Monday, October 10, 2011

Anarchists for good government

Today was my one afternoon of being a tourist in New York. After the return trip to the Natural History Museum I went downtown to see the "Occupy Wall Street" protest in Liberty Square. I had no clue about their agenda and the general description was that they did not stand for anything. If they stood for something like bringing back Glass Steagell maybe we would understand it and maybe they would achieve something - but it seemed far more unfocused than that.

My goal was to work out what they wanted and for that I was going to use a simple research tool. I was going to ask them.

On the periphery I found gold-bugs and anti-fed activists - not really part of the main group. They were a lonely looking lot. This photo of one, standing alone, describes them accurately:



Somewhere between the lone-ranger gold-bugs and the protest were the police. They were numerous and one of their horses startled and scared me. One protester was walking by with a placard protesting the extent of police presence and the seeming cost of that.




I thought he had a point. To an Australian the police seemed far more scary than the protesters though when I asked a protester about them he thought the police were "well behaved".

The first detailed conversation I had was with a middle-aged guy who was there "largely to exercise his first amendment rights" and the "rights embedded in the constitution". He did not really know what he was saying except that he had the right to say it and that it somehow involved good government. He did not like the libertarians (who he thought were rather silly) but he kind of liked the anarchy of the whole scene. And he gave me the quote of the day. The protesters were "anarchists for good government".

Anarchists for good government sounded silly but it was accurate. Whilst there were people carrying placards that said "fight for socialism" that was not why any of the people I asked said they were there. They were there because the system was broken. They thought that income distribution was screwy in America and whilst they thought the Wall Street bailouts might have been necessary they found big bonuses in bailed out banks deeply offensive. And I can't say I blame them.

They almost universally thought that government was owned by "corporations" and uber-rich individuals who have purchased the politicians. A middle aged woman was carrying a placard wanting "no more congressional whores". Almost universally they thought the system did not work for them but it did work for some shadowy elite.

But if you asked them what to do about it they did not know. Some had specific ideas (one argued that the Citizens United Judgement should be overturned). Most however had no specific agenda at all - just a general feeling of malaise about the economy.

A pretty young black woman I spoke to was about the most lucid person I found. She thought the American dream had been narrowed to a very small elite and that class distinction was rampant. She was at the protest because she thought that Wall Street was the most obvious bastion of elitism in America.

I asked her what she wanted to do in life and she said she wanted to work in the fashion industry in New York. I looked at her puzzled and she sheepishly admitted that was another bastion of elitism. Then she told me she wanted to start her own company. I wished her luck. She was charming in her hypocrisy.

This placard best summarized the crowd:



Our economy could be "more fair" is a reasonable statement of desire or even fact - but it contains no prescription at all. The United States has had times of high income inequality (the Guilded Age, now) and times of lower income inequality. And I do not want to say it was the New Deal or anything else that caused changing income distribution. Income distribution in Australia was flattest at the end of a very extended period (23 years) of Conservative government. The economy could be more fair. Then again it could be less fair.

Somehow we have developed a winner-takes-a-great-deal economy. I regret not asking these people if they begrudged Steve Jobs dying with 7 billion dollars personal wealth. I somehow doubt it. iPhones were ubiquitous and they clearly believe that Jobs created something that they wanted.

But they would have universally thought it unreasonable that Wall Street CEOs were so rich when their banks were bailed out.

In other words they had a view that the economy could be more fair and that their definition of fairness actually accords with a lot of other Americans. Plenty of people would agree with them.

The Tea Party protesters in America are also animated by a feeling that the system could be more fair - as are the people who protested the Federal Reserve bank. For that matter the (very small) minority at this protest wanting "socialism" probably feel that way too. The feeling is unifying. The prescriptions as to what to do about it are not.

And the puzzling part of this protest was that there was no consistent prescription and nobody arguing for one - so they were unified by their common feeling and not divided by their hostility to each other's prescriptions.

