Author Archives: SamT

Have we any loyal readers left?

How about loyal authors?

Readers may or may not know that this blog was created for a school project. As the semester has ended, the number of posts has gone drastically down.

I am testing the waters. Readers: like this post if you think we should keep the blog going.

Also, I might be able to finagle some new authors onto the blog if any of you are interested in sharing your ideas about OWS as well. Let me know.

-Sam

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Aside

my blog.

What is “Occupy Wall Street”?

What is “Occupy Wall Street”?

OWS is a protest seeking to change the status quo.

But that alone doesn’t tell us much. What changes are Occupiers after? What is wrong with the status quo? As Kara noted in her post “We Demand Better Demands”, there is a complete lack of formal consensus on what changes OWS actually seeks. This analysis will seek to answer these questions—without authorization from the GA—in order to form a rope that we can use to wrangle some sort of perspective.

If we seek to define the movement, we have to frame it in a broader context. Let’s talk about a main theme of the protests: economic hardship. On this issue, Occupiers espouse a sentiment of ‘many versus few.’ Taken at face value, they imply that a majority of our country is in dire straights while a minority remains affluent. This is a valid claim: wealth is super-concentrated in the upper quintile of the American population (Domhoff). Meanwhile, America is experiencing the greatest financial crisis since the Great Depression (Cowen). Symptoms include, among others: high unemployment, slow growth, and increasing inequality (Cowen, Domhoff). So far, seems like good reasons to be pissed off.

One problem: these are only indicators of deeper issue; they tell us nothing about what is malfunctioning in “the system”. What causes such economic stagnation? What changes should Occupiers seek? In a previous post I questioned the ethics of redistributive taxes as a means of solving Occupiers problems. According to Tyler Cowen, the answers to these questions have little to do with corporate greed; rather they point to depleted innovation:

“In a figurative sense, the American economy has enjoyed lots of low-hanging fruit since at least the seventeenth century, whether it be free land, lots of immigrant labor, or powerful new technologies. Yet during the last forty years, that low-hanging fruit started disappearing, and we started pretending it was still there. We have failed to recognize that we are at a technological plateau and the trees are more bare than we would like to think” (Cowen 8).

So, simply put, America is in a recession (literally meaning “lack of growth”, distinct from depression, which means “negative growth”) because there are no easy ways to obtain growth anymore. The world rate of innovation peaked around 1873 and has been falling ever since (Cowen). In other words, it was easier to invent something useful a hundred years ago than it is today. Inequality stems from the lack of innovation: while labor and capital are relatively plentiful in American society, valuable ideas are scarce and thus high incomes accrue to the creators of these ideas (Cowen).

This problem is only made worse by government policy. Andrew D’Amato does a great synopsis of how political forces have contributed to the recession. He explains that most of the important decisions that exacerbated economic hardship were not made on Wall Street, rather in Washington. Of course, it is contended by Occupiers that Wall Street has a strong influence in politics.

In either case, we have identified some factors of the status quo that are problematic. There are no fresh ideas in the economy and the government is treading water. Now things get complicated: what changes should be sought? What is the best way to solve this problem? This is where everyone disagrees, and there can be no consensus because the best way to solve these problems is not known. Some call for more democracy others call for less. There are a myriad of proposed solutions to the problems we have discovered.

What is OWS? It is a spontaneous unifier of these diverse voices, letting people know that if we don’t get together and figure things out we will have a dark future. Emma notes the flexibility and size of the movement, describing it as “a sort of springboard for countless divergent agendas”. This is key to the movement’s success. Out of the diversity of agendas a forum for ideas has formed (quite literally: see Amanda’s post for more on this).

So, in a sense, OWS is not protesting anything specifically. It is rather an informal coming-together of various parties in mutual recognition of salient issues. Its goal: to brainstorm solutions. In this sense, it is clear from not just the number of participants, but from the number of people who have attempted to understand the movement in the media or otherwise, that OWS has succeeded in its goal of making people think about the problems our world faces. Hopefully solutions will arise from this forum. For more on that, just read our blog.

Thanks for reading,

Sam

Link

Interview with Harvard Economics professor Greg Mankiw

Interview with Harvard Economics professor Greg Mankiw

On Wednesday [Nov 3, 2011] a group of students walked out of a popular economics class because they say it pushes ideology that favors the rich at the expense of the poor. Host Steve Inskeep speaks with the professor of that class, Greg Mankiw, who used to be an economics advisor to President George W. Bush.

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Graduated? Unemployed? Occupying Wall Street? Maybe you shouldn’t have majored in something useless… Why do so many Occupiers have college degrees? A college degree is supposed to get us a job, not land us in a protest begging for one, … Continue reading

The 98%

Sorry this is an old article from the NY Post (Oct. 2011) and a re-post from Alex Tabarrok at Marginal Revolution, but I think it’s kind of funny. No one likes freeloaders, not even OWS protesters.

The Occupy Wall Street volunteer kitchen staff launched a “counter” revolution yesterday — because they’re angry about working 18-hour days to provide food for “professional homeless” people and ex-cons masquerading as protesters.

