Occupy Wall Street-Posner



What is one to make of the “Occupy” movement? Is this the return of the turbulent 1960s? Is it the American version of the “Arab Spring”? Of of the French and English riots of recent years?

 

I think only three things are clear: first, human beings are imitative, and the success of the Arab riots that brought down several governments and have shaken others was bound to attract imitation in some form (a necessary qualification: the “Occupy” “occupations” have been minimally violent); second, the social media have reduced the cost of organizing collective activity by strangers; and third, a depression (which we have now been in for more than three years, since the financial crisis of September 2008) gives rise to street demonstrations. (Think of the “Bonus March” on Washington of 1932, broken up by U.S. soldiers under the direct command of General MacArthur, who at the time was the chief of staff ot the Army.)

 

The police I think made a tactical mistake in routing the “Occupiers” from Zuccotti Park near Wall Street. That is the lesson of the 1960s. Arrests, whacking demonstrators with billy clubs, dragging screaming women to paddy wagons, and other police just create anger, martyrdom complexes, and sympathy for the demonstrators. The Occupiers had made the mistake of—occupying urban spaces (in imitation of the Egyptians who occupied Tahrir Square in Cairo), rather than marching in them. The occupations attracted criminals, panhandlers, and lunatics, and created unattractive, unsanitary conditions. Self-destruction impended, which cold weather in most of the country would have accelerated, had not the arrests interrupted the natural process of decay. As a result there is an increased danger that the occupations will be replaced by a movement—how effective a one I do not know. (In January 1969, student radicals occupied the Administration building of the University of Chicago. The police were not summoned, and after two weeks the radicals abandoned the building; almost 100 were then expelled or suspended from the university. The university was largely spared the turmoil that continued for years at other major universities.)

 

The grievances of the “Occupiers” appear to be three: income inequality, lack of jobs, and the baleful influence of the banking industry (“Wall Street”), broadly defined to embrace pretty much the entire financial sector. The three grievances are related, and a skillful leader could make them coherent, as follows. Income inequality had been growing for many years, most rapidly at the top of the income distribution; between 1979 and 2007, the income of the top 1 percent had grown by 275 percent, and the average income by only 18 percent. The income of the top 1 percent has actually declined during the current depression, but the growth of unemployment and underemployment has highlighted the enormous disparity in wealth between top and bottom. Although unemployment is much lower among college graduates than among others, the unemployment rate of young college graduates has increased sharply during this depression, from 2 percent in 2007 to more than 7 percent today. This helps to explain the prominence of college students and young college graduates among the “occupiers” and their emphasis on unemployment and income inequality.

 

Income inequality at the top of the income distribution has been further highlighted by the enormous publicity concerning the extraordinary incomes that continue to be obtained by financial executives despite their role in the current economic distress. Their incomes do appear to be excessive, in the following senses. These incomes are generated to a significant extent by speculation, which has social value in increasing the amount of information about asset values and the speed with which that information is generated, but these social values are smaller than the profits of successful speculators, since those profits consist primarily of gains, often produced by sheer chance, at the expense of the people or firms with whom they are trading. Speculation is not a zero-sum game, because valuable information is generated, but the value is smaller than the gains of the successful speculators. In the case of nonfinancial products and services, the producer is typically unable to capture anywhere near the full value that he creates. Bill Gates is believed to be the wealthiest person in the world, but the business model that he invented, and its implementation by Microsoft under his leadership, have created far more value that he and the other leaders of Microsoft have appropriated.

 

And without government assistance, whereas the incomes of financial executives have been bolstered by the efforts of the government to keep banks from failing.

 

Banking moreover has never been popular. The main reason I think is that banking is one of the few industries that simply refuse to sell to many of their most willing, even desperately willing, customers. For what they are “selling” is loans, and mainline banks won’t lend to people who have poor credit, leaving them to deal with the payday lenders, the car title lenders, and the pawn shops.

 

Because many financial executives have very large incomes, and because banks have huge financial resources, the banking industry has enormous influence on legislation and regulation. In the regime of deregulation and lax regulation of the financial sector that began at the end of the Carter Administration and accelerated in subsequent Administrations (notably Clinton’s and the second Bush’s), bankers were enabled to engage in a variety of risky and sharp practices—and competition forced them to do so. Banks depend mainly on short-term capital, both financial and human, and firms that depend on short-term capital are constrained to compete to the fullests extent allowed by the law and regulatory authorites, or else they lose their capital to their bolder competitors. Competition in such an industry is Darwinian.

