OCCUPY WALL STREET IS GOOD FOR AMERICA

Like a lot of fellow Americans and people all over the world I have been following the progression of this movement.  My last blog addressed why the need for movements like this exist but now I am blogging in response to various claims that these protestors are anti-capitalist and therefore Un-American.

So let’s start with the definition of Capitalism.  Unfortunately there is no static universal agreement except for certain elements which include; private ownership of development, manufacturing and distribution of goods and services for profit in a market where prices and wages are set by competition. We’ve all heard about Supply and Demand, well COMPETITION is the heart of Supply and Demand. The other important component of the idea of Capitalism is the expectation that it encourages Economic growth. 

One last defining point before I jump into it.  As a student of economics I cling to the portion of the idea dealing with Free Markets which consists of a fluid pricing system where supply and demand are allowed to reach their point of equilibrium without intervention by the government.

Now one would think that I wouldn’t be a supporter based on the notion of a system unfettered by government intervention but what we have here in the US is not pure capitalism.  The idea has been corrupted by back door deals, corporate subsidies, tax loopholes and an army of special interests lobbyist that have all become an accepted part of business as usual.  No longer is competition won by the best product or service, it’s ruled by which company has established the best industry advantage. Striving for that advantage used to be good for America because it meant innovations in research and development or manufacturing, but today that advantage is gained by who has hired the most effective lobbyist, that advantage is now a result of legislation. Just look at subsidies for the energy sector that artificially inflate profits which attracts investment. According to Forbes, even liberal activists in the Rocky Mountain Institute, the Sierra Club, and the chairman of the Global Environment Fund, believe the time has come to end energy subsidies in the tax code and allow market forces (supply and demand) to let the best fuel win.

So how this all ties back to the Occupy movement and why it’s good for us is this:

1. Corporate America has lost its way, (for the most part).  Instead of achieving market dominance through product excellence, it’s achieved through clever deals to best position the company.
2. Through the supply and demand model in our current system, the “better mouse trap”  has been replaced with a "better lobbyist" as demand for an advantage in the market is high.  Made in America used to mean something a long time ago.
3. This manipulation of the system does not allow for prices and wages to find a natural equilibrium which produces income disparities the likes of which we haven’t seen in 30 years.
4. This movement will help start the conversation, activate the public and put the politicians on notice eventually getting us back on track and reversing the growing income divide in this country.  

Consider this, the income disparity, which is measured by something called the Gini Coefficient, is more pronounced in the US, the greatest nation in the world than in Egypt, and we all know what happened there.  Note: the greater the index number the greater the income disparity.

Capitalism was not designed to create a nation of “Haves and Have Nots” and THIS is what the Occupy movement is about. 

Now no one is saying privately earned profit is bad for America.  Let’s look at one of  my favorite companies, Apple Inc.  Apple’s mission statement on its site starts with, “Apple designs Macs, the best personal computers in the world…” Sounds like a better mousetrap to me.  Because of its superior design, demand of Apple products is in the clouds… globally (which is an important point I’ll get to later).  This allows them to price it accordingly; we all know these products are not cheap, but placed in the marketplace in competition with others, a natural equilibrium price is allowed to be reached without subsidies, loopholes or lobbyist. The last point is one of the most important, and has to do with encouraging economic growth.  Although Apple enjoys industry dominance it creates opportunity for other companies.  Apple’s success created a market for MP3 players, a unique online music store model, tablets and phones that is stimulating competition from Blackberry, HTC and others. There is a growing market for iPhone and various mobile device docks, chargers, cases, screen protectors, and repair shops all creating opportunity, generating economic growth which is a hallmark of capitalism. 

There is a saying, “When the US sneezes the World catches a cold”, the US has been the economic model for a lot of economies in the world yet we see the Republican Party seeking to adopt the practices of our foreign competitors. I’ve written about it before but here is what I mean.  Some of our global competitors do not have the same high standard of living supported by wages for their citizens. They don’t have the same corporate tax structure or regulations. So what we’ve seen is a conservative movement to level the playing field by attacking unions that protect wages and workers rights, attacks on regulations that protect consumers and the environment and a call to minimize corporate taxes. The Warren Buffet example of the top 1% paying almost no taxes is based on rewarding wealth earned through investment versus work, all in an effort to attract investment and positioning the US to compete. I submit the only way to compete is to invest in education to foster the next generation of American ingenuity.  Henry Ford realized that by paying his workers more, it reduced turnover AND allowed them to buy the vehicles they were building creating a market.  THIS is the American way and this will bring us back to our once economic dominance, NOT mimicking countries that have governments that have been infiltrated with special interest corporate dollars and little regulation.

It is sad that the debate is not fully understood by the opposition. Maybe I’m being naïve in believing they don’t get it but this week while watching a discussion on how California could become the base for many Occupy protestors during the winter months, a conservative pundit questioned why Hollywood wasn’t being occupied as if the debate was about poor vs. rich.  It’s true that movie stars make millions for a few months of work but the pricing mechanism in Hollywood isn’t rigged. If Bruce Willis is paid millions to make Die Hard 5 and the movie is a bomb, there is no government subsidy funded by tax payer money to provide corporate welfare to the studios.  If the studio makes a bad bet the repercussions to John Q public will amount to a bad review and maybe $50 for tickets and popcorn for two, however, this argument is about how deregulation and corporate influence has created a system where the richest in this country have become richer while everyone else has seen an decrease in real income during one of the toughest times we’ve ever seen. It’s about how when Wall Street makes a bad bet it affects everyone including the world. They may think it’s safe to call it class warfare but it’s really about undoing the wealth redistribution perpetrated by the Bush administration that this country can not afford.

My hope is that the Occupy movement reaches a tipping point that challenges the allure and influence of special interest dollars. My hope is that it reminds our confused “representatives” that VOTERS not DONORS are their true constituents and despite the fact that corporations are legal entities they are not endowed with the same inalienable rights as citizens because they are not people, sorry Mr. Romney. My hope is that through the discussion that is generated we move to  fulfill the dreams of the next Henry Ford and Steve Jobs by becoming competitive through our inventive nature and not through our ability to rig the system.