Occupy George
occupygeorge.com"Votes for Women" movement in 1903 used to deface the penny to spread the word.
Suffragette-defaced penny : http://www.bbc.co.uk/ahistoryoftheworld/objects/iVUVhaKVREWj...
Can someone brief me on what Occupy Wall Street is trying to do? I can't quite figure it out.
If they're mad about being unemployed, marching sure isn't going to fix their situation. If they're mad about government corruption, what exactly would they like done? If they're mad about the economy in general, isn't Wall Street the worst place to be protesting? I feel like the traders on Wall Street would be the first people to want an economic bounce back. Do they just hate rich people? Hmm.
I've held back on criticizing this movement, but after all this time, I still can't figure out exactly what they want. It's seeming more and more to me, as just a way to waste peoples' times, and our tax dollars.
I feel like the traders on Wall Street would be the first people to want an economic bounce back.
Hence your failure to understand OWS. Wall Street's job is to make money. Period. If it happens that it is effective to make money by repeatedly crashing and booming the stock market, then that is exactly what they will do.
Well, it turns out that it is extremely effective to make money by repeatedly crashing and booming the stock market.
If it happens that it is legal to pay government officials to pass laws covering your losses, and if it can be done for a reasonable cost, then they will do that too.
Well, it turns out that yes, this can be done for a very reasonable cost!
I find it amazing that any person on HN - HACKER news - is unable to imagine of hundreds of different ways to hack the government-economic system for fun and profit, or once having imagined them, to imagine that people with the necessary money would then not do so.
Our economy has been rooted.
I find the most interesting part of this 'hack' is how it's next to impossible to pull off a successful protest in civilised society: The greatest trick the upper echelon have pulled, is convincing the masses that using violence to achieve your ends is uncivilised.
As a non-US-er, we sometimes look down on the US for having a gun obsession, but there's no way anything OWS does would escalate to the point of seriously grabbing everyone's attention like, say, building an army, storming a building and forcibly arresting a CEO. They say OWS is inspired by the Arab Spring[1][2], but that would be a pretty tame example compared to the revolutions in Egypt and Libya. The people in OWS are upset, but not desperate, and I'm not sure this can lead to any sort of radical change unless the 1% agree voluntarily, which is obviously unlikely. It's very hard to think of a non-violent way to actually incite some change.
"The USA should invade the USA and win the hearts and minds of the population by building roads, bridges and putting locals to work." - Paul Myers
As a postscript, the amount of copycat protests are also slightly embarrassing. It's great to show solidarity, but for instance I don't think there needs to be one for my town. It's just awkward and trivialises the situation, since our economic problems are negligible compared to the US.
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1. https://secure.wikimedia.org/wikipedia/en/wiki/Arab_Spring
"The greatest trick the upper echelon have pulled, is convincing the masses that using violence to achieve your ends is uncivilised."
Bam.
I amazes me that when 500,000 people marched in London on the 26th of March, people were dumb enough to ignore the messages being sent, and instead focus on some superficial property damage.
Next time, the 500,000 should forcibly take over the media outlets ala V for Vendetta.
That sounds like a good way for the people calling themselves the "99%" to lose what little support they might have from the 98.999%.
> If it happens that it is effective to make money by repeatedly crashing and booming the stock market, then that is exactly what they will do.
The two crashes of the past decade were painful exactly because "they" expressly failed to make money. They caused a lot of pain to a lot of 1%ers. If you think the financial sector likes, and purposefully causes, crashes, well, you're wrong.
> Our economy has been rooted.
Thing is, the box was left with numerous unpatched known vulnerabilities for the better part of half a century. Whenever it got sluggish, the sys admins eagerly added memory and processors, not bothering to consider what might be wrong. And when the box finally collapsed the sysadmins are more than happy that all the anger is directed at the hackers.
They caused a lot of pain to a lot of 1%ers. If you think the financial sector likes, and purposefully causes, crashes, well, you're wrong.
http://en.wikipedia.org/wiki/Black_Wednesday
George Soros made $1bn in a day. The UK Gvt lost 3.3bn UKP.
Some people believe that Norman Lamont rose to the highest office of economics in the united kingdom without the knowledge of how currency markets work, and that he could not possibly have known that his actions would be to hand George Soros, and others, 3.3bn UKP. But let us pretend that this was incompetence so that we can answer your point.
Did George Soros purposefully crash the value of the UKP? Yes.
I use this example, rather than other more recent examples like [1], because it highlights the role of government in the transfer of wealth from the poor to the rich. In short, if the government were to say to the common man "We must give this rich person one trillion dollars and you and your children will pay for it", there would be revolution.
But if the government says "Look! The stock market has crashed! We must give one trillion dollars to the banks so that the financial system does not collapse, so that children and dogs do not roam the streets, oh dear God we must give one trillion dollars to the banks now!" And nobody complains.
Better yet, give one trillion dollars in a highly recognizable bill, lets call it TARP. Make sure that all of that money is paid back. Then, when someone says "But we gave you all that money", the rich can claim "TARP? No! We paid all that back! Look!".
But also give several trillion more in completely one-off, non publicized, totally forgettable transactions. For example, give citibanks $25bn in TARP funds - and also give them $275 in non-TARP funds. Then have them pay the $25bn back. Amazingly, if you ask the average american about citibank, they will say "Yes, they got $25bn! Bastards". "No! They gave that $25bn back! Look it up!" "Oh you are right!" And that will be the end of it. Fox News will tell you almost daily, "Look who paid back their TARP funds! TARP has made a profit!". TARP is the hand they want you to look at, while they make your future vanish with the other.
You have to admit, its really impressive.
[1] http://www.npr.org/2011/05/02/135846486/how-some-made-millions-betting-against-the-marketAnd yet, curiously, George Soros and #Occupy are both leftists
I don't mind getting down voted, but you could at least leave a comment on why.
I didn't vote you down, but I'd say you were missing the point. You think OWS is exclusively left? Did every ordinary right-leaning American suddenly decide massive government spending is OK so long as it's to bail big corporations out of their own f'ups?
Whenever it got sluggish, the sys admins eagerly added memory and processors, not bothering to consider what might be wrong. And when the box finally collapsed the sysadmins are more than happy that all the anger is directed at the hackers.
This would be a reasonable analogy if the hackers (bankers) hadn't spent the last decade paying the sysadmins (congress) to remove the safeties and add vulnerabilities.
Indeed you say this as if in the computer world, the idea of hackers just paying a sysadmin for access would be unimaginable. Certainly it appears that you haven't thought of it.
And of course the analogy is flawed, as analogies tend to be.
Yes, what has happened essentially amounts to corruption. How do you usually approach corruption, by going after the corrupted officials or the people paying the bribes? Both, especially at this scale, but no-one expects corruption to go away while there are corruptible officials.
> Certainly it appears that you haven't thought of it.
It might appear so, but appearances can be deceptive. By all means, lets have a debate based on what the other side appears to think.
I stated explicitly that the bankers had bribed the politicians.
You responded with a statement that the bankers did not do so, and that in fact the politicians had caused the damage, and then blamed the bankers. A direct contradiction of my assertion.
You are now claiming that "of course the analogy is flawed". No sir. The analogy was effective. It was the logical conclusion that you made using the analogy that was wrong, and you now admit so.
I stand by my analogy. Our economic system has been rooted.
How to fix it? How can we do that, when the people writing the laws are the ones who would be jailed by them?
I stated explicitly that the bankers had bribed the politicians.
It seems to me that it was mutual, sort of a ouroboros snake swallowing its tail. Just as we could say that bankers offered promises to politicians in order to secure favorable regulations, so did the politicians offer favorable regulation in order to secure their own re-election. As far as I can see, they're two sides of the same coin.
That being the case, it doesn't make sense to demand that the politicians wield great power in order to exercise greater control over the bankers. We know that the politicians are corrupt, so why would we give them more power?
If you were a purely profit-minded trader in a situation where you have the chance to make a million with 50% chance and lose a thousand with 50%, and in the scenario where you lose a thousand, other members of society take a collective loss of hundreds of millions, what would you do? My numbers are not indicative of the historical reality but are just to illustrate the idea of socialized costs. Anyway, I think your choice is clear.
This trader is not intentionally causing crashes, but is increasing systemic risk of crashes. 'Purposefully' causing crashes is not necessary for actually causing crashes.
The problem is both the sysadms and the hackers. I don't think, though, that the anger is directed 100% at the hackers, though the location of the protest, apart from the actual message you see on the signs if you bother to examine them, may suggest otherwise.
What you're describing is so common when government embrace an industry that it is it's own field of economic research. It's called moral hazard.
I try not to draw too many conclusions from signs or any individual expression of opinion. But I do note that the protesters marched to the home of the J.P. Morgan CEO as well as the J.P. Morgan headquarters, even though J.P. Morgan didn't bet the house on sub-prime mortgages and didn't need bail-out. That's location and action indicating anger focused on Wall Street.
http://online.wsj.com/article/SB1000142405297020349970457662...
