Why the Occupy Wall Street Movement is Occupying the Wrong Street

I am not without sympathy, or empathy, for the “Occupiers”, those mostly 20 somethings who are part of the Occupy Wall Street (and other streets) movement.

If I grew up in a middle class home, and watched as my parents and neighbors enjoying the good life, with a nice home, two cars in the driveway, a big screen television, annual vacations, and frequent restaurant meals, I would expect the same for myself when I attained adulthood.

I may have been a very prudent young person, getting good marks in high school, and graduating from college or university.

But then, the train went off the tracks. After finishing school, it’s not fun to be confronted with the stark reality of our current economic malaise. Someone who entered the workforce in 1982, or 1992, or 2002, had the benefit of a relatively strong economy for many years to guarantee a good head start.

However, those unfortunate enough to enter the workforce after the credit crisis of 2008 have faced a much different reality. Good jobs, even for the educated, are much harder to find. Even those who started their working careers in 2005, 2006, or 2007 may not have had enough time to establish their careers before the down turn claimed many working lives.

Those unfortunates expected to now be living the “American Dream”, with a nice car, nice house, nice vacations, and every “i” imaginable (iPod, iPad, iPhone).

Instead, unable to find well-paying work, they find themselves, at age 20, or 25, or 30, living in their parent’s basement, with no real hope for anything better.

No hope.

It is that lack of hope, I suspect, that is the root cause of the “Occupy” movement. What else can one do if one cannot find a job, and has no prospects? Go to Wall Street and “occupy”, I guess.

Of course these protests are not just an American phenomenon, and in fact their origins are not on Wall Street, but instead are perhaps derivatives of the “Arab Spring”, and the protests in Greece, and other countries.

Alas, I’m sad to say, their occupation is misplaced.

This apparently leader-less movement is occupying Wall Street, the heart of American business, apparently because American business is to blame for our current problems. The fault, apparently, lies with the big corporations and their obscene profits, and the bankers who foreclose on homes and then declare massive bonuses for their top ranking executives.

This gives rise to the “99% ers”, rallying against the 1% of the population that apparently controls all of the wealth, and makes all of the profit.

Is it really the corporations that are the cause of all of our problems?

No.

It’s true that corporations exist to make a profit, so that’s what they do. But we as consumers have the ultimate power over corporations: we can choose to buy, or not buy, their products and services.

If I object to the fact that Apple Inc. makes most of their products at “sweatshops” in China where employees work for 12 hours per day in hot, unpleasant conditions for very low pay, I can choose to not buy an Apple product. (It was interesting to observe the out-pouring of love for Steve Jobs, after his death. The average American apparently loved the man who exported jobs overseas, but that’s another story for another day).

So if the corporations are not to blame for acting like corporations, who is to blame?

The answer, obviously, is the government.

Government spending has continued to increase for decades. That spending represents a burden on future generations (that same generation that is now protesting). But it was not just runaway spending that has caused our current crisis; there were other stupid policies that must also share the blame.

One glaring example was the government policy, promoted most heavily during the Clinton years, that every American should be able to own a home. Fannie Mae and Freddie Mac became, via the banks, the home mortgage lenders to every American that could breathe, and we still today read the absurd stories of the person earning $10 per hour working at McDonalds who qualified for a $300,000 mortgage.

Is it any wonder that an increasing number of homes are under foreclosure?

Of course the biggest mistake was the numerous bank bailouts. The government encouraged stupid lending practices (through artificially low interest rates, Fannie and Freddie, etc.). The banks, like a drunk with access to free vodka, kept on borrowing, and lending, and derivative swapping. And then, inevitably, it all went bust.

When John Q. Public borrows too much and can’t pay it back, he goes bankrupt.

That’s what should have happened to the banks. They should have been allowed to fail, causing the shareholders and the executives to suffer the losses that they created.

But the politicians, funded in large measure by these same banks, decided that the banks were “too big to fail”, so they bailed them out. Through various means (I won’t bore you with a discussion of the “Fed Discount Window”) the government took your money, and borrowed more, to paper over the bank’s mistakes.

That is the crux of the problem. The government is spending considerably more than they have.

Of course it’s not just the banks where governments are blowing money. The American government has spent trillions on wars in foreign countries for no obvious reason, and for no benefit to Americans. The wars have made America much less safe, and broke.

And that’s sad. If the government borrowed money to build roads and bridges, at least we’d have roads and bridges. But when you spend money on war, and bank bailouts, the money is gone and you have nothing to show for it but debt.

That leads to the inevitable collapse of the U.S. dollar, as foreign investors are no longer willing to buy American bonds. That’s why the U.S. Dollar Index, which peaked around 120 in 2001, is today around 75. That means in the last decade the U.S. dollar has lost well over 30% of it’s value.

In simple terms, and yes I am over-simplifying here, the government, through reckless spending, has given away a third of the value of the country.

That’s a reason to protest.

But the protests should not be happening on Wall Street. They should be happening in Washington.

Protesting on Wall Street makes the “occupiers” look silly.

They put on their clothes, made in China, that they bought at The Gap (a corporation), and take the subway (made by a corporation) to the protest where they take pictures with their Nikon Camera (Japanese corporation) and send text messages to other occupiers over their Apple iPhone (American corporation with production in China) over the Verizon network (a corporation). They are using products made by corporation to protest corporations.

That’s silly.

Instead they should be marching on Washington demanding an end to:

• corporate bailouts with government money;
• wars we can’t afford; and
• foreign borrowing that’s killing the currency.

Either the protestors don’t understand the problem, or they don’t want the correct solution.

Sadly, I fear the later.

It appears that the solution the protestors want is more government. They want government to solve their problems, through more taxes on the rich, or more spending, or whatever.

If the solution to the problem of too much stupid government is more stupid government, the economy is doomed.