systemic" risk - a risk to our ENTIRE economic and social system. And no one in Washington, Wall St. or Main St. was prepared to accept or manage that systemic risk. This is why the government stepped in and once again provided or mandated resources beyond the scope of functional "free-markets" in order to avoid the catastrophe. So before you oversimplify the financial crash of 2008, you have to be prepared to consider how you would have felt if the overall impact to you and our society would have been even worse, much worse - and more prolonged. Just ask Japan about prolonged economic pressure. The solution at the time was not to pull away all the backstops, but the solution NOW is to critically look at what risks have been socialized, allowing artificial market conditions to exist (and eliminate them).
Protesters want to point the finger and scream (or rather sit and do nothing) at Wall Street. Could it really be so simple? So black and white? Does Wall St. have and exercise a perverted level of influence in Washington - probably yes. But is Wall St. the only interest in our society with possession or access to a perverted level of influence in Washington - emphatically NO. The "Occupy" focus (at least in NY) is so intensely trained on Wall St. that they do not see their massive blind spot - what the (#@%) has been going on in Washington?! Why were interest rates so low for so long? Because the Federal Reserve forcibly kept them there (Fed Funds rate). What if the Federal Reserve were empowered to set the price on say, the stock market - or even just one stock. How would that affect your perception of that stock and your willingness to take on risks associated with that stock? This is why you might hear someone like Ron Paul talk about eliminating the Federal Reserve - he wants to let its functions be guided by markets instead of a committee (see REGULATION in previous paragraph). Resist the temptation to make this an entirely political issue. Resist the temptation to declare a de-facto victory for your cause by identifying reasons why one political party or the other is the perpetrator. Both Democrats and Republicans have enabled the problem yet neither is now willing or able to provide the kind of leadership and conviction needed to bring things back into alignment (ex. SUPER COMMITTEE). There is a powerful gravity in this country drawing citizens to one party or another when in this case it is not so binary.
I'm not saying protesters are wrong (I'm not saying you're right) - but you're really just mad as hell and looking for someone to take it out on. Keep kicking Wall St. if you feel like it but stop pretending like Wall St. has kidnapped America unless you're prepared to give Washington a pass for having a terminal case of Stockholm Syndrome. And stop calling yourself the 99% - you do not speak for me.
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