Jewish World Review Oct 13, 2011 / 15 Tishrei, 5772
Occupy Wall Street most certainly does have an agenda
By Robert Robb
http://www.JewishWorldReview.com | The conservative reaction to the Occupy Wall Street protests has been derision coupled with a reflexive defense of Wall Street.
Both are a mistake.
One of the elements of the derision is the claim that the protesters don't have an agenda. But they do.
The protests consist mainly of people who believe that economic and social justice require a form of economic organization other than capitalism. That may not lend itself to a five-point plan, but it's an agenda nonetheless.
It's a decidedly misguided agenda. The protesters are massively wrong about the incompatibility of capitalism and social justice.
Social justice shouldn't be measured on what the rich have, which is the fixation of the protesters. Instead, the focus should be on the lot of the poor. The spread of market capitalism has done more to improve living standards for more of the world's poor than anything else in human history.
There is, however, a serious social-justice problem that has developed in American market capitalism. Two of the bridges to the middle class for those without a college education - manufacturing and construction - have been eroded. Manufacturing jobs haven't been lost mainly to free trade, as the brief against capitalism would have it, but to sharply improved productivity. And construction wages have been undermined by illegal- immigrant labor.
The American economy hasn't really developed substitutes for these bridges. While the protesters misdiagnose and exaggerate the problem, conservatives shouldn't be so dismissive of the rising income gap based upon education.
The protesters are occupying Wall Street because they see large investment banks as the heart of American capitalism. They are also wrong about that, but their mistake is shared by the policy makers in both of the country's major political parties.
Capital is the bloodline of commerce. Businesses produce first, then get paid by those who buy their goods or services. They need money to get from Point A to Point B.
There are an infinite number of ways that businesses get capital. Large Wall Street investment banks play a role, but a rather small one. And almost exclusively for big businesses, which isn't where the growth in the American economy occurs.
A lot of what the large investment banks do isn't raising capital. It's gambling on economic movements of various sorts. Some of this is economically useful hedging to minimize risk. But a lot of it is rich people betting on economic trends rather than ponies, dogs, cards or dice.
Some compare Wall Street investment banks to casinos, but that's unfair to casino operators. Casino operators just bank the house take. Investment banks have a house take, the fees to set up the bets. But then they bet, as well. Worse, they bet with borrowed money, which is about as stupid a business model as can be envisioned.
When their bets with borrowed money turned out badly, Washington bailed them out with public money in the mistaken belief that they were more important to the broader economy than they really are.
The reforms proposed by the Obama administration and approved by Congress are inadequate to prevent a recurrence. If policy makers are unwilling to let large investment banks go broke, then the gambling needs to be thoroughly separated from the brokerage and capital- raising functions. And banks and hedge funds have to be limited to a size that policy makers are willing to see go broke.
The ire of the Occupy Wall Street protesters is warranted. Large Wall Street investment banks have taken taxpayers on a ride and escaped deserved consequences for their irresponsible financial behavior.
The protesters are wrong, however, in regarding Wall Street as the heart of American capitalism. But they have a lot of company in that mistake.
Every weekday JewishWorldReview.com publishes what many in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.
© 2011, The Arizona Republic