I have now spent most of the last two decades of my life in the United States. And, I have seen few instances of public angst, be it against the war in Iraq, globalization, or environmentalists against the oil companies or for that matter, “tea party” against “expansionary” federal government. But never before have I seen such an outpouring of anger toward the elites of Wall Street. What is happening?
I think there is a genuine anger towards the big banks and their Washington power brokers. I don’t know whether it is all justified. However, those who take this lightly and ridicule (some mainstream media persons have sounded arrogant and elitist when addressing the concerns of these protesters) the whole movement as some passing phenomenon could be in for a surprise.
Whether or not Wall Street was singularly responsible for the current economic malaise is irrelevant now. It is a fact that banks made huge bets in the housing mortgage sector, endlessly securitizing, in search of non-existent yields (risk-adjusted return, I mean), disregarding every risk metric in the book. Of course, banks were not solely responsible for it; nonetheless, being the foundations and pillars of capitalist economic system, responsible behavior was expected of them. This is what I call the capitalist dharma. Leaders of these institutions should have displayed solid integrity and morals, devoid of rabid greed for profits (more securitization, more CDOs meant higher profits and the only way to compete was to be in the game and find every loophole in the regulatory system to increase profit). The fact that they settled for lesser standards is at the root of what ails the general economy today. When the lifeline of an economy—credit and liquidity—is choked, aggregate demand nosedives, companies’ layoff workers, and production activities dwindle and we get hit with a recession. Unfortunately, this is not one of those run-of-the-mill recessions; it’s a massive credit-related depression, the likes of which one experiences once in a long time. Who is responsible for this credit crisis?
I am sure most of these protesters blame the banks and I get a feeling that most would agree with that perception. While a huge section of the population suffer from this continued economic downturn, top bankers and top executives from other big corporations seem to be earning in millions; somehow, that dichotomy doesn’t sit well with those who have a hard time putting meal on the table for their families. It is futile to argue that these bonuses were part of the contract, or this is how the free market system operates (highest talents get highest rewards), or for that matter, this is how America got rich, and so on, do not fly in the face of suffering, inflicted on the masses since the economy started bleeding jobs in millions. And, it is also true that these executives are receiving big bonuses for the big profits they have generated and mostly these profits are an outcome of massive cost cutting and layoffs. So the saying goes, “privatize the profits, socialize the losses”, while millions lose livelihood, few earn millions because they let go millions? It simply doesn’t feel like justice.
It is one thing, if these executives earn their well-deserved salaries for their continued shepherding of their firms during these difficult times, but it is another if they are paid in millions for downsizing and therefore, better bottom line at the expense of ordinary employees; contracts or no contracts. Well, one may argue that that’s what companies do in recessions; but, is this an ordinary recession? If so, how is it that profits are so good and bonuses are so good? So, this recession induced by the “too big to fail” is only for those “too small to succeed” types? One cannot dismiss and just label this line of argument as “populist” socialist argument or some other “class warfare” argument; it simply feels like adharmic (unjust). When the rich and powerful start understanding the pain and suffering of the small guy, then we don’t have to hide behind the free market ethos to defend these excesses by the few. I am sure these top executives deserve bigger rewards for the kind of hard work they have done or the kind of responsibilities they shoulder, yet it serves the society better if they can feel the pulse of the majority and lower their expectations, be content with lower rewards and be more magnanimous. More than rights, it is about duties; doing the right thing for the good of the society.
I feel that we wouldn’t see unrests in societies like ours, if those who have plenty are little more understanding of those who find it so hard to rise above subsistence living despite their hard work. It is a known thing that rich don’t become rich purely because they are hard working and talented; Somewhere this society as a whole creates that opportunity for those few who were lucky enough to rise above the competition. We, as a society, suffer from survivorship bias, and tend to focus on the success stories too much; we then go on to create heroes out of these figures forever lauding their unique traits. What we ignore is the fact that thousands who fail despite having the same traits and qualities; why? Because of bad timing or ill luck or that proverbial “not being at the right place at the right time.”
So, those who make it big should be humble enough to recognize how fortunate they were; that awareness will make them stay more in-tune with the feelings of millions who hit the brick wall no matter what they try to do. It is certainly true that this world is lopsided when it comes to the distribution of material success and failure figures. There are few rich nations and many poor; there are few CEOs and most are ordinary employees; there are few rich and most are materially poor. It’s the 80/20 rule. And, the few who are lucky to be at the top get there because of confluence of factors and not just their talents and hard work. What they don’t realize is that no one remains at the top forever.
Everything is cyclical in nature. Rich and strong nations become poor and weak and vice versa. It’s only a matter of time. Some timeframes are much longer than others, and that gives us this illusion of permanence of a state or condition. There are countless cases of demise of rich families and the wretched conditions of their offspring. This is no fiction.
Well, I digress. Coming back to the subject matter, we know that perception is reality. While most Wall Street workers are like most of us, working hard to earn a living, there is no denying that some at the top were responsible (Joe Cassano of AIG, Dick Fuld of Lehman are certainly up there in this list) in perpetuating this crisis to this extent. Washington was equally complicit in this. And, people have come to this conclusion that their lives have been destroyed by those few who pull the levers of power in Wall Street and Washington.
Once that notion takes a life of its own, as it has shown in the past few days, it becomes a force of change.
This is what I think is going on. The joblessness and the lack of hope among multitudes will seek a symbol of power to rile up against. Disappointment, anger and lack of positive policies to alleviate the misery will help build this movement. Is this the sign of our times? Could this be the great “purging” moment in the history of developed economies? I hope this movement forces the leaders—both political and business—to rethink their behavior. A middle ground has to be reached where solid regulatory framework checks rampant greed while facilitating healthy competition; a fair tax system that brings higher revenues from the very rich in the land (this is not class warfare!); spending restraint on the part of government; reform of Medicare and social security program, should be at the forefront of national discussion. Once again, these politicians have to stop being ideologues and come to the middle. If they fail to do so, this protest will morph into more violent and ugly. When people start losing hope, especially in great numbers, that’s a recipe for a revolution. Capitalism doesn’t need a revolution. It will destroy it or at least, will inflict great damage to our balanced system and just institutions. Political leaders have committed great follies throughout history by their unwillingness to be flexible and listen to those who opposed their ideological positions. Many disastrous wars were fought because some rigid political leader did not have the intellectual honesty to seek the truth.
I hope our leaders learn from history and don’t dismiss this “Occupy Wall Street” as some frivolous protest with a short life span. It could end that way; on the other hand, this could turn into a real unrest, and grow into a force capable of destabilizing our capitalist system. And, that’s not just bad for this nation, but it’s bad for the entire world. Anarchy of global proportions will lead to violence and destruction. This may sound alarmist, but it is a pleading voice (pleading the political leaders and the business leaders to shove their ideologies and listen to those who have been hurt by their decisions) of a concerned citizen whose only motive is to see a stronger benevolent capitalist system and a stronger nation.
