Today, September 17th, marks the one year anniversary of Occupy Wall Street. I wrote about the movement at its inception. Occupy has changed the discourse in Washington and the media. There was finally some focus on class warfare and the concept of shared prosperity.
A response to Occupy protesters was “go get a job after you take a bath”. The problem was that America was stuck in the slowest economic recovery since the Great Depression at the time. Pull yourself up by your own bootstraps. The phrase is actually considered an adynaton – an impossible task. In the wake of a slow economic recovery, the working and middle class need jobs. Companies aren’t hiring enough to meet the demand for jobs. Who is holding back the 99%?
Americans have plenty of reasons not to like Congress. The 2010 election was all about creating jobs and reducing the debt. Instead, the Tea Party caucus obstructed, said no, and threatened to allow the Nation to default on its debt. The 112th Congress, a Republican majority in the House and a filibuster-happy Republican minority in the Senate, has not helped to speed up the recovery – they’ve actually obstructed it. Congress’ shenanigans lead to a downgrade of the US debt by Standard & Poor’s. Republicans touted 30 jobs bills that were passed in the House but not brought up in the Senate. However, the majority of these bills involve reducing access to healthcare, eliminating necessary regulations, or fast-tracking the Keystone XL Pipeline. President Obama presented a JOBS bill (estimated to create over 1 million jobs) to the Republican-led House which was not voted on. Also, economists such as Paul Krugman argued that the stimulus should have been much longer. Public sector hiring on the federal, state, and local levels helped to speed up previous recoveries. The US has experienced a net loss of government jobs during the Obama Administration as states and municipalities have cut their budgets in response to the lower revenue following the financial crises.
Following the 2008 financial crises, too big to fail banks were bailed out while main street was sold out. A friend on Wall Street told me that we could have easily directed the bail out towards main street and had the same effect – but we didn’t. Nonetheless, banks (post-Glass Steagall) currently have 2-3 basic jobs: help clients manage risk, provide advice, and lend money. Banks are reticent to do the latter – especially where small businesses are concerns.
Presidential Candidate Mitt Romney asserts that labor unions drive up costs and stifle innovation. It can be argued that the presence of unions increases cost but they have also improved the lives of workers. Unions are responsible for weekends, paid vacations, sick leave, the 8-hour work day, and workplace safety among many other benefits. Innovation is defined as introducing a new method, idea, or device according to Merriam-Webster’s dictionary. Developing new products and services would start with R&D and Market Research. I don’t think that there are a lot of unions in R&D and marketing. Hence, on the surface, the argument that unions stop companies from creating new products and services appears superfluous.
Companies are looking for purple unicorns – they want to poach talent from the competition (hopefully at a discount). Companies also seek to take advantage of the economic downturn to underpay the overqualified. Job Creator/Destroyers are also downsizing, offshoring, and outsourcing their way to higher profits; and, thus, higher compensation.
Small Business Owners
Small business owners are still feeling the pinch of the slow recovery. I saw a small business owner from New York argue on MSNBC Sunday morning that lower taxes would encourage her to hire an employee. As a fellow entrepreneur, I would argue that people purchasing my products would encourage me to hire more people. Increased demand and money in the bank. A tax cut would increase cash flow if a business have the revenue.
Taxes paid by individuals and corporations go directly towards funding the Government; e.g., Social Security payments, enforcement of regulations , Federal worker pay, National Defense etc. During the Bush administration, the going theory was that “deficits don’t matter”. We had two wars, tax cuts, stimulus programs, and Medicare part “D” that were not paid for. The economic downturn also substantially reduced tax receipts.
Occupy Wall Street forced us to discuss the concept of the 1% and the 99%. For the first time ever, the Nation has been at war without the majority of Americans having to pay a price via a war bond or the draft. Conservatives argue that asking the 1% to pay more in taxes is “class warfare” while it’s okay to seek to eliminate middle class tax deductions or increase taxes on families living paycheck to paycheck. Increasing taxes on those who can afford it can help reduce the annual budget deficit and the long-term debt. Wisely investing new revenue in infrastructure, education, and new industries will help speed up the recovery.
Obviously, there are a plethora of factors that are holding back the 99%. The next part in the Broken Bootstraps discussion will explore personal and macroeconomic factors that are making the economic recovery slow for the 99%.