Occupy the Government, Not Wall Street.Protest movement is misguided.
Inspired by the revolutionary movements of the Arab Spring, “Occupy Wall Street” set up camps in the financial district on September 17th, 2011, and plans to occupy it for months. The protesters are angry at the current situation of the financial system. They hope to educate Americans who they feel are victimized by Wall Street’s irresponsibility and by speculation in the mortgage markets. Yet the situation is not quite that simple. While Wall Street did contribute to the current state of the nation’s financial situation, they are not solely responsible; the largest burden lies on the shoulders of big government.
It was ill-conceived government policies that, when exacerbated by mistakes in the private sector, caused the recession of 2008, leading to the current state of volatility in the capital markets. Policies like Fannie Mae and Freddie Mac’s affordable housing quota, which ultimately led to the massive devaluation of the house sector and the diffusion of bad debt. Then there were the high-profile collapses of firms like Bear Stearns and Lehman Brothers. Eventually, the government stepped in to save the collapsing insurance giant AIG, and the 700 billion dollar bailout was underway.
The government bailout meant inefficiently paying down credit with credit. It put stress on the growing national debt and the burden on the American taxpayer. Oversight and transparency were lacking. As investors became increasingly concerned with the prospect of greater government regulation over the private sector, they began to liquidate investments, leading to more volatility. In its heedless attempt to fix the dwindling credit markets, the government negatively impacted the American economy. American businesses today have less access to greatly needed short-term credit and as a result, the entire economy is suffering. Layoffs and cutbacks have increased as economic growth has come to a halt, bringing with it high unemployment and inflation.
Occupy Wall Street’s grievances are perfectly understandable. The private sector is partly responsible for the crises in that they failed to correct the mistakes of the government. The pubic perception of the financial services industry is that of the old Wild West, in which no regulation or laws are in place. But contrary to popular belief, the financial services industry is one of the most heavily regulated industries today. Further, more regulation and increased government intervention will fail to solve problems. They are the problem in itself. It is troubling to some how a small percent of the population controls most of the nation’s wealth. Wall Street clearly has a powerful lobbying arm in Washington, but ultimately it is the government who rules.
The people of Occupy Wall Street are from our generation. They have indicated that young people are alert and active, but shutting down Wall Street will not solve the problems posed by the current state of the financial markets. Instead, relying on the American ideal of a small federal government with laissez-faire economics and Adam Smith-style “healthy” intervention is a good starting point. Ultimately, the young minds of our generation should seek to lead our free-market economy into the next century, one that should be categorized by equal justice and economic opportunity for all.