Occupying Wall Street: Where should things go from here?


Krugman is right, then possibly wrong: Praising the Occupy Wall Street protest, Paul Krugman provides an important service.

Early in this morning’s column, he reviews the way we all got here. Note the highlighted passage:
KRUGMAN (10/7/11): A weary cynicism, a belief that justice will never get served, has taken over much of our political debate—and, yes, I myself have sometimes succumbed. In the process, it has been easy to forget just how outrageous the story of our economic woes really is. So, in case you’ve forgotten, it was a play in three acts.

In the first act, bankers took advantage of deregulation to run wild (and pay themselves princely sums), inflating huge bubbles through reckless lending. In the second act, the bubbles burst—but bankers were bailed out by taxpayers, with remarkably few strings attached, even as ordinary workers continued to suffer the consequences of the bankers’ sins. And, in the third act, bankers showed their gratitude by turning on the people who had saved them, throwing their support—and the wealth they still possessed thanks to the bailouts—behind politicians who promised to keep their taxes low and dismantle the mild regulations erected in the aftermath of the crisis.

Given this history, how can you not applaud the protesters for finally taking a stand?
Have people really forgotten that history? Of course they have! More significantly, most people have never encountered so clear an account of these disgraceful events.

It’s always important to keep it simple. Krugman provides an important service by walking us through those events.

After that, we think his judgment may be wrong. We’re somewhat inclined to disagree with what he says in this passage:
KRUGMAN: A better critique of the protests is the absence of specific policy demands. It would probably be helpful if protesters could agree on at least a few main policy changes they would like to see enacted. But we shouldn’t make too much of the lack of specifics. It’s clear what kinds of things the Occupy Wall Street demonstrators want, and it’s really the job of policy intellectuals and politicians to fill in the details.

Rich Yeselson, a veteran organizer and historian of social movements, has suggested that debt relief for working Americans become a central plank of the protests. I’ll second that, because such relief, in addition to serving economic justice, could do a lot to help the economy recover. I’d suggest that protesters also demand infrastructure investment—not more tax cuts—to help create jobs. Neither proposal is going to become law in the current political climate, but the whole point of the protests is to change that political climate.
We’re inclined to disagree with that idea. In our view, this protest movement serves best as a form of “teach-in,” as a forum for helping the public understand the basic history—and the basic sociology—of our long, ongoing meltdown. As soon as specific proposals are made, many citizens who might be drawn in will find themselves getting pulled back.

Sadly, it gets even worse. As soon as Krugman endorses proposals, many others will instantly feel that they can’t. We think that’s a deeply unfortunate state of affairs. But such is the state of the culture.

We’ll discuss the coverage of this movement all next week. But the best thing this movement has done is this: It has redefined our political math.

Over the past dozen years, our standard political math has all turned on 50/50. We’re a 50/50, tribal nation—half red and half blue.

The Occupy Wall Street movement has pushed an important new math—99/1, not 50/50. “We are the 99 percent,” they keep saying. Through that accurate reckoning, many people, across all tribal lines, are being told, completely correctly, that they are part of this movement too—that they’re getting ripped off by the one percent, just like everyone else is.

We think it’s smart to stress this instruction, in both the history and the math. As soon as specific proposals are made, tribal walls will start rising again. The plutocrats will use long-established scripts to peel one tribe from the other.

This movement should keep giving people that history. People don’t know how we got to this place. Very few people have taken the time to tell them in a simple clear manner.

Krugman’s history is clear—and important. So is that new American math. We need more of that history, aimed at all tribal groupings, in a movement which heavily buys that new math.


  1. What a marvelous series of articles! It's amazing and sad that one of our top newspapers would handle a story this way.

    Bob leaves open the question of whether the deceptive writing is due to malice or stupidity. Hanlon's Razor says: Never attribute to malice that which is adequately explained by stupidity.

    However, in this case I do attribute it to malice. Even if the worst were true, this ought to be a miniscule story. The continuing, prominent coverage demonstrates WaPo's malice IMHO.

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  3. Demonstration photo with a twist
    Down With Evil Corporations

    Scroll down a paragraph for the photo.

  4. I have a question for David in Cal: What do you want? Are you happy with the state of the economy? If so, then you clearly are part of the problem. If not, then what do you think will change it? People who created the problem? The people protesting are right to protest the current state of affairs. The people are groaning under the weight of Wall Street/Banker/Insurance-written laws and policies, and you mock them for that? You're so consistently on the side of the oligarchs that I have to wonder if you're paid (as in an astroturfer) or just a voluntary tool for these people. Sad either way.

