My take on Occupy Wall Street

by Russ Roberts on October 24, 2011

in Financial Markets, Gambling with Other's $

From Foreign Affairs:

Occupy Wall Street reminds me of a doctor who sees a patient with a broken arm, decides that both arms are broken, and proceeds to amputate them: The diagnosis is half right, and the cure may be worse than the disease.

Start with the diagnosis. “Us against them” always makes for good theater. But is the big problem with the American economy really the top one percent versus the rest of us? Are we being victimized by the fat cats? The data seems undeniable. The share of income going to the top one percent has risen dramatically over the last 40 years. If the top one percent have more, surely the rest of us have less, right? But as the writer P.J. O’Rourke has said, wealth is not a pizza. If we’re sharing a pie, and you get a bigger piece, that does not mean that I have less to eat. It depends on what happens to the size of the pizza. Ten percent of an enormous pizza is more filling than all of a tiny one.

The protesters are right about one thing: Washington has been coddling Wall Street. But they have missed the most important way that Wall Street lives off the rest of us. Programs like the Troubled Asset Relief Program of 2008 are red herrings. TARP did send $700 billion to Wall Street, but most of it has been paid back.

There is a much more important, albeit quieter, favor Washington has been performing for Wall Street over the last 25 years: When large financial institutions get into trouble, policymakers make sure that their creditors receive 100 cents on the dollar.

Rest is here.

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{ 229 comments }

Jon Murphy October 24, 2011 at 6:42 pm

As always, Russ, you do a great justice.

vidyohs October 24, 2011 at 7:23 pm

Except that Russ misses the point.

It isn’t about data, not the correct data, not any data.

If reason and rationale could reach them, they wouldn’t be there because even just open eyes, ears, and an active unbroken brain would have taught them long ago that what they are doing is a lie.

Justin P October 24, 2011 at 8:29 pm

Look at the Youtube link I posted below…no amount of reason, logic and data will get that Wesleyan grad to think anything other than what he has been indoctrinated to think.

Invisible Backhand October 24, 2011 at 9:30 pm

“That’s completely bonkers. The working class does not get hurt by inflation, banks get hurt by inflation because nominally denominated debts are worth less, and so the interest that they are collecting is worth less. Literally that’s bonkers–”

(“Adam” feigns laughter during this. He then changes the subject)

Whatever you think of his conclusion, he’s had some education on the subject. The video is also obviously edited.

Dom October 25, 2011 at 8:10 am

“Whatever you think of his conclusion, he’s had some education on the subject.” Considering the state of our schools, you’re probably right. But that’s the problem. He’s an idiot who was taught nonsense.

“The video is also obviously edited.” Yes, the really vomit-inducing stuff was taken out.

Justin P October 25, 2011 at 5:41 pm

I figured the “30 minutes later” would have told you that fairly obviously.

Invisible Backhand October 25, 2011 at 7:56 pm

@Justin P

That’s all you have to say? Did I waste my time on your video you claimed was soooooo important?

People will start to think your a flake, Justin P.

Automatic October 25, 2011 at 8:53 pm

If he was educated on the subject, he was not educated well enough to consider the likely event that wages would lag far behind inflation. This would devastate the poor, despite whatever nominal debt relief it might provide.

Fred October 25, 2011 at 8:37 am

what they are doing is a lie

Those who worship violence feel that through the use of force they can turn lies into truth. So they don’t care that what they are doing is a lie. That does not matter. If you feel that might makes right, then you do not seek the truth. You seek to shape the truth through violence. And that’s all these people are. Wannabe thugs. Tomorrow’s lawyers and politicians.

Krishnan October 25, 2011 at 9:25 am

Re: vidyohs – Philosophy always matters – and there are some/many who will continue to think in ways that make it impossible to reach them. If they are given data that demonstrates clearly that Government intervention – through crony capitalism is the problem – they will refuse to believe it. They cling to a view of the world that is very bizarre and refuse to accomodate any information that contradicts the model they have built within.

We can see that in the responses of many on this blog – no matter what Don or Russ may write, they respond with something irrelevant or attack on unrelated grounds or simply froth at the mouth.

Nikolai Luzhin, Eastern Promises October 25, 2011 at 3:54 am

the piece is pathetic in many many ways but especially because it misstates the small truth and the big truth

small truth first:

1) Lehman Brothers failed

2) lots of S & Ls failed

3) PMI Insurers failed

4) AIG failed

Now the big truth. The Lesser Depression was not caused by any alleged willingness on our part to bail out creditors 100%.

The Lesser Depression was caused because millions of homeowners lied to get loans and could not pay those loans back. These people know they couldn’ t service the mortgages they were taking out. When you have millions of people engaging in fraud this is what happens.

They judged, correctly, that no one would go to jail for loan fraud and they were right. This wasn’t about paying off creditors 100% (which didn’t happen and which is why Europe is now in mega bailout mode). This was about not prosecuting criminals. We have not prosecuted the borrowers, the brokers, the appraisers, and the confidence men on Wall Street who re-packaged and sold the junk. History has never seen a greater non-violent break down of law and order.

SaulOhio October 25, 2011 at 9:28 am

As usual, you completely ignore what point Russ was trying to make, pretend he was arguing for something entirely different, and pretend to have won the debate. Russ was not blaming the Great Recession on bailouts of creditors. That was clearly the result of housing policies, which is not what Russ was talking about. All he was saying is that the protestors should be aware that big Wall Street corporations are NOT creatures of capitalism or the free market, but of government favors.

Nikolai Luzhin, Eastern Promises October 25, 2011 at 10:04 am

big Wall Street corporations are NOT creatures of capitalism

Go ask Gordon Gekko:

Teldar Paper, Mr. Cromwell, Teldar Paper has 33 different vice presidents each earning over 200 thousand dollars a year. Now, I have spent the last two months analyzing what all these guys do, and I still can’t figure it out. One thing I do know is that our paper company lost 110 million dollars last year, and I’ll bet that half of that was spent in all the paperwork going back and forth between all these vice presidents. The new law of evolution in corporate America seems to be survival of the unfittest. Well, in my book you either do it right or you get eliminated. In the last seven deals that I’ve been involved with, there were 2.5 million stockholders who have made a pretax profit of 12 billion dollars. Thank you. I am not a destroyer of companies. I am a liberator of them! The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA. Thank you very much.

SaulOhio October 25, 2011 at 10:35 am

You hit a new height of argument from authority, using a fictional character as your authority.

And what does any of that have to do with the subject at hand?

Another example of what I said before. You answer what other people say with irrelevant nonsense, and claim to have won the debate. Try actually saying something about the topic.

Justin P October 25, 2011 at 5:42 pm

+1 to Saul

SmoledMan October 24, 2011 at 6:51 pm

More and more I hear accounts of “normal” people showing up at OWS rallies. It’s not just the dirty hippies anymore!

vidyohs October 24, 2011 at 7:25 pm

In the eyes of the beholder.

Muirduck and ilk believe that the OWS crowd are normal people, and that it is the rest of us that are weird.

What is a normal person?

Methinks1776 October 24, 2011 at 7:28 pm

Do you not consider hippies normal?

vidyohs October 24, 2011 at 7:35 pm

:-) I’m not giving anything away, m’lady.

Methinks1776 October 24, 2011 at 7:51 pm

I’m asking our left of center friend. I thought they were supposed to be so much more “I’m okay, you’re okay” humane and loving.

Justin P October 24, 2011 at 8:30 pm

Do they live in filth?
http://www.humanevents.com/article.php?id=47048

If yes, they are hippies.
If no they are normal.

Greg Webb October 26, 2011 at 1:31 am

LOL! See Howard Stern’s interviews of OWS protesters. They are not just hippies anymore. They include the hard-core unemployable, the stupid, the uninformed, the uneducated, the leftists, and the socialists. Forgive me for the redundancy in my use of terms as noted above.

Brad Hutchings October 24, 2011 at 6:52 pm

I think you’re giving the actual protestors too much credit, Russ. They don’t have any actionable grievances. They’re just props for all sorts of popular angst. A lot of people, from Tea Partyers to Gary Johnson to Reason Magazine, have tried to approach them and find some common ground, and it never turns out anything but awkward.

A better way to approach this crowd might be with a live Keynes/Hayek appearance and rap battle. The one thing they’ve done is create a stage. Sieze it to get attention for yourself. That’s about the only practical use of OWS.

Methinks1776 October 24, 2011 at 7:04 pm

People I know who have deal with the protestors in Zuccoti Park daily (and who are very far left, I might add) report that it seems to be a hodgepodge of young people seeking an outlet for their youthful angst. I personally doubt they know who Keynes or Hayek are or if they would care if they found out. Although, I can already see the videos blaring on huge screens in the small park and I like it. So, obviously, I love your idea. The people working and living near the park would undoubtedly consider it a nice change from the constant drumming.

SmoledMan October 24, 2011 at 7:06 pm

Admit it – these people scare the bejesus out of you and the other bankers.

Methinks1776 October 24, 2011 at 7:09 pm

Lucky I’m not a banker then, eh?

vidyohs October 24, 2011 at 7:37 pm

LOL, yeah it’s a pity when “youthful angst” wears a grey beard and rimless eyeglasses. When do the majority of those clowns get over their youthful ignorance?

kyle8 October 24, 2011 at 7:44 pm

the worse are the guys over 60 who still were a ponytail !

Methinks1776 October 24, 2011 at 7:50 pm

Say what, Kyle? You mean to tell me you don’t find geezers with long, grey, thinning hair pulled into a rat tail drumming and crapping in a park for weeks on end appealing? Why, I declare!

Methinks1776 October 24, 2011 at 7:47 pm

When it gets colder in Zucotti Park.

Chris O'Leary October 24, 2011 at 7:19 pm

The lack of actionable grievances is deliberate because, like Barack Obama, it lets you turn OWS into what you want it to be.

Methinks1776 October 24, 2011 at 6:59 pm

Exactly. Brilliant, Russ. Just brilliant.

Stephan October 24, 2011 at 7:00 pm

Hmmm… I’m a subscriber to Foreign Affairs. I pay $$$ for my subscription. Do I want to read the opinion of a right-wing hack Russ Roberts? Yes but I can read for free here. The last thing everybody needs is paying a hack to spread his propaganda. (I will write a letter complaining about this to FA.)

Andrew_M_Garland October 24, 2011 at 7:42 pm

Really? You want to read the opinion of “a right-wing hack Russ Roberts”?

Further, you are only happy if you are paying for it?

That is really keeping an open mind.

SmoledMan October 24, 2011 at 8:26 pm

Fascist. You only want to read opinions by people you already agree with.

Greg Webb October 26, 2011 at 1:27 am

A fascist is a type of socialist, which is what you are, StupidMon.

Invisible Backhand October 24, 2011 at 8:38 pm

…about paying hacks to spread propaganda:

http://i.imgur.com/i7L5k.png

Stephan October 25, 2011 at 6:14 pm

That these folks and especially the Mercatus “Think” Tank are on the pay-list of the Koch brothers is an open secret. No mystery here.

Greg Webb October 26, 2011 at 1:25 am

That Stephan is and unwitting and unpaid stooge for George Soros is not in doubt. Lenin, a fellow socialist, used to refer to people like Stephan as “useful idiots.”

khodge October 24, 2011 at 9:02 pm

You’re okay with “everybody paying a hack” as long as the hack is a left-wing Keynesian?

MWG October 24, 2011 at 9:23 pm

I’m sure your words cut like a hot knife to the souls of CH’s authors.

Krishnan October 24, 2011 at 7:15 pm

We have become so accustomed to Government rescuing their cronies, that the public now has no idea how distorted the system has become. The ruling class (Demccrats AND Republicans) know this – and when in power, they do anything they can to help their cronies and extract campaign donations from them, all the while pretending to support the “little guy” or “capitalism”.

