The Occupy Wall Street protest selected the right issue, but chose the wrong culprit. The financial melt down which has shrunk our middle class is a real problem. However, they are protesting the wrong villain. The Wall Street bankers have not changed. They have just extended the reach of Adam Smith’s invisible hand into the wealth of a global economy. Perhaps, they should be lobbying to close the borders to make capitalism more manageable. Capitalist have not changed. The system has just grown to a new level of greed.
That is not something to protest about. The evil nature of man is taught in the bible as the doctrine of original sin. Another Adam fell to this temptation in the Garden of Eden, and ever since men have been grabbing for the biggest apple in the barrel. This motivation drives our capitalistic system. The system was built around a cast of characters that compete with one another in a high stakes game of poker. When bankers try to maximize profits they are just working within the system to do what they are suppose to do. The Occupy Wall Street crowd is yelling fowl because the repeal of the Glass-Steagall Act of 1932 merged the banks with the investment brokers. This infusion of cash is real, but it is my opinion that the real cash did not come from domestic leveraging. Glass Steagell was removed because it had outlived its usefulness. The opportunities that deregulation opened made the global economy possible. The real cash and speculation was fueled by leveraging our domestic debt against the growth of the global economy. No one knew the limits so the bankers sold whatever they could in race to find the boundaries of the market.
If we were to change the system we would also need to change the very nature of man. So how do we stop history from repeating itself? It is in the interest of these bankers to protect the middle class. This allows for more transactions, more commissions, and more players in the game. Just as Glass Steagell once regulated banking after the stock market crash, we need regulations now to insure small and numerous transactions to protect our middle class without jeopardizing our credit markets. We do not need a new economic system. Our only hope for a new system would be an internal revolution of the heart. A new nature could allow for a more cooperative system. This is why my language of virtues BLOG culminates with the virtue of reverence in world history.
This cooperative system does not seem to work in other countries. I have traveled to China, Latin America, and Egypt. Capitalism seems to work best in governments where people participate in government. The Chinese economic revolution and Arab spring seems to validate this. These changes in the world economy are inevitable with the explosion of information available through social media. Very few countries can do what North Korea is currently doing in Libya. They are forbidding 200 citizens who were living there during Gadafi's Regime to return home. They are concerned about how information about the Arab spring will affect their people. The North Korean Government is very naïve, if they think they can hold this information back in this information age.
The world economy is here to stay because people desire the bigger apples at the bottom of the barrel. The desire to better ourselves is a pragmatic solution to a competitive, capitalistic economy. People become aware of other people’s conveniences and luxuries because of the information explosion available through cell phones. There is no way to stop this progress because the inherent benefits of technology are advantageous to the rich as well as the middle class. The wealthy need the middle class to use this technology to make even more money. When the middle class grows the rich make the maximum money. They are not what Joaquin Posada likes to call marshmallow eaters. This metaphor comes from the famous Standford research project where pre-schoolers were placed in a room by them selves and told not to eat a marshmallow. Adult marshmallow eaters will take a quick $5 profit instead of delaying gratification to make a $20 profit from their investment later. A short cut, quick buck, marshmallow minded strategy will not maximize profits. More profits can be generated by the wealthy selling their goods to an ever expanding affluent market than by squeezing every bit of money from the poor. It is important that government guards against short sighted capitalist by providing incentives or rules for them to sacrifice immediate gratification for larger profits over the long term.
My former boss, Bruce Josten at the US Chamber of Commerce used to tell me that most business owners desire a level playing field above anything else. What does a level playing field mean? A level playing field means that government manipulation of the capitalist system should have the same impact on all businesses. The good intentions of government many times can be confounded by layers of self serving bureaucracy, and blind spots of favoritism that corporate lawyers are trained to exploit. Perhaps this is where some of the fervor of the Occupy Wall Street crowd is deserved. These abuses are marginal compared to the growth of the global economy. Like Glass Steagel, blaming the financial crisis on corporate lawyers is not the root of the issue. The corporate lawyers are the wrong villain again. The real villain, human nature, can not be regulated or taxed. The real villain can only be changed by their own desires. A system of balanced competing parties can protect the middle class and an affluent economy here, and around the world. As long as those parties play by the rules.