 

Railing against income inequality, job loss, and banking abuses is thus understandable, but it doesn’t do any good. The “Occupiers” are anarchic and disruptive, and the solid middle of American society, which rejects the Tea Party because of its goofy ideas, is likely to reject the Occupy movement because of its style, while broadly sympathetic to its antipathies. But if the movement attracts charismatic leaders amidst a stagnant or worsening economy, it may become a force in American politics. Already Kalle Lasn and Micah White, who appear to be the nearest thing the movement has to leaders, have published an articulate manifesto, “Why Occupy Wall Street Will Keep Up the Fight,” www.washingtonpost.com/opinions/why-occupy-wall-street-will-keep-up-the-fight/2011/11/17/gIQAn5RJZN_story.html?hpid=z2 (visited Nov. 20, 2011), which reminds me of Tom Hayden’s 1962 “Port Huron Statement of the Students for a Democratic Society,” www.h-net.org/~hst306/documents/huron.html (visited Nov. 20, 2011).

Comments

[Ugg Australia Boots]

Using free markets solutions to solve are problems rather than the Government goofy ideas.

[Cheap Air Force Ones]

Ask the administrators at University of California - Berkley and the University of Wisconsin who took a "hands off". They paid for dearly. It took the California National Guard under Governor Reagan to restore order at Berkley. Wisconsin had buildings that were blown up because of the soft approach by the administration.

[Ugg Australia Boots]

One, you cannot take the college protest movement in the 1960's as it was handled at the University of Chicago and extrapolate from that one example on how protests should be handled. Ask the administrators at University of California - Berkley and the University of Wisconsin who took a "hands off". They paid for dearly. It took the California National Guard under Governor Reagan to restore order at Berkley. Wisconsin had buildings that were blown up because of the soft approach by the administration.

[Cheap Burberry Scarves]

Nice post and thanks for highlighting this important issue.

[Beats Headphones]

I do npot know what will happen with "Occupy" movement, but I am happy that it was created, because there is a positive result because of it!

[NEH]

As for the "Hard" approach to dealing with Ad-Hoc demonstrations, just ask Governor Rhodes of Ohio and various former National Guardsman about Kent State. Anyone remember the four dead in Ohio? Better to use the soft touch and lose a few buildings to arson than killing innocent bystanders in order to prove one's authority, power and control. The British tried it at the "Boston Massacre" and look what it got them...

[Jack]

NEH..... yes, Kent State combined with Neil Young's year long hit, dirge about the affair perhaps accounted for a substantial fraction of defunding the fiasco that should have ended, at least, by 1968 when Nixon got in, partly, on an Ike-like "bring the boys home" campaign.

And Ha! Using force in THIS era to drive it "underground" when the "inmates" have "facebook" for creating flash mobs, and the internet for distributing truths --- that haha! was designed for the military to be destruction proof....... block a packet on 3rd Ave and it zips around the block to travel on 2nd Ave ------- and there is NO taking the whole thing down. The Occupiers have the same guarantee of communication as do the banksters whose fully corrupted, greed laden acts were largely the cause of the mess.

[Back Taxes]

They will all be gone soon.

[Jack]

Geez "Back Taxes" I accidentally clicked on your handle to find you're but another of our poor desperate spammers foolishly "feeling" that spamming this rarely visited site might draw that one saving consumer to your failing businesses. It's truly a sad picture when things get this bad.

[NEH]

Ahh... Yes. "Tin Soldiers and Nixon's coming! We're finally on our own"... And I was only in Highschool at the time. What a situation too find oneself in - graduate then either enlist and end up coming home in a bodybag from Indochina or go to College and get shot down while walking between clases. My the tough choices an 18 year old had to make back then... ;)

[Thompson]

I am a big fan of Becker's and Posner's writing here and elsewhere. However, I take issue with Posner's reference to the Washington Post article and Port Huron manifesto. The Port Huron deal is way too long. Few have time to read that long of a document--plus it is diffuse at best.

Ah! Perhaps that was Posner's idea: the Washington Post article is also diffuse. If that was his idea, then I support it.