November 2010 did not result in any significant change – Government spending continues to increase, taxes continue to go up, growth is stalled. Stimulus (I, II, III, IV, etc etc) have simply raised the baseline for spending – and yet they want to spend more and more. Someone is certainly getting rich off the backs of the poor tax payers and the fraud continues. What a shame.

Darren October 24, 2011 at 7:23 pm

You can’t expect everything to change in one election. That’s the problem, though. Most people can’t pay attention for much longer than that.

Ken October 24, 2011 at 7:39 pm

Darren,

I think most people can, and do, pay attention for a very long time. It’s journalists who need to sell stories and politicians who need to start campaigning as soon as possible who have short attention spans.

This biggest problem, though, is that journalists and politicians are convinced of the stupidity of all others, so do their level best to “save” everyone, so become the busiest busybodies you’ve ever seen. The problem isn’t that people don’t pay attention to politics or elections, it’s that people, other than journalists and politicians, have other things to worry about that what policies are being debated.

I hate the fact that in addition to the hours I spend at work and at home devoted to being better at my job, I know how to pay attention to politics because politicians think nothing of enacting policies affecting topics about which they know nothing. Why is health care a political issue at all? Why is what job I have and what I make a political issue at all? Why is where I live, what kind of car I drive, how much electricity, what type of toilet I have, what type of light bulb I use, how much I save for retirement, where I go to school, what my children learn political issues at all?

It wasn’t always like this. Politicians used to recognize the limits of government. Politicians took their oath of office in good faith. Not anymore. People didn’t, nor should they, have to pay attention to politics; now we have to.

Regards,
Ken

Jim October 25, 2011 at 2:55 am

Great rant:)

Like

Nikolai Luzhin, Eastern Promises October 25, 2011 at 3:57 am

Ken

Grow up. All of life is political

Ken October 25, 2011 at 11:03 am

Nicki,

All of life is political.

False. Busybodies like you should grow up and understand that almost nothing is none of your business, hence not political.

Regards,
Ken

Ken October 25, 2011 at 12:45 pm

Edit: almost nothing is any of your business

Randy October 25, 2011 at 2:03 pm

I’ve heard this many times, and I too disagree. Politics is the art of exploiting human beings. By definition, we cannot all be exploiters. Also by definition, someone must produce for there to be anything for the politicians to exploit. Thus, we are not all political. Some of us are producers. Finally, from this we can derive a moral structure. Productive behavior is moral. Political behavior is immoral.

Chris O'Leary October 24, 2011 at 7:17 pm

I’m no historian, but it seems to me that scapegoating a small group of people rarely turns out well.

Ken October 24, 2011 at 7:41 pm

I don’t believe this. When has this ever gone wrong? The Jews rich people aren’t being scapegoated. It’s totally their fault.

Regards,
Ken

Methinks1776 October 24, 2011 at 7:46 pm

:)

BTW, you don’t have to cross out “Jews”. To many of the OWSers, “Jew”, “banker”, and “rich” are synonymous. Just as they are in Arab countries and in Germany.

PrometheeFeu October 24, 2011 at 8:04 pm

I must say I have not seen any evidence of the OWS people having problems with Jews…

Methinks1776 October 24, 2011 at 8:16 pm

Check out youtube.

Ken October 24, 2011 at 8:44 pm
Ken October 24, 2011 at 8:44 pm

And this: End the Fed with stars of David, along with the standard evil Jewish banker banner.

That took me a whole 45 seconds to find.

Regards,
Ken

GiT October 25, 2011 at 4:08 am

Just look at all these anti semites erecting sukkahs and reciting prayers in Hebrew.

http://vimeo.com/30500844

(But there are a couple videos of anti semitic people so clearly that’s representative of the general tenor of the movement)

Methinks1776 October 25, 2011 at 8:50 am

No, Git. Nobody ever said they’re all anti-semites. They’re not.

GiT October 25, 2011 at 12:43 pm

Right, it’s just that for ‘many’ of them jew, rich, and banker are ‘synonymous.’

I never used the word all. You used the word many, however. And nothing shows that ‘many’ of them are anti-semitic.

Ken October 25, 2011 at 12:47 pm

git,

just that for ‘many’

You are aware that ‘many’ and ‘all’ are two different words with completely different meanings, right?

Regards,
Ken

PrometheeFeu October 25, 2011 at 7:28 pm

Thanks. I wonder how widespread this is. As GiT was saying protests often attract some crazies.

@Ken: Hm… I’m not sure that Yom Kippur sign is anti-semitic. It sounds kind of like saying: “It’s Christmas, group X should practice generosity.” It could be anti-semitic, but it seems like a stretch…

GiT October 26, 2011 at 12:50 am

Yes, Ken, I know. Hence why I never accused anyone of using the word all. I used the word all, but not in a way that suggests anything about all of OWS being, or not being, anti-semitic.

GiT October 25, 2011 at 4:03 am

Nice job at seeing what you want.

The same Rothschild conspiracy theory nuts were present at tea parties as well. An open protest will draw extremists. An open protest that has to do with banking will draw out extremists who believe in jewish cabals of bankers and masons. It’s not to the point but it would do well not to forget the various bigots that showed up at tea party rallies (white supremacists, islamophobes, homophobes, neo-nazis.) I’m not saying that was representative of the tea party, but it was present. Presence doesn’t establish much of anything. It certainly doesn’t establish that ‘many’ OWSers are anti semitic.

As to the Yom Kippur sign, that may actually be being held by an observant Jew. (And really, I don’t see anything anti-semitic about it.)

One thousand practicing Jews gathered on Yom Kippur at Occupy Wall Street for a Kol Nidre service.

Sukkot tents have been set up and encouraged at multiple occupations.

So how about you can it with the bull shit anti-semitism meme.

Krishnan October 25, 2011 at 10:02 am

Re: methinks1776 – Some things will never change. No matter what happens, the Jew Haters come out. Even as Jews vote overwhelmingly (it seems) “progressive”, they are hated. There is simply no winning – even by losing. It is indeed depressing to watch the same old, same old hysteria and hatred being paraded out in the open and not being challenged sufficiently. It also does not help to have as President, someone who is openly hostile in so many ways to the Jewish State and yet goes for hand outs from the “Jews” on Wall Street.

Methinks1776 October 25, 2011 at 10:37 am

Actually, OWS is relatively tame in its a Antisemitism You should have seen the venomous anti-Semitic commentary when Lehman went bankrupt. The left seems to be okay with that, but you can’t say anything negative about Obama’s policies (not Obama personally, mind) because that’s racist.

PrometheeFeu October 25, 2011 at 7:32 pm

I don’t understand this whole “hostility to Jewish state” ~= anti-semitism thing. Israel is a state which has a number of policies to which one can object. One can also be hostile to it based upon its previous actions. I don’t see how that makes one anti-semitic. A number of countries claim to be Muslim states. Does hostility towards Iran or Saudi Arabia make one islamophobic?

Methinks1776 October 25, 2011 at 7:35 pm

Does hostility towards Iran or Saudi Arabia make one islamophobic?

According to the left? Yes.

PrometheeFeu October 25, 2011 at 11:27 pm

What about according to the people who think hostility to Israel is anti-semitism?

Methinks1776 October 26, 2011 at 1:01 am

Define “hostility”.

PrometheeFeu October 26, 2011 at 10:22 am

We had a good enough agreement of the word up till now.What changed? Here is a good enough definition for the purposes of this discussion:

Hostility: Believing that a state’s policies are some version of immoral, unenthical or against your own interests and that as a result the United States should do something between reducing its assistance to that state and using violence to stop it from implementing its policies.

e.g.
-People who believe the US should invade Iran to prevent them from accomplishing its nuclear program.
-People who believe the US should stop rendering assistance and apply diplomatic pressure on Israel because of its treatment of Palestinians.
-People who believe the US should refuse to give Saudi Arabia military assistance because of the Saudi treatment of women.

Methinks1776 October 26, 2011 at 10:57 am

Prom,

Any unfavourable view of Islamic countries is considered unacceptable by the left (except when discussing the inane “energy independence”). So, “hostile” in its most benign form will do.

In my experience, the very same people don’t consider it at all hostile to support “pushing Israel into the sea”. That’s why I asked for a clarification.

I don’t think we should be providing aid to any country for any reason – including Israel. I don’t think we should be “pushing Israel into the sea”. Since you consider either of those “hostile” your definition is so broad as to be useless.

Anyone who wants any version of pushing Israel into the sea is, IMO, clearly Antisemitic. Anyone who criticizes specific policies or favours pulling aid from any country because they subscribe to the principle that it is not our job to do so is not. Anyone who wants to pull aid specifically because they believe it will make it easier for Israel’s neighbours to kill more Jews and eradicate the Jewish state is an Antisemite. In my experience, leftists do not have a principled stance against meddling and aid. Their opposition to the support of Israel is most often rooted in Antisemitism.

PrometheeFeu October 26, 2011 at 1:53 pm

“Any unfavourable view of Islamic countries is considered unacceptable by the left (except when discussing the inane “energy independence”). So, “hostile” in its most benign form will do.”

That’s not my experience. I have seen and heard many people on the left heavily criticize Saudi Arabia and Iran for their treatment of women and homosexuals for instance. Now, I live in Berkeley where there are real leftists who are nowhere near as rabid as the ones who get on cable television. Perhaps you are not exposed frequently to the average leftist who is IMO wrong, but not that bad overall.

“Anyone who wants to pull aid specifically because they believe it will make it easier for Israel’s neighbours to kill more Jews and eradicate the Jewish state is an Antisemite.”

What if instead you believe that you should stop providing aid to Israel because Israel is using that aid to kill innocent people? What if you want the disappearance of a “Jewish state” because you believe defining a state around a religion is inherently dangerous for freedom and liable to lead to religious wars?

Maybe I’m misunderstanding you, but you seem to be saying that one can oppose aid to Israel only on the grounds of anti-semitism or principled opposition to all aids. In my experience, the reality is much more nuanced and the positions you present compose only a relatively small percentage of reasons for opposition to aid for Israel.

brotio October 25, 2011 at 11:10 pm

protests often attract some crazies.

Funny that these protests have earned endorsements from David Duke, Communist Party USA, and the American Nazi Party.

GiT October 26, 2011 at 12:53 am

David Duke endorsed the tea party, and white supremacist groups and the kkk distributed literature at tea party rallies and actively discussed how the tea party was a great picking grounds for new recruits.

So, um, get a grip.

Methinks1776 October 26, 2011 at 1:09 am

Hey, git, you do know that running around trying to push your fliers on people in the hopes of recruiting them isn’t the same as endorsing or actually recruiting them, right? Right?

On the other hand, the OWS flunkies are ranting about support for the intifada, the glories of Socialism, Communism, and the damn Jew bankers (at least the ones who are not too strung out on dope to know that there are Jews in banking), among other dumb things. They’re already recruited.

GiT October 26, 2011 at 2:55 am

Your inane stream of labels, typically applied ad naseum to any form of left protest in this country out of pure reflex by the chattering pea-brains of the reactionary right , tell me much more about you than they tell me about the OWS movement.

Methinks1776 October 26, 2011 at 10:59 am

I can’t take that seriously from a guy who calls himself a git.

vidyohs October 24, 2011 at 7:42 pm

What? Are you hinting that there is an oblique comparison between the OWS crowd to Hitler and the Nazi’s? If not, then you should, well maybe not even hint, just flat out say it.

There seems to be identical technique between the OWS crowd and that used by the Nazis.

Demonize the Jews, the uber-rich, and deny self blame for one’s own situation. The OWS are just good throw-back Nazis.

muirgeo October 24, 2011 at 8:45 pm

“I’m no historian, but it seems to me that scapegoating a small group of people rarely turns out well.” Chris O’leary

Especially when that smaller group has been thieving from the treasury and auctioning the government… they better watch it… people are pissed and rightfully so.

Are you aware of the Fed Audit and what it revealed?

Chris O'Leary October 24, 2011 at 10:27 pm

So, in other words, they deserve whatever they get?

Sticking it to them wouldn’t be doing anything wrong or troubling, it would just be evening things out a bit.

