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According to the Wall Street protestors it is the large corporations and Wall Street firms that are responsible for all that ills the U.S. This all is not new, in fact these protest seem to be a newer version of the old 60’s “need not greed” protests. Not to demean the well meaning sign carriers but if the world was ran by them their would be nothing but need. This is due to the fact they do not understand economics or why things happen. That many probably agree with them is a testament to the lack of economic education in this and most other countries.
One of the top things on their list of grievances is the profits of Wall Street. One would suppose from their protest that they would prefer that Wall Street be awash in red ink (which it has been for much of the last three years). Of course it is obvious from their signs and chants they do not have the faintest idea what Wall Street does. Wall Street to many does nothing but price the value of companies through trading stocks. The truth is it is also the primary means by which capital is allocated in this country and much of the world. In other words the folks in all those high-rises keep money flowing to where it is most needed. When allowed to work properly funds are allocated out according to where they can do the most economic good. The most economic good just happens to be those things that create what society wants and needs. These also happen to be the places that will create the most jobs and the most societal good. Wall Street tycoons only make money if they make this call correctly. If they fail they loose money. To put in more succinct they make money only if they create an even greater amount of wealth and opportunity in society at large. To wish them to fail is to wish society to fail. Of course I am talking of a properly working marketplace, Wall Street like anything else can be perverted.
If a large entity, say a government, wishes to disrupt the market to get money to flow where it normally would not then it can corrupt the process. All it has to do is make it profitable to do something and Wall Street will respond and funnel money to it. Which is exactly what happened when Fannie Mae and Freddie Mac, the semi governmental mortgage giants, decided to start to buy large amounts of sub-prime mortgages. Wall Street responded by supplying all the sub-prime mortgages the entities could handle. In fact they were so good at it they created a glut that they then decided to repackage and hide inside so called mortgage securities (very similarly to the adage selling a pig in poke). Now not to say all this bundling and repackaging was on the up and up, it was in fact down right shady (and that is putting it politely). The fact that bad results came out of bad incentives should not be surprising. We should not let that be an excuse for loosing sight of the fact that the reason for the glut of sub-primes was good ole Fannie and Freddie and by default the U.S. government. The whole thing started because of what an economist would call a perverse incentive. Like adding to the delinquency of a minor or even the police using entrapment, the crime happened because those in charge encouraged it to happen!
This is of course is lost on those roving protesters. It was all just Wall Street greed and a lack of governmental controls. It never occurs to them that their futures and Wall Street’s is somehow connected. Of course Wall Street is not the only focus of their wrath; big corporations and their record profits are also in their sights. This brings us to Steve Jobs. Steve Jobs ran one of those greedy corporations and this last week was his last one on earth.
Steve Jobs was one of these innovators upon whose backs society advances. In Ayn Rand parlance he was one of society’s Atlases. The very way we interact with our computers and use programs can be traced to him. He is responsible for putting the personal in personal computing. Not only would there not have been an Apple if it had not been for Steve there also would not have been a Microsoft. He was that important. He and his company were also very rich.
Steve Jobs is probably as close as we can get to a Hank Rearden (A character from Atlas Shrugged) in our modern society. Steve did not invent a new kind of metal but he did invent a new way of using computers. To Steve computers and gadgets should fit seamlessly into our lives, which meant you shouldn’t need to study a 200 page manual to use it. This philosophy and with a personality as driven as any pulled from the pages of a novel he changed the world.
Society has advanced on the backs of giants like Steve. What should be obvious to all is Steve did not get rich off of society but it was society that was enriched by him. If he was able to retain a bit of what he created for himself and his company who are we to complain. Would you stone a farmer for keeping some of his crop for himself?
While the protesters complain the bottom 99% are supporting the top 1% the top 1% quietly go about paying over 50% of the taxes. The attitudes of the the protesters are of course not new, as articles were written lambasting the so called Robber Barons they went about making this the richest nation on earth. That they raised the living standards of a nation was not laudable in the minds of their enemies who insisted instead on condemning them for keeping some of what they created for themselves. Just as it never occurred to the muckrakers of old it never occurs to the protesters today that if the movers and shakers of today do not receive their due they will not be any movers and shakers.
Society survives and advances on the backs of men like Steve Jobs and the work of Wall Street financiers. This has always been true. The Atlas’s of the generations past, men like Henry Ford, Thomas Edison, John D. Rockefeller and countless others. Men who lifted the world to the position it is in today.
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More on the Wall Street protesters in the next article