Thursday, October 13, 2011

Occupy America's Wallet

There is entirely too much to say about the phenomena of Wall Street protesters springing up across the land claiming to speak for 99% of the population.  Noman imagines that his first reply should be, please don't.

Though belonging to the 99%, he has nothing else in common with Occupy Wall Street.  He pays taxes; they don't.  He works in the private sector; they don't.  He thinks America is just great; they don't.  He bathes...  

Unlike the various students demanding subsidized education, and others insisting on free whatever-they-think-they-are-entitled-to, Noman doesn't believe that anyone owes him anything more than common courtesy, and space within the confines of common decency to be who he is.

The one constant in this metastasizing phenomenon has been the futile search for a causal nexus between the protester's actions, aims and the various injustices they point to in order to explain themselves.

One young woman on the radio was willing to risk her scholarship to medical school in order to protest 1.5 million homeless children living in America.  Granting the number, ad arguendo, Noman scratched his head trying to connect her risking her scholarship, going to New York to protest Wall Street, desire for higher taxes and more spending, and how any of it would address the problem of homeless children--or even had anything to do with it.

It was classic Liberal: clutch onto a tear-jerking problem and cite it righteously to demand the policies you favor.  If the reader, for instance, is against the policies, it is because you want the problem to fester.  You probably profit from it, too.

Add Saul Alinsky to this mix and hopeless polarization ensues.  You are a "Have" trying to keep power away from the "Have-Nots."  Moreover, you are "the enemy."

In any event, and at all costs, ignore the obvious causes of the problem, which would recommend policies that Liberals oppose and spent decades deconstructing.

For example, the primary causes of child poverty in the US are the breakdown of the family, especially in black, single-parent families, and the breakdown of traditional sexual morality.  Policies addressing these root causes would undoubtedly spur Occupy Maternity Ward protests, chants of "get your rosaries off my ovaries," and invocation of child poverty as the raison d'être for their outbreak. 

Noman might focus with justice on the rank hypocrisy angle.  For instance, Nancy Pelosi--The Speaker of the House who shepherded Hank Paulson and Ben Bernnanke's bailout of Wall Street through Congress over the objections of House Republicans (who voted it down the first time, and took a beating from the media and a Republican Administration for torpedoing the stock market)--is magically the scourge of Wall Street.

She called down God's blessings on the protestors saying: “The message of the American people is that no longer . . . will the recklessness of some on Wall Street cause massive joblessness on Main Street.”  Really?  Who will prevent it?  Government?  Her?

Perhaps Nancy forgot her role in the January 24, 2010 deal to increase Fannie Mae and Freddie Mac's loan limits in high-cost areas from $417,000 to $729,750.

Packing in that last trillion-dollars-plus of sub-prime, Alt-A mortgage-backed debt before the system froze up from cascading defaults didn't work out too well for Main Street.  But, Wall Street and the GSE's sub-prime confederates loved it.  [n.b. Fannie Mae and Freddie Mac are "government sponsored entities," or GSE's.]

She also colluded with Chris Dodd and Barney Frank to omit the GSE's from Dodd-Frank's ambit.  Another big win for big finance at the expense of the 50%-of-the-99% who continue to pick up the tab for the 49%-Party's formerly government-subsidized, now government-owned, cash cows.

Noman supposes that it is Minority Leader Pelosi's theatrical outbursts, not governing actions--what she says, not what she does --that count.  Like her oft-repeated, yet never-substantiated (nor questioned by the mainstream media) accusation that tea party protesters spit on members of Congress, it is her words, not reality, that matter.  (They presumably did so as they picked up garbage leaving Washington, DC cleaner than when they arrived en masse.)

There is also President Obama himself, who despite talking protesters onto the streets and winking at them for encouragement is the leading recipient of Wall Street contributions among all politicians in the 1989-2010 period.  That's impressive, especially considering that he's been a candidate for less than a decade.  Nevertheless, he leads the pack of pols with decades more campaign experience, and expenses, reaping $16 million of Wall Street lucre into his coffers.

Then there is a matter that George Soros complained about recently.  The Government--President Obama's government, and before that Senator Obama's government with House Speaker Pelosi and Majority Leader Reid running it--injected capital into banks, effectively relieving them of their bad assets and allowing them to earn their way out of a hole.  This allowed banks to earn bumper profits, and pay bumper bonuses once they had paid off their TARP loans.