It's more like the hackers bribed the sysadmins to give them root access, and the users couldn't afford big enough bribes for the sysadmin to care about them.
Well, it turns out that it is extremely effective to make money by repeatedly crashing and booming the stock market.
I am not an economist[1]. Boom and bust cycles - I have read - happen as a natural result of millions of people making informed choices in their own self interest.
Simplistically: Cost of X perks up a bit. People buy in, seeing a trend. Price perks up a bit more. And so on. Rational actors see a bubble - X is valued now way above what it is actually worth. These guys are also paid to make money for their investors - fail to get in the market for X and you'll simply be fired and replaced with a guy who will.
Multiply that by millions and you get booms and busts.
How does one cause a boom and bust cycle, absent a grand cabal of Rich Guys and their cronies? How would _they_ do it?
[1] Would it be lame to say IANAE or has that kind of thing cycled back to cool, yet?
The OWS movement is certainly pretty confused and vague when it comes to demands.
It would be a mistake, IMO, to use this to dismiss the reasons why people have chosen this time to protest.
If you look at the people and signs at a #Occupy protest, you will find a familiar theme: income disparity and unemployment. People are running scared in an economy where social mobility has been utterly destroyed, unemployment runs at an all-time high, and the gap between rich and poor continues to widen unabated.
Some people have chosen to blame corporations, some people pin it on banks, some are angry at the government. In the end though, the theme is the same. OWS protesters clearly have no clue how to fix it, but they are correct that something is fundamentally broken, and it would be a mistake to sweep this all away because the protesters can't put together a solid fix.
There are, of course, also the piggy-back causes. Environmentalists, educational reformers, health care reformers, and all manners of all side-issue protesters are out in force at the #occupy protests, and that really does hurt the main message.
I agree with your assessment of why the protesters protest, and that they don't have a clue how to "fix" things. I disagree with your claim that this indicates anything "fundamentally broken", other than the mindset of the protesters in thinking someone else should step in and make their lives better in all the individual ways they consider their personal situations undesirable.
Edit: Clearly people disagree. I'd appreciate some responses to go with the downvotes; I'd enjoy some discussion, rather than silencing.
I'd venture to say that the downvotes are coming from the very broad brush with which you're painting tens of thousands of people, few of which you personally know.
I'd argue that the unprecedented unemployment rate represents a clear systemic dysfunction. These aren't temporary job losses due to the natural boom-bust cycle, a very large portion of these jobs are simply never coming back. Whose fault that is is hard to say, but I don't think it's at all cynical to doubt that the unemployment rates will abate on their own.
It's also no secret that wages have been stagnant (if not outright dropping) for the past two decades. None of the trends indicate a cyclical nature, so it's not hard to suggest that these are systemic issues that won't correct themselves.
The quality of life of the average American is dropping precipitously. In a singular case we can point to any number of causes - lack of education, lack of self-discipline, substance abuse, etc etc. When multiplied a couple hundred million times over, it suggests systemic failure.
In other words, "broken", though of course we can argue about the meaning of "brokenness" till the cows come home.
FWIW, I'm the "4%". I'm definitely not doing badly at all for myself, even in this economy. In fact, my quality of life has never been higher. Despite this, it would be a mistake for me to dismiss the problems this country faces, or to jump to conclusions about those affected. It is perpetually disappointing to me how judgmental the wealthy and successful can be, using their singular case of triumph over the system as a wide brush with which to paint all those who have failed to beat it.
Funny, I'd actually intended my comment as a complaint about the very broad brush with which the protesters paint all the world's problems, or at least the ones they personally see. I'd argue that we don't have a "fundamentally broken" system which we could simply fix and solve all the problems at once. A large number of people have a large number of individual problems, and some of those problems look superficially similar. I'm pointedly trying to not paint a huge number of people with a broad brush. :)
I think taking issue with 'fundamentally broken' is fair though.
The current recession is not as bad as the great depression, and I'm very, very glad that in the US, we pursued incremental, evolutionary fixes to the breakage then, than much of the radical transformation that happened elsewhere, and turned out to be far, far worse than the 'broken' in the US.
I mean, if something is genuinely fundamentally broken, you should throw it out and completely remake it, no? Terrible idea, as far as I'm concerned, with regards to the US economy.
Other than that, I think your original comment was as good, although I still think the whole thing ought to be flagged as a political discussion that doesn't belong here.
Something can't be a "systemic dysfunction" while being the sole fault of 1% of the population, either.
Maybe I'm getting crazier and more radical in my old age, but I'd say that if the 1% can afford to buy/bend the system to their ends, then it most certainly can be systemic.
The fact that I hear Obama's "$1B war chest" being trumpeted and that Tim Pawlenty drops out of the Republican race solely for lack of funding reinforces what I've felt for a very long time - that campaign finance is the elephant in the room in terms of the issues that are bringing this country down.
In this particular case, the housing and higher education bubbles required significant proportions of the population to buy into them. Bubbles that do little but draw poor investment from the already wealthy aren't as problematic.
I see what you're saying, and I agree. Those bubbles were not the systemic issue I'm specifically fired up about, though. Those are more like branches of the tree rather than the root.
The root, to me, is corporate money and influence in Washington to such a degree that it effectively shuts out democracy. I lay fault for that systemic problem at the door of "the 1%" and the politicians they influence.
The root, to me, is corporate money and influence in Washington to such a degree that it effectively shuts out democracy.
I see another layer to the onion. Inside of your problem is a deeper one, which is that so much power is concentrated in such a small place.
While we might wish for our government officials to be better, at the end of the day they're people just like us. In giving them so much power, we're also expect them to exhibit a super-human degree of self control. When the possible rewards to them for "selling out" are so high; when any one act of selling out may not have much impact; and when in many cases, the morality is fuzzy and it's not clear that what they're doing is selling out at all; I think it's too much to expect that they'll keep to the straight-and-narrow.
It seems to me that these cries about "too much corporate money" contain an unspoken assumption of a need for greater governmental oversight. But if you see my point about the danger of the concentration of power in Washington, then it should be obvious that vesting the government with greater oversight powers is just adding fuel to the fire.
The only reason campaign finance is an issue is because voters vote based on television advertising. So the real root cause is a lazy and easily manipulated electorate, which can further be pinned on things like useless public schools.
I don't think this is a good idea, but I think if you actually restricted the vote to the so-called "1%" you might even get better government. There's no conspiracy by rich people to ruin the country for everyone else.
It can, if that 1% effectively control the system.
I have two very simple questions for you:
1) Do you believe it right that the financial sector was, and is still being, bailed out?
2) If not, how do you describe the system producing that result, if not "fundamentally broken"?
1) No. I also don't consider said bailouts the root cause of anything except one more instance of wasteful spending.
2) "Too busy fighting over local minima/maxima to ever escape them and make core changes, but as a result at least mostly harmless except as a drag force on productivity." We could argue all day about core changes that might fix the system, but we'll never agree on precisely which core changes to make, so they'll never happen. And that still probably works better than the case where the wrong core changes occur.
(And a meta-level comment about search heuristics comes about as close to a political comment as I'd like to get.)
I'll throw two out there -
1. Campaign finance reform. Debate the details, but you can't debate that there should be some.
2. Vastly greater oversight/transparency, if not an outright ban of the current lobbying system.
Both of your answers ask for more government control. Consider the government is a huge concentration of power, so many will want to corrupt it. Our goal should be to reduce the power of government, thereby reducing corruption.
The bailouts are a result of brokenness, I never said they were a property. But I think we have rather different ideas of what "fundamental" means, if you're arguing that it's not fundamentally broken, but that "core changes are necessary".
I guess I'll leave it at that.
1) No
2) Because bail-outs aren't a fundamental property of "the system".
Bail-outs are a symptom of plutocracy, which is very much the fundamental nature of the American system (amongst many others).
They are a result of the system. I find it hard to believe that a not-fundamentally-broken system would produce that result.
What non-fundamental properties of the system do you think should change to halt now, and prevent in the future, bailouts and related actions (e.g. corporate subsidies)?
Why is something fundamentally broken?
Because democracy and equality is fundamentally superior to feudalism, therefore any system that is on an unstoppable slide toward feudalism is fundamentally broken.
How is the system in an unstoppable slide towards feudalism? Is this the same feudalism I studied in European History, with the land-holders and vassals and all? If not, why are you using that word?
More precisely it is "corporate feudalism" or "neofeudalism"
It's a lot of different people with different beliefs. The majority seem upset about some combination of:
1) growing income disparity (http://www.slate.com/articles/news_and_politics/the_great_di...)
2) regulatory capture by financial institutions (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=892925)
3) the use of public funds to subsidize risky investment (http://www.thenation.com/article/153929/aig-bailout-scandal)
4) apparent double standards for the rich (you certainly face more jail time for robbing a bank than for ruining one)
I think that most people can agree that these are significant problems. It's actually amazing how little has changed since the 2007 mortgage crash.
