11/22/11 OCCUPY WALL STREET The causes and repercussions The Causes and Repercussions
CRONY CAPITALISM • When businesses form tight relationships with government officials to help them profit. • The largest firms spend a tremendous amount of money in lobbying efforts to sway lawmakers. It’s as if the more wealth one has, the greater their political power. This makes competition unequal where “the smaller, younger firms almost always lose.” "The Uncertainty Principle: Dodd-Frank Will Require At Least 243 New Federal Rule-Makings." The Wall Street Journal, July 14, 2010,http://online.wsj.com/article/SB10001424052748704288204575363162664835780.html#articleTabs%3Darticle • Estimates show for every $1 spent lobbying, the largest firms make $220 in returns in forms of tax deductions, permits, incentives, and much more. "Money and Politics," The Economist, October 1, 2011, 1, http://www.economist.com/node/21531014. • When wealth is concentrated in larger companies and fewer people, the political power of the average citizen is curtailed.
TODAY’S CRONY CAPITALISM • Corruption: Business and Politicians in Chicago: • Illinois Democratic legislature passed the largest tax hike in the state’s history in 2011. • 10 months later, the state’s three largest and most powerful firms were given a tax break after the businesses voiced their concerns about out-of-state competition. Other businesses are excluded. • Illinois Gov. Pat Quinn, strong supporter of the tax relief, received nearly $100,000 to from these companies in campaigning in 2010. • William McGurn, "Crony Capitalism, Chicago-Style," The Wall Street Journal, November 15, 2011. • “The logic of crony capitalism: Raise taxes on everyone—and then cut side deals with those big enough to lobby for special relief.” • William McGurn, "Crony Capitalism, Chicago-Style," The Wall Street Journal, November 15, 2011.
The Financial World • "We don’t really care than much how [the government is] going to fix the economy, how they are going to fix the situation. Our job is to make money from it." - Alessio Rastani, investor. • The rise in distrust of the banking system is understandable: those tied to finance, have increased its share of GDP from the 1960s by 70% while simultaneously building a network of connection into the political sphere (Zingales, 31). • The bailouts are often led by government officials who were previously tied to the banking world’s network. BBC News, "Maverick Trader: Was What He Said Actually Right?" September 27, 2011, BBC News, http://www.bbc.co.uk/news/magazine-15095191?print=true.
Decline of Social Mobility • -In general, the rich are becoming richer when no one else can climb upward. • -Stagnant earnings • The sharp decline of Economic Freedom since 2008’s Financial Crisis suggest that those in Power are likely to remain in Power. The Wall Street Journal and The Heritage Foundation, "2011 Index of Economic Freedom," Index of Economic Freedom, accessed November 18, 2011,http://www.heritage.org/index/explore Carl Bialik, “Income Ladder’s Sticky Steps,” The Wall Street Journal, November 12, 2011, http://online.wsj.com/article/SB10001424052970204224604577030720603515022.html.
Who Benefits From Government? • Taxpayer’s money are used to bailout the institutions who caused much of the economic crisis themselves by making the risky investments. • Fannie Mae & Freddie Mac are recovering slowly and its employees’ pay check were just reduced, but the CEOs’ salary have grown to $6 million annually. Officials intended to see the stimulus trickle down from top down, but evidently, they are still largely funneled back to the businesses and managers. Alan Zibel and Nick Timiraos, "Lawmakers Target Fannie, Freddie Pay," The Wall Street Journal, November 16, 2011.
Greed in the Business World • BBC News, "Maverick Trader: Was What He Said Actually Right?" September 27, 2011, BBC News, http://www.bbc.co.uk/news/magazine-15095191?print=true.
Frustration • People are tired of hearing of stories of the rich becoming richer, investors saying, “I go to bed every night and I dream of another recession. I dream of another moment like this...[to] make a lot of money from this.” • Protestors are not ‘lazy.’ Many are trying to make the most out of their situation, but sometimes there simply is not a demand because of the recession. BBC News, "Maverick Trader: Was What He Said Actually Right?" September 27, 2011, BBC News, http://www.bbc.co.uk/news/magazine-15095191?print=true.
