FYI.

This story is over 5 years old.

The Moral Compass Issue

We Can All Agree the System Is Fucked

Occupy Wall Street's transformation from a few leftist protesters squatting in Zuccotti Park into a global movement is both predictable and surprising.

Occupy Wall Street’s transformation from a few leftist protesters squatting in Zuccotti Park into a global movement is both predictable and surprising. It’s predictable because the global financial crisis, the subsequent taxpayer-funded bank bailouts, and the stringent austerity measures that followed were the political equivalent of pouring gasoline all over the Western world; it’s surprising because no one would have guessed that a tent-based demonstration instigated by Adbusters magazine and Anonymous would be the match that lit the whole mess ablaze. As the leaderless Occupy movement spread to 2,400 cities worldwide, it’s slowly become more organized and is now trying to hammer out a consensus on what they want to change through roughly a gazillion mind-numbing, bongo-drum-backed general assemblies. Until it issues an eloquent sound bite suitable for public consumption, we’ll have to glean what we can from the countless reforms being suggested on the hundreds—if not thousands—of Occupy online forums, live streams, and Twitter feeds. Below are recaps of some of the suggestions, both clever and ludicrous, the Occupy movement has offered to date, coupled with commentary by Richard Beardsworth, professor of political philosophy and international relations at the American University of Paris, and Martin Kragh, associate professor at the Stockholm School of Economics. A WORLD WITHOUT MONEY Many protesters believe that a world without money would be a better place for everyone, as all the current problems could be fixed without anyone saying the solutions were “too expensive.” Additionally, it is claimed, in a barter-based society where people gave one another their skills and knowledge freely, crime “would be greatly reduced.” Richard Beardsworth: Without money as medium of exchange and stock of value, there would be neither international trade nor investment (and therefore growth). A world without money would quite simply not be a “world.” Like similar proposals during the crises of modernity, the proposal is ahistorical and metaphysical. Martin Kragh: The idea of a world without money has been around for centuries. However, archaeological and anthropological studies strongly suggest that all larger societies have used some sort of currency. Shells, coco beans, and various metals are examples of early money used already thousands of years ago. Today most transactions are done electronically, but it is money nevertheless. So one can probably change the current monetary system in bits and parts, but as long as we have any trade and interaction between people, money will be with us. RESTORE THE GLASS-STEAGALL ACT The Glass-Steagall Act, passed in 1933, separated investment banking from commercial banking, preventing the banks where most people keep their money from speculating in risky securities. Many components of Glass-Steagall were repealed in 1999 with the passage of the Gramm-Leach-Bliley Act. Some of the members of the Occupy movement believe that restoring it would help control speculation in complicated and risky financial “products” like derivatives, which they feel helped cause the financial meltdown. Richard Beardsworth: The Gramm-Leach-Bliley Act pulled down barriers between investment strategies and deposit holding, allowing bankers to confuse and ignore their responsibilities and take excessive risks with other peoples’ savings and debt. To argue for restoration of the division between investment and commercial banking makes a great deal of political sense to me, in this context (I cannot speak to the financial arguments). Without it, the actual responsibility for the crisis is not being politically addressed. This is bad politics. Martin Kragh: There is actually a discussion right now in the United Kingdom to implement a law that would again separate the two branches of commercial and investment banking. This is a political process, and as such is hard to predict. But it is clear that all Western economies will emerge from the current crisis with a set of new regulations. We just don’t know which ones. RESPONSIBLE BEHAVIOR Some Occupiers go so far as to say that there should be a “cap” on how much money you can have—say, $1 billion per person—and how large a company’s market share could be globally—say, 10 percent. As a poster on the Occupywallstreet.com forum who goes by “apacheman” put it, “There is no moral, ethical, or legal ground to sustain an assertion of the right to unlimited wealth for an individual or corporation. Capping individual wealth and corporate market share is necessary for the betterment of all.” Richard Beardsworth: Disparity of wealth between the rich and the poor has increased substantially over the past 20 years, although it is important to recall that relative poverty has declined during the same period (most importantly due to the accelerated growth of “emerging” economies). A response to this growing disparity is critical for many moral reasons. However, I don’t think one should limit individual wealth per se, but tax this