Sunday, November 6, 2011

The 1%

The Occupy Wall Street movement, or the We are the 99% movement, speaks to a real issue in the country and the world, but it's violence and nutty fringe puts me off.  It is no surprise that the Loony Left has joined the protests in Oakland, Wall Street, etc.  It seems to me that they live in a paranoid fantasy world with Good Guys and Bad Guys, and they give their personal lives meaning by hating and fighting the Bad Guys.  It has been said that the movement has no coherent agenda, but that is primarily because the agendas that are spoken by the protesters are old fashioned far left revolutionary rhetoric that has long ago been dismissed by America and the world.  The failure of Communism never seemed to reach into the brains of some of the loonier elements of the protesters.  

I have no problem with how much money anyone makes.  The more the merrier. Good for them.  It is part of the freedom of America and the freedom of the capitalist economy.  People are free to make fortunes.  That is a good thing.

The only problem I have with people making fortunes is if they do so by damaging others.  I clearly have a problem with meth and heroin dealers making their fortunes because they do so by the ruination of millions of lives.  I have a problem with criminals of all types who create their wealth by hurting others.  I have a problem with the fortunes made by the reckless financial industry who found ways to pull vast sums of money out of the middle class's pension funds, homes, and lives by creating financial casinos that generated personal fortunes for them, but ended up creating the Great Recession and scores of millions of unemployed in America and the developed world.   

But, do I have a problem with the 1% per se?  No.

The left wing Mother Jones magazine published an interesting chart showing the makeup of the upper 1%.  The top category is non-financial executives, managers, and supervisors - 31%.  Next is the medical profession at 15.7%.  Only then does the financial sector show up at 13.9%.  Then you get lawyers, engineers, scientists, real estate, entrepreneurs, arts, government, farmers, teachers.  

How does it become such a wide range of people?  They get their wealth via investments, primarily.  Their money makes them money.  

So, I hate to see this political movement call upon the old, tired and toxic appeals to envy and jealousy. I think the financial industry still is in need of reform by regulation and oversight because their unfettered actions and greed have crashed the economies of the developed world, not because they are making too much money.  The outsized fortunes that the financial people are making come from an incentive system that rewards financial transactions that put the economies of the world at risk rather than do what the financial industry is supposed to do, which is support and spur the economy.  It has become out of balance.

The key question in my mind back in the '80s when the Left Wing was so upset by the spirit of Reaganism was this.  Which is better, a system that allows the top end to grow its wealth 300% and also allows the lower and middle classes to grow their incomes 2, 3, 5% - or a system that has the upper end stay the same or lose wealth, but the lower and middle classes also stay the same or lose income.  I think that describes the difference between Capitalism (everyone grows but the top grows faster) and Socialism (everyone stays about the same but slowly declines in a stagnant system).

We ended up with an overly deregulated capitalistic system where the top end grew by leaps and bounds, and the lower and middle stayed very much the same.  The expanding economy didn't lift all boats, as it turned out.  

Finding the balance is always the result of competing ideas and political forces.  We had nearly thirty years of Reaganomics which crashed into the wall in 2008.  We are experimenting with Obamanomics now with his attempt to grow the government and control the markets.  The angers on the Left and Right today are largely inchoate, naive, and fairly stupid.  But they speak to real issues to balance the need for growth and freedom to innovate and create, and the need for the society as a whole to feel they are operating in a fair world that isn't stacked against them.