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Occupy Tea PDF Print E-mail
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Friday, 14 October 2011 00:33
Occupy Wall Street has now been raging for a few weeks and I've been trying to understand what specifically it's all about. It's a given that the mainstream media are telling the story wrong, or telling the wrong story, so my facts are gathered mostly over the internet from the horse's mouth as much as possible. Much can be gathered from signs held by protestors; however, there are quite a few divergent and even mutually-exclusive memes, indicating that the protests encompass more than one goal or mindset, perhaps with some overlap. This is to be expected from the wide range of groups who jumped into the mix right off the bat -- anti-consumerists, unions, Anonymous, libertarians, hippies, anarchists, socialists, etc.

I think that what unifies everyone is the emotional feeling that things are very wrong in this country and the overt involvement of banks at its root. What's interesting is that this is also what drove the organization of the Tea Party movement two years ago. The major difference, I think, is that the Tea Partiers identified President Obama as being a part of the problem, whereas the Occupy Wall Street movement only later came around to that understanding. Many people were naively charmed by Obama and genuinely believed he would bring hope and change. When it turned out that Obama not only continued many of the corrupt policies of George W. Bush, but layered on even further corruption, opaqueness, and infringements on our civil liberties, the masses became disenchanted. However, having bought into liberal punditry falsely labelling Tea Parties as racist corporatists, they were incapable of assimilating into that movement. At least not right away anyway.

What I'd like to do is try to address some of the more glaring fallacies eminating from some in the Occupy Wall Street movement based on "official" decrees, common protest sign themes, and prominent apologists, and try to reconcile some differences so as to suggest a more cohesive and appropriate direction. Perhaps even cross-polination with the Tea Party movement.

The Declaration of the Occupation of New York City, which has widely been proclaimed as the "official" manifesto of Occupy Wall Street, identifies that the chief goal of the protests is to "express a feeling of mass injustice". They then go on to list some "facts" which may or may not be agreeable to everyone, but I think that most would probably agree that the feeling of mass injustice is the main gist of it all. That's what the Tea Party has responded to as well and it's a great common ground. Where things go sideways is who and what people blame for the feeling of mass injustice.

Let's start with the Declaration... the second paragraph begins to lay blame at the feet of "corporations", who they say "do not seek consent to extract wealth from the people and the Earth... [and] place profit over people, self-interest over justice, and oppression over equality". They also allege that corporations "run our governments". They then list a few dozen grievances against corporations. Sounds pretty bad. But what exactly is a corporation anyway? Merriam-Webster says it comes from Latin corporare, meaning "to form into a body", and in the present legal sense is "a voluntary chartered association of individuals that has most of the rights and duties of natural persons but with perpetual existence and limited liability." There is a charter which defines the governance of the association and the rights of its members (shareholders and officers). Individuals are members voluntarily, meaning they can come and go as they please. Nobody is holding a gun to their heads. The association of individuals has similar rights and duties to any single individual, since it is composed of individuals and acts on individuals. It survives any of its members freely coming or going. And it has limited liability, meaning that if one of its members or officers does wrong, they are personally liable, and the shareholders are not directly liable for the one individual's actions. This all seems very reasonable and not the least bit evil. Corporations are formed when individuals don't have sufficient resources on their own to accomplish a large goal and so they pool resources to accomplish it such that any benefits are equitably shared according to the individual risks taken. What's so bad about that?