Heck, we ought to repatriate their possessions and return them to the people. That wouldn’t be stealing because you can’t steal what’s already been stolen.

We also ought to send some people down to Wall Street to bust some windows and get their attention.

dsylexic October 25, 2011 at 12:33 am

govt =small group. which libertarian wants the fed in the first place.

muirgeo October 25, 2011 at 12:41 am

Government is not the problem it is who is controlling the government. Control needs to go back to the people and away from the banks.

Ken October 25, 2011 at 1:11 am
Ken October 25, 2011 at 1:13 am
Fred October 25, 2011 at 8:57 am

That’s right. The problem is that the government is controlled by teh rich and teh corporations.

By giving more power to the government that is controlled by teh rich and teh corporations, the government will magically take control of teh rich and teh corporations that control it.

It is ludicrous to suggest that giving more power to the government will only give more power to teh rich and teh corporations that control it. No. That’s crazy talk.

Because the government is Teh People™. Well, not really. Right now it’s teh rich and teh corporations. But if government becomes powerful enough, then Teh People™ will be able to rise up against teh rich and teh corporations! Yeah! Power to Teh People™!

Oh My God! The Stupid! It Burns!

muirgeo October 25, 2011 at 9:13 am

No the stupid that burns is going from this statement “That’s right. The problem is that the government is controlled by teh rich and teh corporations.” to this “By giving more power to the government…” when what we are suggesting is giving control of the government back to the people. It’s pretty simple and straight forward. Giving the government back to the people is NOT giving it more power.

SaulOhio October 25, 2011 at 9:38 am

RIIIIGHT!

The problem with communism wasn’t the theory. Its just that, for some strange reason, communist countries ended up ruled by bad people like Stalin, Pol Pt, Mao, and Castro. It would all work if we just got the right people in charge, instead of these crazy megalomaniacs and bloodthirsty tyrants who always seem to SOMEHOW take control.

And in America, if we can just SOMEHOW prevent regulatory capture, government control over the economy will somehow work out alright. SOMEHOW.

This is a good place to use a good Randism: “blankout”. You completely blankout any thinking or ideas about why the wrong people end up taking over your gun-backed plans. The cause of the corruption is well understood, but you never listen. You don’t want to understand, preferring to blankout anything anyone says to explain not only why it always happens, but why it always WILL happen. EVERY TIME!

Fred October 25, 2011 at 10:50 am

Giving the government back to the people is NOT giving it more power.

Back? Government has never been in the hands of the people.
Never has been. Never will be.
Government is an agency that allows the rich and popular to literally get away with murder. It has nothing to do with the people.

“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

See that?
That says is that power not in the hands of government is power in the hands of Teh People™.
Legislation and regulation takes power away from Teh People™ and puts it in the hands of government.
Government is not Teh People™. It is government. It is made of people, but it is distinct and separate from Teh People™.

It’s a pipe dream to believe Teh People™ can control government. It’s the opposite. Government controls Teh People™. Members of government can kill Teh People™ and get away with it. Kill a member of government and they will spare no expense as they hunt you down until you’re dead.

Teh People™ will never control government.

Ken October 25, 2011 at 11:05 am

muirgeo,

It’s pretty simple and straight forward.

Right. The struggle for proper governance is thousands of years old. You’re a stain on this blog and humanity in general.

Regards,
Ken

Greg Webb October 25, 2011 at 1:40 pm

Ken, excellent response! And, muirgeo does not understand the country’s history. All he understands is his need to blame someone else for the problems of the world so he has someone to direct all that pent-up hate at.

Randy October 26, 2011 at 6:57 am

@SaulOhio. Well said.

Nikolai Luzhin, Eastern Promises October 25, 2011 at 3:59 am

Are you aware of the Fed Audit and what it revealed?

What did it reveal that was so sinister?

That the fed loaned money?

That’s what is is supposed to do. It worked

muirgeo October 25, 2011 at 9:14 am

Really … it’s supposed to loan $16 trillion dollars to a small group of banks that are NOT loaning to the rest of America. I’m not sure what the hell you are thinking.

Nikolai Luzhin, Eastern Promises October 25, 2011 at 9:56 am

muirgeo

I know you won’t believe this but banks are not lending money because of a bunch of evil reasons.

they are no lending money because no sane person would want to borrow money, due to a lack of aggregate demand.

you wholly fail to understand banking. At one time banks existed because they could make commercial loans. This reason is gone. Large commercial loans are now made by investment banks, etc. (Remember all the dollars we send out of the country to China and for oil. Well, they come back not to banks but to investment banks, who use such to make loans (bonds, bridge financing, etc. to large business).

However, because of the need for deposit insurance, our banks have been stuffed with cash for years and years. To try to stay in business, banks have gotten into other lines of loans (consumer and real estate development loans). Very very little bank lending is to small and medium size businesses, because honestly, even these businesses don’t borrow that much. Historically, when they did, the loans were real estate secured loans—use of home equity as collateral for a business loan (ex. $100,000 loan to finance opening and operation of a restaurant secured by 2nd deed of trust on home equity. The fall in home prices has gutted demand for such loans.

In sum, you are correct. We have no loans. You are wrong about why. It has really nothing to do with the banks and everything to do with inadequate aggregate demand and all the other complaints you usually express pretty well

Michael October 25, 2011 at 10:12 am
John J. October 24, 2011 at 7:58 pm

Great point, Russ! It is very frustrating that most OWS keep voicing their opinions of corporate greed and inequality. While the economic pie is indeed larger as you said, it just seems more skewed because the gains to the top are easier to measure monetarily while the middle and bottom gains are not.

The huge developments in information technology alone brings huge returns in personal enjoyment, productivity, and integrating social circles.
It’s really funny, especially when you consider this “anti-capitalist” movement, setting up online networking systems in the middle of Zuccotti Park and using iPhones to broadcast over twitter and youtube. This economic gain is just overlooked because most of the internet is free, and so it is just seen as another entitlement.

Maybe if they were protesting in burlap sacks I would pay more attention.

SmoledMan October 24, 2011 at 8:27 pm

They’re protesting several things:

* they got into huge student debts and want those forgiven since the banks got their TARP loans…

* they are angry about the top 1% having so much wealth, private jets, and all the wonderful things

John J. October 24, 2011 at 9:03 pm

I just read Cowen’s TGS, and both of these points are addressed.

The top earners have been able to flourish because of the increased returns to capital. As Russ pointed out, those in information technology are in the 1%, and as Cowen says, those industries brings huge returns with relatively few workers. Facebook, Twitter, etc. are completely different than some of the industries in the past, such as GM post WWII.

And higher education is still a good, and if they are forgiven then future generations will expect free education as well, subsequently destroying the value of a degree. Additionally, the US still has lower graduation rates for science, engineering, and other high skilled areas than the rest of the developed world; I doubt any of the protestors majored in those. And lastly, I find it selfish to complain about a $30k debt for something that made them (hopefully) better off when there are homeowners 100′s of thousands in debt and with underwater mortgages, and putting a larger strain on the overall economy.

SmoledMan October 24, 2011 at 9:23 pm

Yeah I’d like to know how many out-of-work engineering majors are attending OWS rallies.

John J. October 24, 2011 at 11:09 pm

judging by some of the statements I’ve heard from protestors, I’m pretty sure they spent their money on a degree in Underwater Basket Weaving.

Josh S October 25, 2011 at 1:30 pm

Not that many of us engineering majors are out of work to begin with, what with us having this thing liberal arts majors refer to in hushed, reverent tones as “marketable skills.”

Nikolai Luzhin, Eastern Promises October 25, 2011 at 4:01 am

Additionally, the US still has lower graduation rates for science, engineering . . .

What sane person wants to work in an area where efforts are persistently made to cut incomes by importing foreign workers?

Poor people may not understand that illegal immigration is responsible for their declines in income but not everyone is uninformed

PrometheeFeu October 25, 2011 at 7:52 pm

I know… Who the hell would want to become a software engineer? You’d have to be an idiot to want to compete with workers imported from abroad. It’s not like starting salaries hover around 2x the median wage. It’s not like we get great perks and benefits. It’s not like there are so few of us per job opening that recruiters are practically begging us to come work for their companies… It’s not like the profession still garners respect and admiration. It’s not like we have a whole industry dedicated to help us start multi-million dollar companies allowing those of us who succeed to retire in wealth in their mid-thirties or more commonly go back to work just for the thrills. I should go look for work in one of those industries where the immigrants are not depressing my household income to the top 10% of income earners with less than 2 years of experience…

Methinks1776 October 24, 2011 at 9:42 pm

TARP was repaid. You think that’ll encourage them to pay off their loans? Not bloody likely.

Nikolai Luzhin, Eastern Promises October 24, 2011 at 8:07 pm

Given that, “The share of income going to the top one percent has risen dramatically over the last 40 years” and we are in the midst of Lesser Depression, it is more than fair to ask, Is there a connection and, if so, what is that connection?

Nouriel Roubini has a excellent essay up a Project Syndicate where he remarks (The Instability of Inequality):

“The problem is not new. Karl Marx oversold socialism, but he was right in claiming that globalization, unfettered financial capitalism, and redistribution of income and wealth from labor to capital could lead capitalism to self-destruct. As he argued, unregulated capitalism can lead to regular bouts of over-capacity, under-consumption, and the recurrence of destructive financial crises, fueled by credit bubbles and asset-price booms and busts.”

http://www.project-syndicate.org/commentary/roubini43/English

If you look at the Austrian indicators, these ought to be the best of times.

1) Government, everywhere, is completely immobilized and demoralized; we have a complete lack of leadership, at all levels.

2) Reals wages are stagnant and declining

3) Interest rates are at historic lows

4) Taxes (and tax rates) are at historic lows

5) The rich and powerful dominate all

6) Debt financed imports are through the roof and climbing ever higher

I could go on and on. This should be the best of times. Why is it the worst.

Now, maybe it has nothing to do with what has happened, but it is more than fair to ask.

Those who shrilly deny there can be no connection are the most compelling evidence that the rich do have us and are using paid voices to throw out propaganda.

rmv October 24, 2011 at 10:42 pm

[citation needed]

Justin P October 24, 2011 at 8:11 pm

How about this for OWS?
“Inflation doesn’t hurt the poor.” about 6:00min in.

http://www.youtube.com/user/AdamKokesh#p/u/9/5HXd4rU4oRI

Justin P October 24, 2011 at 8:13 pm

But hey, is has a BA from Wesleyan?!?

Cliff October 25, 2011 at 11:56 am

Sounds like a pretty smart guy to me who is pretty much in line with mainstream economic thought. Even libertarians like Cowen/Tabarrok would probably agree with most of what I heard.

PrometheeFeu October 25, 2011 at 8:31 pm

Well, temporary moderate inflation will hurt people with savings more than anybody else and helps debtors. So yes, he is somewhat right.

muirgeo October 24, 2011 at 8:18 pm

The biggest common complaint of the OWS people is the same as in 1776. Unequal representation.

The amount of influence paid lobbyist have on policy that gets converted into things like $17 TRILLION dollars of loans to the big banks since TARP and discovered on the audit of the Fed is a massive inequity in our society. And I am not even sure about how many people commenting on the protestors even know of the audit results. It’s hardly got any attention in the corporate media while the Solendra deal for 0.0001% as much is a HUGE scandal???

Our government is up for auction and with wages and wealth so slanted it’s clear who gets better representation.

You guys claim the people in OWS want a hand out….. THAT IS FALSE… the people who want and who ARE getting the handouts IS Wall Street.

Again $17,000,000,000 TRILLION dollars in free loans while the $0.050 trillion dollar bill request to hire teachers, firefighters and build infrastructure gets turned down and while people with upside down mortgages get no help at all because THEY are not responsible?

Anyone who can not see this as a problem…. This double standard is beyond my ability to comprehend.

http://www.gao.gov/new.items/d11696.pdf

SmoledMan October 24, 2011 at 8:24 pm

Where did you get the $17 trillion figure?