In other words like most Americans they do not have a practical clue on how to get the sort of economy they want and the sort of politics they want. And so they had no agenda at all.

But most Americans don't go to protests. These people go to this strangely unfocused protest. This man - clearly middle-class and better dressed said it quite well. He was at this protest and he just wanted to tell you that. He had no agenda.



I found the lack of an agenda puzzling as did one life-time protester I talked to (someone who thought that growth-led capitalism would eventually fail because of environmental problems). He thought it was the most anarchic protest he had ever been to (no leader, no agenda). But then he thought the food was better than at any protest he had been to. I repeated the anarchists for good government line to him and he agreed. Then he said, pointing at dinner just being wheeled out, that the food was great. It was also he said anarchists with good government.



John

36 comments:

Anonymous said...

i would say the major problem many of them face is too much student loan debt

Richard said...

Maybe George Orwell's "1984" prediction has come true. The lexicon of discent have been stripped from our language.

Orwell blamed Big Brother. I blame Rupert Murdoch.

Anonymous said...

Yeah, I agree with the last comment. Most people there probably are over indebted (student loans they can't repay, mortages greater than the value of their houses). It probably seems grossly unfair that banks can be bailed out of their debt, while ordinary people aren't.

I just wonder what this protest achieves though... In the end it seems quite self-defeating. They make a lot of noise, get posted all over the media, but without a coherent agenda I just can't seem the really achieving anything...

Finster said...

BAC and banks under our system are not regular enterprises. They are allowed to create money via the fractional reserve system. Money is a public good. Through balance sheet extension and lending they can bring money into existance and allocate real purchasing power.

These banks massively created money during the real estate bubble, converted those balance sheet entries into profits through mark to market accounting of their assets and subsequently paid out large amounts of phoney profits to employees and shareholders.

The bank's control over a public good made this business model and these remuneration levels possible and that is why there should be greater scrutiny on the banking sector than on regular corporations, which incidentally don't threaten the system in case of deserved bankruptcy.

The legal frameworks need reform. Excess needs to be contained. Super profits need to be taxed. Especially the zero sum game of derivatives needs to be regulated or the tax payer has to foot the bill again (AIG). AIG should be the lynchpin of all protest. Of all that is deeply wrong. Zero sum enterprise that allows participants to profit, generates no value in the real world, but saddles the taxpayer with cost.

Anonymous said...

I'll even go a step further: a market economy inherently abhors (excess) profits. If Party A is earning a lot of money doing something, then Party B enters into that line of business until profitability is comparable to other lines of business.

For the financial sector to have been so profitable for so long suggests that the market economy is broken.

Kid Dynamite said...

come for the anarchy, stay for the delicious dinner.

Anonymous said...

Its early days yet. If it grows the Democrats can show leadership and bring back Glass-Stegal.
That will be the circuit breaker.
Until then the misery will extend extend.
http://cdn.americanbanker.com/media/pdfs/093011VolckerRulePreamble_FINAL_DRAFT.pdf

Anonymous said...

Wonder how many of these shiftless "protestors" would line up if Goldman put up a recruiting booth in the middle of their camp.

exuberance said...

This is interesting - http://rortybomb.wordpress.com/2011/10/09/parsing-the-data-and-ideology-of-the-we-are-99-tumblr/

Anonymous said...

JW Mason has an interesting analysis about the reasons for the "protest without policies" here:
http://slackwire.blogspot.com/2011/10/this-is-what-democracy-looks-like.html

jeff said...

Great piece.

Caveat Bettor said...

I think the Wall Street bubble is popping. I predict about 75% unemployment from 2008 to whenever things settle. The model is broken. Markets break almost as much as government solutions (but the former facilitates clearing and exit much better than the latter).

Too much mutual fund and 401(k) money flowing in over the last few decades. But technology and productivity gains are now causing a huge layoff wave.

Anonymous said...