OWS appears to be a concentration of several basic grievances held against the financial industry's control of the government. It attempts to raise awareness to the fact that income inequality is increasing, and that the accumulation of capital does not seem to be benefiting the large majority of society.
It complains about the fact that the mistakes of the financial industry are being paid by the whole of society.
It raises more questions than it attempts to solve, but has some basic tenets in favor of restoring the regulations of financial markets that have been lost in the last 20 years.
Here's a random link I pulled that attempts to explain some issues: http://blog.pfaw.org/content/the-media-way-occupy-wall-stree...
It seems interesting to note that, from what I've heard from people working in the media industry, there's a directive to paint the OWS as having no purpose, however many of the critiques that are being leveled towards it are just as valid, if not more, again the Tea Party movement, yet such comments were never made in mainstream media. It's also worth noting that there were some very powerful interests funding the Tea Party. Finally, many people within OWS have concrete propostitions, such as restoring the Glass-Steagall Act, changing the capital gains tax, introducing the Tobin Tax, etc. Of course, that would actually imply knowing a thing or two about political science, so most people can't be bothered to research that.
"It's also worth noting that there were some very powerful interests funding the Tea Party."
You said it. The Tea Party is/was essentially a media fabrication. There's obviously a lot of middle class dissatisfaction out there to be mobilized and the right wing tried to co-opt it for their agenda.
OWS, on the other hand, is an actual grass roots movement. Furthermore, when I listen to NPR (of all media outlets) continually doing their very best to interview every fumbling 22-year old and make the entire movement look stupid it makes me think that OWS has some very powerful people genuinely worried.
Thanksgiving with my entire Republican family is going to be a blast this year.
> I feel like the traders on Wall Street would be the first people to want an economic bounce back.
This lies near the crux of the widespread belief that wealth merely lets you buy more stuff.
Currency is the formalization of power, which is intrinsically relative: you have more power when the people near you have less.
Imagine a village of 10 people, where 9 have $20k in wealth and one has $80k. This relative difference in capital allows the wealthy person to earn more than 4x more income. This means he can easily outbid everyone else for, say, the choicest cuts of meat at the deli; the best investment opportunities; the dinner with a visiting performer; the nicest house on the block; the flattering stares of the village's prettiest dame.
Let's pretend a car costs $90k, so that it's not affordable to any one person in the village. One day, a car manufacturer contacts Mr. 80k to ask him whether he thinks his village would be a good place for a marketing stunt in which everyone was given a $90k car, which they could choose to sell if they really wanted to. Since this is a small village in a big economy, it's not as though all this extra wealth will cause serious inflation. The question is, how should Mr. 80k respond?
If Mr. 80k is a homebody only interested in absolute wealth -- having more things for him to play with on his own -- then he should go for it! He'll finally have a car!
But it might be in his interest to say "no": sure, at $170k he'll still be the richest, but now the ratio of his wealth to the wealth of his friends will have gone from 4x to 1.5x. Could this have a materially negative effect on his current standard of living and his economic security?
Well for one, while he'll be able to afford better investments, there will be more people to compete with for them. If everyone has a car then Mr. 170k will no longer be able to loan out his horse and buggy in exchange for favors and status. The previously receptive dame might start to notice Mr. 170k's bald spot, and spend more time staring at a younger prospect. When the local celebrity comes to village, Mr. 170k will have to bid higher to taken them to dinner. Mr. 170k will no longer be a crucial lynchpin of local politics, so the village alderman might no longer call on him as often. And Mr $170k will no longer be treated with the same reverence while on his evening walks as he had previously received.
So while Mr. 170k could nearly double his wealth, if the marketing promotion were to happen, Mr. 80k might perceive the decline in relative status as costing him far more.
So, no: depending on the kind of rich person you are, you might prefer for other people to stay poor. Unethical and immoral? Maybe. Rational? Certainly.
One of the common outcomes I've heard called for is a "separation of corporation and state," in response to what people feel is an outsized voice in the democratic process for corporations at the expense of individual citizens. The backlash against TARP is a good example of fairly broad sentiment that federal policy favors financial institutions and high-value investors over "Main Street."
Lawrence Lessig has spoken rather extensively about campaign finance reform in this vein. His latest campaign is for the Fair Elections Now Act, which would encourage small donation-powered campaigns. He's also often argued for a constitutional convention that would address these concerns without needing to stay within the current legal boundaries...that seems to have fizzled a bit, though, I assume because it's so hard to pull off.
I am convinced that that in the same vein as america pioneering the separation of church and state, the next big government evolution will be the separation of state and business.
It will be extremely hard to accomplish though because historically money and power have always been bedfellows.
The real problem is the people are complacent, most of what western governments legislate is in the interests of lobbyists, but people only care about lawmaking when they are personally poor or if it concerns foreign policy (TERRORISM).
I have always thought a jury system for legislation might be a good idea, get the sponsor of a bill to stand in front of 12 randomly picked citizens and have them explain what the bill will do, and most importantly, why they are trying to pass the bill.
That would turn legislation into marketing. We have a bad enough problem already with knee-jerk legislation passed because it sounds shiny.
Now, as a filter, introduced in addition to umpteen other ways to prevent legislation from passing, it sounds potentially helpful. Anything that makes legislation fail by default without an exceptionally good reason to pass would improve matters.
To a large extent this is the purpose of the House of Lords in UK parliament.
The selection process for its members is not at all democratic which leaves a bad taste in many people's mouths. But the general concept of an elected body whose members serve over several terms of government can be helpful to limit overtly populist or ill-thought-out legislation.
Yeah, I wasn't suggesting the jury be only check and balance, and I don't think it would be a silver bullet.
We are where we are because business (those who desire money) and politicians (those who desire power) have overlearned the system.
There is no reason why they couldn't overlearn the jury check as well, I can't think of a simple solution.
Perhaps we are doomed to cycles of people being complacent, which lets tyranny flourish only to be ended violently?.
You should read this http://online.wsj.com/article/SB1000142405274870426150457620...
99% of TARP has been repaid already. That's more than you can say about regular people paying back their credit card debts due to limitless spending.
Limitless spending? Do you know anything about regular people? To suggest that the TARP banks are in any way more responsible than the average consumer is simply ignorant. 'Regular people' these days are not spending more than they used to, and they're not examples of limitless spending: http://www.yale.edu/law/leo/052005/papers/Warren.pdf
Furthermore, TARP being repaid is not an inherently good thing. Who cares whether we got the bailout money back if the system is still completely broken? We're still in a situation where those banks can do whatever they want, and when things collapse the government will have no choice but to bail them out again because the alternatives are unacceptable. Now that the banks don't owe the government TARP money it has even less leverage than it might have had before.
You can't just blame Wall Street for everything. I never suggested consumers were more responsible I just said that heaping 100% of the blame on Wall Street is ridiculous. Yes consumer debt was on the rise before the financial crisis: http://www.csa.com/discoveryguides/debt/review.pdf
You say Banks, which part of the Banks? You can't lump the whole Banking system into one group and blame it all. Also the top 1% encompasses much more than these 'greed fuelled' bankers on Wall Street.
That paper uses a 2001 data set, and things have certainly changed since the housing crisis, but it was interesting all the same.
The paper argued that certain things - like the cost of housing (due to rising prices) and health care - were the cause of middle-class debt loads, and that consumption on frivolous items was actually down from the 1970s.
This is a plausible argument. The cost of housing, health care, and education has certainly skyrocketed. What Warren doesn't mention, though, is that all of these areas are heavily regulated and subsidized by the federal government - unlike all the areas where middle-class consumption has declined.
You might be able to persuade me that people are in fact spending responsibly, but you'll have a harder time persuading me that the solution to their problems is more regulations, or that the appropriate target of these protestors is anywhere outside Washington DC.
TARP! Yes TARP has been repaid! Why are people complaining, when the money has been repaid? Who are these people who are clearly ignorant of the facts?!!?
That would be you.
We loaned citibank $25bn with TARP. They paid that back. You seem to think that thats the end of the story. Thanks for telling us what we should read.
Turns out we also guaranteed losses on $300bn of assets, added an additional $20bn, and a further credit line of $45bn.
From were I'm standing, that should mean we own citibank. If my company was in that situation, you think investors would offer me a loan? You think that's gonna be the deal you get next time your company is in trouble?
We should own it, dismantle it, break it up. Do that for every big bank down the line.
But forget the $350bn. You think that if your business needs $25bn or it goes under tomorrow, that one of these rich people will just loan you $25bn and let you pay it back when you can? LOL. In my world, $25bn bought citibank outright, and we overpaid. Instead we got 36%. Joke.
Two sets of rules. One for them. One for us.
And how much of that profit flowed through into the real economy? That's the protesters' point.
"Through the repayments announced Wednesday, as well as dividends and interest, taxpayers have recovered about $244 billion of the $245 billion in TARP funds disbursed to banks, the Treasury said. The Treasury currently estimates that bank programs within TARP will ultimately provide a lifetime profit of nearly $20 billion to taxpayers."
