What do the numbers 3, 0.5%, 8.6%, 200 and 1 billion all have in common? They are at the heart of the recent Occupy Wall Street movement. While liberals, conservatives and independents struggle to understand the rationale for the movement, its causes and what the outcomes will be, TOC would like to submit that its causes can be summarized in the above numbers . . .
First, let’s look at 3. Those in the top 1% wage-earning bucket have seen their income grow 3 times from 1979 through today as the growth in all other income buckets is flat or declining. This is not the fault of just Obama or Bush – this is due to an ongoing decline in the ability of this nation to create wealth. We import more and more of our goods from overseas. Simple math that most of us fail to consider – if you consume more than you make, you have to either give up wealth you have accumulated or promise wealth you will have in the future (borrow). The fleeing of wealth from this country has been mostly caused by the rest of the world “catching up” and competing against us since the 1950s (when the US was virtually free of competition in the free world). As the US has had to compete with these emerging economies and import an increasing portion of its energy and goods, wealth has been leaking out of the US. According to the US Census office, the US has not had a trade surplus since 1975. All of this has led to a situation in which the top 1% can take advantage of this globalism (including Wall Street, executive positions at corporations that profit through globalism and outsourcing, and the rich that have resources to invest into globalism) while most of the rest are not well positioned to compete in a now global marketplace. So, how have we at least maintained a certain standard of living with the hemorrhaging of wealth to foreign nations?
That brings us to our next set of numbers. First is 0.5%, which is the growth in real wages from 1973 to 2006 while productivity rose 80%, according to economist Dean Baker of the Center of Economic and Policy Research. Second is 8.6%, which is the average annual rate of increase of household debt from 1973 to 2011, according to the Saint Louis Federal Reserve Bank. Productivity has outpaced real wage growth for the majority, which leads to the need for increased household debt. This includes the growth in credit card, student loan and mortgage debt that has been witnessed over the same period. Consider that we have seen this explosion in household debt coupled with the rapid growth in dual-income households (female participation rates in the US workforce have grown from 45% in 1974 to over 60% in 2010); this is the middle-class attempt to maintain a certain standard of living in light of anemic growth in real wages. There are two important considerations here. One is that governmental policy has done little to address it. Second is that it appears the middle class is out of “bullets” to fight off this inevitable decline in living standard. Houses are underwater, there is an ongoing credit crisis and a college education is no longer the differentiator for employment at all, much less a better employment situation. The scary part is that the nation depends more and more on consumption as the way to come out of recessions. Government, along with the fed, have boosted consumption with subsidies on gasoline, unemployment insurance and easy money. Now, we are out of rugs under which to sweep our lack of real growth.
When will government focus on policies that increase real growth in income by choosing to invest in a smart, comprehensive energy policy and an education system that is competitive with the rest of the developed world? When do we move from short-sighted to long-term focuses? When do we address the lack of opportunities in the minority communities, which see the highest population growth rates in this country? When do we stop limiting the power of the dollar and trying to print and borrow our way out of short-term recessions? These are the steps to create real, well-distributed wealth.
Finally, we have $1 billion and 200. The $1 billion figure is the amount President Obama’s re-election campaign has set as a target for fundraising and 200 is the estimated amount of OWS protestors in Zuccotti Park in NYC. TOC believes that, after growing up in a world dominated by this erosion of wealth and power in the US middle class, this group is the first generation to fully bear the brunt of the massive shift from old to new in the US. They saw many of the calamities take place while they were getting their degrees in college and preparing to get their share of the American Dream. Now that they have worked within the political process and elected what they thought was the best hope of achieving real opportunity, they are disillusioned. They believe the political process cannot produce the results they were promised; they are seeking to find change in other ways.
Note that this is not an attempt to blame Obama alone. He inherited the problem from Republicans (the destruction of the housing market took place during Bush’s presidency while he funded illegal wars with debt and no chance to pay for them) and Democrats (the passing of Gramm-Leach-Bliley under Clinton, which helped to create the modern “too big to fail” bank; community reinvestment acts and forced reduction in underwriting standards under Clinton and Carter to increase minority home ownership in lieu of concentrating on wealth creation amongst those minorities so that they could afford said homes); however, he has only moved the ball backwards. This is best epitomized by his unwillingness to appoint Elizabeth Warren. Consider the article published by WXYZ.com in New York City regarding the decision not to appoint her to the new Consumer Protection Agency in conjunction with facts presented in Michael Moore’s Capitalism, A Love Story. The Obama administration that decides not to fight the fight against unfair banking practices and hired Tim Geithner (an alleged part of the problem of lax oversight by the Fed), and Larry Summers, who was Clinton’s Secretary Treasurer and main proponent of Gramm-Leach-Bliley. Maybe the President is cozy with the banking community, considering his record fundraising in 2008 and present fundraising activities, broken promises to avoid lobbyist money and decisions to line his administration with re-treads from the Clinton era instead of real reformers. Now that Obama has to raise $1 billion to get re-elected, he clearly is not going to raise that money be giving $38,000 per-plate dinners in Zuccotti Park with the protestors. He may give lip service to the OWS cause in public, but probably not during any private Wall Street fundraisers.
In closing, TOC believes there is a message here for conservatives and liberals. You may believe in free markets and competition without the over-burdening of government with smart and light regulations. You may believe in government controlling the means of economies due to unfair practices of big business. None of us believes that government should be allowing businesses to write rules and to siphon off taxpayer money because of a strong lobbying force on K Street. While Wall Street is an easy scapegoat, the root of the problem is the lack of integrity by those we pay and empower to guarantee a level playing field and fair opportunities. As long as Washington continues to play lobbying favorites and sedate the masses with short-sighted policies to appease habits of overconsumption, we desperately need OWS – we just need to give them directions from Zuccotti Park to K Street in DC.