WHY NOW? Ashley Smith is a coordinator of the ISO – International Socialist Organization
“You can’t evict an idea whose time has come.” The Occupy Movements have stemmed from a long pattern of economic disparity. Perhaps one of the most blatant injustices was the government’s promise to reign in large corporations greed and risk and then backtracking. The Occupy Idea is prevalent enough to infiltrate through all media sources and garner public sympathy and respect. It is a movement that resonates with a lot of people. The protests might fizzle out with time, but it has proven that the country is unhappy with the economic situation and the next issues the country and politicians will be forced to face will be remedying income disparity and a jobless market. The movement has now spread around the world. The time has come for peaceful civil disobedience and the time has come for there to be discussion and antidotes for this issue.
Politician’s Hypocrisy • Politicians’ responses: shallow & populist: • Politicians have debated whether or not to support the Wall Street movement. For instance, “Governor Mitt Romney, who had first called the ‘dangerous,’ executed another of his patented flip flops that he, too, identifies with America’s 99 percent not the top one percent where he’s always dwelled. ‘Boy I understand how these people feel,’ he said.” Frank Rich, "The Class War Has Begun," New York, October 23, 2011, . • "I think it expresses the frustrations that the American people feel," President Obama said in early October, shortly after the protests began. "People are frustrated and the protesters are giving voice to a more broad-based frustration about how our financial system works.” Joe Newby, "President Obama Should Stop Occupy Violence or Resign," Examiner.com (blog), November 20, 2011, http://www.examiner.com/ conservative-in-spokane/president-obama-should-stop-occupy-violence-or-resign.
Politician’s Hypocrisy • Politicians’ and Insider Trading: • Insider trading done by everyone—from Nancy Pelosi to John Boehner. • Rick Perry campaigned to stop insider trading: “Any congressman or senator that uses their insider knowledge to profit in the stock market out to be sent to jail—period.” • Why hasn’t it been outlawed before OWS? Michael O'Brien, "Perry: Jail Lawmakers Who Engage in Insider Trading, "MSNBC, November 14, 2011, accessed November 17, 2011,http://firstread.msnbc.msn.com/_news/2011/11/14/8804297-perry-jail-lawmakers-who-engage-in-insider-trading.
Effects of Occupy • “OWS has raised the profile of recent reports showing growing income inequality in the US. Reports by the UN, the Congressional Budget Office, the U.S. Census Office, all show America maintaining the highest rates of income inequality in the rich world (and the highest our country has seen since the Great Depression, in fact they are higher than that). Additionally, OWS has helped raise the profile of reports out this fall regarding America's high adult and youth poverty rates, the highest since World War II.” • —Michael Shank, U.S. Vice President, Institute for Economics and Peace Alice Rawsthorn, "Elements of Style as Occupy Movement Evolves," New York Times, November 12, 2011, accessed November 20, 2011,http://www.nytimes.com/2011/11/21/arts/design/elements-of-style-as-occupy-movement-evolves.html?_r=1.
What has OWS done so far? • Occupy has given a voice to a vast majority who have been slighted, it has proved that social justice is still important to the hearts and minds of many. • As Gloria Feldt, the former Planned Parenthood CEO said, “[Wall Street is] courageously laying bare the root of our economic problems: the rapacious greed of the one percent who control most of the wealth and contrasting that with the other 99 percent's justifiable aspirations to earn their way to food, shelter, healthcare, and a shot at the American dream.” Gloria Feldt, "Has Occupy Wall Street Accomplished Anything?" The Arena (blog), November 18, 2011, http://www.politico.com/arena/perm/Gloria_Feldt_78DA4F2F-92D2-47A8-AAE6-6EAEC76D6930.html.
Pooja Thakkar, "Occupy Wall Street Protestors Pepper-sprayed byPolice," Technology Digital (blog), November 21, 2011,http://www.technology-digital.com/web20/calif-police-suspended-after-the-pepper-spray-incident. College Students Many of the protests are at college campuses and many of the protestors are college students or recent college graduates. Many young people are unable to find a job in today’s economic situation. They have no experience and also no opportunity to get experience. They are pressured by hundreds of thousands of dollars of student loans. Many believe that education The Occupy Movement serves as a warning against higher education and some believe that one of the root causes of the Occupy Movement is too many young kids with college degrees.
