As more Occupy movements are springing up throughout the United States and the world, one must come to wonder, what is Occupy Wall Street's end game? Does Occupy Wall Street have an overall plan? If so, what is this plan and how does the group expect to accomplish this goal?
According to the Declaration of the Occupation of New York City the group proposes that "all people who feel wronged by the corporate forces of the world can know that we are your allies." Furthermore, the declaration goes on to state:
As one people, united, we acknowledge the reality: that the future of the human race requires the cooperation of its members; that our system must protect our rights, and upon corruption of that system, it is up to the individuals to protect their own rights, and those of their neighbors; that a democratic government derives its just power from the people, but corporations do not seek consent to extract wealth from the people and the Earth; and that no true democracy is attainable when the process is determined by economic power. We come to you at a time when corporations, which place profit over people, self-interest over justice, and oppression over equality, run our governments. We have peaceably assembled here, as is our right, to let these facts be known.
Furthermore the declaration goes on to list 23 "facts" that corporations are guilty of. I will detail several of these facts later, but for now it is important to look at the text above and ask again: what is Occupy Wall Street's goal?
One of the first statements is "our system must protect our right, and upon corruption of that system, it is up to the individuals to protect their own rights." The first question I directly propose to Occupy Wall Street is what rights has our current system disabled us from having? According to the 23 points listed on the declaration the majority of the complaints are monetary related which makes the movement hypocritical. It is important to note, I have deemed 12 of the points as non-monetary related complaints; however all of these, with the possible exception of point #16, are not proven and can be characterized as blasphemy.
The above discussion is only the beginning. Occupy Wall Street's goal is not simple to understand because there are several underlying factors. On the other hand, Occupy Wall Street's motivation is to present negative facts about corporations. However, as mentioned in the previous paragraph, the majority of these "facts" are not facts at all. Therefore, I must reiterate the original question: what is Occupy Wall Street's goal in occupying communities across the country and the world?
Is the Movement About Jobs?
One of the of loudest cries regarding the movement has been unemployment. It is nearly impossible to argue employment is getting better in the United States. With that said, I ask Occupy Wall Street: what can be done about employment?
If Occupy Wall Street wants jobs for Americans, how do they propose to do this? Do they expect corporations to hire them? Especially after they are spreading slander about corporations based upon conspiracy theories that are far from proven. The key point that stands out regarding jobs is point #6. Point #6 states "they [corporations] have continuously sought to strip employees of the right to negotiate for better pay and safer working conditions." Does Occupy Wall Street expect businesses, whether they are small mom and pop shops or Exxon Mobil (NYSE:XOM), to pay hirer wages for simple jobs? This leads me to my first proposal regarding employment.
Here is one question I propose to Occupy Wall Street: do you expect the government to subsidize jobs? This plan would work in theory. This theory is the idea that legislature is passed abolishing minimum wage and allowing corporations to set their own wage limits. Before you get up in arms, please take a moment to understand the idea.
While many would think America would turn into a sweatshop economy with no minimum wage, this not the case. One key to keeping corporations from opening sweatshops is by adding in the legislature a point that requires businesses to keep strict tabs on employees and only hire American citizens. By doing this, all employees would be accounted for and there would not be a scenario where business are packing immigrants into a warehouse to manufacture goods at an incredible rate.
Occupy Wall Street's argument to this would likely be "the corporations would pay the government to essentially turn the other check regarding their illegal actions, therefore sweat shops would pop up all over the United States." While this is a possibility, I do not see it playing out this way for one important reason. This reason is the equilibrium between competent workers and hourly wages would keep wages above pennies per hour.
Occupy Wall Street may fire back and say, "what does it matter if an employee is competent or not?" It is a simple answer really. First, the United States is a land of civil rights, therefore, if corporations attempted to create sweat shops, the Police would be informed immediately. Again, Occupy Wall Street would state, similar to point #12, "the corporations would simply pay off the Police and nothing would get done." If this is beginning to sound like the corporations are Mob bosses then we are following the correct path.
Another reason the equilibrium point would keep wages from reaching pennies per hour is because the standard of living in the United States is much higher than other countries in Asia. Let me go over an example to reify this idea. Let's assume minimum wage is abolished. Employer A decides to pay $1/hour for somebody to sweep the floors of a building for 10 hours a day and seven days a week. While this is a simple job, standing and walking for 10 hours everyday is not easy. Continuing with the example, what kind of employees would you expect to see apply for this job? Would you expect to see CFA chart holders lining up to sweep the floors for $70 a week?
Please note, I am not trying to say you would get less intelligent people applying for this kind of job, but you would get people that may not be qualified for anything else. Therefore you are likely to find an incompetent employee that will be likely to show up late, not work, or quit at a whim. Not to mention $1/hour will not keep employees for long. With that said, even sweeping floors is a job and any job is better than no job.
At this moment, Occupy Wall Street would likely argue "corporations would simply keep hiring somebody new when somebody quits since there will always be another person in line to sweep floors $70 a week during a 70 hour work week." While this argument is fundamentally sound, it is flawed. There would come a point in time where the employer would not be able to find an employee for this simple job. Essentially there would come a point in time when the employer would need to raise their wages in order to find a full time, fully competent employee.