Well, let's look at some of the particular grievances...
  • They have taken our houses through an illegal foreclosure process, despite not having the original mortgage. This is clearly specific to banks, not corporations in general. But isn't the "foreclosure process" a legal procedure? So isn't it the legal system which has failed in this case?
  • They have taken bailouts from taxpayers with impunity, and continue to give Executives exorbitant bonuses. Well, what shareholders choose to pay their officers is their own business. It's their money. But it's interesting that they phrase this as "they have taken bailouts". Corporations have no means to take anything from government; they can only accept what is freely given. So this seems to be a complaint against the government giving bailouts, not banks or corporations taking bailouts.
  • They have perpetuated inequality and discrimination in the workplace based on age, the color of one’s skin, sex, gender identity and sexual orientation. I wonder how this is possibly the sole province of voluntary associations of individuals called corporations. This seems to me to be a general gripe against culture itself! Discrimination is rarely if ever a corporate policy, but rather the result of many individual interactions.
  • They have poisoned the food supply through negligence, and undermined the farming system through monopolization. Monopolies do not exist in a free market, but only through government force. So to the extent that there are monopolies, the fault lies with government laws, regulations, subsidies, and other interventions in the market. As far as having "poisoned the food supply", that would necessitate that the food supply is indeed controlled by a monopoly, and it is not, although the government has increasingly tried to make it so by outlawing everything produced by small, independent farms in favor of heavily-regulated food conglomerates. Again, the gripe here seems to be properly aimed at government, not corporations.
  • They have profited off of the torture, confinement, and cruel treatment of countless animals, and actively hide these practices. Again, this seems to be an issue with culture rather than particular corporations who fail to share the same values as some individuals regarding humanity's use of animals.
  • They have continuously sought to strip employees of the right to negotiate for better pay and safer working conditions. Corporations are intriniscally incapable of such action, because in a free market, employees work at will. The employer-employee relationship is inherently a negotiated one. The great leaps in pay and working conditions have been a direct result of such free-market negotiations.
  • They have held students hostage with tens of thousands of dollars of debt on education, which is itself a human right. Nobody has a right to the labor or property of others. Education is a service. To suggest that anyone has a right to this service is to make educators slaves. Everyone has a right to voluntarily engage the services of an educator, but not by force. Like everyone else, educators must earn a living from the services they provide. They do so by charging tuition. If students don't have the means to pay tuition, they borrow the money to be repaid later after they presumably get a better-paying job as a result of their education. This debt is entirely voluntary. Who is being "held hostage"?
  • They have consistently outsourced labor and used that outsourcing as leverage to cut workers’ healthcare and pay. Outsourcing is a direct result of market forces reacting to the costs largely imposed by our own government. When taxes and regulation make hiring onerous here, it is natural to look elsewhere to conduct business. This is not the result of any evil intentions on the part of corporations, but the desire to provide a cost-effective product or service to customers. Corporations are always doing what's in the best interests of customers, because that's who pays the bills.
  • They have influenced the courts to achieve the same rights as people, with none of the culpability or responsibility. Since corporations are composed of people, why wouldn't the rights of the shareholders extend to their voluntary association? And in what way are they not responsible? The liability of the whole is limited, yes, but only insofar as the liability of the individual is intact. If the courts have been "influenced", isn't that a gripe against government rather than corporations?
  • They have spent millions of dollars on legal teams that look for ways to get them out of contracts in regards to health insurance. A contract is a voluntary agreement. The only way to "get out" is by satisfying the terms of the contract. If they manage to find a "loop hole", then it is because the other party allowed that loop hole into the contract in the first place.
  • They have sold our privacy as a commodity. People give up too much privacy voluntarily. Every company has a privacy policy. Customers engage freely with companies knowing full well what their privacy policy is. Much more disturbing is when government infringes on your privacy by force without your consent.