wealth, progressively, through institutional mechanisms; in other words, let us not moralize upon wealth creation but instead institutionalize its limits. How is one going to limit global corporate market share without antitrust/antimonopoly laws at the global level, which requires a world government? The suggestion is not feasible without a world constitutional order (with targeted mechanisms of enforcement) in which the global market is embedded. Consequently, each proposal is, respectively, morally and historically inappropriate. Martin Kragh: How do you know that $1 billion is the magic number? I don’t get it. And will this number be adjusted for inflation and exchange-rate movements? And if a firm has a huge market share, is that not because people like their products? Governments should not regulate whether people buy iPhones or Samsungs. I’m in favor of progressive taxation, but we also need to encourage entrepreneurship and investments. For this to happen, we have to accept the fact that some successful people earn more money. GLOBAL ACCOUNTABILITY Some Occupiers want the global financial and global energy sectors to be thoroughly and constantly investigated for fraud, bribery, insider trading, violations of environmental laws, and conflicts of interest. The results of these investigations would then be published and all lawbreakers, including politicians, would be prosecuted. This argument speaks to the feeling among protesters that widespread corruption and illegal activity is what bankrupted the economy. Richard Beardsworth: Things are never black and white, and the universal pretensions behind this proposal are utopian and moralistic. That there should be a universal body to investigate globally articulated bank frauds is, however, a reasonable suggestion. The first more feasible and more effective thing to focus on is the elimination of tax havens. Martin Kragh: This sounds good to me. However, I’m afraid that most of the current financial disaster was brought upon us by people who acted completely according to existing legislation. So first we need good governance and sound regulations. CONTROL OF OUR OWN MONEY Another idea bandied about in Occupy discussion groups is that taxpayers should have more of a say in how their money is spent. This could be accomplished by setting up secure tax-payment hubs where citizens would be able to decide which government departments and programs they want to support. The government could present proposals to voters, but it would be up to the citizenry to decide what programs get funding, and how much. Richard Beardsworth: Strong participatory democracy regarding fiscal policy can make sense locally. It certainly makes no sense, however, at the national level, given the technical complexity of the issues. This is not to excuse technocracy (Obama was unable to reform Wall Street partly because of his necessary reliance on “insider” technical advice), but one should bear in mind that politicizing technical issues is itself a complex process. Direct citizen decision-making is not the answer on this issue. More generally, we need to reinvent republicanism for a global age, not reduce complex concerns to a “city-state” model of democratic participation.  Martin Kragh: This idea sounds extremely dangerous to me. We do not want people to negotiate who should receive medical treatment or education. We elect governments on local and parliamentary levels; if you don’t like their spending decisions, you should vote for someone else. THE ROBIN HOOD TAX The so-called Robin Hood Tax is a proposal that would place a tax on financial transactions like stock and bond trades and currency exchanges. The tax rate would be as low as 0.05 percent, but proponents say it would yield hundreds of billions of dollars a year. It has been backed by high-profile economists, politicians, and even the Vatican. Richard Beardsworth: It is a very attractive idea that dates back, in its specifics, to the 1970s and has, as said above, a large backing. The question is how to put it in place (feasibility and efficacy). Some suggest that the IMF would be the suitable institution to coordinate the levying and collection of the tax, although many countries in the South do not believe the IMF is impartial enough. With recent policy changes and new direction, I do think the IMF is the right institution to coordinate and collect, since it is the only financial institution universal enough to begin to make the tax effective. Concentrated focus on this proposal seems worthwhile at this moment of financial and ideological uncertainty. Martin Kragh: Economists believe that a tax can be levied in order to direct incentives of households and firms. The idea of a levy on financial transactions (also known as a Tobin tax) sounds reasonable but can be hard to enforce in practice. Banks today finance their activities to a large extent on short-term money markets, meaning that they rely on borrowing from other banks, domestically and abroad. I’m not sure we want to hamper their ability to do so. There is also the risk that the EU will use such a tax to finance their huge deficits, which implies a risk for more federalism—something most Europeans don’t want. There might be more efficient ways to regulate speculation on the domestic level.