It's been a couple of weeks since the last post here, primarily due to a very busy couple of weeks in the office and classroom. Grading exams and papers, preparing lectures, and writing a paper for presentation in Philadelphia in November has left me with little time for blogging. But enough about that. Something seems to be afoot and the Obama Administration is paying attention. In the past week the president has announced executive initiatives to make it easier for those with 'underwater' mortgages to refinance their homes and for individuals with low incomes to reduce their student loan payments and have their unpaid balances forgiven after 20 years instead of the current 25 years. Both are steps in the right direction. The Occupy Wall Street movement deserves, at least in my humble opinion, a little bit of credit for that. Yesterday, I spent a half an hour talking with a reporter for the Jackson Clarion-Ledger about the movement and its message.
Occupy Wall Street, hereafter OWS, began nearly two months ago as a protest in New York City aimed largely at the 'fat cats' on Wall Street who have done exceptionally well over the previous three decades while much of the rest of America has ostensibly been left behind. The top 1% has prospered while the bottom 99% has floundered, or so the argument goes. The OWS movement has a lot of solid ground upon which to base their argument, such as a report by the Congressional Budget Office showing that the top 1% of earners enjoyed real, after-tax income growth of 275% between 1979 and 2007. The next 19% saw their incomes grow by 65% over that period, while those in the 21st to 79th percentile saw income grow by an average of 40%. The bottom 20% saw average income grow only 18% over the 28 year period. The full CBO report can be found here. To many in the OWS movement this is indicative of greed on the part of Wall Street and other wealthy interests. I think they are partially correct because greed drives markets in general, but I also think they may be barking up the wrong tree. The question, what has enabled the tremendous growth of income for the top 1%, is a good one. The answer, I think, is far more complex than OWS protesters recognize or want to admit.
The real answer lies in the capture of government by corporate special interests. Over the past 50 years Washington D.C. has been inundated by special interest groups taking up residence on K Street and clamoring for policy makers to protect their constituents (or provide them subsidies). They've argued against regulations and worked to roll back tax rates on the wealthy, some of which reached 90% during the Eisenhower Administration. The devil has been in the details, as the old adage goes. Recently, political scientists Paul Pierson and Jacob Hacker tackled the question of why the distribution of wealth and income in America has been much less equal since the 1980's than it was between 1946 and 1979, when incomes grew at a good pace for nearly everybody. In their book, "Winner Take All Politics: How Washington Made the Rich Richer--and Turned its Back on the Middle Class" they take on some of the classic arguments about technology, globalization, and just plain working harder. Each is found to be lacking when it comes to explaining the increase in inequality over the past three decades. While not pointing a finger at either party in Congress, Pierson and Hacker argue that the culprit is public policies that have been designed by elites for elites. As a result, the top 1% of Americans have gone from controlling about 9% of the wealth in 1980 to 24% in 2007. This is not the result of simply working harder or smarter. If it were, I'd be perfectly fine with it since I support the idea the of reaping the fruits of one's labor. It is the result of deliberate choices made by our elected representatives.
I think OWS has a significant message to get out to the American people but I fear they are targeting the wrong people. Most Americans are not aware of the income distribution inequality in the country and are often shocked when they realize just how skewed it is. In large part, I think, it is because we have segregated ourselves into like-minded groups sharing the same socio-economic status. Millionaires are not hanging out with people earning $10 an hour who find it difficult to fill their gas tanks with gasoline at $3.50 a gallon. The people who shop at Wal-Mart are not the same people who frequent Neiman-Marcus or Sak's Fifth Avenue. There is a divide in America today between not only the rich and the poor but between the lower middle class and the upper middle class. OWS has at the very least made more Americans aware of this. Sadly, some have taken to lawbreaking to get the message out, which only serves to reduce its effectiveness. Fortunately, this appears to be a very tiny percentage of the protesters who are engaged in unlawful activity. Instead of occupying Wall Street, perhaps they ought to be occupying K Street in Washington, D.C.?