Blame the government for that, not Wall Street. Also how much of Apple's 70 billion or so in cash flows through to the economy?
No, 99% of the funds TARP paid directly to banks has been paid. However there was a large amount of money that went to AIG and other bailouts.
I agree that the movement lacks a coherent message.
That being said, one of the large issues in play is that people feel slighted by rising income inequality, which they perceive to have arisen out of a sort of government-industry feedback loop. Certainly this is what the printed dollar bills seem to be about.
With regard to your comments about the utility of the protest: I don't think it's a waste in any regard. If you feel something about government (in this country), you have several options: wait for an election and vote, write to your congresspeople, protest, etc. I agree that it's frustratingly difficult to figure out what the movement wants, but (even unaligned) protest is a perfectly legitimate way to express (even general) displeasure with your (perhaps even falsely perceived) current government.
Shouldn't you have a viable alternative solution in mind, when you express displeasure? I can understand that they're angry - I just can't understand how they want the government to fix it.
It would definitely be a lot easier (and seemingly, effective) if they all just said we want X, where X is some not necessarily even specific reform.
But maybe they just want to say 'we're angry about this rising income inequality and we want someone to do something about it.' I think that's a valid stance to have, and opinion to express. It then falls on the government to either:
1. Do something about income inequality. 2. Explain why they can't or shouldn't or won't.
Failing that either of these things occur, it may inspire someone to run for office with the platform of performing (1) or (2) above. Any of these outcomes seem like a 'successful' outcome of the protest.
Shouldn't you have a viable alternative solution in mind, when you express displeasure?
Not necessarily; there are times when it's more fit to just walk out into the street, meet others who are as displeased as you are, and try to figure out what to do about it on the spot.
CodeMage provided an excellent analogy to answer this question some time ago: https://news.ycombinator.com/item?id=3080440 - you should check it out.
Another way to look at it is this: The grievances of the protesters cannot be fixed by individual action. They require a change of the rules, i.e. political action. When such grievances become large enough, you (i.e. the people) use progressively stronger methods to try to tell politicians that you're serious about it.
If the political system is flexible and effective enough to react and address the grievances, then the movement succeeds, e.g. the civil rights movement in the US in the 1960s.
If the political system is too rigid and unable or unwilling to react, and the grievances remain, then the state will ultimately fail, e.g. East Germany in the 1980s.
" Do they just hate rich people?"
Yes. More precisely, they're angry about recent economic stagnation and unemployment and are scapegoating the rich.
Economic difficulties leading to mass populist movements with a defined, minority scapegoat (especially the rich, or the bankers) is a dangerous pattern. Even in this thread you see people calling for violence. The last element--a charismatic leader--is historically all that is needed for something like this to turn very ugly, very fast.
There are other good replies here. But one of the reasons you can't figure this movement is because it's a grass roots movement. There is no central body defining agendas, goals and slogans. Only thousands of people fed up by what they see going on above them.
30 years ago, you could probably see the hand of Moscow in this.
Last year, the involvement of the christian right and at least some members of the republican party was very clear when looking at the Tea Party.
OWS appears to be something else.
Going to march is better than sitting at home saying "marching sure isn't going to fix my situation."
Only if that statement is false.
The action itself (en masse) defines whether the statement is true or false, much in the way of "my vote does/doesn't count".
Inequality has hit a level that has been seen only once in the nation's history, and unemployment has reached a level that has been seen only once since the Great Depression. And, at the same time, corporate profits are at a record high.
If you're not mad you're not paying attention.
The meme that "the rich get richer, while the poor get poorer" means that today, the poor must have a worse situation than ever before.
So let's do a thought experiment: suppose that you can choose to go back in time. You can enjoy the 1% level of income at any point in history prior to, say, 1950. What era will you choose? Do you want to go to 1950, or some point in antiquity, or stay with your current income in the present?
Remember, even in 1950, there are no antibiotics, for practical purposes, civil rights are only slightly better than medieval levels, and so on. You won't have access to instant communications, and only through difficulty, to the greatest works of art, music, and literature. And so forth.
So, if you don't want to go back to those times -- even at the top of the economic heap -- can we really say that today's poor are finding their plight worse and worse?
Its not only about the poor its about the 99% who's wages have stagnated over the last 30 years. The current generation under 25 is the first american generation that will be worse off than their parents.
It's true that the gap between rich and poor is greater today than in recent history. But I don't think that it's entirely correct to say that wealth has been redistributed to the wealthy. In fact, to a significant extent, people have redistributed themselves away from the wealth.
These wealth numbers are presented as household income. But this increasing disparity closely tracks the rise since the 70s of single-parent households. Divorce, and more recently the trend to have children without being married at all (in certain demographics, this is now the norm), mean that people are deciding on their own to arrange themselves into units having less earning power.
Even when single-parent households aren't the explanation, the idea of "sortative mating" amplifies differences in income. People tend pair off with similar people. Thus, well-educated people (who tend to have higher income potential) marry each other; uneducated people also tend to marry. So if two people, each with income potential of 2X, marry; while two others, each with income potential of 1X, also marry, then the resulting differential across households is 2X. The sortative effect has, in this example, doubled the apparent difference between people.
Neither of these effects can be attributed to corporate behavior in any way.
Obviously, some of the difference simply reflects the difference in productivity between different people. We tend to dislike thinking of things in these terms, but people doing certain kinds of jobs are far more productive than people in other jobs. In particular, the skills we've learned in wielding technology, or medicine, etc., benefit people to a much greater degree than, say, an individual McDonald's worker or miner or the like. And the fact that one is producing more leads to being able to demand greater income.
We also err in considering people (or households) as being high-income or low-income, as if this were a static condition. In fact, at least in America, there is pretty good opportunity for income mobility. I don't have stats at my fingertips, but a really large portion of those in the top quintile have spent time near the bottom. It's a mistake to believe that someone is just "a rich person" or just "a poor person", since there's significant migration between those groups (at least relative to much of the rest of the world).
You'll note that the rise in income inequality seems correlated with the rise in the power of the federal government (as opposed to the state and local authorities). I assume you've heard Lord Acton's Dictum: "Power corrupts. Absolute power corrupts absolutely." Well, he said another interesting thing. He said (sorry that I don't have the actual text here) that democracy tends to concentrate power into the hands of an elite few, and that the only known solution is a strong federalist system, in which the central government is kept weak by power residing in the hands of the states. Thus, it seems that the rise of a strong central government that we've seen over the past, say, 3/4 century, may be related to the rise of a privileged oligopoly. If so, it's clear that looking for a solution by giving that central government additional power is the opposite of the best answer.
> You'll note that the rise in income inequality seems correlated with the rise in the power of the federal government (as opposed to the state and local authorities).
Income inequality really took off in the 80s so it is more correlated with the rise of the conservative movement ushered in by Reagan. Reagan started the trend of deficit-financed tax cuts for the wealthy that continues today.
As far as the power of the federal government, it doesn't matter, the federal government is a wholly owned subsidiary of Wall Street at this point. Both Democrats and Republicans go begging hat in hand and do the bidding of their true masters in Wall Street.
Income inequality really took off in the 80s so it is more correlated with ... the trend of deficit-financed tax cuts for the wealthy
This just doesn't make sense. The discussion is about inequality of income. Taxation doesn't change my taxable income. It takes away part of my income (and gives much of that slice to someone else).
The tax cuts you're complaining about are assessed after the income level has already been determined. That is, the salary number on my pay stub is significantly higher than many other Americans. Even if the marginal rate were cranked up to 90%, the fact remains that my taxable income is much higher than many others.
Both Democrats and Republicans go begging hat in hand and do the bidding of their true masters in Wall Street.
The bankers aren't angels, no argument from me here. But you're painting an absurdly one-sided picture. Why do you think it is that the bankers need the bureaucrats to "do their bidding"? It's because those politicians really do hold the power! It's true that the bankers are corrupting our democratic process by looking for favors. But it's equally true that the politicians are corrupting our democratic process by selling favors.
And from what I've been able to read from these Occupiers (and I grant that this is just my impression, and I may be wrong), it seems like the ire is directed at those bankers, and that they are looking for the government to help redress the problem. But the government is part of the problem. In particular, they're using their regulatory power as a weapon, hurting us by granting favors to privileged parties. Why would we want to increase the power of that weapon -- ask them to do even more regulating -- when that power is what's enabling the mischief? The only sane answer is to take away their weapon.
The tax cuts of the last 30 years have been accompanied by massive deregulation and cuts to social services. Society has taken a huge right-ward tilt, conservatives have gotten everything they wanted. But you guys can never get enough and are always claiming that we need more tax cuts, more deregulation and more cuts to social services. The deficits created by the tax cuts during Republican administrations are used to demand cuts to social services during Democrat ones. It's happening now under Obama, even though conservatives are in a panic over supposed socialism there have been huge cuts at state and local levels, Federal government has shed half a million jobs [1], and Obama has been negotiating trillions of dollars in cuts to Medicare.
