Monday, September 26, 2011

In praise of.......the Occupy Wall Street protests

In September 2011 it seemed that the disenfranchised youth of America finally woke up. Over three years after the Neoliberal Economic Crisis plunged America and much of the global economy into recession the downtrodden American people finally began to assert themselves with the occupation of Wall Street.

As with the Arab Spring and the Spanish "indignantes" protests, the Occupy Wall Street campaing is a "grass roots" popular uprising, heavily reliant on social networking due to a mainstream media blackout. The movement is described on occupywalstreet.org as a non-violent "leaderless resistance movement" which was initially proposed by the Adbusters website and organised by a a collective of individuals. The stated aim of the protests is to end the corporatisation of America and restore legitimate democracy.

The origins of the movement can be traced back to the "Credit Crunch", which happened when the reckless gambling of a tiny deregulated financial sector elite caused global money markets to freeze up and created havoc in the stock markets. The US government response was to pour $trillions of taxpayers' money into the financial sector in order to recapitalise the system. the next step was to begin magicking up new money via money printing schemes called "qauntitative easing" in order to pour even more capital into the banks. Instead of using this unprecedented cash flow to support the US economy the financial sector used it to write down many of their toxic debts and continue to pay themselves obscene salaries and bonuses.

Instead of attaching strict lending conditions to these bailout funds and re-regulating the financial sector to discourage further speculative or ponzi style investments the US establishment simply handed over the cash and left responsibility for restabilising the economy with the financial sector elite that created the crisis in the first place.

Thomas Jefferson, still right after more than 200 years.
An interesting historical comparison can be made with the US government's reaction last time an unregulated Laissez-farre financial sector elite drove the US economy into depression; the 1929 Wall Street Crash. The eventual government response was to entirely shut down the banks until they agreed to new regulations designed to get the money markets moving again and prevent similar crashes in the future. Another huge difference in Franklin D. Roosevelt's strategy was that instead of using government funds to prop up the greed stricken financial institutions, he used them to provide direct stimuli to the "real economy" through hugely ambitious state infrastructure projects and housebuilding.

The rise of the neoliberals since the 1970s and the political acceptance of their mantra of "small-statism", privatisation, corporate deregulation and low taxation of the economic elite" eventually led to the destruction of the Roosevelt administration's financial stability reforms in 1999 when the Glass-Steagall 1933 Banking Act was repealed, allowing the banks to engage in dangerously speculative activities using the capital of the high street banks as equity. Another victory for the free-market neoliberals was another piece of Clinton administration legislation; the 2000 Commodity Futures Modernisation Act, which effectively deregulated the derivatives market.

The fault lines in these deregulation policies were clearly demonstrated by the 2001 Enron collapse, which came about after it was discovered that the company had been using complex derivatives to hide their losses and artificially inflate their share prices. The Enron collapse illustrated the dangers of neoliberal deregulation and also exposed a catastrophic failure of the company auditors Arthur Andersen who also collapsed, reducing the global accountancy oligopoly from the big five to the big four.

The neoliberal response to the Enron scandal was as predictable as it was pathetic, instead of reconsidering the decision to deregulate the derivatives market, the authorities concentrated on creating show trials for Enron executives and the introduction of a whitewash response called the Sarbanes-Oxley Act which created Public Company Accounting Oversight Board, to supposedly improve the auditing regimes that had failed. PCAOB was incontestably a huge failure given the subsequent collapses of many larger financial institutions and the exposure of the astonishing levels of reckless speculative and ponzi style investment these institutions had been engaging in.

It is incontestable that post Enron regulation of the US financial sector remained inadequate given the failure of regulators to spot the dangers of a boom in sub-prime lending, Collateralised Debt Obligations and the astonishingly inaccurate AAA+ awards given to these financial products by the Credit Rating Agencies that took vast payments from the creators of these dodgy financial instruments in return for their glowing ratings.

It is not as if the failings of militant neoliberal dogmatism and their inadequate responses to their own crises were limited to the Enron scandal. In the outside world, other countries had suffered the devastating consequences of adhering to neoliberal economic theory imposed on them by the US based International Monetary Fund who imposed tough neoliberalisation conditions on their loans (privatisation, corporate tax cuts, globalisation, deregulation of the banking sector, welfare cuts, relinquishment of fiscal autonomy).

There are too many failings of neoliberalism to cover in the space of a single article but obvious examples can be seen in the Post-Communist neoliberalisation of Russia, the rise of the Oligarchs and the stifling of democracy, the 1997 South-East Asian economic crisis and the Argentine economic meltdown.

In the 1990s Argentina were the IMF's poster boys for their enthusiastic embrace of neoliberalism however the economy collapsed in 1999 and didn't recover until 2002 when the IMF neoliberal textbook was torn up and the government engaged in IMF opposed policies of debt restructuring, targeted taxation, reduction in unemployment, improvements to social welfare provision and massive scale infrastructure development projects which rapidly boosted the economy out of depression and gave it the stability to continue prospering throughout the Neoliberal Economic Crisis. Not only can neoliberalism be seen as the cause of the Argentine economic collapse, but the abandonment of IMF neoliberal dogma created the necessary conditions for their economic recovery.

