Every time I see press about the Occupy folks (which is constantly) I groan inwardly. There are so many problems with the world, our government, our cultural et al right now that it is painful to watch such a large movement about something that makes so little sense. I also am frustrated at the popularity of socialism in a country that, not too long ago, fought hot and cold wars to stop it.

First let me say that I have one of “those friends” on Facebook that is always posting poorly conceived political platitudes that directly insult the opposing party. I’m not here to do that. Some of my closest friends will strongly disagree with my thoughts which is why I intend to be civil and hopefully present that logic behind my opinions.

 

Point 1: It’s such a First World problem.

The Occupy camp is focused on the gap in the distribution of wealth but more specifically, it’s focused on what they don’t have instead of what they do. America is a place where you can make more and have more as a fast food employee than most of the world population has access to. The tagline “We’re the 99%” is ridiculous because, in actuality, the lowest class American has more opportunity than probably 99% of the world.

I love cold orange juice. Every morning, before I leave work, I can open my fridge and pour myself a glass of cold orange juice. I don’t know for sure, but I’d be willing to bet that the richest kings in history couldn’t pour themselves a glass of ice cold orange juice at will. And it’s not a privilege that I enjoy because of my “vast personal wealth” – the average bum could probably score a bottle of cold OJ on a daily basis without a lot of effort.

The point here is that these OWS folks, with their waiting pallet of peanut butter in the picture above, have no idea what it actually means to be underprivileged. Very few Americans do.

 

Point 2: Okay, it’s not fair to completely deny that there’s a problem just because I have little respect for OWS. Ignoring my first point, I will pretend like I can empathize with the Occupy point about the wealth gap.

The ridiculous thing is that the OWS movement wants to burn Wall Street and the banking industry at the stake. The reason this is inane is because the banking industry is amazing at manufacturing wealth and paving the way for economic growth. The fact that the average American has access to large amounts of borrowing is an incredible opportunity that must be credited to the minds behind the banking industry. Of course they make a lot of money in the process, that’s what capitalism is, but the point is that without the provision of credit our economy would grow much, much more slowly.

Let’s illustrate how a bank creates wealth. If you put money into a bank savings account you are promised a fixed income rate, let’s call it 3%. The bank takes your deposited money and lends it to someone else, after calculating the risk, at 10%. The borrower uses that money to fund some venture that should provide them a return in excess of 10%, let’s say they make 20%. So, you put $100 in the bank, you make $3, the bank makes $7 and the borrower makes $10. The bank has provided a lot of quality service here: they kept the money safe for the investor and paid them 3% in the process, they enabled the borrower to start a small business or participate in some capital venture, they hired a variety of employees, leased or purchased a branch office and more. They used money to create (or enable the creation of) more money. Incidentally, the Stock Market is a very similar wealth-machine that basically allows people to directly invest in a business venture by purchasing a piece of the business.

Now let’s say you buy a US Treasury savings bond for $10 that will be worth $100 in ten years. That’s similar to storing $10 in a bank for 10 years. First of all, your personal income was probably taxed at 20%. This means that when you paid the government $10, they had already taken $2 from you so you actually gave them $12. After 10 years you cash in the bond and get $100 but you have to pay that 20% income tax on the $90 interest so you lose another $18. So, it cost you $20 to earn $100 over 10 years. I’m not claiming that’s a terrible interest rate, just pointing out the actual earnings.

But wait. The government doesn’t create a product. The bank was able to pay your 3% out of the margin they earned selling their product (credit). But the government didn’t use your $10 to earn a profit so after 10 years how do they pay you back? By either selling more bonds or from taxpayer funds. This means that you essentially paid yourself back. Even worse, they can also turn a profit simply by manipulating the value of currency itself.

Both banks and stocks bring the opportunity to earn money with money to the average person. The problem is that some people understand it, capitalize on it and earn themselves a cushy lifestyle and an office on Wall Street. Other people use the credit to purchase an unearned-but-cushy lifestyle and end up in a tent on Wall Street.

One other note: a healthy banking business should make smart lending choices. If they don’t they should go out of business, just like any other business that makes poor decisions. But the Federal Government keeps that from happening which throws the door wide open to corruption.

 

Point 3: Take a look at the US Debt Clock. As of this post we are just over $15,000,000,000,000 (that’s trillion) in debt and the rate at which those numbers are changing freaks me out. To help you appreciate the magnitude of that number, imagine it was fixed at $15 trillion (it stopped climbing) and we were able to pay that debt back at the rate of $1 per second. How many years do you think it would take to pay off that debt?

The answer is 475,647 years. That’s right. It would take us almost half a millineum to pay off the national debt if it stopped climbing and we paid $1 per second.

To put it another way: there are 300 million people in the United States as of July 2009. If we spread the national debt out so that every single person had to pay the same amount we would all owe $50,000. But that’s every single person. I have a wife and three kids so my family would owe $250,000.

We have a president in office that promised Change and has provided nothing besides astronomical debt, a handicapped health plan, more foreign wars and a plan to pull troops out of Iraq just in time for 2012 election year.

So why is OWS attacking the people that create wealth instead of the people that destroy it? I’m convinced that it’s both ignorance and the fact that we humans have a tendency to resist admitting that we were wrong about something we were really invested in.

 

Point 4: The message, organization and tactics suck.

Nobody agrees on what they’re actually campaigning for beyond anger at the fact that they owe more on their mortgage than their home is worth. Also some people that do some stuff with money have money and they work in New York.

Some demonstrations have a clear point: leave Vietnam, stop abortion, stop racism, etc. The only globally identifiable point in the OWS camp is that rich people should stop earning money. Or something.

 

 

In Summary: Occupy Wall Street is not a demonstration. It is a collection of refugees from the real “American Way.” A collection of people that thought the American Way meant living like a king on your Visa card and home mortgage. Guess what? It’s not. And no amount of socialist policy and financial regulation is going to enable us to offload our personal responsibility. We have a central bank that constantly plays god of the market, a government that can be convinced that pizza is a vegetable and has enough unconstitutional power for it to matter. The change has to start with the fed.