Invisible Backhand October 24, 2011 at 8:40 pm

is it that hard to goohlel 17 trillion dollars?

http://21stcenturywire.com/2011/02/17/repudiate-our-17-trillion-of-debt/

Invisible Backhand October 24, 2011 at 8:40 pm

it’s easier than spelling it, obviously

muirgeo October 24, 2011 at 8:42 pm

SmoledMan,

See page 121 of the link I provided above.

muirgeo October 24, 2011 at 8:37 pm
Ken October 25, 2011 at 1:32 am

This only demonstrates how deeply confused these people are. Why are they protesting Wall Street and not congress if their complaints are corruption and lobbying?

Regards,
Ken

muirgeo October 24, 2011 at 8:38 pm
muirgeo October 24, 2011 at 8:39 pm
Ken October 25, 2011 at 1:29 am

This sign is incorrect. The political class has corrupted Wall Street.

Regards,
Ken

muirgeo October 24, 2011 at 8:39 pm

And this… they have very legitimate complaints and rational solutions.

http://media.treehugger.com/assets/images/2011/10/occupy-wall-street-photo.jpg

sdfsdf October 24, 2011 at 11:56 pm

The problem is that government has all power over all industries and is in a position to grant favors and destroy competitors. The vain hope that this power will be used to promote fairness is a laugh.

There is only one solution and that is to dis-empower the government from having the ability to control every aspect of every endeavor and to give away the favors in the first place.

I know that you know this, and that you are willfully ignoring this fact in favor of the delusional hope that somehow, some way, a government with even more plenipotentiary powers will somehow be better.

The OWS dupes are half way there. If only they can connect the dots…..

Ken October 25, 2011 at 12:49 pm

Again, this sign is wrong. Wall Street and corporations were corrupted by government.

Regards,
Ken

SmoledMan October 24, 2011 at 9:23 pm

muir – in the end they’re the same dirty smelly hippies of yore.

muirgeo October 24, 2011 at 9:30 pm

Yeah it’s just $17 trillion dollars of low interest loans not available to the average person. You OK with that?

Seth October 24, 2011 at 11:19 pm

And this means we should do what?

muirgeo October 25, 2011 at 12:49 am

Make lobbying for hire illegal for the bribery of a public official that it is. Money is NOT speech it’s bribery. Allow a maximum of $100 of contributions per person to any given campaign… including your own. Pass an amendment stating that corporations are NOT people.

That’d be a good logical start.

What’s YOUR specific recommendations…. Again…specific like mine were. And I ask you this knowing full well you have none… you will answer at best with vague sounding generalities.

Ken October 25, 2011 at 1:25 am

muirgeo,

Money can be used for speech. I, by the first amendment guarantee, can hold and preach whatever opinion I have. To express such an opinion to more than those that are in immediate earshot of me, I have to use money. I have to buy a writing utensil and paper or a computer or a voice recorder, etc. This includes buying air time on TV and radio, as well as all production elements involved. To stop me from purchasing any of these thing through the force of law is indeed a violation of my first amendment rights. Preventing me from cooperating with others to purchase those things is indeed a violation of my first amendment rights.

if you think these aren’t violations of the first amendment rights, what’s to stop the government from interfering with the way MSNBC, FOXNEWS, the NYT, The Washington Times, etc. uses their money to express opinions. Should there be a law eliminating or restricting how newspapers can spend money producing their Opinons or Op-Ed sections? It takes money to produce those sections, so by your definition the government can interfere all it likes.

It’s like you don’t understand the implications of “Congress shall make no law … abridging the freedom of speech, or of the press;” Read that again no law. Is that really hard to understand?

Regards,
Ken

muirgeo October 25, 2011 at 9:19 am

“To express such an opinion to more than those that are in immediate earshot of me, I have to use money>”

Shut up ignoramus… the only point here is the one at the top of your goofy head. Money is not speech. Speech is speech. People are people and Corporations are legal fiction. You are an uninteresting poor thinking dope… that’s why I almost never read or reply… BORING…and poorly thought out.

Seth October 25, 2011 at 10:32 am

I agree with you that a big problem stems from politicians in gov’t making non-market loans backed by taxpayers.

I am no fan of lobbying. I’m also no fan of drugs, but making those illegal has not stopped that market from getting drugs to consumers, has it? Neither did prohibition. It’s just created a rent-seeking opportunity for criminals. Outlawing lobbying, without reducing the power of Federal government that lobbying seeks to harness, will have much of the same effect. It would push lobbying to the black market and make it even more corrupt.

Also, let’s say we follow your recommendation and successfully cut lobbying. Then how will those politicians allocate that $17 trillion? I don’t think the answer is ‘they won’t.’

My specific recommendation is to reduce the power of Federal government. A return to the powers enumerated in the Constitution would be a good start. A simple tax code that cannot be gamed for special interests would be good. We should view Federal gov’t more like we view our Homeowner’s Association (very specific and defined role, primarily to protect the country), instead of an Aladdin’s Lamp to any perceived problem.

Ken October 25, 2011 at 11:08 am

muirgeo,

Shut up ignoramus

Thank you for demonstrating for all to see what a pathetic fool you are. When faced with reality you explain “Shut up”.

Regards,
Ken

Methinks1776 October 25, 2011 at 11:18 am

Seth,

you said: I am no fan of lobbying.

Why? How else are the representatives made aware of the desires of their constituency? And isn’t representing their constituency the job of the representative?

Seth October 25, 2011 at 12:03 pm

“How else are the representatives made aware of the desires of their constituency?” -Methinks1776

I’d suggest they have fewer sessions in DC and spend more time at home listening to their constituents, surveying them and reporting the results of those surveys back to constituents so they can see how their views line up with their fellow constituents.

My impression might be mistaken, but I don’t think lobbying groups generally represent constituents. They tend to represent special interests.

Sure, constituents could form their own lobby, but I thought that was the point of representation to begin with — so constituents were represented, not lobbies.

Fred October 25, 2011 at 12:07 pm

Lobbyists represent the constituency?

I thought they represented cronies and groups seeking unequal protection under the law.

Methinks1776 October 25, 2011 at 1:23 pm

Seth (and Ken?),

To lobby simply means to try to influence the vote of your representative.

Of course we all wish influence that vote in our interest. That’s a given.

But, if you have a representative democracy, all constituents must be able to lobby their representatives for the institution to be truly representative.

I think you fully understand why special interests get what they lobby for at the expense of the more diffuse interest. That’s why I think perhaps it’s not the act of lobbying that you are really against but, the ability and willingness of politicians to bestow special favours at the expense of everyone else.

Lobbying is just a red herring.

Methinks1776 October 25, 2011 at 1:24 pm

Not Ken, Fred. My apologies to Fred

Ken October 25, 2011 at 1:27 pm

Methinks,

I understand what lobbying is and don’t wish to limit it because I believe in the first amendment. You’re correct, lobbying is simply an attempt to influence politicians, which is dastardly in any way. Talking to politicians, in addition to voting, is one of the primary ways people can influence politics.

Regards,
Ken

Fred October 25, 2011 at 2:24 pm

To lobby simply means to try to influence the vote of your representative.

Not everyone has direct access to their representative. Most of us call their office and speak to an aid, write a letter and get a form letter response if we’re lucky, eventually discover that our representatives care what the average constituent thinks only on one Tuesday every so many years, and give up.

Yes I agree that the problem lies not with special interests asking for favors, but in a government that grants favors.

What can be done about it?

Ken October 25, 2011 at 2:32 pm

Fred,

What can be done about it?

Vote the bums out, show up to your local council meetings, actually go to your representatives office. You seem to think that you can’t get an audience with your rep, but I’m certain that’s wrong.

Regards,
Ken

Fred October 25, 2011 at 2:55 pm

Voting the bums out doesn’t work. You just get more bums.
I firmly believe that anyone who seeks out a position of power should not have it.
Seeking out my reps wouldn’t matter anyway. They want to know what i want them to do.
I don’t want them to do a damn thing. I want them to undo.
I want to see the power structure dismantled. I don’t want to see laws changed, I want to see laws repealed.
But people don’t seek power for the purpose of destroying it.
People who call themselves “lawmakers” don’t repeal laws.

We’re screwed.

Ken October 25, 2011 at 3:10 pm

I firmly believe that anyone who seeks out a position of power should not have it.

Tripe.

Regards,
Ken

Fred October 25, 2011 at 3:17 pm

That was thoughtful and convincing. Or perhaps a little too close to home.

Ken October 25, 2011 at 3:30 pm

Fred,

Winners want the ball, always. The fact that for you simply seeking elected office is somehow a badge of dishonor for you shows just how thoughtless and shallow you are when thinking of politics. There are many good men and women in office. All of whom chose to seek election. But for you, this is an automatic disqualification, which is why your statement is tripe, i.e., worthless.

Regards,
Ken

Fred October 25, 2011 at 3:40 pm

You must consider Don to be thoughtless and shallow as well, for he has an extremely low opinion of people who will do what it takes to win an election.

Good to know.

I look forward to reading his response to your telling him so on his next post regarding his low opinion of politicians.

I expect your comment to be right up there at the top, informing him that you consider his post to be tripe.

Ken October 25, 2011 at 5:40 pm

Fred,

You must consider Don to be thoughtless and shallow as well, for he has an extremely low opinion of people who will do what it takes to win an election.

Of course, this is a strawman because you didn’t say you have a low opinion of those willing to do what it takes to win an election. You said anyone who seeks out a position of power should not have it.

Next time compose your thoughts and realize what it is you are talking about. The two statements you made about Don’s opinions and your own are two different statements.

Bless your soul, though, you keep plugging away.

Regards,
Ken

Seth October 25, 2011 at 9:43 pm

“What can be done about it?”

Get know the names of some candidates that don’t believe in this. Let your friends and families know those names and why you plan to vote for them..

Ask for it in a candidate.

Ask your friends and families to consider the trouble these special favors create and for them to consider this quality in a candidate. Keep the conversation away from red herrings like “will he support this program or that” or “will he give good speeches”. Keep it focused on “will she do the job right and not auction off government power”?

muirgeo October 25, 2011 at 11:11 pm

“Why? How else are the representatives made aware of the desires of their constituency? And isn’t representing their constituency the job of the representative?”

You write them letters, you call them and you email them. THAT is all 99% of us CAN do… is there a better way to get their attention? Hummmm?

Fred October 26, 2011 at 7:54 am

Ken says “There are many good men and women in office. All of whom chose to seek election.”

I have seen many posts from Don that would conflict with that statement.

Next time Don makes such a post, I expect to see the following from Ken.

Don, you are a pinhead.
Your statement is tripe.
Go fuck yourself.

Regards,
Ken

Ken October 26, 2011 at 11:02 am

Fred,

Ken says “There are many good men and women in office. All of whom chose to seek election.”

I have seen many posts from Don that would conflict with that statement.

No you haven’t. Because you are a pinhead, you cannot distinguish between ‘all’ and ‘many’. You made the statement that all politicians are not good because they chose to seek office. For you “anyone who seeks out a position of power should not have it” (emphasis added).

Don has never, nor would he ever say that.

The problem with you is that you seem to think the following statements are mutually exclusive:

1) There are many bad politicians.

2) There are many good politicians.

Of course anyone with even a passing understanding of logic knows that these two statements can be true with no contradiction. This is true because there are many good men and women and there are many bad men and women.

The absurdity of your statement is that anyone who wants to be a father shouldn’t be a father. A person who wants to be an officer in the military shouldn’t be an officer; anyone in the military who seeks promotion should be denied that promotion. A person who wants to run a business shouldn’t be allowed to run a business. A person who wants to become a master at his trade shouldn’t be allowed to become a master of his trade.

So you’ve all ready fucked yourself, Fred. You have fucked yourself good and hard because you’ve made a blanket absolute statement, which is obviously false and now refuse to admit it. That denial is proof of the good fucking you’ve given yourself.