Most people are there for the free food, $10 heroin and $15 pot that's widely sold among the crowd. Any of the under 30s there would tell you that.

Hurricane said...

I hope the "reverse Citizens United decision" sentiment catches fire. Corporations aren't people, don't act in the best interest of people and shouldn't be allowed to dominate the political system. It would be a start.

Absalon said...

Given some of what we have heard of what happened on Wall Street in the run up to the crash it is a scandal that no one has gone to prison.

The protest is a mob in search of a leader. God help Wall Street if they find one. Wall Street would find itself compelled to publish fair financial statements, maintain adequate capital ratios and tell the truth about their products. It would be the end of the world as they know it.

John Short said...

"Most people there probably are over indebted"

Funny thing is because this money has already been spent, the musical chairs dance will soon end.

Anonymous said...

All the concern trolling over a lack of specifics from the protesters misses the point and power of these protests entirely.

These protests aren't for wonks, by wonks. No one ever asked the Tea Party protesters for a detailed policy paper on Medicare financing. Instead, the protests provide the media and insider opinion the opportunity to completely shift the conventional wisdom narrative. With the Tea Party it was a change from the Obama hope & healthcare reform narrative to the budget deficit narrative. With the occupy protests, it's a pivot from austerity to jobs and income-inequality.

In both cases, the policy doesn't come from the protesters, but rather the protesters provide the broad mission statement(do something about jobs, do something about biased economic institutions) and buy the political space that the think-tank wonks then fill in with concrete proposals. The Tea Party people didn't come up with the latest federal budget deals, but they provided the "facts on the ground" that gave Republican Hill staffers bargaining strength and gave Obama reason to doubt his own strength during the negotiations.

And really, there hasn't been a shortage of specific policies aiming at the broad goals of the occupy movement(see Christina Romer & Paul Krugman); the shortage has been political will. These protests are thus correctly aimed at politically bolstering those who are pushing for economic fairness policies and politically attacking those who continue to block anything that helps ordinary people at the expense of the superrich.

David said...

What fascinates me is not so much that we have lost the words to describe our predicament as we have run out of prescriptions we collectively believe in. It is as if we have run through all conceivable life scale experiments of utopian social organization and found them all lacking. We are stuck individually with egoistic pragmatism and collectively with a political idea system resembling a circus left to professional manipulators, who have no interest in truth. It seems both left and right are conservatives now. They want to revive the same tried and true experiments or else change as little as possible (careerism/don't rock the boat).

If there is anything we need to change it is the circus and the value of truth in public debate.

If that can be accomplished we will need to become accustomed to knowing a lot less and that a pragmatic politics is inherently suboptimal. Back to square one (Socrates). Unfortunately, as far as I am aware, that has never worked, perhaps because we as human beings are biased to correlation and have a very weak understanding of uncertainty.

How to change politics on the margin, so that it has more to do with asking the right questions than having easy traditional answers?

Anonymous said...

The fact is that the institutions of American society have atrophied and failed for the majority of American citizens. For 99% of Americans the world is upside down.
We have an African American Democratic president who executes the civil rights policies of Bush II, the health insurance program of Romney/Chaffee/AEI conservatives, a gay rights program defended by Ted Olson (the lawyer who got the Supreme Court to make Bush II president, damn the voters) and Dick Cheney's daughter, and the warmaking proclivities of predecessor C+ Augustus enhanced by ten. Bush never managed to order the murder of an American citizen by robot plane.
Our economic system rewards failure. HP? GE consumer products? AOL? Not only did taxpayers save firms that failed because of fraud and wrongdoing, we made sure the corporate leaders were richly rewarded with bonuses for their performance.
Our educational institutions are now profit centers and grade mills. This is on purpose because people who can't think critically are easier to manipulate, and that's how you extract profits from people. We make consumers, not citizens. They exist only to produce nondischargable debts thanks to new bankruptcy laws, eat poisoned food, watch television and buy products designed to make them feel something.
Our representative government is in the hands of the high dollar players who extract rents from us. Both parties are slaves. Those lucky enough to pay taxes send money to crooks who support failed businesses and corruption.
Maybe the best thing people can do is not to participate in their own debasement.