  5. Ron, the current economy is bad. Millions of people are suffering. IMHO:

    1. Laws are made by politicians, not corporations. I utterly disapproved of the Wall Street and auto company bailouts. However, I don't blame the companies that benefited as much as I blame the politicians who gave them the money -- Presidents Bush and Obama. And, I especially blame Timothy Geitner who pushed this wrong-headed policy under both Presidents.

    2. Bad as the economy is, it could become a lot worse. Huge spending increases by Presidents Bush and Obama have created intractable deficits. If we keep running massive deficits the US dollar will inevitably be debased. That would wipe out people's savings and cause an even worse recession.

    3. Economic problems have historically led people to search for scapegoats, like the Jews or the middlemen. Attacking scapegoats has never made the economy better; in fact, it often made things worse. Occupy Wall Street is all about blame, not solutions. IMHO it's today's version of finding a scapegoat. YMMV.

  6. David in Cal:

    I fail to get the point of the photo. So what if the protestors use stuff made by corporations. You can't live in America today without them. Maybe they should just live on Walden Pond?

  7. David in Cal said: "Laws are made by politicians, not corporations."


    Oh. My. Goodness.

  8. David in Cal

    We don't need to create scapegoats. All we have to do is follow the money.

  9. David in Cal:

    1. Yeah, those poor Wall Street brokers (and auto company execs) were just the innocent victims of the no-strings bailouts for which they lobbied so assiduously. The trillions of taxpayers' money were FORCED upon them, poor babies! (BTW, on this point at least, you seem to agree with OWS. You could at least acknowledge that.)

    2. See Paul Krugman's blog on a this--he's spent the past year refuting exactly this mumbo-jumbo, and has persuasively argued that with a deeply depressed economy in a liquidity trap, the great risk is a catastrophic DEflation--and if you want to see what that leads to, look at Germany 1930-33 . . . just before the arrival of you-know-who.

    3. Er, so the primary problem with the Nazi attempts, post-Depression, to exterminate European Jewry was that it harmed the ECONOMY??? Um . . . hokay. (One might suggest that since economic problems do indeed lead people to search for scapegoats, often ethnic, sexual, and racial minorities, that perhaps our leaders should implement policies that actually SOLVE said economic problems--but that's just me). And you're not even consitent in this, dude--YOU just finished blaming "politicians", "Presidents Bush and Obama", and "especially Timothy Geithner" for the current economic mess. And you haven't proposed a single solution of your own as to how we, as a nation and a world, get out of the unprecented economic mess we are in. It seems to me your post largely focuses on "blame, not solutions."

    So I repeat Ron Robertson's question, which you haven't even tried to answer, Dave: what do YOU think should be done about the economy? What do you WANT?

  10. In the Godfather Part II, Michael Corleone tells his wife Kay that his father is like other powerful men, men that are responsible for others, like senators or presidents.

    Kay says Michael is naive, that "Senators and presidents don't have men killed."

    Michael replies, "Who's being naive now, Kay?"

  11. I heartily agree that OWS has promise as the source of educating the public about the real problems. Everyone will have different positions about the solutions, but that's okay -- more than okay. If we can all reach some accord on what the problems really are, then we can start practicing that old business of negotiation and compromise (another stage of learning from one another, actually), instead of plutocrat-induced gridlock.
    I agree with Mr. Somerby about where Krugman goes off in a wrong direction in this column, though I forgive Krugman (as I bet Mr. Somerby does), not just because Krugman's earned a lot of room for our indulgence but more because he's worked so hard to try to get people to see the problems OWS is focused on, as well as to push his own policy solutions. If Krugman is impatient to push his solutions as soon as possible -- well, as I say, I forgive him.

  12. " If we keep running massive deficits the US dollar will inevitably be debased."

    Evidence, please. Throughout most of US history there's been a budget deficit (the budget was balanced only 6 times in US history, all of which were followed by recession), and the dollar has yet to be "debased." The deficit we have now is bigger than a couple years ago, but it isn't out of control. There's no reason to believe that more debt will lead to hyperinflation especially in this period of historically low inflation.

  13. David in Cali:

    You can find ignorant or crazy people making all kind of claims in any movement. The OWS people are no different.

    Also, there is a certain subset of economists who are always predicting hyperinflation. Usually they are paleolibertarians/paleoconservatives. I would not waste my time listening to them.