You’re inability to understand the basic logic of the above puts your stupidity on par with muirgeo and Invisible Backhand. Congratulations.

Regards,
Ken

Fred October 26, 2011 at 9:22 pm

Thank you Ken for a brilliant ad-hominem argument.

Your capabilities to attack a person are admirable and you display them well here on a regular basis.

What is the root of my assertion that seeking power should disqualify one from having it, you ask?

No you didn’t ask. You attacked. Like you always do. Someone says something that offends your conservative ideals, and you launch a personal attack. Every time.

But I’ll answer anyway.

Some say power corrupts.

I say power attracts those who are already corrupt or who are prone to corruption. Like moths to a flame.

Yes, yes, yes, there are the rare exceptions.
I should have put some qualifying adverb in there.

I’m soooooo sooooo sorry for not putting a qualifier in my statement.
I’m soooooo sooooo sorry for not putting a qualifier in my statement.
I’m soooooo sooooo sorry for not putting a qualifier in my statement.
I’m soooooo sooooo sorry for not putting a qualifier in my statement.
I’m soooooo sooooo sorry for not putting a qualifier in my statement.
I’m soooooo sooooo sorry for not putting a qualifier in my statement.
I’m soooooo sooooo sorry for not putting a qualifier in my statement.
I’m soooooo sooooo sorry for not putting a qualifier in my statement.
I’m soooooo sooooo sorry for not putting a qualifier in my statement.
I’m soooooo sooooo sorry for not putting a qualifier in my statement.
I’m soooooo sooooo sorry for not putting a qualifier in my statement.
I’m soooooo sooooo sorry for not putting a qualifier in my statement.
I’m soooooo sooooo sorry for not putting a qualifier in my statement.
I’m soooooo sooooo sorry for not putting a qualifier in my statement.
I’m soooooo sooooo sorry for not putting a qualifier in my statement.
I’m soooooo sooooo sorry for not putting a qualifier in my statement.

May I please have forgiveness from the great Regards, Ken who runs this blog?

Please?

Pretty please?

With adverbs on top?

Ken October 26, 2011 at 10:04 pm

Fred,

Ad hominem? You clearly have no idea what that means. You’re an idiot because you say idiotic things. I didn’t attack you at all, in fact. I simply pointed out that your unqualified and obviously wrong statement was tripe. Go look up what words mean before you use them. It helps to keep yourself from looking like a bigger idiot than you all ready do.

What is the root of my assertion that seeking power should disqualify one from having it, you ask?

If you’re not smart enough to make any qualifications on your blanket statements, don’t get pissy when people call your stupid statements tripe. I didn’t ask for a qualifier because I make the assumption that people say what they mean. If you can’t write clearly or have implied assumption, the fault is yours if your message is received incorrectly. Anyone speaking or writing to another knows this.

In fact, we were having a civil conversation till your comment at 3:40, you decided to drag Don into this and claim that I thought he was “thoughtless and shallow” without a shred of proof that I think this at all of Don.

I’m sure you think I was attacking you for saying your were thoughtless and shallow about elected politicians, but I was merely pointing out the obvious, which you even acknowledge, in a petulant manner for certain, but you acknowledge nonetheless.

Someone says something that offends your conservative ideals, and you launch a personal attack.

I’m not offended, nor was I attacking you. Saying a clearly untrue and worthless statement “tripe” isn’t an attack. It’s correctly identifying tripe. You should think clearer (and write clearer), and you’ll write tripe less often. My attacks came later after you decided to throw a temper tantrum.

I say power attracts those who are already corrupt or who are prone to corruption.

Of course it does, but to imply that’s all it attracts is tripe. You know. I know it. All who read this thread know it. But instead of acknowledging you said something dumb, being the thinned-skinned panty waste you are, you get all up in arms.

Yes, yes, yes, there are the rare exceptions.

False. Corrupt people seek the limelight more than good people, but to claim that good people go into the limelight is a rarity is simply false. Simply not liking someone’s policy positions doesn’t make them corrupt.

I’m soooooo sooooo sorry for not putting a qualifier in my statement.
May I please have forgiveness from the great Regards, Ken who runs this blog?

Please?

Pretty please?

With adverbs on top?

You should be sorry. And apology accepted.

Regards,
Ken

Seth October 25, 2011 at 2:39 pm

I agree with that Methinks. Allow me to clarify. I’m no fan of lobbying of monied special interests, just as I am no fan of the military war protesters or users of fallacy in debate.

I agree it shouldn’t be limited by gov’t. I don’t think attempting to limit it would improve it and could make it worse.

So while I’m not in favor of special interest lobbying, I agree the root cause concern is bestowing of special favors.

muirgeo October 25, 2011 at 11:15 pm

No one is saying you can’t lobby.You can email, call or write. You just can use money to do it and you can’t get paid for it and you can’t make promises for contributions to campaigns based on being allowed access and there can be no quid pro quo. It’s bribery clear and simple and that’s the biggest reason our government is so corrupt. Same rules for everyone. Do you have a problem with the rules being the same for everyone?

Invisible Backhand October 26, 2011 at 11:11 am

Do you have a problem with the rules being the same for everyone?

That’s democracy and it’s incompatible with the unlimited accumulation of property, so yes they have a problem with it.

Randy October 24, 2011 at 9:34 pm

Re; Links.
Not a fan. Seems to me that the posting of links indicates an inability to come up with an interesting thought on the topic at hand. Then again, its not a bad way to easily identify comments that can be safely ignored.

muirgeo October 24, 2011 at 10:14 pm

links are references to data, evidence and facts. Of cours eyou should ignore them.

But when some one makes claims of what they think the protestors are wanting providing links to real pictures of some of their signs is a good counter.

Ken October 25, 2011 at 1:31 am

They’re data, evidence, and facts of something all right: these people have been completely failed by the government run education system.

Regards,
Ken

Methinks1776 October 24, 2011 at 10:19 pm

Usually, the authors Irritable Bowel, Luzha, and Muirdiot at the top of the comment give me all the indication I need.

Just Another Mike October 24, 2011 at 9:41 pm

Russ,
Excellent article.
I do have one gripe though. The use of “Crony Capitalism”.
Some may dismiss this as semantics, but I have grown to despise the use of these two words together. I’m sure others can come up with multiple other definitions of Capitalism, but Webster defines it as: “an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market”. The adjetive of “Crony” renders the word combination nonsensical. It also plays to the narrative, that so many of the OWS’ers believe, that Capitalism is cronyism, which couldn’t be further from the truth.

Randy October 24, 2011 at 9:50 pm

I hear you, though I prefer the term free markets to capitalism. Capital is an essential tool in free markets, but it is not the objective.

Bastiat Smith October 25, 2011 at 1:13 am

I’ve heard ‘Crony Socialism’, I think it’s more accurate because it necessarily refers to the state. ‘Crony Capitalism’, literally, could just refer to the old boys club within any private entity. This does exist and is not 100% bad. (It’s good to know who you promote or do business with.) ‘Crony Socialism’ means that the rule of law is not the artifice against which contractors are measured.

I do like using ‘Free Market’ rather than Capitalism. It’s less of a hot word. AND it flows well with the first amendment.

vidyohs October 25, 2011 at 9:45 am

J.A.Mike is on the right track. He understands the essentials of language.

Connecting a negative word to a neutral or positive word, only pollutes the neutral or positive.

If you want to use your words and make your points, do not use their words in their way.

Analogy: Imagine you have three apples, two full blown ripe and delicious, and the third rotten and stinky. Using those three apples to make apple sauce will produce a polluted apple sauce. There is no way one could combine the two ripe apples with the rotten apple and produce an attractive apple sauce.

It is the same with words, one negative word properly placed can pollute the most excellent of ideas.

RussFan October 24, 2011 at 9:44 pm

This tired old argument that relative wealth ought to be meaningless to people (when it never has been and never will be) has run its course. Can’t we just move on and start dealing with that reality?

P.S. Convenient that the quantity theory of money is never brought up when this “smaller piece of a larger pie” rhetoric occurs.

Randy October 24, 2011 at 9:44 pm

It occurs to me that the OWSers may have actually done some good in making any new bailout politically impossible. Even the Democrats are afraid of bailing anyone out now.

T Rich October 25, 2011 at 4:21 pm

A new word will be coined and the media will go along with the Mad Hatters in DC. “Why no, that’s not a bailout. It’s a (fill in the blank) and not a bailout!”

dcj125 October 24, 2011 at 10:06 pm

I’ve been following the blog for a long time and enjoy reading the back-and-forth in the comments and am mostly a lurker, but I have to add something to the conversation.

I sympathize with OWS. One of the popular criticisms about OWS is that there are real innovators in the 1% and the OWS movement is misguided. Their slogan is “We are the 99%” but do you guys really think it’s about 99 people picking on the 1 because they have less money? Nobody is protesting the productive members of society – like Sergey Brin, Larry Page, and Steve Jobs. That’s why it’s Occupy WALL STREET and not Occupy Silicon Valley. Refuting a slogan makes for a good talking point on the 24hr news cycle, but doesn’t do justice to the point. Where’s the consideration for the context?

OWS protestors may not be the most educated, clean, or organized. But when such a large number of people turn up – across the country…across the world – something is wrong. Look at history – people who tend to protest and riot aren’t usually the most educated with the perfect economic remedy. They tend to be the ones who are unfairly socially or economically oppressed and just want the oppressors to stop.

Methinks1776 October 24, 2011 at 10:16 pm

So are you saying that innovations in the financial industry are not innovations? Options are not innovations, for instance? Innovations in risk management which allow transactions costs and risk to fall are not innovations?

Perhaps you should consider that Wall Street is a big place and extends beyond the big box banks, that the functioning of capital markets is simply less understandable to most people than a search engine or social network site they use daily and that makes it much easier (if still stupid) to attack.

dcj125 October 24, 2011 at 10:48 pm

I can easily agree with you that Wall Street is a big and complicated place. I am not saying that all ideas in the financial industry aren’t innovations. But as we know now, there are also “innovations” that seemed like a great idea in the short term, but end up costing society much more in the long term. Maybe for the CEO with the golden parachute, it was a great innovation to put all the risk on the US taxpayer.

In a country that hangs its hat on innovation and creativity, there’s no doubt we’ll have some duds now and then, but that doesn’t mean there shouldn’t be any accountability.

Seth October 24, 2011 at 11:37 pm

“Maybe for the CEO with the golden parachute, it was a great innovation to put all the risk on the US taxpayer.”

He didn’t do that all by himself.

dcj125 October 25, 2011 at 2:54 am

Did you expect me to list everybody who took part in it down to middle manager Joe Schmoe? Is the CEO not responsible for the actions and decisions of his subordinates? Is the excuse “It wasn’t me, it was the-guy-that-was-hired-by-the-other-guy-that-I-hired-who-makes-1/100th-of-what-I-make’s fault” acceptable to you?

But you’re right, it wasn’t entirely the CEO’s fault because the US govt is the enabler, although I think the govt (and by extension, the US taxpayer) is more like the sucker instead. But we all know that govt is in a perpetually broken state – regardless of who is in the Oval Office, regardless of which party controls Congress, regardless of what the national debt and trade deficits are, and regardless of how high or low the Dow Jones is. Govt is never supposed to be the answer and banks are never supposed to fail because something in the system is broken.

Maybe if the courts or regulating bodies did something or had more power to do something, it would go a long way to restore confidence in the system.

Methinks1776 October 25, 2011 at 8:46 am

dcj,

The reason these innovations seem to cost society and not the banks, bankers, and the banks’ counterparties is that government forcibly takes it out of the hide of society to make those parties whole. This, btw, is what Russ is talking about.

I agree that this is unacceptable. Do you really care what risks people choose to take with their own money so long as your money isn’t stolen to make them whole? I don’t.

There’s nothing inherently wrong with CDS, for instance. More than an innovation It’s a variation on a theme. It’s effectively a teeny option and a teeny option is just insurance on a catastrophic, low probability event. Teeny options are in the tails of the distribution and are for that reason notoriously difficult to price because pricing mechanisms rely on a log normal distribution. This also means that it is extremely hard to know just how much capital is required to write teeny options without risking blowing up (as AIG did). AIG and its counterparties took the risk and you and I paid the price. Deeply unfair.