[Jack]

NEH, Ha! consider the positives! Back then everyone wanted us, military, companies that would even train their new hires...... now the kid, a grad or not is "lucky" to be able to contribute his labors and gifts. But....... other than counting rap as music and being able to understand the words, not much of a musical score to accompany today's "choices".

[Jack]

Thompson: Some good thoughts from Port Huron

"Automation brings unemployment instead of mere leisure for all and greater achievement of needs for all people in the world -- a crisis instead of economic utopia."

.......... not bad for '62! though until recently I argued the "freeing up to do other things and improve std of living" side.

In a participatory democracy, the political life would be based in several root principles:

that decision-making of basic social consequence be carried on by public groupings;

that politics be seen positively, as the art of collectively creating an acceptable pattern of social relations;
that politics has the function of bringing people out of isolation and into community, thus being a necessary, though not sufficient, means of finding meaning in personal life;

that the political order should serve to clarify problems in a way instrumental to their solution;

it should provide outlets for the expression of personal grievance and aspiration;

opposing views should be organized so as to illuminate choices and facilities the attainment of goals; channels should be commonly available to related men to knowledge and to power so that private problems -- from bad recreation facilities to personal alienation -- are formulated as general issues.

The economic sphere would have as its basis the principles:

that work should involve incentives worthier than money or survival. It should be educative, not stultifying;
creative, not mechanical; selfdirect, not manipulated, encouraging independence; a respect for others, a sense of dignity and a willingness to accept social responsibility, since it is this experience that has crucial influence on habits, perceptions and individual ethics;
that the economic experience is so personally decisive that the individual must share in its full determination;
that the economy itself is of such social importance that its major resources and means of production should be open to democratic participation and subject to democratic social regulation.

........ I hear the millenials talking about what sort of cog they want to be. It seems a while since we've heard much idealism. I'm reminded of studies showing pride of workmanship when employees built a whole unit as compared to putting in the bumper bolts. Long way from those being paid $15 to "robo-sign" the docs of rotten mortgages day after day w/o even knowing what they were producing and what crap it turned into being.

[lee]

take action.

[North Face Coat]

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[Oneaveragebear]

So, Posner is bringing up the lack of leadership issue again. Every time I see this argument for the impending failure of the OWS movement in comes in conjunction with a misunderstanding: the OWS movement is not about "putting their guy in power." They don't want a candidate to represent the views held by the majority of their movement. They don't want someone to champion their cause.

The movement is about the spread of ideas. This is the reason behind the 90% vote threshold idea. Until every significant minority group feels heard, they aren't going anywhere. They are not looking for a mouth piece; they are the mouth piece and, quite frankly, people are listening. When the protests started Mitt Romney condemned OWS as a disorganized mob. After one week he came out with a statement pandering to the "understandable" anger that Americans are feeling.

All that needs to happen for OWS to succeed is for their issues to become necessary talking points in the Obama, Romney, Cain and Bachman campaigns, which has already happened to a large degree. When the CURRENT presidential candidates realize that they need to appease the OWS movement to win the election, then it will have succeeded regardless of physical presence, candidates or leadership.

[stuart boynton]

I hope the essence of OWS, i.e., protest against present-day income inequality, gets through the fog of disorderly group behavior and lodges itself in the political campaign.

[Jack]

Oneaveragebear................... good observations. I think right on!

And great! as THE function of our form of government IS that to bring in the concerns of the nation, weigh them and respond to them. There is just about a full year left to go!

[Mike Spike]

This can't last forever!

[Ralph Lauren Outlet]

Your article is very special, I learned a lot, I will always look at your article, I covered up your site.

[Christian Louboutin UK]

All of the sci-fi stories pointed to a shorter work week, more leisure time and industries developing around increased leisure time coupled with the income to enjoy it.

[Monster Beats Spiderman]

Global demographics instruct that manufacturing job growth in nations with emerging economies will continue to outpace manufacturing job growth in America.

[Classic Ugg Boots]

Thanks Mr Becker for sharing the information.

[Air Maxs 95]

Thank you for such an informative website and post on the EU debt crisis. German tax-payer will react to the prospect of higher taxes oer many years to bail out weaker EU member nations. This is particularly the case when there seems to be constant and volatile opposition in these weaker EU nations to austerity measures.

[Cheap Air Max 90]

I think it's hilarious, albeit tragic and appalling, that those who think like pathological narcissists or sociopaths - content not to think beyond the cramped confines of their own comfortable little plutocratic niche.