I have not done many political posts lately because I've trouble finding a voice that is more substance than opinion. I tend to take the easy route, which is to simply give my reaction. But ultimately, I have less interest in simply preaching to those who agree, rather than in trying to offer a perspective on something to someone who hadn't considered it.
There has been a lot of news lately about Occupy Wall Street protesters camping out in city parks across the country to make their case about why Wall Street is the source of our economic ills. I'd like to talk about some of the protester's demands and talking points, and offer an alternative voice on (some of) them:
- The rich, specifically those on Wall Street, have too much influence on politics and the influence of money needs to be stopped.
- Too few people have too much of the country's income ("We are the 99%").
- The Fed should be abolished.
The influence of money
I agree with #1 -- that the left that the rich have an undue effect on government -- but don't always agree on how.
In a truly capitalist society properly understood, neither the rich nor the poor nor middle class would have control of the government. Individual rights mean everyone's rights would be equally protected, regardless of income, race or other criteria. This entails both a negative and a positive: that government should be limited from providing unfair advantage, it must refrain from stopping peaceful activities, and additionally must protect everyone equally.
However, many people no longer have any concept of individual rights, so this often translates into robbing the rich of their political voice (campaign finance reform and "transparency"), then taking their money. Now that is morally corrupt.
My point is not that bribery does not happen. My point is that the problem is not money; it is the substance of the laws that are being created. If government did not have control over commerce like it does, there would be no need or way to influence government.
One major way in which government unfairly supports big business is with "too big to fail" and "system risk". Failure is how capitalism cleans out people who don't know how to run businesses. What do we do instead? We bail companies out, so that failed business live on and continue to provide poor service and products and so non-performing executives are rewarded instead of punished. Businesses should be allowed to go into bankruptcy like they are supposed to, no matter now big they are. In the current case, I have no doubt this has greatly extended the recession. There is no way it could have done otherwise.
Point #2 is often considered a corollary of #1, but it isn't. Neither the possession of money nor its percentage distribution in itself constitutes and injustice; what matters is how it was obtained.
It may be possible that this number is too small; that in a free society, 1/10% of the population owns 99% of the wealth. As long as it is obtained by people paying someone for a product or service, then this distribution is just. What makes it unjust is if government supports a business by making it a monopoly, or keeps it from going out of business, or the like.
The notion that concentrated wealth is immoral is re-heated Marx, pure and simple. Such ideas are morally and economically wrong and have had utterly disastrous historical consequences, resulting in tens of millions of deaths and the enslavement of entire countries for the better part of the 20th century. It's pretty shocking to me that anyone would advocate such blatant collectivism without realizing what the end of that path is.
Instead of focusing on the how much, we should focus on the how.
Abolish the Fed
As pointed out in the videos below, this item suggests the absurdity of claiming that unregulated markets cause our economic trouble. WE HAVE A GOVERNMENT-RUN BANKING SYSTEM. The Fed was created ostensibly to mitigate fluctuations in markets, but has become a tool of political policy and actually accentuates fluctuations, making them more devastating. This happened in the 1920s and it happened again in 2008.
The irony is that if banks were forced to rely on actual reserves and markets, the housing bubble never would have occurred because they would not have loaned to high-risk customers. But some people won't accept the verdicts of markets, and government policy pressure is exerted towards home ownership regardless, which means lowering of standards. That's not markets, that's government-created institutions implementing government policy.
The Occupy Wall Street movement is right on saying business has too much influence, but often wrong on how and what to do about it.
How the recession really happened
The other day I found the videos below of John Allison, former CEO of BB&T, speaking at Harvard Law. BB&T was one of the few banks that weathered the recession well because of staying away from government policy influences, and has a unique business philosophy derived from -- gasp -- Ayn Rand's philosophy of Objectivism. As a 40-year veteran of the industry, Allison gives an explanation of the causes of our predicament, and then goes on to give a remarkable series of philosophical recommendations in part 2/3. Part 3 is the Q&A.
Yeah it's long -- the main talk is an hour -- but if you are at all interested in the roots of economic problems, I think you'll find it worthwhile.
One of the more interesting things about it is that despite distortions in the media (both liberal and conservative) concerning Ayn Rand's ideas, her philosophy does not mean taking advantage of others, but rather -- as Allison puts it -- "creating win-win relationships". His talk is refreshingly value-driven, and bears a remarkable resemblance to some of the job-related talk in Steve Jobs' great commencement speech. Good stuff.