I agree with you 100% that risk takers must be accountable for all the risk they take and add that for this to be so, they must also receive all of what they win as well.

I know it may seem like regulators can stop such activity, but regulation works exactly the opposite way. It creates a much more cozy relationship with government and facilitates wealth transfers from you to the big box companies. That’s because regulators don’t really understand what they’re regulating and because regulation costs enormous amounts of time and money and increases risk and uncertainty because it is very much subject to political whim. To recoup these costs, the industry seeks subsidy from the government – and an unholy alliance is formed.

Note that the hedge fund industry is relatively less regulated. Hedge funds blew up left and right in 2008 during the crisis. Not one was bailed out by you and me and the system suffered nary a scratch from their blow ups. IMO, that’s as it should be.

I sympathize with your feelings about the issue, but the root of the problem is government interference and attacking that is the only chance you have of ending this rotten practice of forcing you to pay for the mistakes of others.

A tangential question occurs to me: If we can’t justify government subsidy for groups of people called “corporations” or “creditors” when they fail, how do we justify subsidizing private individuals when they fail?

dcj125 October 25, 2011 at 12:27 pm

Methinks, I think that’s an insightful point on the relationship between govt and big box companies. So it would seem that “more” govt regulation isn’t the answer, but the key is to implement more EFFECTIVE regulation. For starters, educating the regulators on what they’re regulating seems like a good idea.

My only real counterpoint would be that you seem to make it sound like the govt is actively seeking to spend money it doesn’t have to bail somebody out. Which of the following two statements do you think the big banks more likely said?
1) Oh don’t worry, we’re going to be fine, but we’ll borrow half a trillion dollars from you if it’s not a hassle.
2) You need to give us half a trillion dollars now or else the whole world will be in deep trouble!

What I want to say is there’s no way the banks are blameless and this is where OWS gets it right. People are realizing that the true “lawmakers” aren’t on Capitol Hill, they’re on Wall Street and other major financial hubs in the country.

On your tangential question, I don’t really see them as the same, but we might be thinking about different things. I am not against welfare because there really are people that exist in this country that are too old, too worn out, and too sick to care for themselves, pay all their bills on time, and live in humane conditions. There really are people in the world who are born too poor to ever give themselves a chance to get into the top 1%. I do not support going so far as forgiving student or credit card debts, but I support legislation that protects the young and/or less educated from predatory practices by loan agencies and credit card companies.

Does that not sound reasonable to you? Or would that be too much interference? How impressive an innovation is it to target people who don’t know enough to make the better choices or people who just flat out don’t have other choices?

Methinks1776 October 25, 2011 at 1:58 pm

dcj,

Plenty have tried to teach regulators. They’re not interested. There’s no incentive for learning.

What makes you think regulations aren’t effective? They are very effective. Large, politically connected firms can use them to kill their smaller competitors and regulators can slap down rules that they claim are “designed to…” do various things that are politically popular. The inexpert public can never make out the effects of those rules (that they are hurting them) because they are…well…not experts. In this way, the large insiders get what they want and the regulatory agency covers its butt politically and keeps its job. That’s the game and it works well.

There is absolutely no incentive at any regulatory agency to carry out its mission statement. And there never will be.

The only truly effective regulator is the market. A market cannot skew the rules to favour insiders. A market cannot erect fake barriers to entry for competitors. A market punishes imprudence and rewards prudence. A market does not have cronies. So long as the market is distorted by the intervention of government, there will never be any incentive to act prudently and every incentive (not to mention ability) to force you to pay for their mistakes and bad luck.

By the way, the bailouts did not happen the way you think. The banks didn’t hold a gun to the government and say “give me money or else”. First of all, banks that didn’t need a bailout were forced to take one. Second, the banks went to their regulator and said “we’re going under”. The Fed, the Treasury, the FDIC and the SEC (I’m sure I’m missing one) all sprang into action because the mangled monster they built with regulation and intervention was about to croak – as all Frankensteins do. Thanks to their intervention we have very large firms with no viable competitors – the definition of TBTF.

You can continue to point out that banks are not blameless, but beating drums all day an night across the street from my accountant’s office won’t change anything. It’s pretty clear to the guys in power in D.C. that the OWSers aren’t a threat to them. They’ll happily scapegoat their cronies to stay in power and maintain the status quo. And the cronies will happily comply.

dcj125 October 25, 2011 at 6:44 pm

“What makes you think regulations aren’t effective? They are very effective.”

I thought this because you said that it “costs enormous amounts of time and money and increases risk and uncertainty…” In most industries, I think that would be considered ineffective and inefficient.

Perhaps more effective regulation means reducing it. Or maybe more effective regulation means reducing it in some areas but increasing it in others. I don’t pretend to know what’s needed and I’m not really of the mind to support one idea over the other without knowing the facts.

However, I do think that OWS is a threat to politicians because lawmakers are starting to address OWS in public, on the left and the right. If OWS isn’t at least a potential threat, then there wouldn’t be a need for them to attempt to hijack them for their own causes. It seems to me that picketing on Wall Street might ultimately be more effective at forcing the political hand than picketing Capitol Hill.

Methinks1776 October 25, 2011 at 6:58 pm

By whom would that be considered ineffective and inefficient? By you and me? We don’t count. There’s no incentive to make things more effective for you and me. There’s every incentive to enrich themselves.

They do make things worse for the majority, but they aren’t meant make things better for a majority. It works something like this: you complain that something bad happened to you. Your congressman, in the hope of giving the impression that he’s working in your favour, either sponsors legislation or demands the regulator “so something” to fix the perceived problem. The regulator passes some hastily concocted rule to show it’s doing something. The rule is usually written with the aid of the biggest companies in the industry and in their favour. You’ll be hurt buy it (you’ll suffer the effects of inefficiency) but you aren’t an expert in the industry and you don’t understand that it’s that rule hurting you. The more complicated the industry, the more that’s true. So, your politician gets the credit for “doing something”, the regulator gets the credit for “acting”, the big insider firms get another way to kill their competitors and you get the shaft. Works great for everyone but you and me!

Regulation is really something you should look into. The kneejerk reaction is to always go for more of it, but it’s invariably not the case. There are too many unintended consequences and special interests that hijack whatever well-meaning people might hope to change for the better.

Politicians are addressing the OWSers in the hopes of using them for their own personal political gain. That is all. Personally, I don’t think picketing either place will change anything.

Nikolai Luzhin, Eastern Promises October 25, 2011 at 3:39 am

no these are not innovations

if you knew anything about the history of finance you would know that these “products” have existed for thousands of years

for example, a synthetic CDO is exactly the same product as a wager on a horse race when neither better owns a horse in the race.

Methinks1776 October 25, 2011 at 8:47 am

So, you don’t know what a CDO is. Okay.

muirgeo October 25, 2011 at 9:21 am

So you still deny financial derivatives weren’t a major part of the current problem? Your the dope.

rmv October 25, 2011 at 2:09 pm

muir,

That’s like saying cars are a major part of auto accidents.

Randy October 24, 2011 at 10:43 pm

dcj,
You make a good point. Certainly frustration is driving this. What annoys me is that the effort is so misguided – and I mean that literally. These people are believers, but they believe what they have been told, and the people who have been telling them, the misguiders, are filling their heads with crap. Political teachers producing political students. The intimidation and violence just under the surface. Its like watching the very worst of humanity play itself out. Its 1933. They imagine themselves to be a part of something larger than themselves. They are. And it is evil.

Nikolai Luzhin, Eastern Promises October 25, 2011 at 3:35 am

what—markets want protect you?

idiot

Randy October 25, 2011 at 8:23 am

Free markets are my only protection. Productive behavior is the source of order and freedom. Political behavior is the source of disorder and tyranny.

Ken October 25, 2011 at 3:46 am

dcj,

The fact that it’s Occupy Wall Street, instead of Washington DC simply shows how misguided and how uninformed these people are. The political class is directly and the most responsible for the large scale theft being perpetrated against the American people.

If they weren’t so dumb, they would call themselves “Not the 545″ or “Not friends of the 545″ (the number of people in congress, the president, and the supreme court). Instead, they’ve identified the 1% based solely on money and choose to demonize them.

Regards,
Ken

Methinks1776 October 25, 2011 at 8:54 am

And the political class depends on people directing their ire toward a scapegoat. Scapegoating is the standard practice of every Middle Eastern dictatorship as well as the Soviets. I’m sure you’ve noted that it’s the top 1% and all of Wall Street they’ve directed their anger toward, irrespective of whether any of these people received bailouts.

Randy October 25, 2011 at 9:13 am

I’m thinking about a book on political malfeasance through the ages. Scapegoating would be chapter 3 or 4.

dcj125 October 25, 2011 at 1:03 pm

The way I see it is that people used to voice their concerns to lawmakers on their own, but after years of not being heard and not getting what they want – and after years of seeing the big corporations get exactly what they want through extensive lobbying – people are starting to realize that the laws are not really being written by elected officials. The corporations hold real authority over the political class, not the people.

The phenomenon of protestors showing up on Wall Street is symptomatic of a system to the point where our lawmakers don’t make our laws anymore.

Ken October 25, 2011 at 1:21 pm

dcj,

The corporations hold real authority over the political class,

Again, this is complete fantasy. It is the other way around. Politicians, particularly at the federal level, hold so much power over other people, especially the aspect of people’s lives dealing with trade and commerce, that businessmen have to involve themselves in politics.

A great example is Bill Gates and Microsoft. Bill Gates built a wildly successful corporation making awesome software that people loved so much that he ultimately gained enormous market share for many of his products. He did all this without nary a peep from any politician anywhere. Well this miffed his competition and all those greed politicians ready to whet their beaks. Together these two groups launched a campaign against Microsoft culminating in an anti-trust suit. And just like that Microsoft went from being a company with little to no political ties to sending an army of lobbyists to DC.

Of course, this has been happening since the beginning of the republic – politicians whetting their beak in the till of privately made wealth – and businessmen take notice. Since the collusion off FDR with big corporations, this type of action was codified in law in the New Deal. Government politicians by and large aren’t about “the people”; they are about stuffing as much as they can into their own pockets, all of which is to be taken by force and called taxes or campaign contributions.

The best way to limit this natural impulse of all politicians is to limit their power, not give them more, as many of these OWS fools want.

Regards,
Ken

dcj125 October 25, 2011 at 6:24 pm

Thanks for your reply. While I still can’t see it completely your way, I appreciate the point of view from the other side.

Perhaps companies really did lawyer up as a form of defense, but I definitely think that lawyers are now being used offensively to get what they want from the govt and taking advantage of the taxpayers (ie leaving taxpayers paying a larger share of taxes, defiling the water or the air that the rest of us drink and breathe without proper compensation or taking responsibility for it).

With regards to the Microsoft example, I personally felt that there was a justifiable suit against them. I think that since then, it’s opened the door more for competition in the industry, such as Mozilla Firefox and MacOS, both of which I now use. Maybe competition needed the help of an anti-trust suit. Or maybe not.

Here’s a curious question – why do people who want to lift big business and put down govt regulation always like to use “good” companies like Microsoft, Google, and Apple? If it’s truly a good idea for economic policy, then it can be used to defend companies like Exxon Mobil, Bank of America, or Comcast.

Methinks1776 October 25, 2011 at 6:32 pm

dcj,

ie leaving taxpayers paying a larger share of taxes,
Aren’t taxpayers by definition the only ones paying taxes

why do people who want to lift big business and put down govt regulation…

Because you have it wrong. We don’t want to lift big business. I don’t want government regulation because that’s exactly what it does – at the expense of everyone else.

