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TMFFlushDraw (73.12)

What I Want Occupy Wall Street To Be

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October 20, 2011 – Comments (5)

My rant for today... 

I love the concept of Occupy Wall Street. There are injustices in society that need to be corrected and I'm all for people voicing those injustices. 

The problem is that most of the people protesting are morons and have no clue what really goes on in the economy. And the few that do are drown out by the crowd. 

So I thought I would write a few of the things I've observed in watching the protests and what I would like Occupy Wall Street to have as their talking points. 

- Wealth inequality has become extreme in this country

Real wages haven't risen in decades for the average worker, a vastly disproportionate about of wealth resides at the top of society, and it feels like social mobility is harder than ever. In short as the U.S. has grown and become more successful only a few of us participated in the fruits of that success.

How do we fix it? I have no idea. But I think stating the problem could open up some discussion. Let me know if you have a fabulous idea. 

- The 99% saved the 1% and we're pissed off about it 

The bank and auto bailouts were paid for by everyone but it feels like a very small portion of people really benefited. That pisses people off and for good reason.

A great fix to this would have been many of the provisions in the Barney-Frank bill that was gutted. Instead we're left with a financial system that looks a lot like the financial system we had before.

This time I do have a solution! Chop the big 4 banks into about 20 pieces. There's no reason that i-banking and mortgage units belong in the same business. Bring back some competition and chop them up.  

- It's not about you or me, it's about us (the 100%) 

Fellow fool Brian Stoffel wrote a good article yesterday about how it should be about all of us and not 99% vs. 1%. click here to see the article. 

I agree with the premise that too much of business and politics has become about power, greed, and winning. Why can't we all win? Why can't companies pay a good solid wage, people work hard, and generate a profit for shareholders. Everyone wins.

I started my career at 3M where I often heard about the "good old days" when wages were higher (relative to cost of living), options made many people wealthy, profits grew quickly, and everyone worked hard. Employees weren't looked at as a wage or a number but instead as an asset. And employers weren't looked at as evil, they were partners and provided the means to accomplish something great that would help everyone. We've lost that loving feeling. 

I think there's a lot of responsibility for this that falls on Corporate America and the leaders in our country. As layoffs were happening around the country there was very little remorse as corporations reported record profits. The little guy is out a job and the boss rakes in a record bonus because of cost cutting. The incentives are perverse.

But it's more than a single company that we can blame, it's an entire mindset. It's the mindset of the mega corporation. Maybe what Occupy Wall Street needs to do is start a new movement in the spirit of "Made in the USA" a few decades ago. Maybe we should "Buy Local" or "Buy Small Business". There has to be something we can do other than patronizing the same companies that are making this mess worse. And if we help smaller, local businesses we may just improve the employment picutre in the process.

Thus completes my rant for the day. Thought Fools?

TMFFlushDraw 

5 Comments – Post Your Own

#1) On October 20, 2011 at 2:22 PM, russiangambit (29.29) wrote:

There is definitely shocking lack of loyalty in american workplace, and it goes both ways. Corporations probably are too blame, for treating everyone as an exepndable "resource". But now it goes both ways, and the only loyalty is to the paycheck. I don't think anyting could be done about it now.

And the "occupy" movement really should be direct at the Congress, not Wall Street. Without the tacit agreement from the Congress and the government the bailouts would've never happened.  Congress is the one making the laws. Corporations are simply exploiting them to the fall advantage.

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#2) On October 20, 2011 at 3:50 PM, SkepticalOx (99.43) wrote:

I think it's a bit to broad to blame "Corporate America" as a whole. Companies have an incentive to treat their employees better: they can attract better talent than a company that treats their employees like crap. Look at some of the practices of companies in the annual "Best Companies to Work For" list. 

A huge chunk of the problem is that with globalization, companies have access to talent at much lower costs elsewhere. Many Americans are now overvalued for what they can offer. Hire a programmer in the US or hire 10 in India.

The government should get out of the business of picking winners and losers by bailing out companies that deserve to fail, and rewarding executives that ran their companies into the ground. A lot of the anger is the big bonuses going to the people who ran the companies that screwed not only themselves but the rest of the economy.

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#3) On October 20, 2011 at 4:36 PM, devoish (98.37) wrote:

Why is it that hard to blame corporate America as a whole? I am sure there are instances of companys and execs without blame, but for the most part probably not. In real estate the corruption of falsifying lending documents to make income from fees was industry wide when desperate loan officers ran out of qualified borrowers. Today corporate execs have an easier time raiding payroll and pension for profits than choosing among innovative technologys.

I was introduced to Ellen Schulz on the Daily Show. Here is an excerpt from a USA Today review of her book Retirement Heist;

Schultz opens the book with a look at the December 2010 annual outlook investor meeting sponsored by General Electric and CEO Jeffrey Immelt. (She could have focused on another corporation and another chief executive just as effectively, because the pension heists are so numerous.)

Immelt spoke about the problems for the corporation's profitability caused by the pension plan and medical benefits, announcing those benefits would be closed to newly hired employees.

Immelt and other corporate spokespeople have suggested that pension plan shortfalls are caused by out-of-control factors such as the large number of retirees, declining stock market investment returns and competition from foreign competitors that eschew good benefits for laborers.

Schultz knows better from her extensive research. She is a reporter who has become an expert in a relatively narrow subject matter. As she writes, "What Immelt didn't mention was that, far from being a burden, GE's pension and retiree plans had contributed billions of dollars to the company's bottom line over the past decade and a half, and were responsible for a chunk of the earnings that the executives had taken credit for. Nor were these retirement programs — even with GE's 230,000 retirees — bleeding the company of cash. In fact, GE hadn't contributed a cent to the workers' pension plans since 1987 but still had enough money to cover all the current and future retirees."

Then Schultz delivers the clincher: GE was indeed burdened by a pension plan — the plan for top executives. The obligations of that plan, for a minuscule number of individuals compared with the 230,000 lower-level retirees, totaled $4.4 billion and had drained about $573 million from the corporate treasury over the past three years.

When reading an investigative book, the consumer must decide whether to trust those who are exposed, who usually have a major stake in hiding the truth, or those conducting the exposure, who usually have little or no direct stake in spreading the truth. This book is not even a close call. Schultz's evidence is solid, based on her presentations in the text and the end notes.

Best wishes,

Steven

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#4) On October 20, 2011 at 8:21 PM, TheDumbMoney (38.64) wrote:

Flushdraw's post pretty much exactly sums up how I feel.

I would add that we can also try to focus where possible on investing in companies in which incentives in the boardroom are not perverse. 

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#5) On October 21, 2011 at 1:26 AM, awallejr (83.91) wrote:

How do we fix it?

The only way is through taxation, but you won't get the right politicians voted in to do it.

Wall Street is absolutely to blame, along with Congress.  They were allowed into the mortgage business with the repeal of Glass-Steagall and they ran it as far as their greedy hands could take it.  And when the game ended, Congress had no choice but to bail them out.

Personally I think Obama blew it big time, it is now too late in light of Congressional deadlock.  All he is doing is using rhetoric for a second term which he truly doesn't deserve.  The problem is the Republicans aren't offering anything better in my opinion. Cain? Nope, nice guy but pretty much clueless about politics.  Perry?  I will never vote for another Texan for President, every one has drawn us into war during my lifetime.  Romney?  Possible.  The rest? no real support.

As for helping small busineses, that is exactly where the concentration needs to be.  Small caps create the jobs.  The SBA should be given the money along with allowing all the BDCs to tap into a pool to lend since they give to the small, mid caps, unlike the big banks.

But alas, in the end it will wind up being politics as usual.

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