By Representative Brad Miller
How do we grow the new green economy if our financiers aren’t interested in actually funding companies that make things? While the Chinese and Germans move into the 21st Century, our bankers are stuck in the 19th.)
The grievance of the Occupy Wall Street Movement is not just growing income inequality, it’s what the one percent (it’s really a much smaller number) has done to claim so much of our nation’s income. And that’s not a new grievance.
The case for progressive economic policies has been so infrequently defended for a generation now that Elizabeth Warren’s argument for an “underlying social contract” was a sensation:
“There is nobody in this country who got rich on their own. Nobody. You build a factory out there, good for you. But I want to be clear: you moved your goods to market on the roads that the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.”
She concluded that there is an obligation to “take a hunk of [the profits] and pay forward for the next kid who comes along.” So yes, it’s reasonable to expect the one percent to pay some taxes. Steven Benen wrote that “If more Democrats were able to make the case for the underlying social contract as effectively, our discourse would be vastly less mind-numbing.”
But there is more to progressive economic thought, and to the underlying social contract, than the duty to “pay forward.”
The people who got really rich in the last generation didn’t build factories, they weren’t “job creators,” they worked in finance. “Wall Streeters are taking a bigger and bigger chunk of [the nation’s] income,” Eduardo Porter wrote in a New York Times editorial. Workers in finance made about what other Americans made through the eighties, but their income exploded when financial deregulation ended many of the safeguards put in place after the Great Depression. “The [OWS] protestors’ grievances may be aimed at Wall Street as a metaphor for broader economic forces,” Porter wrote. “But there is nothing metaphorical about who is taking home the wealth.”
Kash Monsori, writing at his blog The Street Light, agreed. Mansori said the “deep loathing” of banks and bankers was largely because of the “extraordinary concentration of wealth and power that has accumulated among the world’s financiers over the past couple of decades. Income inequality in the US, for example, is almost entirely a story about the richest 1% pulling away from everyone else—and a substantial portion of that richest 1% have the financial industry to thank for it.”
But Joseph Stiglitz nailed the central grievance of protestors:
“…[T]hose in this rarefied stratum often are rewarded so richly not because they have contributed more to society—bonuses and bailouts neatly gutted that justification for inequality—but because they are, to put it bluntly, successful (and sometimes corrupt) rent-seekers.“This is not to deny that some of the 1% have contributed a great deal. Indeed, the social benefits of many real innovations (as opposed to the novel financial ‘products’ that ended up unleashing havoc on the world economy) typically far exceed what their innovators receive.
“But around the world, political influence and anti-competitive practices (often sustained through politics) have been central to the increase of economic inequality.”
(Wikipedia defines “rent seeking” as “an attempt to derive economic rent by manipulating the social or political environment in which economic activities occur, rather than by adding value.” In other words, rent seekers take money that they didn’t earn.)
As Mark Twain said, history may not repeat itself, but it does rhyme. The grievances of the first Progressive Movement have a familiar ring.
In his New Nationalism speech a century ago, Theodore Roosevelt said the “conflict between the men who possess more than they have earned and the men who have earned more than they possess is the central condition of progress.”
“The absence of effective…restraint upon unfair money-getting,” Roosevelt said,
“has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power. The prime need is to change the conditions which enable these men to accumulate power which it is not for the general welfare that they should hold or exercise. We grudge no man a fortune which represents his own power and sagacity, when exercised with entire regard to the welfare of his fellows….We grudge no man a fortune in civil life if it is honorably obtained and well used. It is not even enough that it should have been gained without doing damage to the community. We should permit it to be gained only so long as the gaining represents benefit to the community.”
I have no clue how the protests of the 99 percent and Occupy Wall Street will evolve, but the grievances are very, very American. They got Theodore Roosevelt a spot on Mount Rushmore.