In the second interview in a series on the Occupy Wall Street movement, economics professor Jon Wisman talks about the economic concerns of the protestors and what reforms the government might enact.
What are the economic concerns of the Occupy Wall Street protestors?
The principal concerns seem to be that over the past 30 to 40 years, a very small percent of our society—they refer to the richest one percent—has managed to dramatically increase its income, wealth, and privilege and that it has used its greater influence over government to enable this to happen. We have, in this sense, become a plutocracy and to some extent the pretense of democracy has become a cover. At the same time, wages have done barely better than stagnate, school quality has deteriorated for most, life has become ever more stressful, and most children no longer grow up to live better, or even as well as, their parents. For far too many, the American dream has turned nightmarish.
Do you think this is a lasting movement?
Any response would, of course, be pure speculation. Some have predicted that winter temperatures will shut them down. In any event, what is critical is the extent to which they succeed in awakening the greater population to the fact that inequality has indeed exploded, reversing the trend toward greater equality that began in the 1930s and lasted into the mid 1970s.
Photo by David Shankbone.
The protestors have also targeted the huge corporations, and they seem to understand at some level the extent to which corporations are owned and controlled by the very rich. It is, after all, true that the wealthiest one percent of Americans own 49.3 percent of stocks and mutual funds, the richest 10 percent, 89.4 percent, leaving the bottom 90 percent with only 10.6 percent. This means that the interests of the very wealthy and corporate America are usually the same such that the unparalleled expansion of corporate lobbyists in Washington and corporate campaign contributions are merely extensions of the rich’s political power.
It should be noted that it took the crisis of the Great Depression to awaken the American electorate to the fact that the rich had gathered most of the fruits of the economic dynamism of the 1920s. As Milton Friedman put it, “Only a crisis—actual or perceived—produces real change.”
Do you think the government will enact any reforms? What kind of reforms could be put in place to address the concerns of the protestors?
If the influence of the protestors is such that very large numbers of candidates, running for public office on platforms to reset our society onto a path to greater equality, get elected, then the potential policies that could be implemented to do so are extensive.
- On the revenue side: A return to the progressive income tax schedules that were in place in the 1950s and 1960s; treating capital gains as regular taxable income; a financial transactions tax (now supported by the European Union); an excise tax on luxury goods (yachts, private airplanes, and goods such as extremely expensive houses, automobiles, and jewelry); a wealth tax; a low cap on mortgage interest deductions; elimination of farm support programs, a phased in energy tax.
- On the spending side (paid for by the revenue changes): increased spending on education at all levels; creation of neighborhood child-care centers; rebuilding infrastructure (roads, bridges, etc.); a more efficient and egalitarian health care system; eliminating welfare for the able-bodied and guaranteeing jobs and adequate training to enter the private sector for everyone.
- On the regulatory side, enforcement of worker rights to unionize and workplace safety; higher minimum wages; strict pollution controls; limitations on size of financial institutions; a reduction in the work week.