The past several weeks have seen the phenomenon of people "occupying" Wall Street and then similar protests emerged in other places including Toronto. They call themselves the 99% who do not own a massively disproportionate share of society's wealth. Their complaints are many and proposed solutions varied. But they have a point even if they lack focus.
Comparisons to the Arab Spring are inappropriate. They do live in a democratic society and the power of the ballot box is what the Arab protesters were demanding. The 99% in the USA and Canada have the power of the ballot which most of humanity does not. However that doesn't mean that they don't have the right to express their frustrations nor do over the top comparisons make their sentiment irrelevant.
I'm going to focus on one concrete example of why they have a point. They generally say that the deck is stacked and the game is essentially unfair. One example sticks out like a sore thumb and that example is the firm known as Goldman Sachs.
Have a look at this impressive list of Goldman alumni.
http://www.trendsresearch.com/reports/goldman-inter.pdf
The number of Goldman alums who populated senior positions in the Clinton, Bush and Obama administrations is striking. Whether it be a Democrat or Republican in the White House, it seems that Goldman Sachs has a seat at the table.
It is more disturbing when one considers the bizarre decisions related to bailouts. Many in the financial community were scratching their heads when Bear Stearns (small) was bailed out while Lehman (medium) was not and AIG (large) was. It happened in that sequence and one wonders why little Bear and large AIG were too important to fail while Lehman (medium) was not. Could it be that Lehman was a competitor of Goldman while AIG was a huge customer of Goldman??
Most have forgotten now but years earlier, another financial crisis was looming as a massive hedge fund called Long Term Capital Management collapsed. Their massive trading book threatened the financial system as an unwind of large positions would cause big market distortions. The federal reserve worked behind the scenes to avoid such a scenario. It was detailed in a book called "When Genius Failed" by Roger Lowenstein.
http://findarticles.com/p/articles/mi_m1316/is_9_32/ai_65160621/
(I highly recommend this book as it was very good at explaining complex financial transactions in a way that most people could understand it.)
During negotiations to save LTCM, Lowenstein recounts the behaviour of Goldman employees. As a prospective bidder, they were allowed access to a data room of LTCM's secret trading positions. After viewing the data they went back to their desks and began trading against LTCM's positions. ie, if LTCM was short 30 year bonds and long 29.5 year bonds, Goldman would buy the 29.5 and sell the 30's. This has the effect of increasing LTCM's losses and putting Goldman in a position to benefit from the resulting fire sale.
Nowadays, actions like these are considered "Market abuse" by regulators and would subject the firm to sanctions.
Ronald Reagan once said "Concentrated power has always been the enemy of liberty." I wonder if a firm like Goldman is so well connected that the feeling that the deck is stacked (as espoused by the 99% protestors) does not have some validity?
The example of Goldman Sachs is an American one and we Canadians love to be smug about how we are so much better than the Americans: "Hey we have universal health care." "Hey we didn't have a sub prime crisis."
Will we be so smug in saying "Hey the Governor of the Bank of Canada used to work at Goldman Sachs"???
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I thought comparisons to the Arab Spring were inappropriate too--until I learned that many of the people behind the Arab Spring were making the comparison. Have I posted this one to FB before?
ReplyDeletehttp://www.youtube.com/watch?v=ovD6xm51qtQ&feature=player_embedded#!
She's not the only one either. If they're willing to make the comparison, then maybe teh situations are more comparable than our fetishization of our democratic process would suggest.
You know what I think about our democracy--it's not. I would suggest that our tumbling voter turn out numbers demonstrate that most people understand voting to be a rigged game, too.
Still--you have citations! Excellent.
I'm sure that the people behind Tahir square knew well what the situation was in Egypt. I'm not sure that they know so well about Canada and the USA.
ReplyDeleteBe that as it may, I think that any judgments about the Arab spring (and ergo comparisons) should be made with great caution until the final chapter is written there. Egypt is ruled by the military rather than a dictator now. Islamist parties are on the rise in some of the other arab nations.
If it ends up as a mere replacing of dictators with a combination of military and clerical rule, i'm not sure that the arab world is not worse off. IMO (no citations for that)
As ever, you excel at ducking the point; not to mention you haven't watched the video obviously because the young woman in question was in NYC at the OWS protest while she was making the comparison.
ReplyDeleteAlso, read this: "I was in Tahrir Square in Cairo for the fall of Hosni Mubarak, and one of the most striking things to me about that demonstration was how apolitical it was. When I talked to Egyptians, it was clear that what animated their protest, first and foremost, was not a quest for democracy — although that was surely a huge factor. It was a quest for “justice.” Many Egyptians were convinced that they lived in a deeply unjust society where the game had been rigged by the Mubarak family and its crony capitalists. Egypt shows what happens when a country adopts free-market capitalism without developing real rule of law and institutions."
ReplyDeletehttp://www.nytimes.com/2011/10/30/opinion/sunday/friedman-did-you-hear-the-one-about-the-bankers.html?_r=3&ref=global-home
what were you saying again?