Ken October 25, 2011 at 6:59 pm

dcj,

Perhaps companies really did lawyer up as a form of defense, but I definitely think that lawyers are now being used offensively to get what they want from the govt and taking advantage of the taxpayers

Yes. It’s called regulatory capture. And again, those regulations were started by meddling politicians. Once regulations are in place, many businessmen cozy up with politicians and bureaucrats to exploit regulations, and heavily influence new regulations, to keep prices high (like the New Deal did) and to prevent competitors from entering the market (again, like the New Deal did). An easy way to do this is through licensing requirements. Since many people think this is reasonable (it isn’t), this type of thing passes easily.

With regards to the Microsoft example, I personally felt that there was a justifiable suit against them.

I cannot stress to you enough how little feelings matter. If you think the anti-trust suit against Microsoft was justifiable, lay out a logic reason for it. “Feeling” it was the right thing to do just doesn’t cut it.

The main justification I keep hearing is that Microsoft was just too big or people don’t like them. The correct answer to that is: So what? Microsoft provided easy to use software for a reasonable price that is responsible for incredible productivity over the years. The biggest problem people had with them was offering a product for free (Internet Explorer). But why is that a problem? Aren’t anti-trust regulations supposed to keep companies from using their “monopolistic powers” to reap high profits? How is that done by offering free products? If Mozilla firefox really was so good, why did it need the hand of the government to force it onto the market? If Firefox really was so good, people would have bought it, and it would have succeeded on its own.

why do people who want to lift big business and put down govt regulation always like to use “good” companies like Microsoft, Google, and Apple?

This is a false dilemma. The choice is between big government and free markets, not big business and big government. In fact, big business and big government go hand in hand. That regulatory capture I mentioned above is symbiatic. Many big businesses use government subsidies to get big. Do you think GM, BOA, or Comcast (not sure about Exxon) got to be so big without the hand of government?

If big businesses come into being in free markets, that’s fine. They are still subject to losses in free markets, losses big government prevents for their political favorites (like GM and Goldman Sachs). “Good” companies are those who compete in the open market and succeed or fail on their own merits. “Bad” companies are those who use political means to scalp taxpayers to get money rather than provide useful goods and services. An example would be the Great Northern Railroad vs. nearly all others. The Great Northern Railroad was built without any public funds, competed successfully in railroads, and is the ONLY transcontinental railroad to not go bankrupt. All other railroads were built through political patronage and not surprisingly had built in bad incentives (due to the political patronage) that ultimately caused them to go bankrupt. As much as is possible in today’s business climate, Microsoft, Google, and Apple rose on their own merits, not due to political patronage.

Regards,
Ken

vidyohs October 25, 2011 at 9:54 am

@Dcj125

“Nobody is protesting the productive members of society – like Sergey Brin, Larry Page, and Steve Jobs. “

Obviously your missing something there. The OWS protesters are not protesting those creative people by name; however, they are protesting the wealth of those creative people, because those creative people are in the 1%.

Next, the protesters are not even close to being the 99%, if you don’t know that, yet you repeat it for them, then you contribute to the illusion that it is a large movement. We have 330 million people in this nation, and would you like to bet that the total number of protesters do not even add up to .0001% of the population?

It is the drive-by media that is making them seem large.

I am not dismissing them as a problem they represent, not in their protests so much, as thugs who are breaking laws and causing physical damage to public property, and who seem to be getting a free pass because they are backed by the looney left unions and faithful.

dcj125 October 25, 2011 at 12:53 pm

Again, there seems to be a hang-up on the slogan. I contend that their slogan is a metaphor that characterizes the widening gap in income inequality and the bending of the rules to benefit the few at the expense of many.

I agree with you on the point about damage to public property, but I don’t think the whole movement should be dismissed because a couple hundred people decided to hang out late at the park or because a minority of them are also union members. If the movement ultimately brings in more tax dollars from corporations or better protection of the general public from predatory practices or stop the practice of bailing too-big-to-fail banks, then I would say there will be a net gain for society.

PKSully October 25, 2011 at 10:38 am

How can they tell on a case by case basis who are part of the “good” 1% and who are the “bad”? The small Chicago contingent of OWS is directly across from my office. I’ve spoken with them 3 times and they see no benefit to society at all from exchange traded financial futures and options at the CBOT. After teaching them a little Futures and Options 101 they agreed that there is some benefit to trading in commodities such as corn or oil. When I explained how the same publicly traded and exchange settled instruments are useful in keeping orderly and efficient debt or equity markets, they disagreed. I think the understood a little bit how markets work but they just didn’t like having their beliefs knocked down. We, the people who work at the exchanges across the street from where they are protesting, are the bad guys and having someone close by who can be blamed for their problems makes them a bit happier.

dcj125 October 25, 2011 at 1:11 pm

I think it’s just “mob mentality” and I don’t mean to use it in a negative way because it exists on both sides.

You’re not automatically “good” just because you fall in the lower 99% income bracket. If you are sympathetic to their cause, then you are “good.” But you’re on the payroll of the company that is doing business with the other company that they are protesting against, so you are not sympathetic to their cause. Therefore, you are “bad.”

If you want to risk losing your job and join the protest against the guys across the street, you would instantly become a good guy.

PKSully October 25, 2011 at 2:23 pm

Trading interest rate options hasn’t been too profitable lately so I thought it’d funny to make a sign saying, “I’m part of the 99%…unfortunately”, or “…not by choice, though.”

Methinks1776 October 25, 2011 at 4:38 pm

What has been profitable lately :) ? No strategy seems to be working. It’s amazing – nobody is making any money. Oh, how the fortunes of the one percenters rise and fall, eh?

Crapping and sleeping in Zucotti park is starting to sound attractive.

Randy October 26, 2011 at 7:02 am

:)

Greg Webb October 24, 2011 at 10:39 pm

Russ, thank you for posting your excellent article that was published in Foreign Affairs. I might not have cancelled my subscription had I seen your article and more like it in that magazine.

muirgeo October 25, 2011 at 12:55 am

Russ wrote,

” The top one percent included Steve Jobs, who grew fabulously wealthy by making the rest of us better off. The same goes for Sergey Brin and Larry Page, the founders of Google. These innovators make enormous sums of money, but the gains to the rest of us are even larger. ”

Yes and can you imagine if only they had put their talents into being hedge fund managers or creators of complex financial derivatives just how much better we’d be doing. And they might have been even wealthier than they are.

Ken October 25, 2011 at 1:16 am

Why? Clearly Jobs, Brin, and Page weren’t as fascinated by finance as they were by computers and algorithm implementation. Knowing this it’s clear that your imagining is pure fantasy.

Regards,
Ken

muirgeo October 25, 2011 at 1:39 am
Ken October 25, 2011 at 1:54 am

muirgeo,

And like a good lefty robot, you’ll take this opportunity to blame it on all your political enemies regardless of what the facts are or turn out to be. You really are shameless. The fact that you thought of the Tea Party, with absolutely no reason to think of it, and how you can use this violence to your own political ends clearly demonstrates what a political know nothing hack you truly are. Why not ask why there weren’t bombs at the anti-Iraq War protests? Or the anti-Bush protests?

You take douchebaggery to Keith Olbermann levels.

Regards,
Ken

muirgeo October 25, 2011 at 2:20 am

Read Ken…. I didn’t blame the Tea Party I asked did anyone throw chemical bombs at them??? But yeah it was probably a tea party Jack Ass.

Ken October 25, 2011 at 3:05 am

muirdouche,

As is always the case with douchey lefties like you, you filter all events through your political filter without a thought or a care as to, you know, actual facts. In the cases of Jared Lee Loughner and James Von Brunn you and your kind beclowned yourselves, tripping over each other declaring these shootings as politically motivated, when in fact these people were simply disturbed individuals making the most of an opportunity. Instead of seeing these tragedies for what they are, scumbags like you race to the bottom and swim in the muck of baseless accusations. You are foul from balls to bones.

Regards,
Ken

Ken October 25, 2011 at 3:13 am

Edit: You are foul from the sack where your balls should be to bones.

Ken October 25, 2011 at 3:10 am

muirdouche,

And knowing you and your style that I’ve become acquainted with over the years, there is no doubt that your mention of the Tea Party in the same sentence as the bombing is definitely not innocent. You are the very definition of the worst kind of bastard willing to throw political opponents under the bus without any regards to reality. There is no doubt that your mention of the Tea Party in the same breath as the bombing was to implicate the Tea Party in the bombing. This is the type of bottom feeding societal parasite you are.

Words cannot express the disgust, disdain, and revulsion I feel for you. You are an intellectual leper.

Regards,
Ken

Nikolai Luzhin, Eastern Promises October 25, 2011 at 4:32 am

Vatican calls for global authority on economy, raps “idolatry of the market”

http://www.reuters.com/article/2011/10/24/idUS264245887020111024

The Vatican called on Monday for the establishment of a “global public authority” and a “central world bank” to rule over financial institutions that have become outdated and often ineffective in dealing fairly with crises. The document from the Vatican’s Justice and Peace department should please the “Occupy Wall Street” demonstrators and similar movements around the world who have protested against the economic downturn.

“Towards Reforming the International Financial and Monetary Systems in the Context of a Global Public Authority,” was at times very specific, calling, for example, for taxation measures on financial transactions. “The economic and financial crisis which the world is going through calls everyone, individuals and peoples, to examine in depth the principles and the cultural and moral values at the basis of social coexistence,” it said.

It condemned what it called “the idolatry of the market” as well as a “neo-liberal thinking” that it said looked exclusively at technical solutions to economic problems. “In fact, the crisis has revealed behaviours like selfishness, collective greed and hoarding of goods on a great scale,” it said, adding that world economics needed an “ethic of solidarity” among rich and poor nations.

Martin Brock October 25, 2011 at 11:35 am

The document from the Vatican’s Justice and Peace department should please the “Occupy Wall Street” demonstrators and similar movements around the world who have protested against the economic downturn.

This statement is dehumanizing, collectivist nonsense. The “OWS” demonstrators are not a single collective Mind with a single collective Idea. The author of this article simply substitutes his own “OWS” stereotype for the many individuals protesting. I strongly that the Vatican’s pronouncement pleases Chris Savvinidis.

Martin Brock October 25, 2011 at 11:38 am

I strongly doubt …

For those who haven’t seen the viral video yet, Chris Savvinidis is <a href="http://www.youtube.com/watch?v=rQow0Fhua1A&quot;.

Needless to say, I’m not a Chris Savvinidis worshipper. My point is that OWS is a diverse group of people with diverse ideas.

Observer October 25, 2011 at 6:05 am

The Holy See also said, in its encyclical “Rerum Novartum” the following:

“Socialists, therefore, by endeavoring to transfer the possessions of individuals to the community at large, strike at the interests of every wage-earner, since they would deprive him of the liberty of disposing of his wages, and thereby of all hope and possibility of increasing his resources and of bettering his condition in life. . . .

To remedy these wrongs the socialists, working on the poor man’s envy of the rich, are striving to do away with private property, and contend that individual possessions should become the common property of all, to be administered by the State or by municipal bodies. They hold that by thus transferring property from private individuals to the community, the present mischievous state of things will be set to rights, inasmuch as each citizen will then get his fair share of whatever there is to enjoy. But their contentions are so clearly powerless to end the controversy that were they carried into effect the working man himself would be among the first to suffer. They are, moreover, emphatically unjust, for they would rob the lawful possessor, distort the functions of the State, and create utter confusion in the community. . .

And in addition to injustice, it is only too evident what an upset and disturbance there would be in all classes, and to how intolerable and hateful a slavery citizens would be subjected. The door would be thrown open to envy, to mutual invective, and to discord; the sources of wealth themselves would run dry, for no one would have any interest in exerting his talents or his industry; and that ideal equality about which they entertain pleasant dreams would be in reality the levelling down of all to a like condition of misery and degradation. Hence, it is clear that the main tenet of socialism, community of goods, must be utterly rejected, since it only injures those whom it would seem meant to benefit, is directly contrary to the natural rights of mankind, and would introduce confusion and disorder into the commonweal. The first and most fundamental principle, therefore, if one would undertake to alleviate the condition of the masses, must be the inviolability of private property.”

