Why I support Occupy Wall Street

There is an overriding belief among decision makers—overriding in that even those who don’t believe it are afraid to refute it—that Adam Smith’s Invisible Hand of capitalism will guide business and corporate entities to make decisions that are in the best interests of consumers, that a free market will draw many profit-seeking peoples to the best ideas and will then compete against one another to deliver these best ideas and, through such competition, provide consumers with both choice and lower prices and an active laboratory whereby ideas are further refined until the best, most vigorous ideas emerge, and consumers and businesses are rewarded both. One can find examples in recent and past history to demonstrate that the invisible hand has rewarded not only financiers and business-owners and consumers, but workers as well: Henry Ford knew that his workers were consumers and so paid them enough so they could afford his cars; lately, King County has greatly reduced health care costs to its employees by supporting the healthier choices they make in their insurance structure (1); at the start of the Great Depression, W.K. Kellogg found he could run a profitable business by moving to six hour days at the Kellogg cereal plants—because workers with more time for “family, community, church, and individual freedom” were more productive (2). Though free market arguments go largely unchallenged in our state and federal houses of congress, however, the invisible hand has shown again and again that it has not been good for most citizens of our country. We allow our businesses to make decisions not only primarily but purely to maximize profits and please investors. Corporate responsibility shows up as a single lecture in Ethics classes on the way to earning the most popular Bachelors and Masters degree in our country, Business Administration (3). The profit motive, however, has proven harmful. It’s proven bad for workers, bad for voters, bad for consumers, bad for health, and bad for our planet. While Jim DeMint (Senator from South Carolina) told a room that they might have to “take to the streets to stop America’s slide into socialism,” (4) the historical record has shown that our policy makers have backed off corporate regulation and accountability repeatedly, in the face of numerous abuses, disasters and calls for change; it appears now that the only way to shift the conversation away from the unquestioned faith in the invisible hand is to do exactly as Jim DeMint has demanded. Take to the streets.

This would not be the approach if democracy and capitalism were as synonymous as idea-crafters often make them out to be. I say this even given an important caveat that we are not a pure democracy, but a democratic republic in which we are represented under different rules under different interpretations in different institutions and states, such as between the Senate, in which representation by population does not count, and the House of Representatives, where it does; or in the Electoral College, with its winner-take-all states, whereby a majority win takes all a state’s electors, as in Washington State, or with its alternative, whereby electors are chosen by local districts, as in Maine. Furthermore, we are note purely a democracy because we have built constitutional protections to curtail the will of the majority if the popular will becomes totalitarian in impulse. This is called the Bill of Rights. Perhaps the more important caveat is that we are not a purely free market: we have a social safety net, a socialized military, state-run roads and police and schools and parks and more; and we additionally create massive incentives and disincentives for certain corporate and civic behaviors through the use of targeted taxes, fees and direct regulations.

Nevertheless, it is helpful to talk about democracy and capitalism, because their essential ideas justify so much of what we do: in our democracy, every enfranchised citizen has a voice. The idea that personal interests will end up pushing forward the ideas that will best suit us together as a community is stated by Alexis de Tocqueville this way: “The citizen looks upon the fortune of the public as his own, and he labors for the good of the state, not merely from a sense of pride or duty, but from what I venture to term cupidity.” (5) This idea is very similar to capitalism: the law of supply and demand suggests that desires and needs will get fulfilled, as long as all are free to buy and sell what they want. Both of these ideas, democracy and capitalism, rely closely on ideas of individuality and freedom, in ways that, from this level of abstraction, seem almost identical. But they are not. Seen from the concrete lens of history (and I’m perfectly aware this is the tack that Marx takes) and what actually happens, capitalism does not require everyone to win or benefit. Exploitation, slavery, extortion and other nakedly dehumanizing and wrong behaviors from our recent past and today are not behaviors theoretically out of bounds of the laws of supply and demand. Taking hostages creates demand: the fact that this is against the law is besides the point. Laws are a modification of pure capitalism. And while we have such laws and modifications, the biggest idea remains: profit and wealth are the ends, and getting others to pay as much as they can while outlaying as little cost as possible are the means. In a society where everyone is born to the same advantages and temperaments, perhaps capitalism and democracy could be similar ideas. But when capitalism flies on advantages and exploits disadvantages, by definition, not everyone has an equal voice, as they are supposed to in democracy. Democracy and capitalism are different.