What would this equilibrium point be? I don't have the answer, but I would suspect it to be around the $3-$4/hour range for the most simple job. This would lead to a 70 hour work week equaling $10,080-$13,440/year. This may not be enough for a family to survive on, but if two family members are working at this same rate then you get numbers in the $20k-$27k range; which is enough for a family.
In order to more clearly see the equilibrium point, I created a chart that shows this theme at play. Please note, the competency, employee happiness, and employer happiness levels are ranked on a score of 1-10. One being least competent or least happy, and 10 being most competent and most happy. It is important to note, this chart shows the equilibrium point at $13-$14/hour. However, since this chart is simply portraying an abstract example, the exactness is questionable.
click to enlarge
|Hourly Wages||Competency||Employee Happiness||Employer Happiness|
As you can see, this equilibrium point between wages and competency would eventually be breached and employers would not be willing to pay employees for simple jobs. For instance, corporations are not willing to pay somebody nearly $9/hour to do a simple task that a 16 year old high school student can do for $2/hour. This is the exact scenario we are currently in. Minimum wage has moved to a level where employers are hesitant to hire because they will be forced to pay more than what the employee is contributing to the company.
Occupy Wall Street would likely reply, "of course corporations would not want to pay somebody, since corporations place profits over people; as it states in the declaration." According to this logic, I am inclined to believe Occupy Wall Street wants to be paid exorbitant amounts for simple jobs; just as the declaration states in point #2. This point states, "they have taken bailouts from taxpayers with impunity, and continue to give Executives exorbitant bonuses." While I certainly agree Executives should not receive bonuses with bailout money, just as Bank of America (NYSE:BAC) did; I definitely do not believe employees should be paid more than they are worth, and more than there job warrants.
Did Corporations Take Your House or Did you Lose it?
Another major point to the Occupy Wall Street movement is related to the real estate collapse during the Great Recession. Occupy Wall Street argues in point #1, "they [corporations] have taken our houses through an illegal foreclosure process, despite note having the original mortgage." Occupy Wall Street does have a serious argument here because it is becoming more well known that banks essentially "robo-signed" mortgage paperwork which led to many people receiving mortgages they could never pay back.
With that said, I ask Occupy Wall Street: whose fault is that? Can the banks be blamed for thousands of people asking for loans to buy extremely overpriced houses? Occupy Wall Street may reply, "the majority of houses in America were overpriced, therefore it is not the consumers fault because they needed a place to live." While this is true, is it the corporations' fault?
Should the U.S. Government have stepped in as they saw housing prices rocket to unbelievable highs? If the U.S. Government did limit housing prices, would these same Occupy members be protesting against the U.S. Government for restricting homeowners from selling their homes? China has placed limitations on housing prices, so why not the United States? Does Occupy Wall Street want the United States to turn into Communist China?
Is History Repeating Itself?
One final question I pose to Occupy Wall Street: do you want to follow in the footsteps of Mexico? As many may or may not know, the events preceding the Occupy Wall Street movement as well as the theory behind the Occupy Wall Street movement closely resembles the events prior to the Mexican Revolution, as well as the Socialist Worker's Party (PSO) established in 1911. Please note, this group changed their name to the Mexican Communist Party (PCM) in 1919.
Occupy Wall Street will likely respond in one of two ways. First they might say, "we are nothing like the PCM." Or Occupy Wall Street may in fact agree and state, "if it takes socialism to break up the 1% and return America to a free country without corporations running the show, then let's do it." I am more inclined to believing Occupy Wall Street will reply with the latter.
I will now very briefly discuss the history of the Mexican Revolution as well as the PCM in order to show this similarity. To begin, Porfirio Diaz came into power in the last quarter of the 1800s. While in control he modernized Mexico. However, he had no regard for civil rights and liberal reforms. In other words, he was willing to do whatever it took to advance Mexico and bring more profits for himself, as well as his family. Does this sound familiar?
This should sound very familiar to the final sentence of the second paragraph of Occupy Wall Street's declaration. I will repeat it again to make it fresh:
We come to you at a time when corporations, which place profit over people, self-interest over justice, and oppression over equality, run our governments.
The similarity to the Mexican Revolution should be clear, as well dozens of other uprisings throughout the world. This is important because it brings to the table the question of whether Communism will slowly creep into America? Whether Occupy Wall Street likes it or not, the truth is their declaration carries Communistic tones.
What Will Come of the Occupy Movement?
Occupy Wall Street has very good intentions. However, I feel the group needs to rethink their goal. The motivation is there because many of these people have lost their homes and jobs over the past 3 years. This motivation will keep these people going as long as it takes to get change. With that said, I do not believe change is needed or can happen. I will be the first to admit the United States is not a perfect country, but something Occupy Wall Street forgets is that in most countries they would not be allowed to assemble.
Occupy Wall Street will certainly respond by stating "the Police have beaten us countless times for no reason." While this is true, and I do not condone this type of action, the truth is in the majority of countries in the world these people would be kidnapped and killed for protesting in this manner. So maybe Occupy Wall Street should take a step back and think:
If the corporations are really that bad, why have they not had us kidnapped, murdered, or thrown in jail indefinitely?
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.