Banks have earned these profits on President Obama's watch in relatively risk-free fashion courtesy of access to Fed money at record low interest rates held down for a record long period, and capturing the generous spread on tight-money loans in the marketplace even while dragging their feet on lending to small businesses and to the middle class.

Noman doesn't want to dwell on any of that, however.  For now, he's happy just to sit back and enjoy the spectacle.

Taking the longer view, some kind of taxonomy would help to put the disparate pieces of this puzzle together, and describe it.  Aristotelian causation provides one; Michael Novak's tripartite components of modern political economy provide another.  A hybrid of the two ordering devices provides us with a map to survey the scene.

Aristotlte's four causes are the material (that out of which a thing is); formal (that into which a thing becomes); efficient (that by which a thing becomes); and final (that for the sake of which a thing exists).  While they apply specifically to physical objects, e.g., tables, they are useful, though less definitive, for analyzing non-physical phenomena.

Novak's three elements of the American political economy are the political system (which is liberal), the economic system (which is market driven), and the cultural-moral system (which is pluralistic).  Putting the two together, one gets the following matrix:

(market driven)
Cultural-Moral (pluralistic)
(that out of which)

(that into which)

(that by which)

(that for the sake of which)


Materially, these protests are a legitimate expression of 1st Amendment rights.  This is the way we do things in America, and it is to be welcomed, even if not appreciated.

That said, there is a question about whether conduct is law-abiding.  If not--and, let's be real--then the right is conditioned, curtailed by arrests, etc.

Additionally, the movement has caught on.  We can expect some manifestation of it to be with us throughout the election season.

The interesting, and troubling, prospect is of what will happen when opposing Occupy Wall Street and Tea Party throngs encounter each other in earnest on the streets.

Formally, these political phenomena are being shaped by narrators, talking heads like Barbara Walters who exalted that "it has spread to more than 250 American cities, more than a thousand countries," despite there being only 195 nation states in the world.

It bears mentioning that the mainstream chattering class, people like Barbara Walters, works for big media corporations.

Also worth mentioning is media's importance to Saul Alinsky's first rule of power tactics: "Power is not only what you have but what the enemy thinks you have."  As Walter's cheer-leading indicates, there is no force comparable to media for creating illusions.

Otherwise, there is no unified narrative, as protesters clamor for everything from egalitarian utopia, to gay rights, to the freeing of convicted cop killer Mumia Abu-Jamal.  Occupy Wall Street is decidedly a left-fest.  Its general message is "I want.  Gimme.  I'm entitled.  It's fair.  Tear something down."

Just as the Musllim brotherhood will shape the outcome of the Arab Spring despite the participation of idealistic protesters, Occupy Wall Street is already being shaped by the professional community organizers from SEIU, ACORN's successors, and others operating according to Alinsky's rules.

On this latter point, a look at Chapter 7 of "Rules For Radicals," provides an illuminating glimpse into tactics: e.g., "The real action is the enemy's reaction"; "The enemy properly goaded and guided in his reaction will be your major strength"; "Tactics, like organization, like life, require that you move with the action."

Recall that ACORN received access to $5 billion of community stabilization funds in the first stimulus bill, though its leader disclaimed any intention of availing himself or the organization of it; AmeriCorps received $6 billion; state employees unions received hundreds of billions of dollars in redistributed loot, as did recipients of transfer payments.

Despite high-brow protestations to the contrary, it stretches credulity--all but Liberals'--to maintain that none of this money is finding its way back into organized initiatives supportive of federal redistribution.

The trigger was President Obama's fiery oratory in support of a jobs bill that was legislatively dead on arrival but rhetorically alive with populist bombast to fuel combustable dispositions.

His speeches to the joint session of Congress and the Congressional Black Caucus bear special mention, though his every utterance since his return from Martha's Vineyard has defiantly fanned the flames of class warfare.  He is even proud of it.

Nor is the President alone.  Today, Vice-president Biden blamed an increase in the number of murders and rapes in Flint, Michigan--the communist city that drove GM away to its own detriment, and nurtured the chip on Michael More's shoulder as well as the scars in his soul--on Republican obstructionism.

Despite the VP's failure to establish causation (as opposed to correlation), and to explain when, how and why local police became the financial responsibility of every US citizen including those in law-abiding communities (as opposed to local citizens who generally pay for local police), the red meat will undoubtedly feed an Occupy Flint movement, and encourage escalating tensions elsewhere.

