From the beginning there are aspects of the Occupy Wall Street movement that have been widely misunderstood. With the current turmoil in New York City, these misunderstood aspects of the movement are, in part, the key to understanding what will happen next.
The protesters are, in large part, college graduates with no jobs. We must recognize a critical point: The protesters have no place to go.
When people say to me "they will leave;" my answer is always "to go where?"
Right now, the nation suffers from massive long-term joblessness. According to the Bureau of Labor Statistics, 5.9 million people have now unemployed for 27 weeks or more, and unemployment among people under 30 is substantially above the national average. The protesters don't need to be told this; they are living it.
As the Boston Globe wrote (italics added):
Voters under 30 have, as a group, become increasingly disillusioned dealing with the demoralizing economy. Their … unemployment rate is significantly higher than the national average, as many students graduate into a world of massive college loan debts and barren job markets.
The protesters are occupying Wall Street because they want an opportunity to work (as good capitalists) to live the American dream, and to have jobs. Many people have dismissed them as if they could somehow disappear into the vapor. As detailed below, this is simply impossible.
For better or worse, the Occupy Wall Street occupation serves three unrecognized purposes for many of the protesters:
1.) It provides a "place to go" in the morning. This need for a place with purpose is central to maintaining the morale of unemployed people. In an earlier era, corporations provided outplacement offices to laid-off workers for precisely this reason.
2.) It provides the support system that every unemployed person needs. One of the first things ever job placement counselor tells every job seeker is to develop a reliable support system. The kids camping on Wall Street provided support for each other, and the employment dilemma they all face (which is real, regardless of the cause, or who is to blame.)
3.) It provides hope.
A few weeks ago, Jews across the world observed Yom Kippur - the annual day of fasting and renewal. The thing that most struck me in this year's observance was that, in large part, it is about hope. Hopelessness is actually a forbidden way of thinking. The Judeo-Christian ethos recognizes that hope is an essential element for the survival of the human spirit.
The protesters on Wall Street have sparked a movement that has spread across the nation. However you view it, this movement is providing hope to millions of the dispossessed in our society. The success of the movement is a reflection of the lack of hope that previously existed.
The investing community cannot blissfully ignore these sentiments. In the absence of hope and optimism, how can we expect consumer confidence to rise, with an associated recovery in consumer spending and housing prices?
As you may have noted, this article has been written in the present tense; not because I am listening to the news, or hear angry protesters saying "this is not over." It's written in the present tense because people with no jobs, no place to go, no other support system and no other source of hope will find a way to band together. From this perspective, we must expect that this is simply the end of the first stage in what is most likely a long running saga: A sage which we must fervently hope will have a happy ending.
In 1942 after Montgomery's victory at El Alamein, Churchill famously said:
“Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”
I suspect the same is true with regard to the tumultuous events now occurring on Wall Street.
One last point to keep in mind. In writing about the Occupy Wall Street movement over the past month, I have consciously avoided the use of the word "revolution." Nonetheless, in 2009, I wrote It Could Happen Here: America on the Brink (HarperCollins) which said that growing economic inequality (if allowed to continue unabated) in the United States would lead to a dysfunctional economy, greater political polarization and political paralysis, anger, mistrust, and ultimately protests with the potential for political instability and revolution.
One of the key historical analyses in the book reflected how revolutions actually occur. They don't happen because of downtrodden masses. Revolutions happen when people have hope which is suddenly dashed. It's the sudden loss of positive expectations that creates the anger which ultimately fuels the fire.
The French Revolution, for example, did not happen because Marie Antoinette said "let them eat cake." At a time of economic stress, the harvest failed, leading the price of bread to skyrocket and demand for manufactured commodities to collapse. As a result, the laboring poor were denied employment just when they needed it most. In combination with the people's overwhelming lack of trust in the nobility, the sudden change in expectations--caused by the failed harvest--led to rioting in the streets. The words of the nobility came to be regarded as meaningless, and rumors circulated that the nobility was now trying to starve the populace into submission. This sudden change in expectations, and loss of hope was the candle that lit the flame.
I do not believe our society is at such a dire point yet. But, we should not minimize the danger we now face. What will happen if we do not provide meaningful hope to the people across the country who are now part of the Occupy Movement, as well as the dispossessed, often formerly middle class families, who feel cheated out of their homes, jobs, and decent way of life?
In this national saga, we also, perhaps, are only at the end of the beginning.