We are living in your vision of the world. And it is awful. Corporations and banks have totally corrupted our democracy, so yes, Washington D.C. is useless. But the bankers are the source of the problems. They are a blood sucking squid on humanity's face.
When all the banks failed a few years ago it was a great opportunity to break them apart, too big to fail should be too big to exist. But instead we were all told, by both Democrats and Republicans, that if we didn't save them it would supposedly plunge us into the worst economy since the great depression. So tax payers gave them the free money and propped them up but we still got the worst economy since the great depression. And NOT A SINGLE BANKER WAS FIRED OR PROSECUTED, even though there has been tons of documentation of fraud. The government is in their back pocket, they do as they want.
[1] http://thinkprogress.org/yglesias/2011/07/08/263588/the-cons... The peak is for census jobs
The tax cuts of the last 30 years have been accompanied by massive deregulation and cuts to social services. Society has taken a huge right-ward tilt, conservatives have gotten everything they wanted.
Sigh. We just got the biggest increase in entitlement programs in more than two generations. The government claims it's cutting spending, but actually it won't be any smaller, they've only decelerate slightly. In the meantime, the regulatory state is thriving. I challenge you to name an industry that one could safely enter without needing to learn myriad details of what the government demands of businesses in that industry. This is not an age of deregulation, and GWB was no friend of small government nor of the free market.
NOT A SINGLE BANKER WAS FIRED OR PROSECUTED, ... The government is in their back pocket, they do as they want.
The banking meltdown was due to the banking industry taking some unconscionable risks, but it was also due to the regulators themselves pushing the banking industry to take risks. Industry is also in the back pocket of the government, as business leaders vie for the advantages that government bequeaths. Yet how many politicians and bureaucrats have been held accountable for the debacle?
We are living in your vision of the world.
You have no idea how wrong you are. You seem to be drawing a mental picture of the political world that follows the narrative told by the main stream media, but that's so gross an oversimplification as to be useless. The political spectrum is not one of Liberals versus Conservatives. So when you assume that, because I'm arguing against your Liberal stance, I must be a Conservative, is just plain wrong.
There are many ways to look at the political world. Taking the simplistic view is not going to help you solve any problems, any more than you'll be able to debug your software if you don't understand how the machine, your compiler, the network protocols, etc., work.
First, you should understand that the vast majority of the people in politics and in the business world are not evil. They are just people like you and I, responding to the problems and incentives in front of them, trying to make a life for themselves and their families. The size and complexity of the system makes it less clear where the line between right and wrong is, and easy to fudge for any particular action. While the structure of the system today makes it all too compelling to make the wrong choice.
Your insistence that so many of your neighbors are evil -- when they know that they're not, and just doing their best -- is going to make anyone you disagree with defensive. That'll prevent you from changing any minds, and instead just widen the political chasm that we suffer from today. I beg you, take a step back from the incrimination, and try to understand what's going on as the collective work of many individuals, each responding to situations put in front of them.
Do you ever stop and wonder why it is that your ideology so closely aligns exactly with everything that the big corps and banks want? You want deregulation just like the big polluters do, you want lower taxes just like the richest want, you want to remove any policing of business activities, guess who doesn't want business activities to be policed? The fantasy that the banking meltdown was caused by Fannie or some laws passed 30 years ago don't even pass the smell test. For some reason you can't imagine that it had anything to do with the banking deregulation passed in 2000. Somehow anything that might benefit the lower and middle class is a threat but we must keep the most powerful on the dole.
By the way you are distancing yourself from "conservatives" I'm guessing you are one of the self-proclaimed libertarians. But as far as the practical economical results it's the same crap, policies that end up making the powerful even more powerful than they are now.
I'm not assuming that you are evil, and I don't have some simplistic view of the world that you are attributing to me. But there are people that are taking advantage of the rest of us and we should be fighting it. We all live in a world flooded by propaganda coming at us from all sides so I always try to give people some leeway when arguing politics, and I try to stay informed on opinions opposed to mine. It is hard to break free from pre-concieved notions.
The liberal vs conservative (or libertarian) debate on economics has been about whether the bigger villain are big corps or big government. But I think what the new realization dawning on millions of people, especially those that thought Obama would fight against the plutocrats, is that they are both part of the same corrupt and broken system. You want to break apart big government, fine, but why don't you also want to break up the big banks and other monopolies?
Context: (What Wall Street Protesters are so angry about... with charts!) http://www.businessinsider.com/what-wall-street-protesters-a...
Can someone brief me on what Occupy Wall Street is trying to do? I can't quite figure it out.
I think Jerry Pournelle said it best "They don’t really know what they want, but they really don’t want more of what they’re getting."
I would guess they are searching for a more egalitarian society, looking at the specific images they but on the bills.
In a nutshell: Corruption and fraud in the banking system causing global economy collapse, the vast disparity in wealth, rampant corruption in politics and big corporations buying politicians with money, not democratic votes.
For concrete ideas, Matt Taibbi as usual really knows what he's talking about:
http://www.rollingstone.com/politics/news/my-advice-to-the-o...
However, it's important to remember that coming up with good solutions as well as figuring out what it really is the people want is really the job of the politicians. And just because they're failing miserably at that job, doesn't mean the general population suddenly has to know all the answers. I think the general message of discontent is very clear.
http://www.theatlantic.com/national/archive/2011/10/the-occu...
I think this article summarizes the point of the "Occupation" well.
If you are a really good or lucky trader, you can make money in any kind of market. Some banks made up the dubious CDS from questionable house loans, making tons from selling them, and then made money again by shorting them. AIG was one of the poor fools that was left hanging the bag when the housing bubble burst. So, I wouldn't say Wall Street is the worst place to be protesting.
Some illustrative charts from Business Insider: http://www.businessinsider.com/what-wall-street-protesters-a...
Detailed charts presented clearly. Take the time to read this and you'll see the problem. The solution is not so clear...
What about a northwestern European model ? Equality through high taxes.
Chris Hedges says it pretty well in this interview:
i think the majority of people protesting see many interconnected problems that they know deep down there's no silver bullet for. they're not knowledgeable enough to know all the ins and outs of how they're being fucked, but they know what it feels like, and they know they don't like it. that's my take on it.
i think it's important to respect the passion of this movement, whether you agree with it or not, because it's real, because it comes from real causes, and because it won't go away until it's addressed
They are sick about low taxes for the rich and the inequitable distribution of wealth...
But being honest there is nothing they can do about those two.
They're angry that success is rewarded with money. They'd rather failure also be rewarded with money.
Actually, many are angry because failure was rewarded with money. The core issue was that the financial sector took huge risks with mortgage backed securities, which weren't properly rated by firms like S&P, and when that lead to the financial meltdown, the government bailed them out. Other than Lehman, Wall Street firms weathered the meltdown fine but the people of the US - and other countries - felt the brunt of the downturn.
Since the beginning, many groups with different goals have been attracted onto the OWS movement, and the message has been scattered. My bet is that the movement will peter out due to lack of focus and won't have a lasting impact on politics or policy.
Meanwhile, the mortgage industry is still partying it up on your dime: http://www.nytimes.com/2011/10/16/business/fannie-mae-and-fr...
Come on, seriously?
This is alarming to me, because this particular act is appears to be pure sensationalism to me. It also takes the numbers grossly out of context.
When I saw the "Richest 400 vs Bottom 150,000,000" 50/50 split on one of the bills, my immediate thought was the following:
__Do these people consider how many jobs these top 400 people created over the last decades, and how much better off the world is because they existed?__
Yes, the US tax structure is flawed. Yes, there are some truly corrupt things going on. But depicting the situation as a "me vs you" situation rather than presenting the situation as a structural issue seems very alarming to me. I know I'm sounding like a lot of random Republican talking heads when criticizing the "class divide" issue of this movement, but why on earth would you classify a man like Bill Gates, who created tens of thousands of jobs for this economy and continues to do great deeds for humanity through his foundation, along with the truly corrupt?
Generalizations are dangerous, and I'm concerned.
Do these people consider how many jobs these top 400 people created over the last decades
You seem to be claiming that these people actually create jobs. That they have some magical power, or even non-magical power. Some economic something. Some accumen. Whatever. You are saying jobs were created and these people are responsible. Great. If that is the case, may I ask "Why have the stopped now?"
It turns out that jobs are actually created most by small businesses.
It turns out that jobs are actually created most by small businesses.
Which many have been able to grow or start due to Microsoft and Bill Gates.
Replace "due to" with "despite" and you're closer to the mark.
They haven't stopped, many thousands of people still work for them.
And please don't downplay what Gates has done. He may have been a ruthlessly competitive businessman, but he has had a larger positive impact on the world than almost anyone else alive.
My point is, if these people are magically special, why are they not able to create more jobs now? How come they stopped creating jobs? How come 50 million americans are without jobs?
Is it not, perhaps, the case that the situation was such that these jobs would have been created anyway? My complaint is this.
There are 400 rich people. There are jobs. You attribute a causal relationship.
