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Last week, I spent the afternoon visiting the Occupy
Wall Street demonstrations in lower Manhattan. I brought a film crew and a
sign that said "I Am The 1%, Let's Talk." The purpose was to understand
what was motivating these protesters and try to educate them about what
caused the financial crisis. I went down there with the feeling that much of
their anger was justified, but broadly misdirected.
Indeed, there were plenty of heated discussions. I did
little more than ask how much of my earnings I should be allowed to keep. In
return, I was called an idiot, a fool, heartless, and selfish. But when we
started talking about the issues, it seemed like the protesters fell into two
categories: those who generally understood and agreed that Washington caused
this mess, and those who could only recite Marxist talking points. It was the
latter who usually resorted to calling names once I pointed out the hypocrisy
of their positions. They might shout, "the banks have taken over the
regulatory agencies, so we need more regulations!" Obviously, this is
paradoxical. If they're blaming government for causing this problem, why
would they suggest more government as the solution?
http://www.youtube.com/watch?v=vZr9c1zYaOE&am...player_embedded
Peter goes
head-to-head with an Occupier!
I think some of the leadership of Occupy Wall Street
comes from this kind of radical Marxist background - and perhaps they're
smart to intentionally keep quiet about their goals. Because the vast
majority of protesters I met did believe in capitalism - they're just tired
of being screwed over by crony capitalism. Noted school-choice
activist Michael Strong calls it "crapitalism,"
and that's what it is. It's a rotten deal for everyone, and they know it.
The problem is that many of these people are under the
mistaken impression that Wall Street banks are to blame for this state of
affairs. That's like blaming the dogs for getting into the trashcan. Sure,
it's bad behavior, but the ultimate responsibility lies
with the authority figures - in this case, Washington. After all, it's not
the New York metro area that has benefitted the most from this crisis.
Rather, the counties around DC are now ranking as the wealthiest in the
country. And while wealthy New Yorkers have historically made their living
providing essential financial services to the global economy, Washington has
always made its living one way: at our expense.
That's why I have trouble sympathizing with people
calling themselves the "99%", implying they stand in opposition to
wealth no matter how it's earned. I own a brokerage firm, but I didn't
receive any bailout money. In fact, I have to work twice as hard to compete
with bigger financial firms that are propped up by the US government. The
least I deserve is the ability to keep what I earn.
Remember, if the IRS weren't taking so much from the
wealthy who have earned it, there would be that much less for Wall Street
bailouts. A hundred years ago, major banks had no business lobbying
Washington, because compared to their free-market earnings, the government
simply didn't have that much money to dole.
The other tool the government didn't have to use
against us back then was the Federal Reserve. Even if we drastically reduce
taxes, the Fed might decide to do what it has been doing: printing money to
finance government profligacy. This acts as a secret tax on everyone with a
bank account, and is critical in transferring wealth from hardworking
Americans to politically connected elites. So, really, the protests shouldn't
be on Wall Street but around the corner on the ironically named Liberty
Street, site of the New York Federal Reserve Bank - the heart of this
dishonest system.
Until these twin sources of financial oppression are
brought under control, the average American's standard of living will most
likely continue to fall, more jobs will leave for increasingly capitalist
emerging markets, and more young kids will be left with nothing better to do
than block traffic.
One common refrain I heard at the protests was that our
problems result from the rich not paying enough taxes. Most feel that economy
was better when marginal tax rates were higher, and that lower rates are a
cause of financial decline. Forget about the faulty logic of this assumption,
it ignores two key points. First, while it's true that marginal tax rates
were much higher after World War II, the tax code also used to contain many
allowances and exceptions, such that very few people actually paid the
nominal rate. Second, prior to 1913, the rich paid no income taxes at all;
yet, lower- and middle-class living standards rose much faster in the 19th
century than in the 20th!
Overall, I think there was a real lack of understanding
of basic economic principles among the Occupiers. Protesters thought that the
rich owed a duty to share their wealth with society. However, they failed to
see that in true capitalism, the rich can only acquire their wealth by
serving others. No one succeeds in a vacuum. Consider the late Steve Jobs. He
became a billionaire by sharing his wealth. Think about the millions of
people around the world whose lives are vastly better because of Apple
products. Think of all the Apple employees who benefit from high-paying jobs
he created. Think about all those investors who made money from Apple stock.
Steve Jobs shared his wealth with the entire planet before he ever paid one dime
in taxes. In fact, any money Steve Jobs did pay in taxes likely prevented him
from creating and sharing even more wealth. Had Jobs tried to hoard his
wealth instead, he never would have acquired it in the first place.
Of course, the idea that Occupy Wall Street protesters
have a right to share directly in the private profits earned by others is
immoral. The protesters were correct in being outraged by having to share in
Wall Street's losses. But if they do not want to share the losses, they have
no right to demand a share of the profits!
One protester equated the low wages paid by Wal-Mart to
slavery, yet thought the government should take 70% of my income. In the case
of Wal-Mart, employees are free to choose other jobs. What choice would I
have when faced with a 70% income tax? They call it "slavery" when
Wal-Mart offers workers better opportunities than they could find elsewhere, and "justice" when government
enslaves me by forcibly taking 70% of the fruits of my labor.
Another protester challenged my claim that businesses
create jobs by stating that consumers create the jobs by spending money. When
I asked him where the consumers got their money, he replied "from their
jobs," which actually proved my point. Without jobs, consumers have no
purchasing power. And without production, there is nothing to purchase.
I'm calling for these protesters to educate themselves
on the causes of the current financial decline and not to waste their time
attacking the wrong target. They have every right to be angry, but also an
obligation to be part of the solution. Yes, I am the 1% - but I've earned
every penny. Instead of trying to take my wealth away, I hope they learn from
my example.
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