The real points for the protesters
William Miller | Monday, October 31, 2011
The Occupy Wall Street protests started out as a small movement, but have since grown into an international phenomenon. This has been fueled by public anger over slow economic growth in developed countries, a highly disproportional distribution of wealth and continued frustration with the role that money plays in determining politics.
Many of these frustrations are justified. It is true that big banks received a bailout that kept them in business while Main Street suffered. It is true that wealth is disproportionately concentrated in the hands of a few wealthy individuals. And it is true that money greases the wheels of power in ways that are both unfair and undemocratic.
Unfortunately, the Occupy Wall Street protesters have not yet found a cohesive or logical set of policy prescriptions. I personally am a moderate conservative, yet I sympathize with the sentiment of these protests. This is my attempt to give the protesters a message that could actually lead to constructive changes in our society.
First, the protesters need to remember that the American Dream is founded on the idea that it’s okay to become wealthy if you are smart and willing to work hard. Many people in the “One percent,” such as Bill Gates, came from modest backgrounds to acquire enormous wealth. Did he deserve it? Of course he did.
Mr. Gates revolutionized the world, and our capitalist system rewards people whose brilliance can create innovations like the personal computer. What’s more, taxing Mr. Gates at a higher rate would not significantly alter the distribution of wealth in this country.
Would it have some impact? Yes. Would that impact be large enough to undo the fact that a large amount of wealth is concentrated in the hands of a few people? No.
That is, of course, unless we taxed the wealthy at a punitively high rate, which seems incongruous with the liberal economic system that has made America so successful. What’s more, the wealthy already pay a majority of all taxes in our country, while just around half of all Americans pay no income tax. Raising taxes on the rich is an ineffective and potentially unfair way to solve the problems facing our nation.
Second, it is more productive to focus on building up from the bottom rather than tearing down from the top. While it is debatable whether or not income growth has stagnated over the last 20 years or so (I’ve read studies with wildly different conclusions on this point), it is true that workers need to acquire new and better skills to compete in a global economy.
The most effective way to do this is through educational reform, which should focus on opening up school choice for parents and rewarding excellent teachers through some form of merit-based system. The solution is not necessarily more money — per-pupil spending has doubled in the last 40 years, yet high school graduation rates have stubbornly remained stuck at 40 percent — but the political will to reform a system that consistently fails many students.
What’s more, tax reform has to be part of this story. U.S. corporations currently pay a 35 percent tax on their earnings, which, coupled with state taxes, means that U.S. companies pay the highest taxes in the developed world. What’s more, the tax system is so riddled with loopholes that some companies end up paying almost no taxes, while others are stuck paying obscenely high rates.
Closing loopholes while lowering the overall tax rate would help stimulate the economy while simultaneously raising more revenue. This would help close our budget deficit while also spurring more companies to base their operations in the U.S., thus bringing in the type of white collar jobs that contribute to a strong and prosperous middle class.
Finally, the Occupy Wall Street protesters should put together a set of serious proposals detailing how they would like to regulate the financial sector.
It is on this issue that I am most skeptical. Financial services is one of the things that the U.S. does best, and more regulations could force this profitable industry to begin moving overseas. However, I am willing to listen to suggestions, and am open to persuasion, so long as the proposals are detailed and aimed to reduce economy-wide risk rather than punish success.
Few would argue that we have reached the perfect equilibrium of regulation. Some would say we need more, others less, but until clear lines have been drawn in the debate it is impossible to determine where we stand.
I have no doubt that the Occupy Wall Street movement will continue to spread in the near future. The sentiment behind it is too strong, and the slogan of “ending corporate greed” is too catchy for anything else to happen. Unfortunately, sentiment and slogans make great politics and terrible policy. As a result, the movement is destined to flounder unless it can make a serious contribution to the ongoing discussion about our country’s future.
The steps I have outlined above, including my suggested policies, would go a long way towards legitimizing the movement. The best way to grow our country is not by tearing down those who have succeeded, but by helping even more people succeed. Only time will tell whether we focus on the former or the latter.
William Miller is a freshman. He can be reached at [email protected]
The views expressed in this column are those of the author and not necessarily those of The Observer.