I say, you could have killed every one of these 400 at birth, and we would still have the jobs (and to be clear I am not advocating doing that at all, I'm just making a hypothetical argument)
Now you might say that it is not these 400 individuals that matter, but that in any system with jobs, there would be 400 people at the top, and these people would have more wealth.
However, it is the "how much more wealth" that is the complaint. Not that there are 400 of them. The complaint is not that these specific 400 people are the problem. Nor that any such 400 would be the problem. The complaint is that a system that allows for the top 400 people to have such a disparate amount of wealth compared to the other 300 million is a fucked system.
To argue that without these 400 people, or any such 400 people, there would be higher unemployment is rubbish. That "we are better off because they existed".
Fuck you, frankly.
Indeed, its more likely that the richest 400 actively act to prevent individuals from gaining wealth and power that can threaten their own. As the feudal system collapsed, small businesses flourished. In order to maintain control, the ruling classes established laws requiring tradesmen to join guilds and pay fees. In the UK for example, guilds had to be recognized by the monarch.
In modern times, these guilds have been replaced by rules and regulations that have the same effect, but their justification is the same: "its in the public interest". Just as you couldn't buy cloth from a non-guild weaver in the 15th century - because it might not be good quality - so now you can't buy a car from Tesla unless Tesla pays millions of dollars for crash testing, or buys a design from an incumbent.
Similarly, patent lawyers. Accountants. That new iPhone app that records your heart rate? Want FDA approval for that? Want to be hit with a lawsuit for a covered medical device that you released without FDA approval? (because they are covered).
I'm not saying that a capitalist world run by a species that is happy to bomb its own offspring could be any different. I'm just saying don't fucking pretend that we owe them any praise. They get away with as much as they can just short of us rising up and killing them.
Well, many of the jobs that have been lost are of the legacy type: jobs in which the creations of Gates, Jobs, et al. have made obsolete. At a previous company I worked for, each executive had his/her own scheduling and appointment secretary. While that may have been necessary back in the day before easy-to-use, syncable-with-your-mobile-device calendars were developed, the jobs that managed such tasks were the first on the chopping block. In fact, those jobs only continued to exist because it was more of a (emotional/sentimental) cost to cut them than to just keep them.
After the company trimmed heavily during recession and bosses got used to doing their own calendars there was no justifying hiring for these secretarial positions again. Sure, talented young out-of-college kids may have found new types of work, but not these former secretaries.
Wow. Way to keep it civil. Thanks for cursing me out.
I had written up a long response trying to explain how much the large companies these people have founded have helped the American economy compete and people prosper. Then I got to your section implying that crash testing was primarily a way for incumbents to keep startups down rather than being for the public good and I realized that you were either trolling me or are so unreasonable right now that it's pointless trying to argue with you.
To which I would have asked "compete against who?" And you would have said "china etc" and I would have said, "Who the fuck do you think let these cheap chinese goods in here in the first place"?
You would have then started talking about how economists have proved that international trade is good for jobs.
To which I would have replied that americans leading economist said that in 2005 we should all be using ARMs to buy houses.
You believe the bullshit. I don't.
You get upset when people type characters like 'f' 'u' 'c' and 'k' in sequence.
I get upset when people justify a government-economic-hierarchy that kills fucking children with bombs because of oil and tell us "we're better off for it".
Yes it is pointless trying to argue with me. Enjoy your flat earth. I must be the crazy one.
No, not China, that's recent history. We sell our electronics, software, and services to the world. That's competition.
Go to a bar and tell a few people you don't know "Frankly, fuck you" and see if they get annoyed with you.
You're conflating lots of of only slightly related things. I don't remember any economists saying that taking an ARM was a good idea.
I agree that the current state of the govt. is more than a little messed up and outrage is overdue, but you're doing the cause a disservice by talking about the wrong things and generally sounding like a conspiracy theorist. Public-only campaign financing is a good thing to talk about. Talking about how crash testing for cars is used to keep the good guys down is going to get you ridiculed by the opposition, and whatever movement you're associated with will be ridiculed by association.
How many jobs do those 400 create? Who are they, actually? Are they generally captains of industry, steering the ship of employment? Or are they generally trustafarians, doing whatever?
Also would be interesting to know their hiring practices, are they paying the least they can get away with and no job security or are they creating sustainable jobs?
"How many jobs do those 400 create?"
As few as possible... the shareholders demand it!
Let's assume for a moment that the richest 400 people in the US "create jobs" in some reasonable proportion to their personal wealth.
Let's also assume that all of them disappeared tomorrow.
Do you believe that half the jobs in the US would go away?
Let's assume none of them were ever born.
Do you believe the US would have half the jobs it does today?
I hope you can see what I'm getting at.
That aside, take a look at who the 400 are:
http://www.forbes.com/forbes-400/
Just go down the list. Google them and their companies. Take a look at how many people they actually employ.
Some of them you might argue made significant contributions to the creation of entire industries, but many are just investors. Hedge fund managers. Bankers.
OWS isn't pissed about Bill Gates or Larry Ellison, Jeff Bezos or Michael Dell. They're not looking at the guys who started value-creating businesses and contributed directly to their success. That's not who this is about, and it never has been.
If OWS isn't outraged at the Tech Leaders, then they shouldn't generalize "the top 400" in this manner. When you abstract "the ultra-rich" into the symbolic cause of America's current woes, you're going to automatically incriminate those who do drive value-creating businesses as well.
I don't think OWS's purpose or message or mantra is wrong. However, if they continue down this path of generalization and polarization for the sake of PR impact, I'm afraid they're going to become even more unfocused in their messaging.
It's a combination of political slogans/rallying cries and observations about wealth distribution problems in general. The former will always be wider than they ought to be, the latter can't exclude the "good guys" from the conversation entirely, because they have benefited to some degree from the broken system, even if they don't intend to perpetuate it.
But the name is "Occupy Wall Street". They know who their opponents are. They know who screwed with their mortgages and retirements. They know who paid off the politicians. They're out there with MacBooks and iPhones, tweeting and facebook-ing. Silicon Valley isn't their problem, and they know it.
(Edit: They're not even hammering Wal-Mart, and it'd be so easy. I think that says something.)
"The richest 1% of Americans control over 1/3 of the wealth, leaving the bottom 80% with less than 1/5."
This suffers from the pie fallacy covered in http://www.paulgraham.com/wealth.html
Also if you look at http://sociology.ucsc.edu/whorulesamerica/power/wealth.html table 3 you'll see that the distribution of wealth between 1% and 99% in 2007 (which I assume is pretty much the same today) was essentially identical to that of 2001, 1989, 1965, 1939 and 1922.
This may come as a surprise to you, too, but the IMF has finally caught on to the fact that inequality hurts economic development: http://www.imf.org/external/pubs/ft/sdn/2011/sdn1108.pdf
Obviously, forced total equality is unlikely to be good either. But from a certain point, inequality causes macro-economic imbalances that prevent natural growth of the pie.
Besides, what the "pie fallacy" ignores is to discuss the relationship between income and wealth and the talent required to obtain it. Think about it that way: by almost all measures in almost all areas, talent, work ethics, whatever you can think of, it is all essentially normally distributed. But if income should reflect those virtues, then we would expect income to be essentially normally distributed as well. So why do income and wealth essentially follow an exponential distribution?
Something really fishy is going on there, and it is only appropriate to challenge a status quo that leads to such an outcome.
If by the pie fallacy you mean that people are forgetting that the 2011 pie now represents a much greater total number of dollars than the 1920 pie, then I must point out that the simple economic fact that if we just multiplied everyone's bank balance by 1000, nobody would be better off, even though they now had 1000 times as many dollars.
And while it is true that a 1920's person could not buy an iPad, this is of scant comfort to a homeless family in 2011.
Your characterization of the pie fallacy is wrong.
pg: "I can remember believing, as a child, that if a few rich people had all the money, it left less for everyone else. Many people seem to continue to believe something like this well into adulthood. This fallacy is usually there in the background when you hear someone talking about how x percent of the population have y percent of the wealth. If you plan to start a startup, then whether you realize it or not, you're planning to disprove the Pie Fallacy."
Ah, ok. So "Its possible to create wealth without taking wealth from others".
Unfortunately, although it is possible to do so without taking it from others, taking it from others is still a viable way to do it. Further, its also possible to destroy wealth. And its possible for the destruction of wealth to be asymmetrical.
So is the current financial state an example of wealth creation, wealth transfer, or wealth destruction?
I'm looking at the national debt, the median house price, and the DJIA and I'm not seeing "wealth creation". What leads you choose "pie fallacy" as your answer?
Thumbs up for your comment. I'd like to add on that.
Let's take a very prosperous society. Even if all people get wealthier (let's say 2x), which would mean improvement in life quality and all, and 10% of them get massively richer (let's say 20x), then we as a society still have a problem. Because it will be extremely hard for someone who is in the bottom part to get to the upper one. Because of numerous reason I could elaborate on: they will not be able to afford the same schooling, or be in the same expensive circles which creates the networking opportunities. Numerous studies show growing inequality reduces social mobility (American Dream, where are you?). Sure, a couple persons will prove that wrong, but statistics are here.