  • They have used the military and police force to prevent freedom of the press. They have deliberately declined to recall faulty products endangering lives in pursuit of profit. Corporations do not control the military or police. That's government, again. And have you ever heard the phrase "caveat emptor"? Nothing is perfect. To the extent that some companies recall their products (usually under a specific warranty period) does not imply that everyone should do so in reaction to every potential flaw or misuse of every product. Take some personal responsibility!
  • They determine economic policy, despite the catastrophic failures their policies have produced and continue to produce. Corporations do not determine economic policy for the society at large. To the extent that economic policy is determined centrally at all, it is (unconstitutionally) by the government. The blame for catastrophic failures of economic policies lies squarely with government.
  • They have donated large sums of money to politicians, who are responsible for regulating them. To the extent that regulators are influenced by large sums of money, that is a failure of government.
  • They continue to block alternate forms of energy to keep us dependent on oil. Corporations have no means by which to "block" alternate forms of energy. Corporations merely sell things to willing customers. Failure of any particular corporation to offer a product is not the same as "blocking" a product. Corporations will sell whatever is profitable. Alternate forms of energy have largely been unprofitable, costing more to produce than customers are willing to pay.
  • They continue to block generic forms of medicine that could save people’s lives or provide relief in order to protect investments that have already turned a substantial profit. Corporations have no means by which to "block" generic forms of medicine. This is more a function of the patent system instituted by government. Patents are granted in order to make the massive investments into research worthwhile. If patents last too long, they give more benefit than is necessary to incentivize and prevent generics from competing. If patents are too short, it is insufficient incentive to research new life-saving medicines. I don't know whether patents are too long, too short, or just right. But whatever your opinion, you have to take it up with government, not corporations.
  • They have purposely covered up oil spills, accidents, faulty bookkeeping, and inactive ingredients in pursuit of profit. These are largely crimes of individuals, not corporate policies. And to the extent that they are corporate policies, they are crimes if they cover up culpability in causing harm. It is the job of victims to sue and the job of government to prosecute. But you can in no way blame the institution of corporations for the crimes of particular ones. This is merely a function of humanity.
  • They purposefully keep people misinformed and fearful through their control of the media. Corporations in general do not control the media. Only specific ones. And with the advent of the internet, that is becoming less of an issue. Unless of course we permit the government to regulate the internet.
  • They have accepted private contracts to murder prisoners even when presented with serious doubts about their guilt. Corporations do not execute criminals... that's government, again.
  • They have perpetuated colonialism at home and abroad. They have participated in the torture and murder of innocent civilians overseas. That's the military... i.e. government, again.
  • They continue to create weapons of mass destruction in order to receive government contracts. Government orders weapons; corporations do not impose weapons on government. Again, the gripe seems to be with government.
By and large, these grievances seem to be misdirected. What is blamed on corporations is mostly the fault of government or the crimes of particular individuals. To the extent that there is a "feeling of mass injustice" caused by these particular grievances, that injustice is perpetrated by our government. In this sense, Occupy Wall Street is in the wrong place. It should be Occupy DC (which there is one now). More importantly, the common solutions offered are way off the mark! Calling for greater regulation and more taxation would be feeding the beast! It is not agents of Merrill Lynch or Coca Cola who are beating and pepper-spraying the protestors on Wall Street. That's the government doing that! It's not Goldman Sachs that's arresting people on the Brooklyn Bridge (no matter how big the revolving door with the Whitehouse), that's the government doing that! Do these protestors not see the irony of seeking to increase the number of jackboots standing on their necks? The "feeling of mass injustice" is a feeling of the loss of freedom. Government is the opposite of freedom. To increase freedom, you must shrink government.

