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| Occupy Vancouver outside the Art Gallery in October |
Let's properly define the problem, who to blame and how to fix it.
The Wall Street and bank bailouts are a symptom, not a cause. The cause, is a culture of borrow and spend and tax and spend. The root of the problem is that we've been comfortable for too long in North America (and Western Europe) as it became the norm in the second half of the twentieth century to spend money before it was earned. This went for governments, corporations and individuals. The idea that we've been too comfortable may come as news to many people that have been barely making a living, however remember everything is relative; after all a bad day for a poor person in North America, could be considered a good day for someone with a disability on the streets of Calcutta. However, this notion has not stopped people, and probably rightfully so, from becoming angry and frustrated that their expectations for a high or even a decent paying job are dashed. When one observes the wealth particularly in a place like North America, it's only natural to want some of it. It's galling for a low or moderate earner to think he or she has had income confiscated to help corporations that lavish large salaries, bonuses and benefits which enabled the kind of extravagances that caused the envy behind much of the anger. Let's be clear, contrary to popular belief, bank and wall street bailouts are NOT capitalism.
We do not have pure capitalism in North America, rather we have a form of corporatism or crony capitalism (socialism and favouritism for corporations) so those who keep pointing the finger at capitalism for today's problems are really misplacing their blame. Intuitively, most people know this but probably don't understand why. Many don't have the wherewith all to bother examining it anyway because they are still comfortable themselves. For the most part, people are still making money and able to afford cheap travel or the odd meal out which gives them the illusion of being a part of the American Dream and acts as a pacifier. The politicians know that as long as the illusion continues, they can continue business as usual. So it continues.
At some point, when you spend more than you earn, there comes a day of reckoning; you reap what you sow. We've been at that day, for over a decade, maybe longer. However nobody is prepared to take the medicine, endure the pain and correct the system so it does not happen again. So we and our governments kick the can down the road, pay people and corporations entitlements, and hope somehow that some growth, new technology or a new economic paradigm will magically arrive to solve the problem. Most of us, and all levels of government, owe more than we own which inhibits our ability to afford things we've come to expect.
Who can we blame? The Federal Reserve led by Alan Greenspan played the most integral role in the whole process of overspending, while preaching capitalism and practicing socialism. The central bankers around the world are squarely to blame for the current mess we find ourselves in. When they reduced the cost of money to below the cost of the risk borrowing represented, they encouraged banks to lend and corporations, businesses, individuals, and for that matter, governments, to borrow. They were aided and abetted by government organizations such as Fannie and Freddie that were underwriting risks that never would have been taken if left to a free (capitalist) market. This resulted in a flood of new borrowing and spending that in many cases never should have taken place. This loose money policy was the kool-aid everybody drank, designed to encourage as much spending as possible in order to postpone the bitter medicine that should have been swallowed in 2001. If we had dealt with it then, as we should have, we (North Americans led by the US and their Federal Reserve / Central Bank) might have begun a road to some moderate fiscal health which would have prevented the meltdown in 2008, which precipitated the bank and Wall Street bailouts, currently the source of all the anger and the sound bites for the occupy movement.
What's the solution? Certainly not class warfare which seems to be the direction of the Obama administration and many in the Occupy movement. Blaming capitalism isn't the answer because we've not had it in our lifetimes. And for that matter, wealth has never been created by governments who confiscate wealth in order to function. Honestly, it's a difficult question to answer and as long as the can keeps getting kicked down the road with more loose money, bailouts, spending.... and debt, it's not a question many are willing to answer with honesty anyway. The Federal Reserve's sole function has been to line the pockets of the well to do and the banks. It should be abolished.
Related Reading: Greenspan's Bubbles: The Age of Ignorance at the Federal Reserve