When we equate the two, we privilege the ideas of individuality and freedom, and indeed, these are the concepts we shout during speeches; but beneath this equation are the increasingly unequal voices in our democracy: those rewarded for their advantages in capitalism are gaining disproportional influence on those we elect to represent our concerns. While most everyone is equally free to speak and to vote, because of laws of supply and demand, more people depend on those who run corporations, and so, representing more needs, we confer on them a special status, as demonstrated in the phrase “job creators,” a term that lays bare such dependencies.

Yet one of the deep ways that the profit motive has proved harmful has been on our democracy itself. Corporate lobbying and the proximity of K Street to the U.S. Congress has been well documented. Meanwhile, the correlation between the amount of money raised by political candidates and their chances of success is not perfect, but it is consistent. Money determines viability, and often enough, the advertising and marketing blitzes it provides put a candidate over the edge. The Supreme Court ruling favoring Citizens United—unlimited, undisclosed funds—opened the floodgates to corporate influence and demolished practical campaign finance rules (6) in a way that cements the absolute necessity for politicians to go to the rich for help forevermore.

Rick Perry provides a useful case in point. First, he became a millionaire only after he was elected into office: records show his biggest real estate sales were made to political allies and friends while governor (7). Second, the unlimited fund-raising Super-PAC “Make Us Great Again” is officially independent of Rick Perry, as required by what now stands in for campaign finance regulation, but the governor’s picture and record are all over it, and it is run by the man who was once Perry’s chief of staff, a man who co-owns a New Hampshire island with Perry’s campaign strategist (8). Third, while Perry shrugged off Michelle Bachmann’s accusation that he mandated the Gardasil vaccine as quid pro quo for Merck’s campaign donation, declaring, “If you’re saying that I can be bought for $5,000, I’m offended,” a very quick investigation suggests that, in fact, Merck had to buy him for quite a bit more—$30,000 for him and $380,000 for the Republican Governors Association which he came to chair (9). The larger point is that money not only influences whom Americans choose to vote for, it skews the way we are represented, favoring in a craven and obvious way corporate and individual wealth. Rick Perry is only the latest example of corporate interests rewarding politicians and politicians rewarding corporate interests.

The sheen of corruption here suggests the vulnerability of our democratic system. And if we can’t trust our democracy, if our elected officials have stopped listening to the drumbeat of frustration, if our elected officials aren’t aware that these sickly bargains they’ve been making to retain office are beyond the pale, then we take to the streets to remind them.

The profit motive has an inappropriate primacy in American institutions, beliefs and society. Look at what’s happened to our workforce. To maximize profits, many corporations have outsourced or relocated to other countries or free trade zones; and then they apply pressure to state legislatures to relax taxes and regulation so they can compete with companies overseas where capital and labor costs are so much less. Either way, the downward pressure on wages and the health and safety conditions of workplaces has not been counteracted by tariffs or trade restrictions on the part of our government; it has instead opened further free trade zones and competed, state to state, to provide the most business friendly environment, as when Boeing left Washington state for South Carolina’s no-union state (10). Wal-mart, when its workers threaten to unionize, simply closes shop and leaves rather than concede to demands for reasonable benefits (11). The political attempt to villanize unions is a step towards exposing Americans still further to the downward pressure on wages and conditions, and taking away the one lever workers have to tilt the law of supply and demand such that it accounts for their value. Workers’ rights need protection; instead government has been working in both direct and indirect ways to award businesses the freedom and power to exploit them.