But maybe we're missing the point to focus on these particular grievances, which were created by a very small subset of the entire movement and does not speak for everyone. What other memes pervade the crowds of protestors?
  • We are the 99% This slogan (along with "Eat the Rich", "Workers' Rights Now", various things about "Greed", etc.) is an element of class warfare illustrating a growing distaste for the escalating wealth disparity in this nation. Where does this wealth disparity come from? The crowds seem to think that "the 1%" are engaged in criminal activity and somehow stealing it from them. There is no overt theft though, so they surmise that people should be receiving better pay and benefits and are being shafted. But employment is a voluntary agreement, and individuals are free to negotiate for better pay or benefits if they like. However, workers find that they don't have any leverage. There are too many workers and not enough jobs. Ah, but whose fault is that? Well, the greedy corporations are outsourcing all the jobs, they think. But that is far too simplistic. The fact of the matter is that labor is a commodity which reacts to supply and demand, just like any other market. If the supply is too high, it's probably because it's too pricy. I.e. it costs too much to hire that labor because either the wages are too high or taxes are too high or there are too many regulatory strings attached. If the demand is too low, it's probably because it's too hard to start a new business or because it's too onerous to hire someone given the amount of red tape involved. All of these problems stem from our massive government intervention in the economy. If more employees could become employers, the labor market would quickly balance out. But it's too hard and costly to start a new business these days. That's why the labor market is unbalanced and workers have no leverage.
  • End the Wars People are really fed up with our foreign militarism now. They first elected Bush to enact a "humble foreign policy". That failed. Then they elected Obama to bring the troops home ASAP. He even staked his eligibility for a second term on fulfilling this promise. But the wars continue. Obama not only didn't bring the troops home, he started a NEW undeclared, unconstitutional war! This is tangentially related to the other issues in that the Pentagon is a massive expense in our unbalanced national budget besides the fact that it kills many of our young people and makes us enemies across the globe! As with the other problems, this gripe is against our government, not against corporations.
  • Expose the Corruption Also, "Outlaw Lobbyists" and "End Corporate Welfare". Corruption is by definition a problem of government. Often it is related to wealthy people or companies buying favors, privileges, subsidies, loan guarantees, etc., but ultimately this is a problem of government having unnecessary, unwarranted, and unconstitutional powers to grant such favors. Lobbyists will stop having influence when government stops having unlimited power. The problems of "revolving doors" will end when government stops regulating and having the power to grant special privileges to those they regulate. That's the sole reason why ex-regulators go to work for the corporations they once regulated as lobbyists -- to get special favors from government! Stop giving government the power to grant favors and this all ends!
  • Reinstate Glass–Steagall This regards the Banking Act of 1933 which created the Federal Deposit Insurance Corporation (FDIC), allowed the Federal Reserve to regulate interest rates, and introduced banking reforms meant to curb speculation. Specifically, the calls are to reinstitute a provision repealed during the Clinton administration which prohibited bank holding companies from owning other financial firms, separating commercial banking from investment banking. Some economists believe that the newfound ability of investment bankers to gamble with depositors' money contributed to the 2008 financial collapse. But this wasn't really a newfound ability at all. It merely allowed bankers to gamble with depositers' money in a different way. Previously, they could issue mortgages and other kinds of loans with depositors' money. Now they could also buy stocks, bonds, and derivatives. So it wasn't a different kind of activity, just a new class of investments. The problem isn't that investment banks are comingled with commercial banks, it's that commercial banks operate a fraudulent fractional reserve system wherein they're free to invest their demand deposits in hopes of greater profits all the while pretending that any depositor can retrieve all of their funds at any time. Whether they invest in mortgages, mortgage-backed securities, bonds, or stocks doesn't make a lick of difference. The problem is that they don't keep 100% of your checking account in a vault reserved exclusively for you. And the Federal Reserve exists explicitly to protect this fraud. And under current law, this fraud is LEGAL. Let's outlaw the fraud and banks will no longer be a systemic economic issue.
  • Prosecute the Wall Street Criminals This demand is based on the fallacious belief that anyone on Wall Street broke any laws. You'll be hard-pressed to find anyone on Wall Street who broke the law. The 2008 financial crisis was caused by government policies (i.e. the law itself). To the extent that Wall Street helped, they did so at the behest of their regulators. Increasing regulation will only cause more problems, not less.
  • Pass the Buffet Rule Also "Tax the Rich", "Pay your Fair Share", etc. There's nothing "fair" about forcefully taking from any minority group, especially those who have been successful. You get more of what you subsidize and less of what you tax. So why would you subsidize poverty and tax success? I might take Buffett seriously about his political positions when he writes a check in the amount of his entire fortune to the U.S. Treasury. Until then, I know he's a two-faced liar who knows very well that the government does NOT know how to spend his money better than he does!
  • Eliminate Corporate Personhood I'm not sure what evils are specifically ascribed to corporate personhood, which is merely a convenient legal fiction which simplifies transactions between government and corporations, which are composed of perhaps thousands of individual shareholders, each having rights and obligations which are honored in proxy through corporate personhood, including the freedom of association. How would anything improve by ignoring the association and dealing with each shareholder directly? Some people like to claim that corporations are some kind of modern artificial invention which are not necessary or beneficial, but you should recall that corporations were integral to our society from the very first settlers. Plymouth Company and Virginia Bay Company were corporations which brought our very first colonists to America. The building of ships and all of the necessary provisions to survive the voyage and establish a colony were a massively expensive undertaking frought with risk, and this depended on investors self-interested through the profit motive to share in that expense and risk. Only through corporations were we able to establish a thriving society in America. Corporations financed industry and municipal corporations became our towns. This recent antipathy toward corporations belies their long history of good works. Corporations are clearly entities which require legal acknowledgement of some kind. Treating them as any individual would be treated is not an unreasonable method to do this, since they are composed of individuals each having individual rights. As a group, they still exercise individual rights which cannot be taken away simply because they are a member of a group. Like I said, I don't know what great evil is supposedly attributed to "corporate personhood", but it seems like a flimsy scapegoat to me.
  • End the Fed This, the title of a Congressman Ron Paul book decrying the evils of the Federal Reserve System, is a common refrain of libertarians and Austrian economists -- and rightly so. The Federal Reserve is indeed at the very heart of the evils and misery being felt by the protestors.
And this last point is probably where the protestors should be concentrating most of their efforts. The Federal Reserve is the genetically-modified bastard son of Big Government and Big Banks. The Federal Reserve Act was secretly written by wealthy bankers such as J. P. Morgan and John D. Rockefeller, Jr., who also helped fund President Wilson's presidential campaign for the purpose of signing this act, and then stealthily passed it on Christmas Eve when most of Congress had gone home. The Federal Reserve Act established a legal banking cartel, owned and operated by private banks, which would act as the central banking system of the United States. They were given the monopoly power to print money out of thin air, i.e. to counterfeit! The U.S. Treasury would sell Treasury bonds to the Federal Reserve, who would buy them with freshly minted paper, and the Treasury would then spend the money on government projects, essentially laundering it into the economy. The Treasury would of course pay interest on those bonds to the Federal Reserve. The Fed does contribute the bulk of its profits back to the Treasury, but after their own fees are assessed of course. Moreover, the Fed prints and lends paper money to the cartel members at virtually no interest, and the member banks then lend it to the public at high interest, again laundering it into the economy.


