Suffragette-defaced penny : http://www.bbc.co.uk/ahistoryoftheworld/objects/iVUVhaKVREWj...
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.
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.
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.
________
1. https://secure.wikimedia.org/wikipedia/en/wiki/Arab_Spring
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.
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?
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.
Edit: Clearly people disagree. I'd appreciate some responses to go with the downvotes; I'd enjoy some discussion, rather than silencing.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
If you're not mad you're not paying attention.
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?
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."
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.
I think this article summarizes the point of the "Occupation" well.
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
But being honest there is nothing they can do about those two.
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...
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.
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.
Which many have been able to grow or start due to Microsoft and Bill Gates.
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.
As few as possible... the shareholders demand it!
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.
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.
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.
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.
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.
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."
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.
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."
b) You're right, my assumption was wrong. Thanks for finding that quote and sharing it.
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.
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.
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.
Suppose I hold $100 of XYZ stock. Then the value jumps to $500. I've effectively made $400. Who has lost?
"Governments don't rule the world; Goldman Sachs rules the world"
Who is the national debt owed to?
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?
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.
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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.
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.
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.
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 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.
One of my favorites, on a $1 bill: "Taxes are revolting; why aren't you?"
