#1. Occupy’s 1% and its Wall Street


#1. Occupy’s 1% and its Wall Street

Who are the 1% in real life? On the one hand, they are real people, doing real things, affecting other people. On the other hand, they are players in a game not of their own creation, only doing what come naturally to persons in their position in an economic structure that is today globally dominant and unavoidable on an individual basis. Being clear on who/what is responsible for the gross inequality and injustice Occupy and similar protests are targeting makes a real difference, both politically and in policy.

Three examples:

Wall Street as High-Income Individuals

Shaila Dewan and Robert Sebeloff’s discussion (New York City January 15, 2012, p. 1: “One Percent, Many Variations) of who the top 1% of income earners are is interesting, but misses the point Occupy Wall Street tries to make. The Occupiers are not concerned with how much more doctors or dentists make than high school dropout or an immigrant laborer; they’re concerned with how much more of the wealth of our country the holders of power in our economy have compared to the rest of us. Dentists may make 12 times the median income in Manhattan, but that’s not because the manipulate the financial system, use their wealth to accumulate ever more wealth, , use their economic positions to fool and hold down the rest of us. There’s all the difference in the world between a physician using his or her special training and skills to provide a useful service to patients, and a hedge fund manager creating derivatives to play the market and make a killing off the unwary.

The 1% – 99% slogan needs to be seen as another formulation of the Occupy Wall Street slogan: they are both intended to highlight the unfair relations of power and wealth between what generations of scholars and reformers have called the power elite, or in populist parlance the ruling class.

It’s not the simple dollar amount reported on income tax returns to the government that counts, it’s how that amount is earned, whether it’s from clipping coupons on inherited stock ownership or capital gains from speculating in the market while sitting in an office on wall street, accumulating wealth by buying and selling what others have toiled to produce. It matters whether the income comes from Bain Capital or fixing real teeth. It’s the inequality in the relations of power and sources of wealth that’s being challenged, not simply how much more one person earns than another.

Gordon Gekko had it astonishingly right, even before Occupy Wall Street popularized the 1%-formulation:

“The richest one percent of this country owns half our country’s wealth, five trillion dollars. One third of that comes from hard work, two thirds comes from inheritance, interest on interest accumulating to widows and idiot sons and what I do, stock and real estate speculation. It’s bullshit. You got ninety percent of the American public out there with little or no net worth. I create nothing. I own. We make the rules, pal. …It’s a zero sum game, somebody wins, somebody loses. Money itself isn’t lost or made, it’s simply transferred from one perception to another”.

And income reported to the Internal Revenue Service gives a notoriously unreliable picture as to this income:

“Average Americans get most of their income from wages and salaries. Almost all this income faces paycheck withholding. The result: Only 1 percent of the taxes due on wages and salary, the new IRS study reports, goes uncollected.
Rich Americans, by contrast, collect huge chunks of their annual income from capital gains, business ownership, and other sources of income that face neither rigorous reporting mandates or withholding.
Tax evasion for the income category that includes capital gains and private equity partnerships, the IRS calculates, ran at an 11 percent rate in 2006, ten times the evasion rate for wages and salaries”.

Wall Street as Avaricious Corporations

John a. powell & Stephen Menendian, in a thoughtful essay, use the term “corporate power” as the “behemoth in the boardroom,” the force, the 1% (although they don’t use that term) , that should be the target of change. They make the important point that the line (i.e. 1%/99% ) is not between private and public, individuals vs. the government. The target should not include “entrepreneurs, small business owners, farmers, workers… [who] are all swept up into the “private sphere.”

Being clear on what “private” means is very important politically and ideologically. The sanctity of the personal private is a cornerstone of democratic belief, an essential aspect of what freedom means. Applying “private” indiscriminately to Goldman Sachs, the small business owner, the corner grocer, and the individual person, gives Goldman Sachs a cloak of moral standing it does not deserve. So far so good.

