Tuesday, October 4, 2011

Your Guide to "Occupy Wall Street!"

For those of you who missed my last post, Tea Time with Greece, or have lived without any access to the outside world for the last three years, let me catch you up: the world economy is not doing well. It turns out that, in that classy French-Revolution-style mentality, there is now a group so mad they've decided to stand around and yell about it on the Brooklyn Bridge.

The "Occupy Wall Street" protests have been taking place in lower Manhattan for several days now. What they lack in facts, they make up for in arrests! Seriously people - these have got to be some of the coolest angry young liberals around. Michael Moore offered to buy them vegan ice cream.*

Anyway, they have demands. That's right. They know what they want, and they have a picture of a raised fist to prove it. In fact, they've rather helpfully listed their demands on their site, Occupy Wall St.Org. As much as these protestors care, they have a pretty sad grasp on economics. They also probably hate business casual, so take them for what they're worth.

Below, I'm answering some of their demands with fun, real-life economic analysis. I've shortened most of their demands, and I'm not even going to point out their lack of specificity or data. Read on!

Demand 1: Restore the living wage, reintroduce trade tariffs, and raise the minimum wage to $20/hour.
Reply: 
Living wage: Apart from being extremely expensive and impractical, living wages also mean paying people what they need, not what they deserve. This gets into ethical problems fast — what if that white male simply needs more (to support his family of four) than that asian female (to support her love of free trade coffee)? Should they be paid differently? A living wage says yes. I'd like to know who gets to decide how much money I or anyone else need to "live."
Trade tariffs: considering manufacturing and other "hard" industries have declined, I'm not sure how much there is to protect here.
Minimum wage raised to $20: First, this is decidedly different than a "living wage." Which is it? Assuming we've abandoned the living wage in favor of $20/hr minimums, I'd like to point out that this more than doubles the current minimum wage in NYC, meaning unless companies suddenly make a lot more money, they'll be able to employ fewer than half the people. How does this create jobs again?

Demand 2: Institute a single-payer healthcare system, because private insurance only takes money away from doctors and gives it to Wall Street investors.
Reply: Actually, private insurance gives money to the doctors far more often than the uninsured or underinsured, many of whom free ride off hospital emergency rooms, which drives up expenses for the paying population. Also, private insurance companies don't hand money over to investors just for kicks. Or at all, really.

Demand 3: Guaranteed living wage income regardless of employment.
Reply: Considering that unemployment benefits are a lot more than I currently make each month, I'm pretty sure this one is taken care of. Except, of course, that completely biased "living wage" thing.

Demand 4: Free college education.
Reply: TEMPTING! Actually, education expenses are really quite high. However, not everyone values a college education, and not everyone needs one. If it's free, there's going to be an artificially high demand, but prices can't rise. This is going to flood colleges, who won't be able to hire more professors because they have NO revenue, so education standards will decline, and a diploma won't be worth anything. But it will be free ...

Demand 5: Start a fast-track process to get us off fossil fuels and on alternative energy.
Reply: Ok, I'm sorry. What is this fast-track process going to be? I know I wasn't going to press for details, but I just can't work with this at all.

Demand 6: "One trillion dollars in infrastructure (Water, Sewer, Rail, Roads and Bridges and Electrical Grid) spending now" [sic].
Reply: Spending for the sake of spending doesn't do anything. It doesn't create jobs, it doesn't improve infrastructure, it doesn't change anything. Even with Obama's big-spending habits, $1,000,000,000 is still a lot of money. Where are we getting it from?


Demand 7: Another trillion dollars in ecological restoration, meaning planting forests, reestablishing wetlands and the natural flow of rivers and streams ... and shutting down nuclear power.
Reply: Again, not sure how this is going to do anything for the economy,  and not sure how a to plant a forest or reestablish a wetland, or when water started flowing unnatrually. Also not sure how nuclear power fits in with this, has anything to do with the economy, or doesn't completely negate that "alternative energy" point we made earlier.

Demand 8: Racial and gender equal rights amendment.
Reply: Obviously, equal rights are good. But they can't exist along with a living wage. We also already have a lot on the books about equality before the law. In fact, we also have amendments prohibiting racial and sexist discrimination (Amendments 13, 14, 15, 19). Not to be a wet blanket or anything, but this has been addressed.