The profit motive has been bad for the environment. After the Deepwater Horizon oil spill, the hue and cry for change was persistent and loud. No one outwardly defended the shoddy oversight that led to the largest oil spill in natural history. It was the kind of event that might remind our government of its custodial relationship to land and water and remind it to demand effective mechanisms to prevent (if not entirely avoid) such disasters. What government did do was place a six month moratorium on offshore oil drilling. After that, the only policy change in the regulation of oil drilling was that Florida Governor Charlie Crist called for a special session to ban offshore drilling in state waters. The legislature rejected it (12). In other words, despite the fact that no one openly defended the poorly regulated conditions that led to such a disaster, and despite the fact that voters were furious, aggrieved or paupered depending on their locale, nothing changed. Not only does offshore drilling continue, but oversight was in no practical way improved. The profit motive quietly but steadily urged companies to make money, with as little cost as possible, off the supply of oil so in demand.

The profit motive has destabilized money itself. After the Glass-Steagall Act was repealed in 1987, banks were given free reign to take enormous risks with other people’s money, reaping the rewards of such risks without incurring the costs, which would be absorbed by Federal Deposit Insurance (FDIC). As the riskiest investments can realize greatest returns, banks turned to ever-riskier financial innovations, now a hitlist of stupidity: mortgage-backed securities, sub-prime loans, collateralized debt obligations, structured investment vehicles. Despite the housing collapse that resulted, deepening the recession and causing an entire market to compete with foreclosure prices, the only return to banking regulations and protections such as we once knew is a weak Volcker rule coming out this week, which seems to allow the conflict of interest between lending and investing to continue (13). Why isn’t the government pushing harder on something that continues to wreak havoc on our economy? The answer, of course, is It’s complicated, as all the strange terms in this paragraph indicate, an answer that provides great cover to keep the regulatory checks loose.

Health care is perhaps the most obvious example of a profit motive where it doesn’t belong. If an insurance carrier is to make a profit, it does so by taking in more than it gives out. In practice, it does so by shutting out the sickest patients and denying coverage whenever possible. It does so by raising premiums when people get sick, or by canceling a policy altogether when it’s needed most (14). This is theoretically the best way to make a profit in the industry, and the best way to provide stockholders, who expect growth every quarter, a good return on investments; and in practice it happens all too often. One can imagine the kind of urgency that life or death situations have on the law of supply and demand, and health insurance and drug companies take advantage. While medical problems account for more than sixty percent of American bankruptcies (15), health insurance companies are “into a third year of record profits.” (16) Yet attempted adjustments have been decried as assaults on liberty: Senator Ron Johnson, for example, called “ObamaCare” “the greatest single assault on our freedom in my lifetime.” (17) But capitalism is not democracy, and it needs its curbs. If insurers could make a small profit while ensuring needed access to otherwise out-of-reach medical treatments, then perhaps our nation’s citizens could stand idly by; but that’s not what’s happening.

Corporations are under incredible pressure to turn profit and the wealthy are lauded for cultivating the profits they earn. But profits should not be the keystone to our society. While profits do indeed do many of the things we want them to—rewarding innovation and hard work, filling needs and fulfilling desires—the profit motive should not go unchecked. On its own, it has proven harmful to our citizens and our country in so many ways. The solution is the invisible hand must not be a free hand, but one guided by conscious, collective interests. The government must provide regulation, targeted taxes, tariffs and, at times, laws to provide this guidance. Otherwise, the invisible hand too readily becomes a claw, snatching what it can.

Right now our government is too tightly in the thrall and grasp of this hand. I support Occupy Wall Street because I want our government, finally, to recognize that profits are not people, and that it’s the people who deserve the government’s protection and aid.

ENDNOTES:

(1) Gilmore, Susan. “County expects to save millions on health-care.” The Seattle Times. 21 September, 2011.

(2) Hunnicutt, Benjamin Kline. Kellogg's Six-Hour Day. Temple University Press, Philadelphia: 1996. Back cover. Print.

