November 03, 2011

The Wall Street Protests

The phenomenon of the demonstrations around Wall Street and elsewhere seems to have taken everyone by surprise. I applaud demonstrations against corruption, unfair trading, and excesses, particularly where they benefit a small elite at the expense of the majority. Protest is our ancient prophetic tradition. I know they will get nowhere. They will fizzle out. But the principle of decrying corruption and inequality is a good one.

The ongoing sore of capitalist excesses in the USA has got worse, not better since the crash of 2008. Books and films have portrayed the way men who brought down companies, cost thousands their jobs, forced the USA government to pump billions into the economy, did inestimable damage, yet simply walked away with billions in bonuses and not one of them has been prosecuted. Government officials, top regulators who advised and oversaw, failed to do both but still kept their positions and their pay checks. It seems there was neither responsibility, accountability, nor repercussion in the world of New Capitalism where supposedly markets rewarded gain and penalized failure but it seems in reality just dished out fortunes regardless.

Capitalism has now become another word for cronyism, corruption, and protection from the consequences of one's failures. Bonuses continue to be so excessive they cannot possibly be justified. A person who clicks some keys on a computer for a few hours a day, moving vast sums of money about, may be rewarded with millions of dollars, whereas someone spending hours every day, constantly under pressure, struggling with reluctant pupils, trying to inspire them, care for them, nurture them, and impart valuable information that is going to be crucial for the rest of their lives is paid a relative pittance. If the argument is that risk should be rewarded, then risk should also be punished.

I do not oppose capitalism. I believe in rewarding effort. Societies that do tend to have more money for social welfare and helping the less fortunate than do those which burden themselves with massively subsidized workforces and protected industries. I support responsible and moral capitalism, with some proportion and concept of relative merit.

Capitalism might be sick. But Democrat ideological rigidity in the USA was just as much a cause of the whole cheap mortgage bubble and collapse. It was the Democrat government that chose not penalize individual irresponsibility and went on paying inflated bonuses with government money.

Once upon time, governments employed under 10% of the workforce in developed countries. Now they account for almost 40%. Once workers needed union protection against rogue employers, terrible conditions, violence, and starvation. Now they are often provided with a greater degree of job security, protected pensions, health care, and paid holidays than much of the private sector. Then what happens? Civil servants, government workers, protected employees care not whether they treat their victims to long lines, curt responses, and blasé attitudes. They fall back on their convenient job security and rely on their unions to fight their case for better conditions and emoluments. If you do a good job as a teacher or civil servant, if you treat other humans better, you deserve better reward and treatment in return. I agree that where there is reward it should be fair, open, and transparent, rather than depend on favoritism, cronyism, or racial preferment, which is every bit as evil and unfair as the capitalist cronyism and nepotism. The fact is that both sides are to blame. The protests recognize the disease and they are right to draw public attention to it.

I was glad the police cut off the usual attempt of thugs and hooligans to use anti-capitalism demonstrations as an excuse for violence and vandalism. But I have a complaint against the peaceful protestors too. Too many of them are ideologically brainwashed and intellectually dishonest. I hold no brief for Geraldo Rivera but whereas the usual "personalities" of the left, like Michael Moore were welcomed he was shouted down simply because he appears on Fox News. Why? Because Fox News is hated by the left in the USA precisely because it offers a different perspective on the news and politics.

Surely a balanced press, alternative viewpoints, is healthy. This one of the reasons I, as a Jew, feel so much more at ease in New York than I ever did in London--because one is not overpowered by a single dominant news chorus coming from the BBC. Here one can hear different points of view. Once I see ideology getting involved in such demonstrations I know they are doomed, because they are no longer genuine and honest but animated by only one point of view. That is precisely what is wrong with American politics. You are either Republican or Democrat. Pro-private-enterprise or pro-big-government. There is virtually no balanced, engaged debate. I use to think this was only true of the way Israel is regarded, but now I see it is a universal problem.

Despite my cynicism I do believe we must make our voices heard. We must play the role of prophet, however unpopular and however accepted it may be, for things can and do eventually change.

In theory, built into our religious system is constant reevaluation--every New Month, every Rosh Hashana, whenever we go back and start to read the Torah again from the beginning. Trouble is I just don't see it happening, anywhere! The world keeps on turning and we keep on dreaming.

* * *
On a different topic, I think you would be interested in Judge Robert Goldstone's article in the New York Times about Israel and Apartheid, in view of the intellectually and morally dishonest conference about to be held in South Africa, attacking Israel.

7 Comments:

At 9:46 AM , Blogger micha said...

Do they help the small elite at the expense of the masses? Don't the masses have pensions, IRAs and 401(k)s that are comprised of funds that rely on such shenanigans?

Very little of the common man's money is invested among the small traders compared to the money intrusted to professional investor firms.