But how does the Federal Reserve contribute to the "feeling of mass injustice"? In The Economic Consequences of the Peace, John Maynard Keynes wrote (probably his only great insight): "Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." And that is PRECISELY the "feeling of mass injustice" -- the hidden forces of economic law on the side of destruction that not one man in a million is able to diagnose. The protestors know the banks are involved and they know that the economy stinks, they just don't know why. THIS IS WHY!

The Federal Reserve debauches the currency and causes inflation in a number of ways. One, they hold interest rates lower than the market rate through bond purchases on the open market. They buy the bonds with newly created (counterfeited) money. Another way is by loaning newly created money to the member banks or even foreign banks and governments. It was recently uncovered that in response to the 2008 financial collapse, the Fed loaned out over $16 trillion -- more than the entire U.S. GDP! In some cases, they may hide their purchases of U.S. debt through loans to banks and foreign governments for the purpose of buying U.S. Treasury bonds covertly. They also buy other financial instruments on the open market, sometimes under the auspices of fake front companies, e.g. Maiden Lane, so as to hide their actions from the public. The Fed bought loads of mortgage-backed securities from Fannie and Freddie, for instance. And the banks to whom they lend cheaply engage in "fractional-reserve banking" wherein they multiply the amount they have in reserve by 10 times or more in the loans they give out at high interest. No matter the source of the debauchery, the end result is always the same though -- they print money out of thin air, and that new money dilutes the money supply and devalues every other dollar already in existence. It reduces the value of fixed income instruments, salaries, and savings. The prices of inelastic commodities such as oil and copper go up first, and eventually all prices go up, albeit unevenly throughout the economy. Wages always rise last with inflation. The result is that people have to spend more and more to maintain the same standard of living, but don't get paid enough to keep up. Worse, even when they get a raise, it may not be enough to make up for inflation (which is ALWAYS understated by the government), so while they feel like they should be richer, they still can't afford as much as before. And who gets blamed? Innocent oil companies and employers just trying to keep up like everyone else.

The Federal Reserve is the cause of the "business cycle" of booms and busts. E.g. in response to the housing collapse in the early 1990s (itself the result of an earlier Fed-induced boom), Alan Greenspan expanded the money supply and blew up the Nasdaq "dot-com" bubble. When that bubble collapsed, he fueled the next housing bubble. Then that collapsed, and Ben Bernanke is in the process of blowing up the next bubble, perhaps in commodities such as gold. This happens because inflation is a false signal. It tells the market that there's plenty of savings (the natural source of loan capital), and so people should take more risks to grow the economy, and so they invest in factories and housing and internet companies. But when it turns out that the demand wasn't really there, these turn out to be bad investments and the bubble collapses. Meanwhile, real wealth is destroyed in the process. The Fed can only print money, not the wealth that is supposed to be represented by that money. So when people work hard and invest their skill, labor, and capital chasing after fake demand represented by the illusory wealth of counterfeited money, the economy loses. Every bubble and crash takes us to a new low. And there aren't really vast amounts of savings on which to soften the crash, but just another illusion. The result is that more and more people end up unemployed and on welfare.

None of this is a part of free-market capitalism, which tends to get blamed. The cause is fiat money, fractional-reserve banking, and the central bank cartel. That is the source of the "feeling of mass injustice". That is where the energy of Occupy Wall Street should be directed. At the Federal Reserve, at the U.S. Treasury, and at Congress. This triumvirate are the culprits and the only ones who can change the direction of this country and the plight of the people. First we need a full, independent audit of the Federal Reserve and of the U.S. gold reserves supposedly at Fort Knox. Then we need to abolish the Federal Reserve and replace it with competing free market money. No more counterfeiting. No more government-created monopolies. That is how our economy regains a solid foundation upon which it can grow confidently. That's how people can be secure in their savings and their wages. That's how companies can plan well into the future, which supports hiring and investing.

It's something that everyone can get behind. Occupy Wall Street, the Tea Party, Democrats, Republicans, Independents. The time has come to finally end the Fed. Like Andrew Jackson and Thomas Jefferson before him, we must kill the bank. It is the key to our ongoing prosperity.









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Last Updated ( Friday, 14 October 2011 01:27 )
 
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