  14. Because clearly no Tea Partier has ever, ever, EVER said anything racist, bigoted, or otherwise crazy . . . *rolls eyes*

    Alternatively, a big economic recovery will increase the velocity of money. Many ecnomists believe that would increase inflation.

    So the solution then . . . is for the economy to never recover? Boy, that makes a lot of sense. Methinks we have a troll here.

  15. Must be the people who identify themselves as Jews who have been participating in OWS, including holding Yom Kippur service, do not realize the groups goal is to scapegoat "the Jews."

  16. @gyrfalcon
    "David in Cal said: "Laws are made by politicians, not corporations."

    Corporations do us no harm when they ask Congress for favors. Congress does us harm when they grant those favors. Not saying we should not be angry at Wall Street, we should, but we should be directing this protest at Washington as well. Happily, this seems to be beginning to happen.

  17. gyrfalcon, it's true that some corporations have undue influence on setting government policy. They're not the only ones. Other groups with considerable influence include the American Association of Retired Persons, the National Rifle Association, environmentalists, and, organized labor. IMHO corporations generally promotes policies that would create more jobs. Labor and environmental lobbies often promote policies that destroy jobs.

    E.g., corporations want to end the President's restrictions on drilling for oil in Gulf of Mexico and his restrictions on a pipeline to bring in oil from Canadian oil sands. These roudblocks have been set up at the behest of the environmental lobby. They retard the creation of new jobs.

    Corporations want the US to sign free trade agreements, which would increase Amerian exports. Until a few days ago, at the behest of organized labor, the President was holding up agreements with South Korea, Colombia and Panama. Also, to pacify labor unions, the federal government is preventing Boeing from builing a new plant in South Carolina that would create more than 11,000 jobs

    So, beyond blaming our elected officials for the high unemployment, we should blame organized labor and environmentalists.

  18. David in Cal:

    I hope you will stick around here, but your reasoning is a little weird.

    Corporations can create jobs (as can the government), but they aren't doing that now because of a lack of demand due to a poor economy. I don't think that has much to do with new environmental regulations.

    As an aside, there isn't a lot "free" about "free trade" agreements, so says Dean Baker.

    Also, how did you find out about The Daily Howler? It doesn't seem like something a person with your political beliefs would be interested in. I'm just curious...

  19. hardindr, I came across the Daily Howler several years ago linked from another blog. I don't remember which one. Even though I'm a fiscal conservative, I enjoy reading the Daily Howler because Bob Somerby's analyses are intelligent, thorough and honest. He calls 'em as he sees 'em.

  20. David in Cal:

    At the very least we can agree on that about Bob.

  21. hardindr -- no doubt the bad American economy hurts corporate demand. However, we live in an international economy. Imports and exports are both huge. American corporations would expand to fill foreign demand if business conditions in this country were more favorable.

    Here are some ways in which the government has made this country a bad place to do business:

    1. One of the highest corporate income tax rates in the world. And, don't forget that state income tax has to be paid as well.

    2. Highest litigation rate in the world, by far.

    3. Uncertainty caused by actions taken by the Obama Administration to favor their union supporters. Some of these actions were illegal IMHO.

    4. Uncertainty caused by a flood of new regulations from Obama appointees.

  22. The problem with OWS is that these people are much closer to the 1% than they are to the average American. The 98th percentile is still part of the bottom 99 percent but obviously their perspective is much different. If you look throughout history, including American history, revolutions are often instigated by the lesser nobility - the 98th percentile rising up out of jealousy against the 99th percentile. Nonetheless those on the bottom and middle tend to bear the brunt of the misery brought about by these revolutions.

  23. David in Cal said...
    Alex -- YTD inflation is running at an annualized rate of 5.1% as of August, 2011
    Would you mind terribly sharing a source for that figure?

  24. Inflation averages 3.1 for 2011.


    David is incorrect on his arguments. The simple fact is the benefits of vast productivity gains have gone to the 1% and none to the workers. Another fact is the anti-regulatory systems have failed spectacularly, and the failed policies and people have been rewarded and bailed out. Who would have guessed that free rein would allow vast looting?

    Corporations have dodged or evaded their tax obligations. If one is worried about corporate tax rates, in the worst of the 3rd world they are low. Do we want a race to the bottom, as in disavowing environmental protections?

    No, OWS is correct about the solution.

    Justice, liberty, and equality.

    We all still favor those principles, right?