But what is the line that divides Goldman Sachs from the small business owner? Powell and Menendian suggest it is “corporate power,” but they explicitly deny that their position is anti-capital: “the case against corporations is not anti-capital.” But of course it is “anti-capital:” what differentiates Goldman Sachs and the 1% from the small business owner and farmers and workers is the ownership and control of capital. “Ordinary citizens” are not “powerful corporate actors” because they don’t control capital, the wealth that would give them power. And while some, perhaps most, owners of capital use the corporate form, which is specifically designed to permit the aggregation of capital and its use to accumulate further capital, some don’t; it’s not the legal form that counts. Hedge funds control capital whether they are incorporated or not.

Being clear on the source of the undesired power of corporations is important politically. Acknowledging the reality of capital, and the capitalist system that enshrines its use, naming the system, clarifies who’s the 1%, who’s “Wall Street,” and avoids the public/private trap. That’s why conservatives shy away from the use of the words. The conservatives realize that. As Peter Dreier has pointed out,
“Frank Luntz [Republican strategist and Fox News commentator, . … urged Republican politicians to avoid using the word “capitalism…I’m trying to get that word removed and we’re replacing it with either ‘economic freedom’ or ‘free market,’” Luntz said. ‘The public…still prefers capitalism to socialism, but they think capitalism is immoral. And if we’re seen as defenders of quote, Wall Street, end quote, we’ve got a problem.'”

Words matter.

A final example:

Wall Street as “intermediary.”

Adam Davidson, the Planet Money editor at NPR, asks us to imagine life without Wall Street. What would we have?

“THE POOR WOULD STAY POOR
THERE WOULD BE NO MIDDLE CLASS
LOTS OF AWESOME THINGS WOULD NEVER HAPPEN [including] Just about anything that makes you happy — whether it’s a lifesaving drug or just the artisanal goat cheese at the shop around the corner”.

And how does he come to this conclusion? By a simple parenthesis defining “Wall Street” and what it does:

“The country’s largest investment banks, commercial banks and a few big insurance companies (what we generally refer to as Wall Street) play the crucial role of intermediation — matching borrowers with lenders.”

Gordon Gekko would be surprised to hear someone describing what he does as simply “matching borrowers and lenders. Hardly what a derivative does, or what a trader at Goldman Sachs does, unless you consider what a bookie does as matching one bettor with another and thus creating a middle class and “lots of awesome things.”

The problem is in defining “Wall Street.” If you define it simply as an intermediary, doing nothing on its own account, not speculating, not creating and destroying bubbles, not playing key roles in political decisions on policy formation, etc. then you may bless it as “indispensible,” as Adam Davidson does. That simply isn’t the definition Occupy, or most of “us,” use. And it serves to reinforce the strength of the 1%.
1% = Wall Street = Power Elite = Ruling Class?

The 1% discussion that Occupy Wall Street has sharply pushed onto the political consciousness is not something new, but it seems to me striking how disassociated it is from the long history of concern with the distribution of power in society. Books like C. Wright Mills’ The Power Elite, Robert Dahl’s Who Governs?, Barbara Ehrenreich’s Fear of Falling, Michael Zweig’s The Working Class Majority, G. William Domhoff’s Who Rules America? Adolph Reed Jr.’s , the extensive work of Erik Olin Wright, Bertell Ollman, Tony Giddens, not to mention the classics, Max Weber and Karl Marx, are all directly relevant bit more theory in some of the discussions would not be amiss.

But the point is not to push for more footnotes, but to stand back and see, without a broader context, how much work like that cited above narrows the scope of the discussion that Occupy Wall Street wishes to raise. Central to that discussion are three points:
* A moral reaction to the increased inequality of groups within our society; and
* A recognition that that inequality is the result of specific actions of specific actors, and not the result of any random pattern or iron law of nature or economics, and
* That something should and can be done about remedying it.

Lack of clarity as to who those specific actors are and what they do undercuts the impact of Occupy’s work, essentially depoliticizes it

To put it bluntly: the Occupy analysis, and the long line of thinking and action that has preceded it, while disagreeing on many details, see a similar pattern:

1% = “Wall Street” = Gordon Gekko’s winners = the power elite = the ruling class.

One thought on “#1. Occupy’s 1% and its Wall Street

  1. Just watched some clips from Michael Moore’s 2009 film Capitalism: A Love Story. It is amazing how we collectively swallow the BS ladled out by the 1%, even when they laugh at us like Gordon Gecko.

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