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    Wall Street Protesters Should Instead Focus on the Federal Reserve

    I’ve been closely following the loosely organized Occupy Wall Street protests on social media sites over the past few weeks. Now, I’m all for citizen activism and freedom of assembly, but I’m still unconvinced that most of these protesters know what exactly they're protesting. They’re angry about the state of the economy and rightfully so. While I sympathize with their frustration towards our weak economy, their anger is largely misdirected. They would be better off to pick up and move their protests down a few blocks to the New York Federal Reserve building.

    Many of the Wall Street protesters are holding up anti-capitalism signs that read “capitalism doesn’t work” and “capitalism oppresses love.” These posters are grossly illogical because we have never even had a capitalist system. The United States economy is better described as a mixed economy, an admixture of capitalism, corporatism and socialism. Interviews with protesters on the ground suggest that they do not comprehend the difference between capitalism and corporatism. It’s an odd sight to see a bunch of individuals in Che Guevara shirts (who was a murderer, by the way) with fancy iPads and Mac laptops protesting so-called capitalism.

    Capitalism is often regarded as a dirty word for all the wrong reasons. The greatest economic system in the history of the human race has a bad rap mainly due to a fundamental misunderstanding of capitalism itself. The term essentially means economic freedom. Individuals are free to make their own choices on what to own, produce, buy or donate. Milton Friedman was correct in saying that, “underlying most arguments against the free market is a lack of belief in freedom itself.” All other economic systems are characterized by central planning and control, which rests on state coercion.

    Those who equate capitalism with corporatism are making a huge mistake. Corporatism is a system where businesses are allegedly in private hands but are actually controlled by the government. In a corporatist state, the government often grants special privileges and favors to big businesses such as bailouts, tariffs and subsidies. Many top Wall Street executives like to consider themselves “capitalists” as they live off of the taxpayer’s dime. None of these sweetheart deals would exist in a pure free market capitalist system. Businesses would be forced to sink or swim on their own merits. As the famed Austrian economist Ludwig von Mises stated, “what pays under capitalism is satisfying the common man, the customer. The more people you satisfy, the better for you.”

    The Occupy Wall Street website—which surely does not represent the views of all the protesters—has released a 13-point list of pro-government demands. OccupyWallSt.org demonstrates their economic illiteracy by demanding free college education for all, one trillion dollars in infrastructure and ecological spending. One little detail is missing: who is going to pay for all of this?

    The government is not Santa Claus; every dime that it spends must be first forcibly taken from someone else. The movement calls itself “peaceful” while advocating that Americans surrender more money to the government under the threat of brute force. If you’re uncomfortable stealing from your neighbor, don’t demand that the government to do it for you.

    Some real defenders of capitalism are hitting the streets in an attempt to educate the Wall Street protesters. They’ve got their work cut out for them. The OccupyWallSt.org wish list includes raising the minimum wage to $20 per hour and raising tariffs on all imported goods. Anyone who has passed Econ101 should hopefully know that these policies would dramatically increase the price of goods and cause a massive amount of Americans to lose their jobs. Their demands, if implemented, would disproportionally hurt the poor and increase corporatism in America.

    Capitalism is not to blame for our economic woes and more government regulation is not the solution. The Federal Reserve is largely to blame for the financial crisis. Without the Fed, Washington couldn’t have bailed out Wall Street. The first ever—but one-time and limited—audit of the Fed back in July revealed that the central bank “loaned” out $16 trillion at a zero percent interest rate to corporations and banks around the world during the height of the financial crisis. Why then has the list of Occupy Wall Street demands completely ignored the Fed? No serious economic movement can overlook the Fed which literally creates unlimited amounts of money out of thin air.

    Many of the Wall Street protesters may be well-intentioned but lack basic economic knowledge. Political philosopher Robert Nozick said my thoughts perfectly, “it is strange that many young people in tune with nature and hoping to go with the flow and not force things against their natural bent should be attracted to statist views and socialism, and are antagonistic to equilibrium and invisible hand processes.” The Wall Street protesters would be better off to direct their focus to the correct target: Washington and the Federal Reserve.

    8 comments
    Marie Gray
    10/08/2011

    Where's the articles on Fannie & Freddie? Please investigate & make your pronouncements on these two tax payer bailed out monster GSEs. These are publicly traded co's where shareholders & managers got very RICH assuming govt back stop, which was exactly what happened. Tax Payers are propping these two losers up & will never be made whole. Why does no one at Freedom Works shouting from the roof tops about these GSEs that should be closed. This is not how the free mkt functions, it's a socialism & govt control/interference in the housing mkt. Bubbles always burst. When it's a govt created bubble like for housing this is what we get vs. the tech bubble which also burst, anyone call? Not the same aftermath though right? And I'm abit alarmed at the constant finger pointing at the Fed Reserve. Int free loans to banks? These are paper entries to boost capital reserves ON PAPER. Why should interest be paid on thin air? An accounting maneuver. Which is accounted for on paper, & then REPAID on paper. FURTHER, the large banks & WS with exception of AIG & small banks that never should have been included but were because of political connections (cronyism, favoritism) have all repaid WITH DIVIDENDS i.e.; profit, to the Treasury all TARP funds extended to provide liquidity & unfreeze the credit markets i.e.; the CRISIS which hit in mid Sept 2008. Those profits also even covered all losses from the small banks that have not repaid. The auto companies included in TARP vs. allowed to file a normal business bankruptcy & restructuring have cost taxpayers billions. So has the failed foreclosure programs where money is also unaccounted for & wasted. The auto co bail outs - political favors to the unions, the only beneficiary. The failed foreclosure programs funded under TARP - political populist to buy votes. Neither intervention was free market compatible. In the free market, the auto co's would have filed bankruptcy & restructured at cost to me or you, who instead have paid for union worker benefits probably far better than our own. And in the free mkt, if you don't pay your mortgage loan payments when & as due, for whatever the reason, the home is foreclosed. Sad, but the end. And I am not forced to help you pay for a home while I'm also taking of myself thank you. As with many things, sometimes a little knowledge is just as dangerous as no knowledge.