(3) "Fast Facts." National Center for Education Statistics. U.S. Department of Education, 2011. Web. 16 Oct 2011. http://nces.ed.gov/fastfacts/display.asp?id=37.

(4) Hamby, Peter. "Senator Calls Obama World’s Best Salesman of Socialism." CNN Politics. CNN, 27/02/2009. Web. 16 Oct 2011. http://politicalticker.blogs.cnn.com/2009/02/27/senator-calls-obama-world’s-best-salesman-of-socialism/.

(5) Tocqueville, Alexis de, and Thomas Bender. Democracy In America. McGraw-Hill Humanities/Social Sciences/Languages, 1981. Print. 136.

(6) "Editorial: Beware the super PAC." Washington Post. 2 September 2011. Web. 16 Oct. 2011. http://www.washingtonpost.com/opinions/beware-the-super-pac/2011/08/31/gIQAdGB5wJ_story.html.

(7) Fitzgerald, Alison. "Perry Made More Than a Million on Real Estate While in Office." Bloomberg. 18 August 2011. Web. 16 Oct. 2011. http://www.bloomberg.com/news/2011-08-19/perry-made-more-than-a-million-on-real-estate-while-in-office.html.

(8) Isikoff, Michael. “’Independent’? Maybe, but Super PAC Heavily Backs Perry.” MSNBC.com. 17 August 2011. Web. 16 Oct. 2011.

(9) Eggen, Dan. "Rick Perry and HPV vaccine-maker have deep financial ties." Washington Post. 13 September 2011. Web. 16 Oct. 2011. http://www.washingtonpost.com/politics/perry-has-deep-financial-ties-to-maker-of-hpv-vaccine/2011/09/13/gIQAVKKqPK_story.html.

(10) Radil, Susan. "Union 'Hostage Situation' Prompted Boeing's Move To South Carolina." KUOW. 26 September 2011. Radio transcript. 16 Oct. 2011. http://www.kuow.org/program.php?id=24664.

(11) UFCW. "Wal-Mart Closes Store to Avoid Union." Political Affairs. 12 February 2005. Web. 16 Oct 2011. http://www.politicalaffairs.net/wal-mart-closes-store-to-avoid-union/.
Olsson, Karen. "Up Against Wal-mart." Mother Jones. March/April 2003. Web. 16 Oct. 2011. http://motherjones.com/politics/2003/03/against-wal-mart.

(12) Walsh, Bryan. "The BP Oil Spill, One Year On: Forgetting the Lessons of Drilling in the Gulf." Time Magazine. 20 April 2010. Web. 16 Oct. 2011. http://www.time.com/time/health/article/0,8599,2066233,00.html.

(13) Farrell, Maureen. "Volcker rule raises more questions." CNN Money. 11 October 2011. Web. 16 Oct. 2011. http://money.cnn.com/2011/10/11/markets/volcker_rule_banks/index.htm.

(14) Vick, Karl. "As 'Rescissions' Spawn Outrage, Health Insurers Cite Fraud Control." Washington Post. 8 September 2009. Web. 16 Oct. 2011. http://www.washingtonpost.com/wp-dyn/content/article/2009/09/07/AR2009090702455.html.

(15) Tamkins, Theresa. "Medical bills prompt more than 60 percent of U.S. bankruptcies." CNN Health. 5 June 2009: n. page. Web. 16 Oct. 2011. http://articles.cnn.com/2009-06-05/health/bankruptcy.medical.bills_1_medical-bills-bankruptcies-health-insurance?_s=PM:HEALTH.

(16) Abelson, Reed. "Health Insurers Making Record Profits as Many Postpone Care." The New York Times. 13 May 2011. Web. 16 Oct. 2011. http://www.nytimes.com/2011/05/14/business/14health.html.

(17) Johnson, Ron. "ObamaCare and Carey’s Heart." Wall Street Journal. 23 March 2011. Web. 16 Oct. 2011. http://online.wsj.com/article/SB10001424052748704662604576202203050970010.html?mod=WSJ_Opinion_LEADTop.