This error is the same shortsidedness that leads them to think that boycotting someone or making his business difficult will hurt the CEO of the firm more than the mailroom guys, security, and executive assistants. When BofA lays off thousands of people, we're talking middle managers downward. It's easier to convince yourself you can limp by with 75 programmers where you used to have 100 than to convince yourself you can have one manager running the projects that used to be handled by two.

-micha

 
At 9:24 AM , Blogger Rabbi Jeremy Rosen said...

Micha:
Thats very interesting. Thank you Micha. Would you mind expanding and suggesting a cure?
Jeremy

 
At 10:45 AM , Blogger micha said...

I wouldn't mind suggesting a cure, as it would mean I knew of one...

As I see it...

Globalization is inevitable, a consequence of telecommunications, cheaper transportation and shipping, etc... This means that any country financially above the world mean will be pulled down toward the mean. If the US ran on natural resources, it would have wealth that would be safe from this trend. But America's greatest resource is its culture, which created the right atmosphere of entrepreneurial spirit and creative drive. Which it greatly exported. (Much to the dismay of people like Osama bin Laden y"sh, who lamented their youth's absorbing this culture.)

Not that the US would be /at/ mean. Bangalore will never match Philly (to pick a city of similar size) in operating according to the American spirit. Just that the gap between the American standard of living and the world average would naturally shrink.

So, back around 2001, before 9/11 we saw the markets starting to tank. 9/11 caused a major dip, but the truth is that by late Nov the market was about where the curve was heading in August. Enron, Parmalat, K-Mart were among the bigger companies that declared bankrupcy.

Now, had we had a free market, the loss of wealth would have meant a tighter housing market. Instead, the Democrats forced banks to make loans to risk creditors. No one wants to tell their constituents that it was time for austerity. So we created a housing bubble.

Now, had we had a more controlled economy, someone would have been watching what the banks did with the risk they were forced to swallow. But the Republicans resisted that, and the banks and Wall Street traders had free reign to sell each other their risk.

This in itself isn't evil. I would gladly buy a risk in one area in order to make some profit. As long as I didn't have so much risk in any one market that it would take me down. But then it turned out that the products being used to package the risk and profit on home mortgages were all based on a flawed model, one that assumed the housing trend was real and would continue, rather than being a bubble.

So, our legislative branch reached a compromise that by being a little of this and a little of that didn't actually follow any economic model. So that didn't work. And it created a situation Wall Streeters didn't see coming, so their tricks backfired.

Now we're a decade later, the pull toward mean is still there -- and yet our bubble created a large gap that will collapse.

 
At 2:15 PM , Anonymous dk said...

Jeremy,

My suggested cure is that instead of going for grand gestures, we all just try to do something helpful on our doorstep, even if this won't make headlines, good PR or give merchant bankers sleepless nights. Well, not immediately anyway.

For example, suppose a shul website announced that on Sunday afternoons they'd be hosting a cookery lesson on how to make vegetable soup -- just bring any vegetables and a pot? I appreciate that this idea holds little to no attraction for people who prefer to get behind banners, with other people and their banners, and do lots of marching and revolutionary singing because all of that is much, much more fun than chopping up carrots and swedes. That must be the reason why I have never seen home-made soup making advertised on any shul website, notwithstanding there sometimes being rather lengthy messages about the impact of global economic difficulties on ordinary people. Cheap, communal cooking is just as anti-capitalist as any street demonstration.

 
At 9:05 AM , Blogger micha said...

I think you meant to thank "DK" for their suggestion. And it is a great suggestion.

But...

There is still an element of class warfare there which I think is destructive. The American Dream is all about the mobile society of the US, that Herman Cain can grow up in an Atlanta slum and rise to be CEO of a large corporation, and to gain national recognition as an (absurdly implausible) presidential candidate.

Under Bush we split into Red vs Blue states. Mr Obama took that divisiveness and shifted it into class warfare, the haves vs the have-nots. That was part of my point in my previous post -- BofA "fatcats" are a minority of the bank, and the bank is busy making the little guy money. It's one economy, not two.

Yesterday I wrote a long post about globalization, and how it will force us to tighten our belts. That the economic woes we're going through were in the cards for over a decade, and the housing bubble was all about delaying the inevitable, combined with a Democrat-Republican compramise that created an economy that doesn't follow any coherent model.

I don't know where it went, because I don't see it on the comment chain now.

 
At 9:16 AM , Blogger Rabbi Jeremy Rosen said...

DK:

Yes I think thats an excellent idea. We can only work on these micro levels but they will all add up. The main thing is to ensure our voice is heard (though a fat lot of good it did the Prophets in their time)!!!

Jeremy

 
At 9:31 AM , Blogger micha said...

Ah, my earlier comment just got approved or something.

RJR:

Two things in my previous comment no longer make sense. Could you delete the bit about thanking DK rather than myself. Also could you remove the seifa wondering what happened to yesterday's post?

If you can, please reject this post and do so. If you cannot, leaving this request up will allow people to make more sense out of what I wrote.

 

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