    Eva A
    10/07/2011

    The protesters are protesting unbridled capitalism, without regulation or oversight. You can still use an iPad and have issues with the way energy companies do business and harm the public interest. These things are not mutually exclusive and it's simplistic to say that they are. You quote Milton Friedman and suggest that anyone who wants to regulate industry is trying to exercise some sort of immoral control over others' freedoms. There is a distinction however, between freedom from (control), and freedom to, for instance, live in a pollution-free environment. My freedoms have been impinged upon by those who restrict my rights to clean air, clean food and clean water. The perpetrators of this are industries that operate unregulated by the government, which is (at least in principle), an arm of the people that makes collective determinations about how some citizens can behave. We, the people, through our representatives, do this to protect our well-being as a whole. This is how we attempt to live in a civilized society where we make compromises and agree to work together towards common goals despite differing opinions. This is democracy.

    I pay taxes because it's one of the ways that we, in a democracy, pool resources to accomplish tasks that are bigger than any one individual can accomplish on their own. I agree with you that my tax dollars should not be given to businesses that harm the public through greed and irresponsible behavior. This is not in the best interest of the public, and thus not an appropriate use of public funds. But taxes are not stealing. You're an American. In America, we pay taxes so we can have the benefit of roads and schools and parks and police and firemen. All of the things that make this country a nice place to live, where you can do business in peace and with the amenities that make doing business possible. If you don't want to pay for the things that your neighbors agree are a good idea, move to a different neighborhood where they vote differently on how to spend everyone's money. If you don't like how the federal government spends tax dollars, then you have the ability to lobby and petition congress and your representatives to spend it differently. Taxes are not theft. You aren't represented to the degree that you'd like to be in how tax dollars are spent because we don't participate enough in our democracy, not because the federal government is stealing from you. That's absurd.

    And as for your economic arguments, any economist knows that there's no such thing as perfect equilibrium because there's no such thing as a perfectly competitive market whether you have government intervention or not. The invisible hand and perfect equilibrium are theoretical concepts that economists use to think about how economies and nations and political actors and individuals function. I would take a perfectly competitive market and an absence of government intervention if I thought that wouldn't lead to market failures that impair the public well-being. Unfortunately, we don't live in conservative fairyland. We live in the real world and it's filled with immoral people who will do anything to make a buck. I'm unwilling to let those people run rampant over my rights just because Milton Friedman says they have my best interests at heart.

    So, I, as a protester of the current system, am not advocating for an end to capitalism. I'm advocating for a sane and realistic economic policy, based on the democratic process, that utilizes the tools of government to protect and serve the greater good. I think you'll find that this a pretty common stance amongst your supporters as well as those folks out in the streets fighting for our freedom to choose and use our method of social organization. I hope we can all become better at listening to one another and finding commonalities that will bring about real and lasting positive change in this country.

    Respectfully Yours,

    A citizen

    jaydimare
    10/06/2011

    Gee, I dont know how we're going to pay for free college for all...I imagine the same we way we paid for the growing TRILLIONS it costs to fight endless wars with no mission in Afghanistan and Iraq...pull out of there permanently and we can afford to send every person in the US to college. Change the way your think please.

    Marie Gray
    10/08/2011

    for the same cost we could these empty headed hoodlums in jail & hold them for 30 yrs. that's sound better. or ship them somewhere, say to the middle east. no return passage.

    jaydimare
    10/06/2011

    Let me re-type that. I don't generally proof read after I finish. You are right, I have to mention that also, that the Federal Reserve Banking System is the MAIN problem. Anyway, Free College for all is feasible under the same crappy system we have now. If it costs 2 Trillon to send everyone to college and you wonder where we're going to get the money, just look at the growing cost of over 2 Trillon dollars of the useless wars in iraq and afghanistan...that have solved nothing, and caused NOTHING but more terrorism.

    christian kowalski
    10/04/2011

    great article.a lot of useful,helpful information.one commentator at a different topic said this:i do not trust them.we have to gain power over Congress and the White House-i guess he's right.in this case we can add the Federal Reserve.

    Marie Gray
    10/08/2011

    I'm placing this here so Julie B might take note. maybe I'll have to write in separately - where's the articles AND the outrage about Fannie & Freddie?

    Teo W
    10/05/2011

    Hi Julie, Thanks for the article. You're correct about the Fed being the real cause and Wally-Street being but one symptom, but I'm a bit dismayed at your fact-checking. You noted in your article "The Occupy Wall Street website—which surely does not represent the views of all the protesters—has released a 13-point list of pro-government demands. " They have not released any demands. This is a post from a forum ON the website. The title actually states this- "PROPOSED list of demands.." That is a HUGE difference than saying they've released demands. This is just one persons opinion about what they want to see happen, and if you read the comments below it, you can see that most are correcting him- one was actually suggesting(and rightfully so) that the movement needs experts from every field(financial, environmental, etc) to analyze statements. If you look at the section the post is in- it's the "Forums" section- where anyone with an idea can post. Keep spreading the word about the FED though!

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