Anonymous said...

It is unlikely that anyone would begrudge Steve Jobs his wealth. Jobs actually and personally created enormous amounts of real wealth for everyone else. On the other hand Wall Street bankers appear to have created nothing for the broader community and have succeeded only in enriching themselves by some tens of billions of dollars while visiting loses on the broader community in the trillions.

Anonymous said...

Another significant problem is the lack of good employment oppurtunities for young people in our service economy. Yes, you can major in Computer Science and work at Google instead of major in Sociology and go unemployed, but many are simply not smart enough for techinical majors. What are their options? Law is over-run.

brandsinger said...

John:
I find this comment of yours rather obnoxious: "In other words like most Americans they do not have a practical clue on how to get the sort of economy they want and the sort of politics they want. And so they had no agenda at all."

No, "most Americans" are not without a clue. We know what we want. The people you spoke with (gosh oh gee I was puzzled by what they said) are, by and large, a bunch of malcontents and losers. Their behavior—their attitudes and complaints, whatever they are—are ill-focused because they are the product of rampant, self-indulgent liberalism. Alienated youth is nothing new. Alienated 60-year-olds reminiscing about their days as hippies is something new—but not welcome.

Damian said...

I think the movement is being better managed than might be understood.

By having no clear objectives, Occupy Wall Street is difficult to attack or stereotype, giving it longevity. It also provides a large base of voices from which a consensus and popular rationale is likely to emerge, a rationale which will represent a paradigm of thought as opposed to a particular demand, and it will be harder to attack or stereotype away.

Anyway, that's my two cents.

John Hempton said...

Brandsinger is flat wrong I think. The general observations of most Americans I meet - and also in the polls - is that BOTH parties are awful - and the prescriptions in both are repulsive.

American politics is divisive and the thing that polls well is bipartisanship - but bipartisanship can't be delivered and it pretty vague as a prescription.

But of course Brandsinger might know what he wants and know how to deliver it. That I think is rare.

J

Jeff Robinson said...

The "Occupy Wall Street" movement has legs and will spread.
Although their message may not yet be clear I do think it will come together soon.
Here is a "commercial grade" video just released: http://www.youtube.com/watch?v=5O_Ao9w1u7c&feature=player_embedded

Anonymous said...

I liked your report with the exception of some of your comments on the interviews you collected.

Although you are not employed in the US, you are apparently part of the financial industry and have knowledge and viewpoint that is rather specialized.

Your comment about the young black woman who wanted to start her own business in the fashion industry particularly struck me.

"I asked her what she wanted to do in life and she said she wanted to work in the fashion industry in New York. I looked at her puzzled and she sheepishly admitted that was another bastion of elitism. Then she told me she wanted to start her own company. I wished her luck. She was charming in her hypocrisy."

What? She said she was at OWS because "American dream had been narrowed to a very small elite and that class distinction was rampant. She was at the protest because she thought that Wall Street was the most obvious bastion of elitism in America."

Her comments after that were not in the least hypocritical. Her American Dream is to open her own business in the fashion industry:

You may not be aware of it, but at one time small business was the norm in this country -- many of them very small businesses started and maintained in the home.

With the rise of corporations and the inability of small business to compete with behemoths, it became almost impossible for individuals to start small businesses, especially from their homes. Most residential communities have banned the kind of home businesses that ordinary people could start part-time with little start-up money.

While I can't speak for the young woman you talked with, I can speak for myself.

When, in my fifties, I lost my tech job due to the corporation that I worked for closing the department of 75 and reopening it with 25 in a far away city, I decided that I didn't want to depend on the decision of corporations to allow me to work.