All of these warnings were dismissed by the IMF and the neoliberal elite with contorted post hoc revisionist excuses and explanations. Instead of recognising the fundamental flaws in their favoured economic dogma, they simply covered up and carried on.

The blame doesn't simply lie with greedy and reckless traders
on Wall street, Washington based politicians and technocrats
are responsible for creating the deregulated trading
conditions that Wall Street bankers enjoy.
More of the same can be seen in establishment responses to the Neoliberal Economic Crisis, instead of admitting the failures of neoliberalism they have concocted the Great Neoliberal Lie, to justify the introduction of even more militant neoliberalist policies. Instead of imposing regulation to prevent similar occurrences, large sections of the political elite in the US have actually been calling for further deregulation. The lie goes along the lines that the economic crash was caused by the fact that the state is too large, spending too much money and collecting too many taxes. That that the appropriate response to the crisis is "austerity", which is simply a euphemism for more of the same hardline neoliberalism (cutting welfare and the corporatisation of the state).

These neoliberal austerity measures have actually intensified the effects of the crisis. The "real economy" of the US has stagnated over the last three years, unemployment has risen and the discretionary income of ordinary working people that make up the vast majority of America has been slashed. Against a background of austerity, policies such as quantitative easing and the artificial lowering of interest rates have created stagflation, which hurts ordinary Americans by attacking the value of their wages, their savings and their pension schemes. Instead of stabilising the financial sector, the austerity response has led to increased stock market instability, with ordinary Americans paying the price once again.

One of the most shocking aspects of the neoliberal response to the credit crunch is the huge Tea Party movement, which resembled a "grass roots" movements of stereotypically stupid Americans until it was revealed that the whole thing has been funded and orchestrated by multi -billionaire neoliberal free-marketeers like the Koch brothers. The fact that hundreds of thousands of Americans have been signing up to a "more-of-the-same" movement has been frankly astonishing to outside observers, especially given the rise of genuine "grass roots" populist movements across the Middle-East, Europe and South America to oppose the further entrenchment of defunct neoliberal economic dogma.

Over the last few years coverage of the Tea Party and their harebrained ideologues has flooded the mainstream media of the world, however, now that a genuine grass roots movement has finally awoken, the mainstream media silence is deafening, although entirely predictable.

Coverage of the London Riots exposed
reporting bias in the corporate media.
Events in the UK in 2011 can be seen as another example of how the corporate owned mainstream media has been deliberate selectivity in reporting dissent. The huge London Anti-Cuts protest went virtually uncovered by the corporate mainstream media except for the usual tactic of focusing on the violent activities of a tiny minority of mindless yobs. The protest was estimated to have been attended by half a million people, the largest UK demonstration since the March 2003 Anti-War protests, but people from outside of the UK could be forgiven for not knowing that it had even happened given the stymied media reaction.

In August 2011 a wave of nihilistic riots swept across England, creating a tidal wave of mainstream media coverage despite the fact that in terms of participation these events were absolutely tiny in comparison to the largely peaceful politicised protests. The mindless violence, arson and looting played into the hands of the UK neoliberal establishment elite, allowing them the excuse to openly propose draconian responses to public "disorder" including restrictions on the freedom of speech via the the shutting down of social networks.

The Wall Street protests have suffered an astonishing mainstream media blackout that would have been utterly unthinkable had the people involved been Tea Party campaigners or a bunch of mindless nihilists, however social networks and the blogosphere are alive with coverage and the movement continues to gain momentum.

The Washington based IMF should be another target
for American anti-neoliberal protesters.
The disenfranchised youth of America have suffered the effects of wage stagnation, mass unemployment, disgraceful higher education "aspiration taxes" and welfare cuts and are witnessing the biggest transfer of wealth from ordinary working people to a tiny economic elite in history. The Occupy Wall Street Protests have shown that ordinary Americans have finally found their voice and it is about time too. America is the indisputable capital of the neoliberal system, not only are both of the political parties hugely compromised by the massive corporate donations needed to fund their extravagant election campaigns and the activities of the multi billion Dollar corporate lobbying industry, the US is also home to neoliberal financial institutions like the IMF and the World Bank that are vehicles for exporting their dangerous greed based ideology across the globe.

Not only do the disenfranchised youth of America owe it to themselves to agitate for change in the economic system to end the defunct neoliberal heterodoxy, they must also remember that much of the rest of the world needs to be freed from the devastating effects of the ideologically driven, US supported imposition of toxic neoliberal economic dogma.

 

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7 comments:

deano30 said...

Timely and interesting piece Tom!

Thomas G. Clark said...

Cheers Deano

Sheffpixie said...

Enjoyed that tom - keep 'em coming....

Bitterweed said...

good stuff

Leni said...

Hi Tom

i have long advocated a sit in in the City - simply clog up the works.

I also think it would be a good idea if we all drew out all money not committed to Standing Orders/Direct Debits on a monthly basis - depriving the Banks of our cash. If we are paid monthly much of our money is held by the Banks at all times. We should stick it in a long sock and take out when necessary.

I don;t know how much it would amount to in total - a considerable amount.

Interesting article - thanks.

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danceswithcows said...

An excellent and comprehensive survey of what free-market, unfettered un-regulated capitalism leads to. Congratulations.