For three days beginning tomorrow, the cooks will serve only brown rice and other spartan grub instead of the usual menu of organic chicken and vegetables, spaghetti bolognese, and roasted beet and sheep’s-milk-cheese salad.

They will also provide directions to local soup kitchens for the vagrants, criminals and other freeloaders who have been descending on Zuccotti Park in increasing numbers every day.

(link to the blog post: http://marginalrevolution.com/marginalrevolution/2011/10/the-99-98.html, and link to the article: http://www.nypost.com/p/news/local/manhattan/zuccotti_hell_kitchen_i5biNyYYhpa8MSYIL9xSDL#ixzz1c0lbgSth)

This is kind of ironic, right? Protesters want to be fed by redistributive taxes from the rich, and the rich don’t like it, so they are hated. But OWS doesn’t want anything to do with the vagrants and criminals. Forget “give me your tired, your hungry, your poor”. They’ve got no meat on their bones. Give me your fat-bellied, fat-wallet yacht owners and country club members, they make for some good eats!

-Sam

A long-winded econo-speak explanation for anybody interested in finding out why OWS gets nothing done:

Lets just imagine for a moment that OWS truly does represent 99% of America. Here’s a couple of reasons they still wouldn’t get anything done:

1. 99% of America is a large group. Mancur Olson describes three “separate but cumulative factors that keep large groups from furthering their own interests” in his 1971 edition of The Logic of Collective Action:

A. The larger the group, the smaller the fraction of the total group benefit any person acting in the group interest receives, and the less adequate the reward for any group-oriented action, and the farther the group falls short of getting an optimal supply of the collective good, even if it should get some.

B. Since the larger the group, the smaller the share of the total benefit going to any individual…the less the likelihood that any small subset of the group, much less any single individual, will gain enough from getting the collective good to bear the burden of providing even a small amount of it.

C. The larger the number of members in a group the greater the organization costs, and thus the higher the hurdle that must be jumped before any of the collective good at all can be obtained.

(Olson 48)

This is a problem of costs and incentives. To illustrate, who would pay taxes if we were not forced to? Probably very few people because the more people in our group, the less noticed any of our individual contributions will be, and so what incentive do we have? Without coercion, we would have no government. But there is more. Not only do we have less incentive to contribute as the size of the group increases, we also have less chance of achieving any coherent group consensus. This follows logically from the size of the group: the larger it is, the less any individual voice is heard. This tendency is observable when large organizations utilize small sub-groups to take action, for example the use of subcommittees in legislatures. Small groups reach consensus and take action much easier, where large group consensus is “at best rare” (Olson 60). OWS clearly faces this problem, considering there is no unified manifesto of demands or something equivalent. I suppose a solution would be to develop subcommittees to give them some sort of coherent direction.

2. The “Miracle of Aggregation” does not apply to emotionally-charged issues (I don’t think it’s a far stretch to call OWS “emotionally-charged”, but I welcome your challenges). This point flows logically from my first point, but first I have some explaining to do:

It is well-established in the field of economics that people often remain politically ignorant because the cost of being informed exceeds the benefit of voting (because the larger the group, the less likely any individual voice is heard). However it has been argued, in particular by Donald Wittman in The Myth of Democratic Failure, that this has no harmful effects on democracy because of the “Miracle of Aggregation”. This idea is best explained as such: if 99% of people are ignorant but not systematically biased, and 1% are well-informed, the ignorant voters will tend to cancel each other out because of the law of large numbers, and, in effect, the well-informed 1% will tend to be the decisive voters. As an example, “in a contest to guess the weight of an ox, the average of 787 guesses was off by a single pound” (Caplan 8). So, even if it is true that large groups tend to be ignorant for the most part, on average they will make informed decisions. Right?

The truth is, when it comes to emotionally-charged issues, people are systematically biased. Because everyone that is part of a large group knows they have little chance of affecting the outcome of group actions, they tend to be expressive rather than informed when it comes to voicing their opinions, which leads to aggregate systematic biases. The weight of an ox is not emotionally-charged, so the miracle of aggregation rings true. But strong sentiments that take hold of voters such as nationalism often result in poor outcomes. This is why bad policies persist: though widely agreed upon by experts that policies such as trade tariffs are economically harmful, it feels good to ‘protect American jobs’. People vote expressively. Random error is no longer random, it is biased.

So after that long-winded econo-speak, how does this apply to OWS? Well, even if the movement was able to overcome the collective action problems I outlined in section 1, their group consensus would be expressive rather than well-informed. In other words, because individuals in groups tend to put less thought (and more emotion) into issues–because of the correct belief that they have a very small individual effect on outcomes–in aggregate outcomes are biased toward emotions rather than objective analysis. So, while a solution to Occupier’s problems may exist, the conclusion the group would reach would simply be the one that gets the most people the most riled-up. As in our democracy, or in relationships, or in arguments, this can easily lead to harmful outcomes.

So what’s the solution here? I’m with Socrates–OWS needs an all-knowing, benevolent philosopher-king to guide them all, lest they face the consequences of collective action. But, since I suspect that’s not in the works, suffice it to say that OWS might stick around for a little while, but they won’t get anything done. And if they do it will be something stupid. Please tell me why I am wrong.

Sam