OWS vs Tyranny?

Interesting post over on the Libertarian site mises.org on Occupy Wall Street.  The author asked OWS what their main goals are. The three main points were:

1. Get money out of politics

2. Reform the banking system by restoring the Depression era Glass-Steagall Act (ended by Pres Clinton), which separated investment banking from commercial banking (one of the key reasons for the housing and money crashes).

3. Draft laws preventing Congress from investing in companies via insider trading.

Instead of listening to them, we have the Dept of Homeland Security teaching mayors how to disperse the crowds, cops pepper spraying peaceful demonstrators, etc.  As with the Tea Party, perhaps it is time for government to listen more to the people, rather than look upon them with disdain?

 

15 thoughts on “OWS vs Tyranny?

  1. Not to nit-pick, but “Libertarian” should be lowercase (“libertarian”). Mises.org is not affiliated with the Libertarian Party, although it is economically libertarian.

  2. Mike,
    Thanks for the nit-pick. Other than the grammatical error, what did you think of it?

    BTW, perhaps Occupy Wall Street should also include some major restructuring of the Federal Reserve. Bloomberg News notes that they kept us all in the dark, while loaning out $7.7 Trillion to banks, meanwhile pretending those banks were all strong and solvent.

    Just another example of big boys ignoring the electorate, and only benefiting their own. And while Congress can pretend they were kept “in the dark”, they are responsible for the actions of the Central Bank and our money supply, and should have insisted on knowing what was going on.

  3. Since money is what makes emaningful political communication possible, a call to “get money out of politics” is a call to restrict freedom of expression. I can’t support that no matter how much I resent the influence of people who have more than me.

    There is some value in having firewalls between different levels of investment risk. I’m not sure restoring Glass-Steagall is the answer, but I’m at least willing to talk about it.

    I find it despicable that Congressmen are using their position for insider trading. I’m willing to talk about ways to prevent Congressmen from engaging in such trading while in office, but perhaps a healthy dose of sunlight is sufficient? Make all financial transactions of Congressmen beyond ordinary purchase of groceries and paying of the mortgage reportable.

    But what makes me most skeptical is that OWS has any spokesperson who can really to Mises.org on behalf of the whole movement or that these are really their demands. My impression is that a rather narrow interest in forgiving student loans is driving a lot of it.

  4. Other than the grammatical error, what did you think of it?

    I have a great deal of respect for Naomi Wolf, and bought and enjoyed her book, The End of America. But I don’t think that her unscientific survey of OWS is representative of the movement. My impression is similar to Vader’s: It’s anti-capitalist, calling for more government intervention to end what they see as damage to our society by the wealthy, along with free (i.e., government-paid) college education and jobs.

    I also agree with Vader regarding the Citizens United ruling. The problem is not too much money in government; the problem is too much power that can be easily purchased. If Congress and the White House were required by the judiciary to stay within the limits expressed in the constitution, then lobbyists couldn’t buy legislation that benefits the corporations and special interests they serve. But we live in post-New Deal era, when the SCOTUS has given Congress virtually unlimited power to regulate anything under a broad definition of the Commerce Clause.

    One of the few areas in which I agree with the OWS protesters with regard to the problem of corporatocracy. It’s how to solve that problem (via campaign finance limits) where they’re wrong.

  5. Basically agree with comments #3 and #4. I am talked to death about OWS. Has there ever been a movement with so few people getting so much press?

    Bottom line: protesting against the government is good, I love it. Protesting against our corrupt bankocracy is a GREAT thing. End the secret combinations of banks and government colluding to take money from you and me so they can line their pockets. Unfortunately, I don’t think that 99 percent of OWS people even understand the source of their woes, so their movement is of limited usefulness because you can’t treat the disease until you find the source of the sickness.

    Police should basically leave the protesters alone unless they are destroying property.

  6. “My impression is that a rather narrow interest in forgiving student loans is driving a lot of it.”

    This would be quite an ignorant impression. In the Declaration of September 29, almost two months ago:

    http://www.nationofchange.org/declaration-occupation-new-york-city-1317784408

    twenty-three grievances are listed, declaration of independence style, and only one has anything to do with education debt. So despite all the excess press the movement is getting, it seems to message is not getting through to some.

    As for the general understanding of the participants, when I have spoken to them I have usually found a better familiarity with a wide range of issues than that exhibited by the “take your government hands off my medicare” crowd. And many of the participants don’t necessarily have “woes” – certainly some are having trouble finding jobs, like a great many Americans. Others are doing fine personally but are patriotically concerned for the problems that the so-called job creators (in many cases, a non-productive rentier class) and their hired servants in the government have wrought. For example, Yves Smith, a 25-year financial industry veteran whose blog, Naked Capitalism, has provided some of the best explanations for the financial crisis over the past years, is part of the OWS alternative banking working group.

    As for Glass-Steagall, some of us were never in favor of its repeal.

  7. Bill,

    I am as skeptical that your link actually speaks for the whole movement as I am that those inverviewed by Mises.org do. What I’ve seen of OWS is fully as incoherent as “take your government hands off my Medicare.” But then I live in a small town, too small for an Occupy movement of its own, and so most of what I get does come from the press.

