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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.