Martin Brock October 25, 2011 at 10:48 am

Are we being victimized by the fat cats?

The answer depends on who we’re calling “the fat cats”. If a “fat cat” is someone victimizing us, then the answer is tautological.

Did Steve Jobs ever victimize anyone? Noting that Apple and Pixar delivered quality products to market doesn’t address this question. You might as well note the many benefits of the Internet in a defense of Al Gore. He invented it, after all.

Jobs was not the CEO of Apple during Apple’s ill-fated “look and feel” copyright lawsuit against Microsoft and Windows, so I don’t know the role he played in this fiasco. Apple accomplished far less than it hoped with thee suit, fortunately, and I also don’t know the role that Jobs played in the enactment of software patents and other statutory monopolies, but if he played a role, then I must call him a rent seeker and a victimizer. Of course, Microsoft now uses these patents against Google and Android.

I’m not singling out Steve Jobs as particularly victimizing. He only happens to be the Big Story at the moment (or a moment ago). He’s not even a real person in this context. He’s an icon. To Steve Wozniak, Jobs was a real person who made real contributions that Wozniak is well positioned to appreciate. To me, “Steve Jobs” is a sequence of letters surrounded by words that you and others write.

My point is that it’s not all about Wall Street, not remotely. The Leviathan’s tentacles extend far beyond Wall Street, and the identity of the Fat Cats is far from obvious.

But they have missed the most important way that Wall Street lives off the rest of us.

Have they? I’m not so sure.

Programs like the Troubled Asset Relief Program of 2008 are red herrings. TARP did send $700 billion to Wall Street, but most of it has been paid back.

Paid back while the Fed created money to buy Treasury securities from banks as the Federal government sold reams of new Treasury securities to banks. The interactions are complex, and I don’t pretend to comprehend them all, but “paid back” presumably is also a red herring.

There is a much more important, albeit quieter, favor Washington has been performing for Wall Street over the last 25 years: When large financial institutions get into trouble, policymakers make sure that their creditors receive 100 cents on the dollar.

Right. And all of us with deposits in FDIC insured bank accounts are part of the problem. Where is the nearest Fat Cat? Look in the mirror.

House of Cards & Economic Freedom October 27, 2011 at 6:47 am

To me, “Steve Jobs” is a sequence of letters surrounded by words that you and others write.

Once a moron, always a moron.

Methinks1776 October 25, 2011 at 12:54 pm

I just got this via email:

An actual quote from protesters occupying street of Toronto’s

stock exchange…..

“It’s weird protesting on Bay Street. You get there at 9 a.m.

and the rich bankers who you want to hurl insults at and change

their world view have been at work for two hours already. And

then when it’s time to go, they’re still there! I guess that’s

why they call them the one per cent. I mean, who wants to work

those kinds of hours? That’s the power of greed.” – Jeremy, 38

Randy October 25, 2011 at 1:30 pm

Now that’s funny… except its really not…

Methinks1776 October 25, 2011 at 1:40 pm

Maybe it is. Maybe they’ll get a new perspective. I remember pulling a lot of all-nighters, taking the train to work at 5 am and car service back home at 10 or 11 pm that night. Not to mention working every weekend and searching out a Kinkos to fax back to the office reports I’d finished before anyone else woke up while on vacation. After a while, I didn’t care how much I got paid – I wasn’t living at all anymore.

Ken October 25, 2011 at 2:00 pm

Methinks,

I keep trying to tell people, the most important thing for making more income is working more hours. No one seems to believe me.

I bet the protesters don’t get it either.

Regards,
Ken

Millhead October 25, 2011 at 5:59 pm

I agree with you – if you want to get ahead and earn more – work more. That said, I have to chime in here. I truly believe that the OWS people aren’t jealous and they don’t want privileges. It’s not a class uprising and they don’t want civil war — they want just the opposite. They want everyone to live in the same country, and live by the same rules. The game is rigged and the 1% is not about “wealth” – it is about the 1% that thwart the rules and STEAL from the 99%.

Greg Webb October 25, 2011 at 6:14 pm

The game is rigged and the 1% is not about “wealth” – it is about the 1% that thwart the rules and STEAL from the 99%.

Do you have any evidence to support the above-noted conclusory statement? How can the 1% steal from anybody if they are busy working such long hours? The 99% is really about the 19% (Gallup estimates of those calling themselves “liberals”) who are envious of others and greedily wants to steal from the productive rather than working those long, hard hours.

Millhead October 26, 2011 at 8:23 am

You are wrong. And, I am not envious of others. By your definition, I am a part of 1% as I earn a very handsome living. What I, and many of the OWS people are furious about is the oligarchy/Wall Street that controls you and I. They steal in the following ways:

1) FREE MONEY. Ordinary people have to borrow their money at market rates. Lloyd Blankfein and Jamie Dimon get billions of dollars for free, from the Federal Reserve. They borrow at zero and lend the same money back to the government at two or three percent, a valuable public service otherwise known as “standing in the middle and taking a gigantic cut when the government decides to lend money to itself.”

2) CREDIT AMNESTY. If you or I miss a $200 payment on a Visa card or, heaven forbid, a mortgage payment, you can forget about the great computer in the sky ever overlooking your mistake. But serial financial fuckups like Citigroup and Bank of America overextended themselves by the hundreds of billions and pumped trillions of dollars of deadly leverage into the system — and got rewarded with things like the Temporary Liquidity Guarantee Program, an FDIC plan that allowed irresponsible banks to borrow against the government’s credit rating.

3) UNGRADUATED TAXES. Bankers on Wall Street pay lower tax rates than most car mechanics. How? “Carried interest” (i.e. hedge-fund income) or long-term capital gains, both of which carry 15% tax rates, half of what many of the Zucotti park protesters will pay.

You and some of the other arrogant fools here have generalized waaay too much about the OWS topic. Get out and talk to people. I have and that’s why I know that a large number of those people are intelligent, hard working people like myself that are completely fed up with “the system”.

Fred October 26, 2011 at 8:45 am

Millhead – I’d say your and the OWS peoples’ anger is misplaced.

1) Blame the Fed and the government, not the bankers.

2) Blame the bailers, not the bailees.

3) Investments are made with what is left after paying income tax. So before it is invested it has already been taxed as income. Taxing capital gains is double taxation because the invested money was already taxed.

So again, your anger and blame is misplaced.

Blame the Fed, blame Congress, blame the president, blame the courts, blame the people in power who have violated their oath of office.

I don’t blame people who take advantage of “the system”.

I blame the people who created, run and perpetuate “the system”.

Methinks1776 October 26, 2011 at 12:32 pm

Millhead,

You’re clueless.

1.) No banker on Wall Street is subject to carried interest. Not one. That’s an issue mostly for private equity and venture capital firms that make investments in start ups for long periods of time. None of those entities got bailouts. They get apportioned long term cap gains at the 15% rate because by the IRS’ own definition, that profit is cap gains, not income. It is completely appropriate, but still has nothing to do with either investment banks or commercial banks. I doubt anybody sleeping and crapping in Zucotti Park has a job since they’re spending weeks there. They are part of the 51% of Americans who don’t pay any taxes, so I guarantee they’re not paying more in taxes. The people who pay taxes are at work, not drumming in the park.

2.) Your credit amnesty is total hogwash. People all over the country are taking out taxpayer backed mortgages and are living in the houses they purchased with them without paying a dime on their mortgage. The government is allowing it and forcing banks not to foreclose because politicians want to stop foreclosures. Although I agree with you that banks and their counterparties shouldn’t be bailed out, it’s a harder argument to make in light of government interference with foreclosure (forcing bank losses) and political mandates for banks to lend to the unworthy. Still, only government can grant such gifts, so protesting in the backyard of the recipient (who is not there, btw. The banks are all in midtown) is just stupid.

3.) Your ignorance about interest rates is particularly funny. If you are willing renegotiate your loans every day, then you too can borrow at near zero rates. The Fed should not be attempting to manipulate rates to zero (incidentally, it’s trying to manipulate longer term rates down too, but not successfully), but that’s not your complaint. I doubt you understand how all that works. However, the rate at which banks borrow is a function of where on the curve they borrow.

You pretty much confirm my impression of the average OWSer – an ignorant punter looking to steel as much for himself as possible. Your idea of intelligence is obviously anyone who can cobble together a sentence regardless of what the content.

Methinks1776 October 25, 2011 at 6:44 pm

aren’t jealous and they don’t want privileges.

They want all of their debt forgiven, a free education, a guaranteed “living wage”, a job and public make work projects . What do you call that, then?

Ken October 25, 2011 at 9:18 pm

What Methinks said.

Regards,
Ken

Randy October 26, 2011 at 7:10 am

If they are opposed to corporations and banks then they should just stop using the products provided by corporations and banks. They can even try to convince others to do the same. But instead they gather as mobs and “occupy”. Their behavior is what matters, and it makes their message (whatever it is) irrelevant.

Jim October 25, 2011 at 6:36 pm

We understate the havoc of TARP. It prevented market clearing of pricing.

It is therefore a fundamental cause of stagnation. That is its price, along with the huge increase in debt since then.

Andy Wagner October 25, 2011 at 11:39 pm

Well done, Russ.
It was a pleasure listening to your research process on EconTalk the past few years. As an engineer, I’m accustomed to the idea of a “multi-point failure” in any complex system. Politicians, however, campaign on single point failures– it was the other guy’s fault, not mine! You make a compelling case that many things had to go wrong.

brotio October 26, 2011 at 12:38 am

Apologies if this has already been posted. Here’s an amusing video of a Soviet escapee engaging a few people like Yasafi was waddling with in Boston. Watch what the fat kid is doing. He has to be related to our Dear Ducktor!

http://www.youtube.com/watch?v=jMV0TR3pGzg&feature=player_embedded

Appo Agbamu October 26, 2011 at 5:19 pm

GenAppo is a blog that gives insight to our generation on economic issues that will impact us. These decision are being made whether or not we get involved. Lets Reclaim Our Future. genappo.wordpress.com

House of Cards & Economic Freedom October 26, 2011 at 6:44 pm

http://www.foxnews.com/us/2011/10/26/exclusive-acorn-playing-behind-scenes-role-in-occupy-movement/

EXCLUSIVE: ACORN Playing Behind Scenes Role in ‘Occupy’ Movement
By Jana Winter
Published October 26, 2011
FoxNews.com

The former New York office for ACORN, the disbanded community activist group, is playing a key role in the self-proclaimed “leaderless” Occupy Wall Street movement, organizing “guerrilla” protest events and hiring door-to-door canvassers to collect money under the banner of various causes while spending it on protest-related activities, sources tell FoxNews.com.

The former director of New York ACORN, Jon Kest, and his top aides are now busy working at protest events for New York Communities for Change (NYCC). That organization was created in late 2009 when some ACORN offices disbanded and reorganized under new names after undercover video exposes prompted Congress to cut off federal funds.

NYCC’s connection to ACORN isn’t a tenuous one: It works from the former ACORN offices in Brooklyn, uses old ACORN office stationery, employs much of the old ACORN staff and, according to several sources, engages in some of the old organization’s controversial techniques to raise money, interest and awareness for the protests.

Sources said NYCC has hired about 100 former ACORN-affiliated staff members from other cities – paying some of them $100 a day – to attend and support Occupy Wall Street. Dozens of New York homeless people recruited from shelters are also being paid to support the protests, at the rate of $10 an hour, the sources said.

At least some of those hired are being used as door-to-door canvassers to collect money that’s used to support the protests.

Sources said cash donations collected by NYCC on behalf of some unions and various causes are being pooled and spent on Occupy Wall Street. The money is used to buy supplies, pay staff and cover travel expenses for the ex-ACORN members brought to New York for the protests.

In one such case, sources said, NYCC staff members collected cash donations for what they were told was a United Federation of Teachers fundraising drive, but the money was diverted to the protests.

(Read entire article at above link.)

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