    Rents are an important part of the incentive structure of an economy, whatever I may think of many of the rentiers. On the other hand, I despise the rent seeking described by public-choice economists, which is highly detrimental both to the economy and to public virtue. I would probably have a lot more sympathy for the OWS movement if I thought it was a true anti-rent-seeking movement, but my sense is that their objection is that the wrong people are successfully seeking rents, not that rent seeking it itself pernicious.

  8. I agree the OWS movement is not perfect by any means. Perhaps it requires more sensible voices to steer it away from the train wreck it potentially could become.

    That said, I’m for fixing the financial issues between politicians and lobbyists. If we open up the system, so people can freely donate what they will, then it helps to eliminate the extreme bribery that occurs by a chosen few. If every candidate had $1 billion to spend, then it would equal everyone out, as you can only buy up so much air time, etc.

    John Huntsman suggested we place a cap on the value of banks, and even using some trust-busting to keep them from being “too big to fail.” He also stated that not allowing them to fail, is not capitalism or free market economy. He’s right, and I hope we get the chance to explore such ideas more in the future.

    For me, the fact that decent people are protesting government is a good thing. That there are some idiots in the crowd doing bad things or wanting to socialize the nation is not to be unexpected. It is no different than the Tea Party having a few skin heads in the crowd. The focus should be in reducing those voices and the time given them by the media, and increase the sensible voices.

    There is a perfect world, but we are not going to achieve it any time soon. Glass-Steagall worked for about 70 years to keep our banks from doing stupid things. Once it was ended, the banks immediately went back to the actions that crashed the market in 1929. Sometimes government must step in to provide a little sanity. This is one of those instances. I also am willing to discuss other options. But separating out risky investment from safe savings, and ensuring banks do not over-leverage themselves is an important beginning to recovering our banking system and the people having faith in it again.

  9. Rame, something to think about: all of this can be done with one simple reform, ending fractional reserve banking. If you think about it, fractional reserve banking is fraud. You put money in the bank and the bank doesn’t keep the money. Imagine a grain elevator where people store grain. You put in the grain and then the grain elevator operator immediately “lends” it out to somebody else, and when you go to get your grain it is not there. We would never stand for this, yet we stand for banks loaning out our money and not having reserves to back it up when we want our money back. Simple solution: fractional reserve banking is fraud and should be illegal. We would never need a bank bailout again.

  10. So, Geoff, you’re proposing that banks be required to hold 100% reserves against the loans they make? That would cause a marvelous reduction in the money supply. You think the Great Depression saw a huge contraction in the economy? You ain’t seen nothin’ yet.

    And, another nitpick: Clinton did not end Glass-Steagall–Congress did. We still at least should maintain the fiction that the legislature actually is the body of government that makes the laws.

  11. Under Glass-Steagall, fractional lending was limited. Normally banks would lend at a 4 to 1 rate. In 2007, many banks were lending out at a 40 or 50 to 1 rate.

    So, if a bank had a billion dollars in its vault, at 4 to 1, it could lend $4 billion. If 20 percent of its loans defaulted, it still would have enough money in the bank to cover the defaults.

    Now, when the same bank was lending out $40 billion, it could only afford to have 2.5 percent of its loans default, before running out of money. In other words, when 10-20 percent of the housing loans defaulted, they suddenly owed $4-8 billion, which the $1 billion in the vaults could not cover.

    There is smart levels of fractional banking, and then there are stupidly risky levels, which is what occurred when Glass-Steagall was removed.

  12. Mark B, ending fractional reserve banking would have the following results:

    –Complete end to inflation
    –Break up the big banks and create new opportunities for smaller banks to compete.
    –A decrease in risky loans on Mega Mansions and cars that are too expensive for people to buy (unless people want to pay 20 percent interest rates on those loans).
    –A boom in venture capital companies with new ways to finance businesses.
    –No more bailouts, no more too big to fail.
    –No more need for the FDIC.
    –No more need for tens of thousands of regulators monitoring the banks.

    We had massive deflation in the 19th century and the economy boomed. This was because there was relatively little government involvement, and the currency was based on something real. The idea that no inflation somehow causes a Depression is ahistorical. The vast majority of our periods of fast growth in US history have resulted in falling prices.

  13. I agree with Geoff: fractional reserve banking is a very subtle analogue of counterfeiting. Many of the financial crisises we face are a consequence of fractional reserve banking and the systems that have evolved surrounding it.

  14. Regarding deflation, please look at this chart:

    http://en.wikipedia.org/wiki/File:US_Historical_Inflation_Ancient.svg

    We had massive deflation from about 1870 to about 1915. Meanwhile, salaries went up and the economy boomed. How is it a bad thing for prices to go down and people to make more money? What we want in society is for people to be prosperous. Deflation is especially good for the poor because the poor spend a larger percentage of their income on food and shelter, and if those prices go down the poor become more prosperous. This helps explain the incredible increase in prosperity during that period. We also had deflation in the 1920s — again, prosperity. The deflation of the early 1930s was a natural consequence of the depression, but it did not cause the Depression. Since the 1940s, we have had massive inflation by historical standards. Have peoples’ salaries kept up? I know my salary definitely has not.

    Inflation is the enemy, not deflation.

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