Occupy Wall Street: My Suggestion

You end up like a dog that’s been beat too much

‘Til you spend half your life just covering up.

                                                                       --Born in the USA

                                                                       Bruce Springsteen

Over at Plutocracy Files the always estimable Taryn Hart has a great post up about the Occupy Wall Street protest titled “The Left Drops the Ball."  Essentially, she notes that some on the Left have criticized OWS for the protest’s lack of clear cut demands – what, specifically, do they want? – and points out that those carping from the Left haven’t exactly done anything to help:

Gee, wouldn’t it be great if we had a bunch of progressives who were paid to think about such things full time?  Maybe whole groups of people who wrote endlessly about politics, economics and how to make a more equal society?  So yeah, you get my point – that would be the progressive blogosphere.  (Many of whom have advanced degrees in economics and are employed full time at think tanks and/or universities.)

[snip]

Really, the progressive blogosphere has an opportunity – a very rare opportunity – to actually be useful.  Many bloggers/think tankers have really useful expertise and they know things about proposed Financial Transaction Taxes, various technical solutions for debt forgiveness, etc.

Because here’s the thing:  We’re talking about a kind of difficult fucking problem here.

After reading Taryn’s post I started to comment on it, but only wrote a few sentences before I realized that I was having a bunch of thoughts that didn’t fit very well in a small comment section.  So I thought I’d come back to Casa Cognito to work through some of the ideas her post sparked.

Results are below the fold.

I agree that the reason behind OWS has been clearly and articulately set forth by We Are the 99%:

We are the 99 percent.  We are getting kicked out of our homes.  We are forced to choose between groceries and rent.  We are denied quality medical care.  We are suffering from environmental pollution.  We are working long hours for little pay and no rights, if we’re working at all.  We are getting nothing while the other 1 percent is getting everything.  We are the 99 percent.

I don’t doubt that anybody who has paid even the slightest attention to the Occupy Wall Street protest understands why OWS is protesting:  They – like nearly every single other person in the country – have been getting systematically screwed over by an economic system that has been purposefully amended over the past 30 years or so to funnel more and more of the nation’s wealth into the hands of fewer and fewer people. 

Essentially, beginning in the mid- to late-70’s the American people were handed easy credit and told that easy credit was just as good a way to raise their standard of living as was rising real wages and increasing worker benefits.  And this worked, for a while, as we cycled through one bubble economy after another.

The 80’s seemed prosperous in part because of Ronald Reagan’s “government bubble” – he ran up peacetime government deficits in quantities never even imagined before, and the huge jump in government spending artificially pumped up the economy.  The 90’s were largely defined by the tech boom bubble, which had working class people checking the Nasdaq five times a day and quitting their real jobs to make it rich as day traders.  The first decade of the 21^st century was, of course, the real estate bubble, in which everybody who owned a home or could buy one with increasingly easy financing could watch their net worth skyrocket and feel all warm and rich inside.

All of these bubbles were accompanied by large increases in the amount of debt made available to the public and, of course, each eventually ended and plunged the nation into a post-bubble recession.  At the end of the 80’s we had the Bush I recession and the savings and loan fiasco, which we got out of by blowing up the tech stock market. 

At the end of the 90’s we had the Bush II recession and the tech stock losses, which we got out of by lowering interest rates and blowing up the real estate market. 

And at the end of the housing bubble have what we have now:  a nearly complete drying up of credit and the worst economy since the Great Depression.  But the financial system is now so riddled with worthless, “toxic” financial instruments that it is incapable of extending another huge line of credit to the American people, and there doesn’t seem to be another asset bubble we can blow up to get us out of this mess.

So after 30 years of stagnant wages, inadequate worker benefits, and ever increasing health care costs, that easy credit has gone away and the American people are looking around themselves and discovering Hey!  We’re all broke!  The reef was always there, but so long as the ship of society could float on an ocean of easy credit no one worried about the reef; now the tide has gone out and our ship is foundering and no one has any idea how we’re going to make it back to shore and safety.

That’s the real issue, and the source of the criticism leveled at Occupy Wall Street:  okay, yes, there’s a huge problem, we all know that – what do we do about it?  And OWS hasn’t really presented any specific demands because OWS doesn’t really know what to do about it.  No one knows, in part because (as Taryn says) it’s “kind of [a] difficult fucking problem” and also – I would submit – because it is a problem that is not amenable to the only thing we’ve taught ourselves to do over the past 30 years:  extend more credit and blow up another asset bubble.

It’s as if we’re waking up after 30 years in a coma, in a strange country whose language we do not speak, and we want to go home but we don’t even know enough about where we are to even ask for directions.

* * *

But we’ve gotta take at least a few stabs at trying to find our way home.  It’s no good to simply lie in the hospital bed and scream about how unhappy we are.  And this leads me to the next difficulty with trying to come up with concrete demands for Occupy Wall Street:  the things that come to my mind are all political reforms: 

(1)  Tax Reform.  For reasons explained in detail here and here, I would reform the tax code to make the income tax more progressive, eliminate the preferential treatment given to capital gains income, eliminate the cap on payroll taxes, and reinstate the estate tax along a much more progressive schedule than in the past;

(2) Corporate Reform. I’d enact a shareholder bill of rights.  Right now the people who sit on the Boards of Directors of major corporations and decide executive management salary are themselves overwhelmingly executive management at other corporations whose Directors are also executive management at other corporations.  This creates an interlocking web of relatively few people who all sit on Boards, act as Management, and get to vote on each other’s compensation.  Which means Director Bill has an incentive to give CEO Max a lot of money, because then Director Max will give CEO Bill a lot of money in return.  This makes a mockery of the idea of an "independent" Board of Directors, and is a large reason why executive compensation has gotten as out of hand as it has.

