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| Source: Toronto Sun |
Recently I’ve been writing about some of the views I share with Occupy Wall Street protesters in New York, Toronto and elsewhere.
Today I’m going to write about my disagreements.
To review, I agree with them financial fraud on Wall St. and political corruption in Washington are largely responsible for the global economic mess we’re in today.
I agree the public justifiably feels betrayed by how stock markets were manipulated and banks and investment houses bailed out with U.S. taxpayers’ money.
I agree key regulations governing stock markets were gutted by Wall St., which bribed politicians into stacking the rules in their favour, a phenomenon known as crony capitalism.
I agree public anger at corrupt Wall St. executives and their bought-and-paid for politicians — Republicans and Democrats — is justified.
But I disagree with the Occupiers’ view capitalism itself is the problem and wealth redistribution by the state is the answer.
Wherever this has been tried, the state becomes the ultimate crony capitalist and it does to the public exactly what Wall St. and Congress did to them starting in 2008, only on steroids.
The solution is not to replace capitalism but to fix it — by restoring laws for the proper regulation of the financial services sector that arose out of the stock market crash of 1929.
Things like keeping the activities of commercial and investment banks separate, so commercial banks that accept depositors’ money can’t use it to speculate in high-risk securities in the stock market.
Things like placing limits on “leveraging,” meaning buying investments using debt, which can result in huge financial losses.
Things like regulating the use of derivatives such as collateralized debt obligations and credit default swaps.
These were the two weapons of mass destruction in the subprime mortgage securities scandal that wiped out trillions of dollars of people’s life savings and pensions world-wide, while costing tens of millions their jobs and homes.
But I disagree with the protesters who say they are against the bailout of Wall St. banks, but in favour of bailing out giant auto companies, which they’ve indicated by accepting the support of the Canadian Auto Workers.
That tells me these protesters aren’t really against the government picking economic winners and losers. They just want it to pick the winners and losers of which they approve.
I also disagree with the Occupiers’ failure to condemn the roles played by government entitlement programs and public sector greed in the ongoing global economic crisis.
Indeed, excessive entitlement programs and runaway public sector spending lie at the heart of the sovereign debt crisis in Europe, that could cause another global recession.
The problem with countries like Greece — as in much of Europe — is their economies were already basket cases before the contagion of toxic subprime mortgage securities spread around the world and sent their finances over a cliff.
As former Wall St. money trader Michael Lewis, author of The Big Short, widely considered to be one of the best and most understandable accounts of the 2008 subprime mortgage securities scandal, explains in his latest book, Boomerang, Travels In The New Third World, the Greek economy was basically a giant Ponzi scheme before it imploded.
For example, the wage bill of Greece’s public sector has doubled in real terms in the past 12 years.
The average government job pays almost three times the salary of the average private sector one.
Greece’s state-owned railway has annual revenues of 100 million euros, against an annual wage bill of 400 million euros (average salary, 65,000 euros per worker), plus 300 million for other expenses.
Greece’s public school system, among the lowest ranked in Europe, has four times as many teachers per pupil as the highest ranked, in Finland.
The retirement age under Greece’s prohibitively expensive public pension system is as early as 55 for men and 50 for women for over 600 professions classified as “arduous,” including hairdressers, radio announcers, waiters and musicians.
Finally, bribery and corruption are widespread in the public sector.
To sum up, the Occupy movement is correct to condemn the greed, fraud and corruption on Wall St. that led to the global economic mess we’re in today.
But to ignore those same things in the public sector, and their contribution to the economic tsunami we’re now experiencing, is absurd and blatantly inconsistent.
Source:The Toronto Sun
This is so one-sided.
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