Finally, Occupy Wall Street is dedicated to greater federal spending and higher taxes.  It is a protest geared towards stimulating Congressional action along Democrats preferred lines, and establishing its fiscal (and social) priorities into law.

Note this contrast with the Tea Party movement.  Occupy Wall Street is dedicated to the use of government power to confiscate wealth from others in order to redistribute it to protesters and their preferred recipients.  The Tea Party is dedicated to the abstention of government power so that those who earn or have wealth can put it to their own preferred uses rather than surrender it to the uses preferred by government-favored third parties.

With respect to those who create wealth, their uses are far more likely to prosper society than the uses of politically connected cronies, e.g., Solyndra.

It takes a peculiar outlook, the Alinsky perspective for instance--i.e., "How can the Have-Nots take power away from the Haves"?--to consider Occupy Wall Street claims sympathetic, or to call a Tea Party leader a nazi for upholding the rule of law.


Populist rage is the matter from which this movement springs.  It is easy to despise Wall Streeters (if one lets oneself, which is never advisable) who profited wildly from participating in schemes that nearly bankrupted the global economy.

This particular genie, however, once coaxed out of its bottle, can be devastatingly destructive and well nigh impossible to put back in.  Unstable minds are already at work drawing crude connections and making incendiary remarks.

One problem with Alinsky's tactics is that goading enemies into impolitic reactions can be done by anybody, not just the politically correct, which is already bad enough.

Lost in the protests is the nuance doggedly insisted upon by Financial Crisis Inquiry Commission (FCIC) dissenter Peter Wallison, who writes in today's Wall Street Journal that protestor's rage springs from a false narrative.

It was primarily the government's housing policies, specifically Fannie Mae and Freddie Mac's engineering of the sub-prime bubble that bears the blame for our financial misery.   Wall Street was merely a willing accomplice, not its principle architect.
Research by Edward Pinto, a former chief credit officer of Fannie Mae (now a colleague of mine at the American Enterprise Institute) has shown that 27 million loans—half of all mortgages in the U.S.—were subprime or otherwise weak by 2008. That is, the loans were made to borrowers with blemished credit, or were loans with no or low down payments, no documentation, or required only interest payments. 
Of these, over 70% were held or guaranteed by Fannie and Freddie or some other government agency or government-regulated institution. Thus it is clear where the demand for these deficient mortgages came from. 
The huge government investment in subprime mortgages achieved its purpose. Home ownership in the U.S. increased to 69% from 65% (where it had been for 30 years). But it also led to the biggest housing bubble in American history. This bubble, which lasted from 1997 to 2007, also created a huge private market for mortgage-backed securities (MBS) based on pools of subprime loans.
Naturally, when one is trying to "pick the target, freeze it, personalize it, and polarize it" ("all issues must be polarized if action is to follow"--a teaching whose classical expression Alinsky finds in Christ's dictum that "He who is not with me is against me"), nuance gets in the way.

Formally, the idea of a planned, targeted and government-directed economy drives this movement.  Command and control is its essence.

Noman finds this curious as the notion has been thoroughly discredited in management and organizational behavior literature, even in the military, for its suppression of private initiative, reduction of personal responsibility and dependence on centralized actors who cannot possess the omniscience required to make the system work efficaciously.

Ironically, protesters favoring government power over private initiative operate under the cloak of speech and assembly freedoms granted by the same constitution that protects commerce, in its body, not in an added amendment.

The economic trigger was the badly sagging fortunes of the command and control idea.   Despite Newsweek's famous 2009 cover declaring that "We Are All Socialists Now," we are not.

And with persistently high unemployment, skyrocketing deficits and debt, an impending double-dip recession and a proliferation of crony corporatism and corruption, there are daily fewer voices that confidently advocate for top-down economic power.

The discrediting of this economic panacea is all the more alarming to the President's Party as it is accompanied by the President's sinking poll numbers, doubts about his re-election, and concomitant fears of losing Congressional power, which was so opposrtunistically deployed against popular majorities, e.g., ObamaCare.  There is fear of payback, and even of merely justifiable roll back

The momentum to cut spending and lower taxes--a trajectory diametrically opposed to the Democrat's thrust--is on the ascent.  Repeated legislative and budgetary confrontations have only served to raise the profiles of smaller-government proponents such as John Boehner, Eric Cantor and Paul Ryan.

The final cause of Occupy Wall Street's economic thrust is Statism.  Under present conditions, this requires utilizing corporatist intermediaries such as General Electric, Dow Chemical, Pfizer and Walmart: public-private partners that, unlike Chamber of Commerce members, have grown comfortable in bed with the federal government.