So I’d require, by law, that all publicly traded companies must have all their executive management contracts (including, inter alia, salary, performance and incentive bonuses, stock options, and any and all severance packages) approved by a vote of the shareholders.  Furthermore, any shareholder who owns 5% or more of a corporation would have the right to nominate his, her or its own candidate for a position as Director.  And, finally, I’d require, by law, that any corporate funds above a certain amount/capital percentage expended for political lobbying, for donations to candidates or parties, or for political speech under the Citizens United case must be voted on and approved by the shareholders before being spent;

(3) Financial Reform. For reasons explained here I would have the government do to the Big Money Boyz investment banks what the government did to General Motors:  take a large equity stake in them all in exchange for an infusion of capital, fire management, force them to recognize the write-off  of their worthless assets, shepherd them through a fast-track bankruptcy that wipes out their shareholders’ value but preserves the banks themselves as legal entities, and then use the money we are gonna give them anyway to ensure that their own creditors are made as whole as possible.  Hell, since we’d be in effect doing this with the entire financial industry – all its interlocking domestic parts, at least – this way we’d be best suited to deleverage all the banks’ positions in the most equitable way possible. 

And then, after these grossly mismanaged institutions had been set back on at least semi-solid footing, I'd have them broken up, I’d reinstate Glass-Steagall, and I’d impose some serious limitations on the collateral they’d need to have to cover any liabilities they write (Credit Default Swaps, for example).  Oh yeah, and I’d outlaw “naked” Credit Default Swaps, options contracts, or other derivative instruments unless the purchaser of same was using it as a legitimate hedging technique, i.e., already had taken a position on the underlying asset.  That would apply as well to commodities futures; no more investment banks buying up oil futures because they intend to realize a big profit when oil prices rise.  Stated another way:  no more gambling in the market for the sake of gambling – it’s bad for the economy.

These three things – tax reform, corporate reform, and financial reform – would, I think, go a long way toward redressing the basic economic imbalance that has developed in our system since the late 1970’s.  But only the third has anything to do with Wall Street, and of that third category everything set forth in the second paragraph really is difficult to explain succinctly. 

So if I were going to suggest one specific demand the Occupy Wall Street protesters should be making it would be to nationalize the banks.  But -- since “nationalize” is such a dirty word in American discourse -- I wouldn't call it that.  Instead, I'd suggest something like:  “GM the Banks!”  I can even see that making a nice chant:  “GM the Banks!  GM the Banks!  GM the Banks!”  Short, concise, to the point.

It sounds very close to chanting “GD Banks!” or “Goddamned Banks!”  and therefore evokes outrage and passion.  It is also close to what some consider blasphemy (both the actual chant and the mistaken meaning some might ascribe to it), which might lead to some media attention.  And then, when asked about it, OWS could point to the government’s successful reformation of General Motors and demand that the same be done to Wall Street.

Not, of course, that there is a chance in hell what was successfully done to General Motors would even be tried on the Big Money Boyz.  But, if presented this way, I think a lot of the American public would be forced to ask Why can’t we do that?  What makes Wall Street so special? 

Clearly, no actual concrete reform is going to take place because of the Occupy Wall Street protest.  But OWS can help make the American people start thinking about how our economy works to assist those who don’t need assistance . . . at the direct expense of those who do.  At this point, I’d consider it a victory just to get a sizeable percentage of the American public thinking to themselves:  Maybe we don’t have to just keep propping the rich people up just ‘cause they keep telling us we have to.

* * *  

When I started writing up my comment over at Plutocracy Files, one of the things I was going to point out was that the Civil Rights Movement of the 1960’s didn’t just talk about the need to achieve “equality.”  The people working in that movement had some very specific demands:  an end to school segregation, an end to general segregation, an end to employment discrimination, the repeal of Jim Crow laws, etc. 

I was going to point out that these were all specific political reforms that were clearly capable of being enacted, and that one of the reasons it seems so difficult to gin up enthusiasm for the kind of economic reforms outlined here is that Congress and the Powers that Be have made it quite clear that none of these economic reforms has even the slightest chance of being enacted.  Lobby all you want, elect whom you want, argue for what you want . . . the Big Money Boyz have the politicians by the short and curlies, they own the media, and they are not going to give up even a fraction of their Croesus-like wealth unless they think their very lives depend on it.

And then I brought myself up short, and realized what a total ass I was being.

Good Lord!  There I was sitting at my laptop and thinking there obviously is no way to enact meaningful economic change in this country and – somehow – implicitly imagining that the social reform with which the Civil Rights Movement of the 1960’s was concerned was somehow easier to accomplish.  What a jackass!  The people who marched and fought and sang and were beaten and were jailed in the 1960s were fighting to overturn a system of societal injustice that had existed in this country for longer than it had even been the United States of America.  If any kind of reform should have been impossible to achieve, surely it was that.  But they did it anyway.

I cannot for the life of me understand how I could have even fleetingly entertained the notion that undoing a mere 30 years’ worth of injustice and economic stupidity would necessarily be impossible.  All I can imagine is that coming to grips with how the Powers That Be have been mercilessly whaling on everybody else for nearly my entire life has caused me reflexively to cover up and just try to be stoic about the beating.  But that’s just dumb.

So here’s the idea/demand I’m suggesting Occupy Wall Street make:  “GM the Banks!”