As I wandered off my train at South Street Station last week, Occupy Boston was in full-swing. Exploring the makeshift headquarters, I witnessed a spectrum of left-leaning causes. On display were the anticipated Workers Party leaflets, along with literature about “corporate greed,” a statue of Gandhi, some colorful bike racks, teacher’s unions, a Buddhist campsite, artistic interpretations of the real “99 percent” and even — to my delight — a few Federal Reserve-critical libertarians. Although I sympathize with the protester’s grievances about high unemployment, I find their decision to aim irritation at Wall Street, rather than Pennsylvania Avenue, terribly misguided. The movement may be best summarized by one scrap of cardboard I spotted in Quincy Square, which read, “Too many issues to put on a sign.” At least its author was honest.
What I find despicable is the Democratic Party’s attempt to claim the movement, or at least nod heartily in its direction. Voters, it appears, are meant to see Wall Street’s tricks as criminal activity that rests solely with the GOP, as if liberals haven’t been holding Washington’s reins for the past three years. Apparently, it is now irrelevant that Wall Street donated more to President Obama’s campaign than any other in history. If the “99 percent” statistic that the occupiers have drummed as their rallying cry sounds like an all-inclusive slogan, it’s because it is. Of course there will always be percentiles of wealth in society. What people the occupiers overlook is that 1 percent status tends to be pretty fluid, with earners waffling in and out of brackets throughout their lives. The “rich” may prosper, but the individuals constituting “rich” change faces. And so too do the rest of the jockeying “99 percent”.
In reality, well-connected firms like Goldman Sachs help write the rules at the peril of small businesses and everyday employees. It might be tempting to throw the book at Bank of America but, at 35 percent, America already has the highest corporate tax rate in the industrial West. That rate stifles common commerce, start-ups and consumers alike. Chatting with the protesters, I found many of them ratcheting up the rhetoric toward the usual conservative villains: Fox News, the Koch brothers, private jet owners, Ronald Reagan’s ghost and Co. This is a classic example of disparaging the free-market even while a legitimate free-market hasn’t been a guest at the Washington table in a very long time. To peek at this phenomenon, I’d like to offer a snapshot of the mortgage meltdown.
Back in the 1990s, policy makers chased faulty, and often inconsistent, affordable housing panaceas. The wonderful economist Thomas Sowell points out that elitist zoning laws in areas like the San Francisco Bay had, predictably, kindled sky-high real estate costs. These pricey neighborhoods prompted panic from policy-makers who further meddled in the market to shield minorities and lower-income folks from supposedly unfair costs. What pundits fail to mention is that these trendy “open space” and “ocean view” real estate initiatives, enacted mostly by liberals on the American coasts, were a large factor in forcing lower-earners out of their communities in the first place.
Evidently California politicians saw little contradiction in sealing their own communities off from further development at the same time that they demanded more access to housing for lower classes. By railroading traditional mortgage lending standards on behalf of “the poor,” they made feel-good government, rather than genuine market indicators, the forefront of housing legislation. Sowell points out that Americans were dedicating just 17 percent of income to housing in 1998, as opposed to 30 percent in the early 1980s. This illogical zeal to keep both prices and home ownership high would later balloon into the disastrous housing “bubble” — or in this case, a nation-wide parachute.
Bankers did not wake up one morning and decide to lend to unqualified borrowers. Yes, the big banks behaved recklessly and even negligently when they allowed themselves to be carried away on the sub-prime mortgage magic carpet, which dramatically came crashing down by 2008. Yet the foolishness could have been sidestepped if eager politicians and borrowers hadn’t orchestrated the lending concert to begin with.
Let’s not fault the unfettered market when much of the scheming stems from the hubristic notion that a few Washington grey suits know what’s best for America’s many complicated industries. It seems fitting to repeat Friedrich Hayek’s famous observation that “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” Given the political damage, it’s unfortunate that the occupiers place all their woes at the foot of Wall Street. Despite understandable anger at the bailouts, the occupiers still express interest in various other brands of state manipulation, such as vast wealth distribution, an unrealistic mandated living wage, protectionist trade policies and universal debt forgiveness.
Trying to mend our economy by blaming corporate greed is like the American Medical Association bashing gluttony for the obesity epidemic. Clearly, human vice exists. Neither hedge fund managers nor zealous housing regulators like Chris Dodd and Barney Frank hold a premium on the cardinal sins. In fact, the popular protester demand that taxpayers foot the bill for expensive liberal arts educations strikes me as pretty selfish it its own right. Perhaps the free-market, though, can keep our human excesses in check. To truly experience economic freedom we ought to encourage hard work and the American dream. That means building those proverbial bridges, not blocking them.
Danielle is a sophomore. You can reach her at dcharette1@swarthmore.edu.