Notably, these companies are not the target of protestors' rage.  That could change quickly should the government decide to dispense with their services.

There is nothing in the rhetoric or actions of Occupy Wall Street to indicate where, to protestors' minds, the limits to collectivism, if any, reside.


Materially, the movement's moral impulse is grievance at perceived unfairness.  Income disparities are unseemly to many, and Wall Street is a haven for the exorbitantly paid and lavishly pampered.

Noman does not share Occupy Wall Street's aversion to economic difference, or think that there is no economically meaningful distinction to be drawn between an investment banker and a shoe-shiner.  So, he is not convinced that both should earn roughly the same pay for their efforts--something sundry protestors have suggested, and that he has heard from undergraduates for years.

This implicates at least a touch of self-interest--convenient moralizing, say, or easy virtue--given that protesters, unlike Warren Buffet, are not clamoring to pay more taxes.  Rather, they are demanding more benefits paid for by other's taxes.

The conflicts of interest inherent in the frustrated sentiments expressed have largely escaped protestors' self-examination, which does not excuse public sympathizers from Fed Chairmen Ben Bernanke and Treasury Secretary Tim Geithner to short seller George Soros for failing to recognize and acknowledge them.

Formally, the tendency is towards an equal distribution of resources.  It is an article of faith for some that equality of outcome will end injustice and suffering, and usher in heaven on earth.  The pedigree for this notion runs from Rousseau through Marx to Lenin.

But, will redistribution ever achieve its lofty aims?  Noman thinks not given the evidence of history, which leads to the opposite conclusion.

No system geared towards equality could ever ensure that everybody had something because it could never guarantee supply under demotivating conditions.  It could only ensure that nobody (besides the rulers) had anything.

Do you remember Liberals waxing eloquent about Cuba? The Soviet Union?  Nicaragua?  How has the equal distribution of resources worked in those worker's paradises?

Naturally, perfect equality proves elusive because those who effectuate the balancing, the Party, always reserves the lion's share for itself and its members.

What would be different should Occupy Wall Street and the Democratic Party have its way with the people's morals, and wallets?

The efficient cause of this movement is opportunity, specifically opportunism provided by our proximity to the financial crisis.  The relevance of occupying Wall Street as opposed to Beverly Hills, where arguably more millionaires and sub-prime/Alt-A mortgages might be found, is the financial capitol's psychological connection to the still-profusing economic wound.

Moreover, Liberals are so close, yet so far from consolidating massive gains.  The Wall Street Journal editorialized in January of 2009 about Democrats' 40 year wish list.  Today, this article serves primarily as a grim testament to Democrat's faulty prognosticative powers, and untrustworthiness to manage the nation's finances and affairs.

The adoption of the 40 year wish list in the first stimulus bill was followed by countless Liberal conquests including most notably, ObamaCare and Dodd-Frank.  All that remains to accomplish--besides establishing a blue state entitlement to red state taxes--is to pay for these spend-and-tax victories before capital markets definitively protest, and credit default swaps on the nation's debt render them Pyrrhic.

To Occupy Wall Street, these legislative triumphs make America more fair.  They redistribute money and power from the Haves to the Have-Nots.  The Have-Nots are entitled.  Consequently, taxes must be raised now, regardless of the consequences, or all will be lost.  Carpe diem.

Resentment, unemployment and malaise also trigger this moral response.  Things are not going well economically.  As it sounds less-and-less credible to blame the mess on the other guys the further they recede from memory, it must be the fault of systemic injustices.

When the going gets tough, the Left capitalizes on its opportunity for big change, even when its policies are the cause of the tough sledding.  Perhaps especially then.

Finally, the cause is the demand for social justice.  Who doesn't want that, you ask?  But, along whose, and what lines are we talking?

Philosopher Alasdair MacIntyre highlighted the problems besetting contemporary moral discourse and suggested means to surmount them in a landmark series of books commencing with "After Virtue" (1981) and ending with "Dependent Rational Animals" (1999).  The second of four books, entitled "Whose Justice? Which Rationality?" highlighted the incommensurability of moral positions predicated on disparate foundations, each rooted in separate and distinct historical epochs.

To the extent that mere words such as "social justice" and "fairness" bind listeners in their spells, it behoove us to discern the roots of their varying articulations.

Noman will attempt to ground those roots in varying conceptions of "Hope" in a subsequent post on the topic.

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