Demand 9: Open borders migration.
Reply: If we're imposing trade tariffs above, why are we deregulating our labor market as far as possible? How does an unlimited employee pool create jobs?

Demand 10: Voting reform, including paper ballots counted in front of a third party.
Reply: Are they going to ask for chocolate milk in the water fountains next? What does this have to do with anything, other than adding time and expense, and reducing accuracy in the electoral process?

Demand 11: Immediate debt forgiveness of all debts anywhere. Big ones, small ones, some as big as your head: gone!
Reply: Certainly, reducing debt has been tried and worked before (Weimar Republic, anyone?). But "all debts everywhere" would create mayhem, and would hamstring the creditors. I'm willing to have an intelligent conversation about reducing debts for countries, but only in very precise language. And private debts? We have Chapter 11 Bankruptcy anytime you want to eliminate all your debt and hamstring your creditors.

Demand 12: Outlaw all credit reporting agencies.
Reply: If there are no debts, and chocolate milk in the water fountains, we've now entered a world where credit is free, so of course you won't have credit reporting agencies.

Demand 13: Allow all workers to vote on whether they want to unionize at any time.
Reply: Hypothetically, what happens if everyone can unionize and there are no border controls? Everyone gets up really early to unionize and keep extra employees out. Or they just riot.

Author Lloyd J. Harris sums it up this way: These demands will create so many jobs it will be completely impossible to fill them without an open borders policy.
Reply: Lloyd, that makes as much sense as trying to be shorter by wearing high heels.

While they were protesting, I contributed to the economy in:
Black leggings, gray drop-waist coat-dress, abalone shell earrings, landmarks cuff bracelet, studded ring, and black and cream snakeskin round-toe concealed platforms.

*Upon rejection, Michael Moore instead decided to eat all the vegan ice cream himself. 

3 comments:

  1. While I can’t fully disagree with your critique of the demands (and I do have some issues but...) I think you’re missing the point a bit.

    These demonstrations are a response to the destruction of the American Dream. Or at least one of them. Maybe the most basic one. The one that says if you work hard, pay your dues, and keep your nose clean, you’ll get ahead. Get a good life. A house, a car, some kids.

    But not now. We are reaping the rewards of unregulated globalism, where jobs can be exported at the drop of a hat, and most of the workforce lacks the capability to follow them. Often because those jobs goes overseas. No riding the rails there. What only a few analysts point out, is that in doing this to the workforce, you destroy the very consumer demand that creates the economy. How can you buy new stuff if you can’t get a job, and even if you do have one, the threat of unemployment keeps wages below the breakeven point.

    And even here I’m simplifying. The issue is complex with idiocies on the side of both government and business, and is it any wonder that those who do not sit around and think of economic policy choose to go to the streets.

    And watch those demands, these aren’t a final list. You’re watching a policy convention in action. Messy and self-contradictory, yes, but carrying immense political weight. So I suggest you consider alternatives that help a 45 year old mill worker (or middle manager) suddenly without a job, two kids in community college and a spouse with diabetes. And there’s millions of them.

    If we don’t, we’re going to see protests spread and the opportunity for good policy will be lost in the fear driven desire to placate the confused and furious masses.

    I’m contemplating the economic meltdown in black pants, black collared shirt, blundstones and a brown, straw fedora.

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  2. " Spending for the sake of spending doesn't do anything."

    This is patently incorrect. Throwing money out of airplanes is an *excellent* way to spur consumer spending. Especially if the targets of that spending don't tend to save a lot. It's a demand-side solution that works.

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  3. Corey - thanks for the comment!
    What I'm trying to illustrate is that government doesn't tend to allocate money in the most efficient way possible, or anything even close. Raising taxes reduces the incentive to produce (the Laffer Curve explains this), so it's hard to say that raising taxes to raise government spending results in a gross increase in GDP.
    If someone threw money out of an airplane, I'd definitely spend it! But if someone took deductions out of my weekly paycheck and THEN threw it out of an airplane (taxes), I'd be mad.

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