Tuesday, 11 October 2011

Is Occupy Wall Street the Beginning of the Revolution?

When I returned to my homeland a few years ago, after the financial crisis and a brief period abroad, I was quite dismayed.

It's not that America suddenly had changed. We had been changing for a while. Money had been growing into a monster force in politics. Our Washington politicians were far too quiet on social issues, like poverty and the distribution of wealth, where armies of lobbyists didn't represent entrenched interests.

Our politics were getting uglier in other ways. There was less ability to work together for the common good. It was as if, in an age of drama-seeking reality TV shows, politicians thought they had to vie for airspace by pumping out increasingly ludicrous and confrontational soundbites.

But what angered me the most was how we blew the opportunity to have a soul-searching moment about our financial system and effect real change after the 2008 crisis.

Steve Waldman has a brilliant paragraph over at his interfluidity blog about the unfairness of TARP:
Once you understand that the problem is a fairness issue rather than a dollars-and-cents issue, the policy space grows wider. Holding constant the level of expenditure, one can make bail-outs more or less fair by the degree to which you demand sacrifice from the people you are bailing out. TARP was deeply stupid not because it meant socializing risks and costs created by bankers. TARP was terrible public policy because it socialized risks and costs while demanding almost no sacrifice at all from the people most responsible for those risks. The alternative to TARP was never “let the banks fail, and see how the bankruptcy system deals with it.” The alternative would have been to inject public capital (socialize risks and costs!) while also haircutting creditors, writing-off equityholders, firing management, and aggressively investigating past behavior. It was not the money that made TARP unpopular. It was the unfairness. And the unfairness was not at all necessary to resolve the financial problem.
Make no mistake: Something like TARP was necessary after credit markets seized up. Letting giant, highly interconnected banks collapse right and left was not an option. But, out of the ashes of the crisis, who was the leader of power and conviction who emerged and swore, Never again!, and who acted boldly and with courage to reform a financial sector that had metastasized out of control?

Nobody.

Everyone pretended what we had gone through was just a bad dream. What we got instead was watered-down legislation that the banks are already skillfully plotting how to evade.

I would say to friends at work, "It's amazing to me that there isn't someone agitating for a revolution. This is awful, with so many people unemployed, and the rich getting richer, and Wall Street's most powerful getting bailed out without punishment or consequence -- why isn't there a populist uprising?"

Finally, along came Occupy Wall Street. The movement has spread. Winter will probably kill the mass protests, or at least put them on hiatus until spring.

But at least the disenfranchised and angry are speaking, maybe not with enough coherence for the media, who are fussing over their nut graphs and story structure, but their frustration is 100 percent genuine and runs wide and deep.

They're speaking, and I find that quite heartening.