So at some point, inequality is in itself a problem, even if everyone has enough to eat and more. Because everybody should have chances at succeeding - that is, changing things, but also taking responsibilities. PG means often that being a hacker is enough and you can change a lot with that only, but I think this is not enough. CEOs, judges, bankers, politicians should come from a diverse background. And you don't get there without some equality.
And don't get me started on inheritance ;)
I disagree with PG. Ofcourse you can create wealth by fixing an old car. But you will need two things: investment (an old car) and resources (time for instance). When you are working +100 hours a week (commuting included) just to make ends meet it's very hard to fix an old car. Most of the people I describe here are totally exhausted when they come home from work. When you are exhausted it's very hard or even impossible to get out of your situation.
In addition to the pie fallacy, it also fails on several other levels, notably that even if every single person had an identical income, simple savings for retirement would cause a significant "wealth disparity". "Inequality in Equalland" showed that even in completely "equal" conditions, the wealthiest 20% of people would have 64% of the wealth. http://www.daemonology.net/blog/2011-01-10-inequality-in-equ...
Talking about "income disparity" at least makes marginal sense, albeit frequently with a large dose of entitlement thrown in. But the concept of "wealth disparity" makes no sense at all.
which I assume is pretty much the same today
a) Why would you assume that after a major crash the distribution is the same?
b) And the paper that you quoted says this: "So as of April 2010, it looks like the wealth distribution is even more unequal than it was in 2007."
a) My best guess at the weather tomorrow is the weather today. 2007 was the latest data I saw. I did not read 99% of that document. After the dot-com crash the wealth distribution became much more equal, so a major crash can go either way.
b) You're right, my assumption was wrong. Thanks for finding that quote and sharing it.
Am I missing something with this "pie fallacy"?
If you restore a car and then sell it to someone that needs a car then surely there is someone else who has sold one less car. The same principle applies to crop prices when all the farmers have a bountiful year.
Surely the reason that wealth has grown, is that the human population has grown - creating more needs and desires, and more workers to meet them.
By taking a beat up car worth $200, and buying some parts for $400, and fixing it up and selling it for $1500, you just created $900 for yourself. This is growing the pie. The is not a set amount of wealth in the world.
Think about the creation of entirely new industries. Think of how much would be spent on cell phones today were it not for the innovation caused by RIM, Motorola and then Apple. Or cloud computing were it not for Amazon, Dropbox ect. These companies create wealth, by creating value for consumers. Banking is a little more complicated, but they provide capital to allow the aforementioned companies to grow and innovate.
Sure, but the $900 dollars would otherwise have gone to buy a car from someone else who fixed up a car or made cars.
I can see how reducing the cost of items or services can make more people "wealthy" - such as being able to buy a second car. But reducing costs normally means reducing wages meaning the owners get richer, and the manual jobs disappear.
Reducing costs can often be accomplished through scale, efficiency, improved logistical delivery. Its not always about reducing wages.
if you look at table 6 in the paper you can see the distribution of income was in 2006 the most unequal in the last ~25 years
That dismissal is a bit oversimplistic.
With increases in productivity, it is possible for everyone to have more; but almost all the gains have been concentrated toward the top.
PG:
> I can remember believing, as a child, that if a few rich people had all the money, it left less for everyone else.
This is provably true. Just because PG believed it as a child doesn't mean he was incorrect then. It's true by stipulation!
PG:
> In restoring your old car you have made yourself richer.
If both your time and all the physical goods needed are free. Sure.
PG's examples here are really not illustrative of the point he was trying to make, which is that the pie CAN be grown.
But WHERE is that money coming from? If you make a killing off the stock market, someone else necessarily loses.
A startup that is sold or goes public is just an abstraction for transferring money from other people to yourself.
You can ONLY get money from people who have it already. Of course, more is created all the time by the Federal Reserve, in order to inexorably inflate the currency and decrease the value of cash holdings.
The treatment of the distinction between "money" and "wealth" is a little sleight-of-hand here. If he just wants to make "wealth", stick to Open Source. There is demonstrably LESS wealth in keeping things proprietary, but demonstrably MORE money. It's all about control.
Money is specifically and ALWAYS about the withholding and control of resources. Why do you need it? Because the basic things you need to LIVE are still controlled by other people at this point in history.
It's also not true that creating new things is the same as creating more "wealth". Some things are NET DRAINS on productivity or welfare.
For example, Zynga's Skinner boxes. Or slot machines. Devices created to suck money out of people with addiction problems.
Investors want returns in money. "Wealth" is a function of R&D, which costs money. The two are orthogonal; just look at the money made by toilet paper companies. Or PepsiCo. For a sugar water company it's not too shabby to be worth $100 billion with $17.5 billion in revenue and $2 billion net income for this quarter.
> If you make a killing off the stock market, someone else necessarily loses.
Suppose I hold $100 of XYZ stock. Then the value jumps to $500. I've effectively made $400. Who has lost?
The fools who sold the stock to you initially instead of holding it.
To be honest, I am growing tired of arguing against people who believe that the economy is a zero sum game, along with all the other fallacies. I can just grow wealthy on the back of betting against them, which is what I suspect others are doing.
> To be honest, I am growing tired of arguing against people who believe that the economy is a zero sum game, along with all the other fallacies. I can just grow wealthy on the back of betting against them, which is what I suspect others are doing.
Isn't that proving the exact opposite point?
"It's not zero-sum! To prove it, I will make money AT YOUR EXPENSE!"
Whoever is holding it when the price inevitably falls. When the price is increasing, the money is redirected from any other investment seen as less preferable, and whoever is holding that loses money. The money has to come from somewhere.
In order to move the price up, you need new buyers. Eventually you run out of new people to interest in the stock, and the price tops out.
If someone buys it at the peak and holds it, at some point they will either sell it for a loss, or they will hold onto it "forever" which ties up that money for them and effectively makes it a total loss.
In addition, in order to drive the price up, people are choosing to commit money to that purpose and not others. Competitors' stocks will fall. Other types of investments won't be done.
Clearly, it's a game of hot potato where you don't want to be stuck holding the bag, so you play musical chairs and end up changing horses mid-stream.
Let's assume someone has a foreign banknote and doesn't know what it's worth (it's a one dollar bill). He sells it for 20 cents; the next person sells it for 40 cents; and so on. Whoever buys it at a dollar is making a lateral trade unless he finds a sucker.
Anyone who left money on the table is essentially profit-sharing with the next person. In order to make your profit, you had to GET the money from someone else who already had it.
When you sell your $400 stock, someone else buys it, with the express purpose of having an asset that appreciates fast enough to outpace inflation.
It's kind of like the rake in a poker game. If your buyer sells it a year later for the "same" $400, it's not breaking even, it's losing 3% or more. You could posit a theoretical stock that always went up but still was always a loss in terms of real value, because it didn't match the inflation rate.
Let's consider the case of a stock that keeps falling. It's a money-loser for one person after another, and instead of profit-sharing they are distributing loss between themselves, balancing out the profit that has already been taken out. If the freefall rate is too fast for the market reaction time, then someone ends up selling too low, and their loss pays for whoever buys it and sells it at the more stable price.
The issue that people like to muddle is the "pie fallacy" straw man. There ISN'T actually any argument about growing the pie. We all know it gets bigger. There is no dispute about that.
The issue that has popped up over and over again the last few years is that something like (I don't recall the exact nubmers) 80% of the productivity gains have gone to the top 1%, or top 10%.
http://www.google.com/search?q=wages+vs+productivity&tbm...
Your gain also depends on other people losing in another way. If everyone has their money in "safe" investments, there is no demand for your stock. So you need to convince people to put their money in riskier investments instead. And it's risky because most people lose money.
In fact, the whole ecosystem is built on Venture Capital, and most of the ventures fail. As everyone knows, the VCs get paid a fee even if the fund doesn't have a return.
And if it does have a return, there are still all the losses incurred by everyone who put their lives into their startups which ended up not working out, which is something like 9 out of 10 startups. Plus the investors' money which was lost, only made up for by someone else.
And then there is all the wealth NOT created because you can't hire the talent, since it is in a busy-loop at some giant company doing something less useful, like making Skinner boxes, waiting for stocks to vest. Or simply being paid for bodycount, so a competitor can't get them. And then the demotivation that occurs when people have tons of money and find a lot of ways to spend their time other than slaving away on hard problems.
People tend not to push themselves once they've reached a certain level of comfort. What incentive does the Mob Wars programmer have to become an expert developer, now that he's filthy rich from a simple web app?
Creating breakthrough technology depends on expertise, which depends on experience. What might PG, RTM, and TLB have created with their combined abilities in programming?
ViaWeb had some fundamentally great ideas:
> We had a structure editor for manipulating these templates, a lot like the structure editor they had in Interlisp. Instead of typing free-form text, you cut and pasted bits of code together. This meant that it was impossible to get syntax errors. It also meant that we didn't have to display the parentheses in the underlying s-expressions: we could show structure by indentation. By this means we made the language look a lot less threatening.