Occupy for Young People • “Young people – and not just those on the streets- are more likely to face higher taxes, less generous benefits and longer working lives than their parents… In America 17.1% of those below 25 are out of work.” (Rage Against the Machine," The Economist, October 22, 2011) • Occupy UC Davis might be the most volatile of any Occupy Campus. There has been public uproar over videos and photos of a policeman pepper-spraying kids sitting down in protest. This act, just like the riots in Occupy Oakland, has only added more fire to the movement. Police brutality along with the right to protest and free expression are now added to the list of grievances Occupiers and their sympathizers are fighting against. • This example also serves to tell how dependent this movement is on the role media • “Apparently some of those dopey kids, staggering under student loans and bereft of job prospects, have lots of parents and friends of all ages who understand exactly what they’re talking about” Frank Rich, "The Class War Has Begun," New York, October 23, 2011, .
College Student – Young People Responses Two young students attending Harvard. One majoring in Psychology and the other is in medical school. They tell us their opinions on Occupy Wall Street. •“The public is largely sympathetic. But that could change if it looks as if they’re crossing the line into violence” Costas Panagopoulos –Fordham University political science major Rick Hampson, "Occupy protesters try to keep momentum," USA Today,November 16, 2011, http://www.usatoday.com/NEWS/usaedition/2011-11-18-occupy-wall-street18-ST_ST_U.htm. This movement is very much about the young people. The young people are the ones who are in debt thousands of dollars and unable to find jobs.
Where will OWS Lead? Ashley Smith • Ashley Smith is 47 years old and a coordinator of the International Socialist Movement. He works and lives in Massachusetts.
Controversy • Some violence • Heckling police men • Three Rapes since movement began • At first described as ‘ne-er do wells,’ many people participating are and have been homeless for a while. • Loud, illness prevalent, no cohesive goal.
Goals for the future • Occupy can be described as a ‘leaderless’ or ‘leaderful’ movement. There are no firm goals, but as a whole this movement seems to be demanding that the capitalist government take steps to remedy government policies rather than overthrow the capitalist system. • Occupy Wall Street has such varied goals that it is hard to tell what will come of this movement. Perhaps the most important thing they have done is change the economic and political climate. The media has been very sympathetic to them because the public can identify with them. There is no way to tell what lasting effects this movement will bring, but we know that so far, it has shined an unattractive spotlight on wealth discrepancy and government’s role in finance.
Bibliography • The Arena (blog). http://www.politico.com/arena/. • BBC News, "Maverick Trader: Was What He Said Actually Right?" September27, 2011, BBC News, http://www.bbc.co.uk/news/magazine-15095191?print=true. • Bialik, Carl. “Income Ladder’s Sticky Steps.” The Wall Street Journal, November 12, 2011. http://online.wsj.com/article/SB10001424052970204224604577030720603515022.html. • The Economist. "Money and Politics." October 1, 2011. http://www.economist.com/node/21531014. • The Economist. "Rage Against the Machine." October 22, 2011. • Examiner.com (blog). http://www.examiner.com/. • Hampson, Rick. "Occupy protesters try to keep momentum." USA Today, November 16,2011. http://www.usatoday.com/NEWS/usaedition/2011-11-18-occupy-wall-street18-ST_ST_U.htm. • McGurn, William. "Crony Capitalism, Chicago-Style." The Wall Street Journal, November 15, 2011. • O'Brien, Michael. "Perry: Jail Lawmakers Who Engage in Insider Trading."MSNBC, November 14, 2011. Accessed November 17, 2011.http://firstread.msnbc.msn.com/_news/2011/11/14/8804297-perry-jail-lawmakers-who-engage-in-insider-trading. • Rawsthorn, Alice. "Elements of Style as Occupy Movement Evolves." New YorkTimes, November 12, 2011. Accessed November 20, 2011. http://www.nytimes.com/2011/11/21/arts/design/elements-of-style-as-occupy-movement-evolves.html?_r=1. • Rich, Frank. "The Class War Has Begun." New York, October 23, 2011. • Technology Digital (blog). http://www.technology-digital.com/. • The Wall Street Journal. "The Uncertainty Principle: Dodd-Frank Will Require At Least 243 New Federal Rule-Makings." July 14, 2010. http://online.wsj.com/article/SB10001424052748704288204575363162664835780.html#articleTabs%3Darticle. • The Wall Street Journal, and The Heritage Foundation. "2011 Index of Economic Freedom." Index of Economic Freedom. Accessed November 18, 2011.http://www.heritage.org/index/explore. • Zibel, Alan, and Nick Timiraos. "Lawmakers Target Fannie, Freddie Pay." The Wall Street Journal, November 16, 2011. • Zingales, Luigi. “Capitalism After the Crisis.” National Affairs, Fall 2009.