With a dollar and a dream, I decided that I wanted to put my avocation of designing clothes to work and become a "Custom Clothier." I lived in an area that was zoned residential/professional but soon found out that my business had two components: design and sewing. The first was professional and allowed. The second was manufacturing and disallowed. So, if I made patterns, I could operate my business from home, but if I made clothes, I could not.

The inability of people to obtain some level of independence in society by setting up businesses of their own is not unlike the enclosure of the past.

I don't know what the parameters this young woman had for her dream, but the fact that she wants to own her own business does not mean that she wants to become one of the oligarchs.

I see no hypocrisy.

Bob Schriver said...

I saw data from a presentation by my CPA that the 95% income people (about $160,000 family income) are now losing ground to inflation. It is no longer just the poor or just the average (who have been losing ground since the 1978 recession). "it's the economy stupid" - and my friends who used to believe that more deregulation et al were the answer are no longer so sure. It's not Moscow in 1905, nor is it Washington in 1930 at this point - but it's not good.

Bob

Moopheus said...

"And the puzzling part of this protest was that there was no consistent prescription and nobody arguing for one - so they were unified by their common feeling and not divided by their hostility to each other's prescriptions."

Why is this puzzling? People are angry, and they know they're being screwed. So if they can't figure out how to fix all the problems of the political-economic system they should just shut up and go home? Maybe go do a little shopping to make themselves feel better? Not making ideological demands is a good thing.

Anonymous said...

I think you nailed it John. From the top to bottom Americans are suffering a bad case of cognitive disequilibrium. The shared description of how the world works is at odds with the way they are perceiving them working.
The prescriptions are all over the place but mostly it's double down on what used to be tried and true even though the gods no longer answer. It leaves you wondering if the psychological flexibility is there to rise to the challenge.

Anonymous said...

John,

When a person complains that he or she is in physical pain, we don't require an accurate description of the physiological processes causing the pain to validate the claim of pain. We know the pain is real.

Why are the protesters in this case different? Why is the complaint invalidated by a lack of proposed solutions? The pain is real regardless. Wall Street is full of well-educated, smart, hard-working people who have trouble explaining how the economy really works. So why do we expect that people who work outside of finance, many of whom are poorly educated, will be able to? How can a construction worker hope to debate the taxation of carried interest? How can a janitor explain why quantitative easing is enriching those with brokerage accounts at the expense of those with marginal discretionary incomes? How can a recent college graduate adequately explain who benefits when bondholders are protected from losses?

Articulate or not, the pain is real. Those with facebook accounts and young friends can see it in the number of friends who are unemployed and the number of friends who follow the protests with interest, even half way across the world. Those who look at Wal-Mart's same-store sales figures can see it. I can see it, when I walk to the train in the morning and pass by people living in their cars and brushing their teeth in the street.

ChrisD said...

The point now is not forming an agenda, but rather raising consciousness of the problem. The problem of too much debt, corporations having unlimited resources to influence voting and politics and the lack of a bailout for the majority of people in this country.

In the 1960s, we didn't know what feminists wanted, but they wanted to bring light to the problems they faced. In the 1980s, it was the same thing with gay rights.

We don't need to understand what the solutions are, just get everyone to recognize there is a problem

Vinson said...

Brandsinger must be one of the 1%. He's also probably the person who thinks it's ok to slash the salary of a public school teacher by 20% but that it's not ok to raise a millionaire's taxes by 3%.

These demonstrations are growing and the Brandsingers of the world who support Corporatism and monied-influence are the targets. The 99% are pissed off, and as someone cogently remarked before me,

"The policy doesn't come from the protesters, but rather the protesters provide the broad mission statement(do something about jobs, do something about biased economic institutions) and buy the political space that the think-tank wonks then fill in with concrete proposals."