>We also designed Rtml so that there could be no errors at runtime: every Rtml program yielded some kind of Web page, and you could debug it by hacking it until it produced the page you meant it to.
The 1% are hardly representative of the true 'ruling elite'. This group is probably around a few hundred people, no more than a few thousand. Wall Street is also not the center of power, but rather Washington DC and the Federal Reserve.
To quote a recent trader:
If you need any more explanation, ponder this question:"Governments don't rule the world; Goldman Sachs rules the world"
Hint: it's not ChinaWho is the national debt owed to?A trader? This guy was proved to be a joke. http://www.businessinsider.com/turns-out-the-trader-who-scar...
Clearly he wasn't much of a trader.
I did read another article where they interviews other traders about what he had said. While they disagreed with some of his other points they were in general agreement about that one.
Goldman Sachs is expected to report a loss at the next results, seems like ruling the world doesn't guarantee profits ;-)
It's true that day traders don't care if the market is going up or down, just like many specialists focusing on their domain doesn't care that much about the industry that employs them. Some people make money on volatility (day traders), but a lot of others make their money on trading on certainty (pension funds). Some people have a vested interest in seeing certain markets crash, e.g. if your industry struggles because of materials are getting expensive because of high demand from the building industry.
The support from the portion of the 1% who may not exactly be the "ruling elite" in your particular sense of the term is also worth noting:
Very innovative idea. There is probably a law against writing/printing on money in the U.S., though.
It seems to require "intent" to run afoul of the defacing statutes, and that you did it to prevent the bill from being reissued:
It's sad to think that the organizers of this will probably be arrested for "conspiracy to deface government property" or something.
Or, since they're also advancing a political message of 'fear', maybe it will be terrorism?
>Or, since they're also advancing a political message of 'fear', maybe it will be terrorism?
I think you're really reaching there. Things are bad, but lets not kid ourselves from pretending that things are that bad. If we mindfuck ourselves into believing that the government wants to label everyone that disagrees as a terrorist, are we really any better than those that believe Obama is a Kenyan born muslim whose sole purpose in life is to invoke Sharia law on the US?
The correct course of action for them, is to put up candidates to be elected into office. That's what a democracy is about.
You don't get anywhere by whining and moaning on the streets that life isn't fair. You certainly don't get taken seriously by anyone.
Or in a slightly more cynical way (as one of my favourite bloggers commented):
> If you hold a protest and you aren't throwing rocks it will fail.
A long time ago, some crackpots thought protests were worth protecting. Can't remember who they were, must not have had much impact...
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
heh "A long time ago" doesn't really exist in America.
The design of the site is awesome...but seriously, this anti-capitalism/populist nonsense is getting ridiculous.
When I tried to access the site at work (we use Postini for our web filtering), I got the message below. What I found most interesting was the category the site was blocked under.
Access Denied The web resource http://occupygeorge.com/ has been deemed by your administrator to be unsafe or unsuitable for you to access. The resource has been blocked. No further action is required. Reason: The category of Hate Speech has been blocked by your System Administrator
There is a lot of interesting research on wealth inequality in the US and around the world. For those interested in looking at data, I suggest the following as a starting point:
A historical database of top incomes in several countries: http://184.168.89.58/sketch/
A nice theoretical starting point on taxation and inequality: http://arxiv.org/pdf/cond-mat/0002374 Note that the term used to express trade in the first section of the paper could also be used to model progressive/negative tax rates.
Plots of the income going to the top 0.1% above a plot of the US top marginal tax rate (a proxy for the progressivity of the tax scheme): http://visualecon.wpengine.netdna-cdn.com/wp-content/uploads...
The top 5-10% of incomes tend to follow a pareto distribution which has a very fat tail. If the share owned by the top 0.01% increases, so will the share of the top 0.1% and the top 1%. Conversely, the share of the bottom 90% will decrease. In comparison to the 1970s, the take home pay of the bottom 90% is probably 30% lower just because of these distributional effects, while the relative income of the top 0.1% has increased 5 or 6 times. The next time you see an exorbitantly high CEO salary, it might be worth wondering how it affects you. Likely, many readers here are in the top 95-99% for whom the effect is somewhat neutral.
Some argue that inequality is good for growth, and that a rising tide raises all boats, etc. But the literature regarding the correlation between GINI coefficients and long-term growth is weak and not conclusive. When I looked at the data from the income database cited above, I could see little correlation for developed and undeveloped countries. I seem to remember reading an MIT thesis to the same effect.
Perfect redistribution and equality would obviously eliminate economic incentives for growth. Near-perfect inequality, might have the same result. The very small fraction of the population in which wealth has condensed would be economically motivated, but the rest of the population that is living on the welfare state (e.g. welfare, minimum wage + EITC) would have a reduced incentive to earn more. A detailed analysis of the EITC is interesting, but peripheral to my point.
Furthermore, when inequality varies like a power law, it is easy to see that a rising tide with reduced Pareto coefficient (increased inequality) could lead to a worse outcome for the majority.
The obvious way to address inequality is through progressive or redistributive taxation. The theoretical paper linked above shows how increasing progressivity reduces inequality, but this result is also intuitive. With a 100% redistributive tax, one would have perfect equality.
Increasing income tax progressivity alters financial incentives and creates incentives for small business and corporations that target the (more affluent) majority. By contrast, flat or regressive taxes alter the economics to favour larger customers. There is a related but much more complex story for international taxation. When corporations accumulate their income in corporate tax havens and then repatriate that income during a "tax holiday", the result is a highly regressive tax system.
Many argue about addressing inequality through "job creation" and "big government projects". I don't have a story related to this, but the Canadian data I have looked at makes me a little suspicious. I guess when you inject funds at a single point in the economy (e.g. corporation) and then allow it to trickle down to employees, portions of those funds would be funnelled off at every level of the corporation and the net result may be an increase in inequality. However, if that corporation is performing a valuable social service to the public, then that may mitigate the inequality.
I guess my main point is that the story of income inequality is a complex one that is closely related to taxation. As such, it is a policy choice of the government and the people who elect them. If the "99%" feel that they are not satisfied with the deal that has been struck, then they can voice their opinion in the hope that the government will alter that deal.
1. Increase taxes on the rich.
2. ???
3. Better wealth distribution.
I have yet to see a good explanation for what happens in step 2. Raising taxes on the rich is the easy part. How exactly does that money get redistributed? Are we supposed to suddenly trust the federal government to spend its money wisely? What will they spend it on and why?
The papers you cite talk about wealth distribution as if it's obvious how it is going to happen. I'm not so sure that's the case and if the results of the recent stimulus spending in the US are any guide we need to think of some new ideas before considering this course of action.
2. Actually, with respect to progressive or negative taxation, the redistribution is quite direct. The government takes more from some and distributes it to others through benefits, the EITC, welfare, tax credits, etc. The factor most correlated to income inequality is not total tax revenue and government spending, but the amount of progressivity in the tax scheme.
There are also many market models, only one of which I cited above, that describe the evolution of the income distribution in response to changes in tax schemes. The models are complicated but their basic ideas are not. The redistribution changes market incentives and capitalism does its job to modify the Pareto coefficient and income inequality.
Nice to see someone who looks into this in better detail.
Another thing I think we should consider is that as innovation drives up the productivity per person, inequality will always rise, significantly.
The value of a mostly unproductive person will remain very low, while the highly productive will go even higher, so the gap will grow. This is normal, but the problem is that people also now have the ability to destroy value in even greater amounts than before, in the way that lottery winners and subprime borrowers can destroy value. I think this is even more important to address than just taxing progressively on earnings. It doesn't even have to be a tax, it could simply be a throttle on the ability for some to move money around in a bad way.
They are protesting the casino economy.
This is more an annoyance to the 99% that gets such bills (many places don't accept defaced banknotes).
The bill will not be accepted by anyone, so the only one who will see it is the person who printed it.
They could deposit it in a bank, but the bank will just send it to the Fed to be destroyed and replaced. (They have automated scanners that look for dirty, worn out, or defaced bills.)
So this is pointless if they want these notes to actually circulate - all they are doing is wasting money used to reprint the notes.
I used to see decorated bills fairly regularly, back when I mostly used cash. I was never aware of them not being accepted; it never bothered me.
One of my favorites, on a $1 bill: "Taxes are revolting; why aren't you?"
It's already leading to discussions all over the internet. It's obviously a successful stunt.
I've been given and have consequently used many defaced bills over recent years. You haven't seen all those bills stamped with things like that bill tracking website, or just random notes scribbled in with pen? If there are rules against accepting these, they're not followed by businesses I've dealt with.
the problem is mainstream-corporate media is not showing the demands, for those who say the movement has no clear demands, i recommend watching Young Turks : http://www.youtube.com/watch?v=RCiAG7LF7Q4 and Democracy now! :http://www.democracynow.org/
Great hack