Blame Corporate America and Wall Street for “Class Warfare”
Occupy Wall Street Protesters Motivated by Corporate Greed and Fraud
This blog first appeared as an opinion editorial in the online version of the Pacific Coast Business Times on October 21, 2011.
At the Value Voters Summit on Friday, October 7, Rep. Eric Cantor (R-Va.) said he is "increasingly concerned" by "Occupy Wall Street" demonstrations which began in New York and spread to other major cities. Cantor used part of his address to attack the Occupy Wall Street protests, and he condemned political leaders who are supporting them.
"This administration's failed policies have resulted in an assault on many of our nation's bedrock principles," he said. "If you read the newspapers today, I, for one, am increasingly concerned about the growing mobs occupying Wall Street and the other cities across the country. And believe it or not, some in this town have actually condoned the pitting of Americans against Americans. But you sent us here to fight for you and all Americans."
Unfortunately, some have joined the protesters for their own reasons and to vent their individual anger. Others have used the park near Wall Street at which they are protesting as a place to eat, sleep and generally make a mess of the area. This is wrong and disrupts innocent people going about their daily work. Still, we should not lose sight of what the protests are really about. Cantor, like so many Republicans, has misread the true message of the protesters. I add my voice to the protestors and believe the underlying motivation is to speak out about what is the true cause of the economic decline in the U.S., the financial difficulties facing our nation, high unemployment, and the general malaise that exists on Main Street about the future of our country. It is the greed that infected corporate America in the 1990s and early 2000s by the Enron’s and WorldCom’s. It is the fraud and corrupt policies of these companies and institutions such as Fannie Mae and Freddie Mac. It is the hyped securitized mortgages that were sold off by financial institutions to unsuspecting investors. It is the ill-advised mortgages made by commercial banks that ignored home buyer ability to repay the mortgage because the banks sold off these mortgages along with the related risk of default. Wall Street investment firms that held these securities hedged their bets by purchasing credit default swaps from AGI thereby betting on both sides of the coin. It is the Ponzi-schemers such as Bernie Madoff. I could go one but you get the point.
If there is a class warfare that has developed in the U.S. it is because the selfish policies of these institutions caused the financial meltdown, economic recession, and massive loss of jobs – all through no fault of us who play by the rules. The unemployed didn’t cause the crisis. Sure, some people overspent and got too deeply in debt, but that was due in part to the belief fostered by the actions of these institutions that the good times would keep rolling along. Instead, the bubble burst and it was the average American that was left holding the bag.
The Republicans attack over-regulation in the form of Dodd-Frank and Sarbanes-Oxley that, they claim, has created an uncertainty and unwillingness to expand economically by the very companies being regulated. That may be so and there is no denying it is a problem. However, the Republicans need to look in the mirror of those being regulated to see the face of who created the need for more regulation.
Our free market capitalistic system is based on the notion that by acting out of self-interest, business will create a better economic climate for all Americans. Well, it is just not working out as intended by Adam Smith. According to a survey by salary.com, the average salary and benefits paid to the CEOs of the Standard & Poor’s top 500 companies in 2010 was $11.4 million. The average CEO earned 343 times more than typical workers.
Very little has been said this election year cycle about how much the financial crisis has cost the average American in lost wealth. Well, hold on to your chairs as you look at the data provided by The Pew Charitable Trust that covers the period between 2008 and 2009:
- $100,000: Cost to the typical American family in combined losses from declining stock and home prices
- $5,800: Average household income loss resulting from declining economic growth
- $14,200: Average household loss in wealth caused by plunging real estate prices
- $66,200: Average stock market losses for households from July 2008 to March 2009
- $2,050: Average household cost to pay for TARP, the main government program to shore up the economy
Oh, and Representative Cantor, his net worth went from $2.2 to $7.6 million during 2008 to 2009, and he ranks 60th in the House with respect to personal wealth.
Blog posted by Steven Mintz, aka Ethics Sage, on October 24, 2011