In my opinion, the single most effective change that could come from this movement is the end of the influence of money on our politicians. The only way this is even remotely likely to happen is to amend the constitution to either remove the link between money and free speech (overturn "Citizen United") OR make it illegal to give money to individuals running for office.

To this end, there is a website and petition you can sign if you believe that money should be removed from Washington, DC:

http://www.GetMoneyOut.com

And this is how an actual Amendment would read:

"No person, corporation or business entity of any type, domestic or foreign, shall be allowed to contribute money, directly or indirectly, to any candidate for Federal office or to contribute money on behalf of or opposed to any type of campaign for Federal office. Notwithstanding any other provision of law, campaign contributions to candidates for Federal office shall not constitute speech of any kind as guaranteed by the U.S. Constitution or any amendment to the U. S. Constitution. Congress shall set forth a federal holiday for the purposes of voting for candidates for Federal office."

Visit GetMoneyOut.com now and join your fellow citizen in the Occupy Wall Street movement to eliminate Corporatism in America.

Anonymous said...

When Stan O'Neal, the boss of Merrill Lynch, destroyed the company in the subprime mortgage crash of 2008, he got a $US161.5 million severance package funded by the American taxpayer and he now sits on the board of Alcoa.

It's facts like these that create the anger and disillusionment among the American public that is energising these Occupy Wall Street protests.

msHedgehog said...

I think the purpose and effect of this type of action is simply to change the debate. It changes what is talked about, and how. It is an informational excercise, almost like a blog, and it's more effective at that for not having a list of demands.

It's publishing - "these things are here, deal with them or explain why you aren't." That doesn't get specific things done directly, but it can cause deeper changes.

My sign would read "prosecute fraud".

Anonymous said...

And like many of the well educated elite, the author seems well skilled at observing and criticizing but without a strongly articulated position or alternate vision.

Taught how to be sarcastic, but not to hold an serious opinion, such is the crucifix of the modern man.

Anonymous said...

I think it's pretty clear what unites the protestors--they think government at the moment works most for the wealthy/corporations. I think even most people who consider the OWS protestors in low regards would agree with that.

How many people do you think would come out for a protest against illegal foreclosure practices? How many for a protest against youth unemployment? What about the difficult of getting a job if you're over 50 and laid off? The point is that it actually makes more sense to protest something vague that is a cause of all three than to protest a specific effect.

Even if you consider protests with specific targets, like a protest against NAFTA or the health care law, generally the people there believe the specific is simply a symptom of a larger, underlying problem. And the civil rights era was full of large protests in support of "rights" and against "racism"--a more coherent concept that "99%", but not by much.

The movement also might be willing to support specific policies were they more likely to succeed. Repealing Glass-Steagal would not be a bad start, or creating a CFPB that actually had teeth, resolving foreclosures in ways that are more favorable to borrowers, or working to reduce student debt. As there are plenty of laws that give businesses advantages over individuals and regulators not effectively regulating, there is clearly room for governence that is less captive to business interests. How many bills have been passed in the last year that seem to actually benefit the middle/lower class? How many states have laid off employees because they decided their defecit was more important than jobs? Maybe the OWS protest won't accomplish anything meaningful, but why not express yourself anyways? How protests accomplish anything is not really well-understood, but at least you're standing up for your principles.

I did find this to be an interesting viewpoint, but I'd also disagree with your characterization of the "hypocritical" fashion designer. Sure the fashion industry mostly generates clothes for the wealthy (is there any industry that doesn't sell mostly to the wealthy or other companies?), but that is just the current industry structure, not the nature of fashion. Certainly Sweden, Japan, or France are still able to have fashion despite their higher levels of equality. And a job in fashion, publishing or academia in the US generally requires years of unpaid or underpaid work.

General disclaimer

The content contained in this blog represents the opinions of Mr. Hempton. Mr. Hempton may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Hempton's recommendations. The commentary in this blog in no way constitutes a solicitation of business or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author.  In particular this blog is not directed for investment purposes at US Persons.