Occupy protests in Canada and the birth of the "nothing burger"
Toronto, like Vancouver and most large cities, has been undergoing an “Occupy Protest”. Things have been largely peaceful in this offshoot of the Occupy Wall Street protests in New York. Perhaps the most significant media event occurred not at the protest, but on CBC. On Oct 6, Kevin O’Leary (Business journalism’s answer to Don Cherry), referred to the Occupy Wall Street protesters as “nothing burgers” and suggested that author Chris Hedges sounded like a “left-wing nutbar.” This caused a storm of complaints from viewers and a protest from Hedges.
It's not certain exactly what a “nothing burger” is, but it sure isn’t complementary. If O’Leary was simply reporting about individual protestors, he might have a point. Like many protests, I am sure that in addition to the well-educated and committed, the Occupy protests have their share of clueless idealists, trust fund babies, tourists, and people with nothing better to do.
But an ad hominem attack on protestors is beneath O’Leary.
What O’Leary needs to do is address the core issue – people feel that that social contract that has supported Western society (and capitalism) has started to unravel. From Roosevelt’s New deal to a couple of decades ago, people in the West, and particularly North America felt pretty certain that their children could have better lives than themselves, regardless from which social stratum they began.
Today, it is much harder to find good paying work for those with less than average education and ability. What work there is pays poorly compared to the cost of living. Meanwhile, wealth is becoming further and further concentrated in the upper strata of society. This is poisonous to a democracy since it allows the wealthy to effectively set their children up as new feudal lords. Note – Adam Smith, godfather of market economics warned of just this outcome.
To be sure, we are not yet on the verge of some kind of Marxist revolution. People in North America, including the poor, still have it much better than would be required for blood in the streets (praise be). It is not the 1930s. The trend, however, is not positive and people are much better informed than in the past. The protestors’ sentiment is valid, agreed Bank of Canada governor Mark Carney while speaking with Peter Mansbridge.
The real question is; what should be done? O’Leary seems to think everything is hunky dory, and we should leave well enough alone. This strikes me as deliberately naïve and obtuse. The occupy movement does not have a single voice or common vision. At worst, while individuals that identify with Occupy may be far more nuanced, the message often comes off as a simple “capitalism is bad”.
The protestors, and people on the Left in general, need to understand that capitalism is the goose that laid the golden egg for socialist endeavours. In that span from Roosevelt to today, well regulated capitalism generated the kind of wealth that allowed things like high quality universal education and health care in most Western economies (even the US has Medicare for the elderly). There isn’t really an alternative worth considering (in the short term). Capitalism works as a means of distributing resources, and more importantly, fostering innovation which is where real wealth is generated.
But the apologists for capitalism also need to understand two things. First, that capitalism is a tool for society and not the other way around. If it fails to deliver what the people expect, then they will demand change (whether there is a good alternative or not). Second, there is nothing natural or virtuous about unregulated markets. The capitalism that has existed for the last sixty years owes its existence to vast networks of laws, regulations, and policies.
The coercive power of states is used to protect assets and police intellectual property. Contracts are mediated by the courts. The education of workers and critical transportation infrastructure are funded by the state. Research and development is massively subsidized by the work of publicly funded universities. Finally, through redistributive processes, real class warfare is avoided.
So what is to be done? From easiest to hardest: adjust regulations on financial institutions and the investment industry, alter tax codes to favour productive activities, and increase the tax burden of the wealthiest citizens.
As demonstrated in the prior crisis, banks and investment firms have huge influence on the real economy. Regulations that enhance banking stability (e.g. higher reserve requirements) and reduce parasitic trading activity (e.g. Tobin Tax) should be a “no brainer”. We might also decide that no firm should be allowed to become “too big to fail”.
Such changes are only opposed, as far as I can tell, by members of the financial industry and their hangers-on. They will cry that somehow this will reduce liquidity and make it harder for businesses to start and grow. This canard can be ignored. Competition (one of the good things about capitalism) will ensure that loans are made to deserving borrowers. Capitalists should not fear regulation so long as the playing field with their competitors is level.
Tax codes today do not differentiate between money generated creating and delivering new or better goods and services (think Apple, Steve Jobs) and money simply invested in the market (I buy Suncor shares and they go up). The former deserves to be rewarded with lower tax rates since it involves risk, creativity and the provision of new and better things. The latter is just rent seeking behaviour (again, see Adam Smith) and should be taxed as income.
The hardest thing to implement will be to increase taxes on the wealthy. It will be difficult because the wealthy have loud voices and well paid lobbyists. It will be hard to get right because there is real hazard in taxing the wealthy. There are levels of taxation that will discourage work, investment, and economic activity. Based on sixty years of history, it is reasonable to assume we are nowhere near those levels now.
Regardless, our governments (Europe now, the US soon, and Canada if the price of our natural resources ever takes a serious dive) are going broke and they need the money. Since we know very well where the wealth is being concentrated we know where to go knocking for a bigger slice. There isn’t really another choice. The lower and middle classes are tapped out. And, the alternative, cutting the big spending programmes like education, old age security, and health care leads us back to the 1930s. It isn’t class warfare to suggest this. This is a time of crisis. Those with means need to step up. Of course we need to seek savings and efficiency where we can find it, but we will not nickel and dime our way out this.
None of the above is new or original. But, if the "Occupy" protest is to have a real policy impact, the movement needs to offer real, pragmatic solutions and demand government and industry come to the table. Mark Carney, at least, sounds like he will listen.