Occupy Wall St is the Kid in the Fairy Tale - The Emperor Has No Clothes

As Tom Friedman recently wrote in the NYT, “There’s Something Happening Here”. There sure is. The market system that has delivered so much to the world over the last century – brought great technology, alleviated so much poverty, produced a better life for billions – is now destroying itself.

Some say this process is now inevitable. That like an empire in decline, the system is deluded by its grandeur and historical power and thus fails to see its weaknesses – so is unable to respond.  I disagree. The crisis is certainly inevitable, indeed that is well underway. The ecosystem is breaking down, and the economy is in hot pursuit in the collapse stakes. But the path into and through this crisis is a choice we get to make. The future doesn’t just happen, we create it.

But who gets to make these choices? Some argue it’s “the 1%” and that the victims of their decisions are “the 99%” – that the rich beneficiaries of the current system control it, and do so in their own interests. This analysis says that’s why we have low taxes, bailouts of wealthy investment banks, lack of action against those who caused the financial crisis and a failure to deal with climate change – because the rich 1% want it that way. But is that correct? And if so, are they making the right decision even for themselves?

The data that “the 1%” are the beneficiaries of the current approach is certainly strong, as the chart below shows, based on numbers from the US Congressional Budget office. The rich have got richer, and spectacularly so, taking nearly all the new economic wealth created in the past 30 years. The rest – and the rest is nearly everyone – have stayed the same. In share of societal wealth, most have gone dramatically backwards.

From Mother Jones: Original here.

The actual numbers make it more human. In the US, the top 1% have an average annual household income of over $1 million while the bottom 90% of households average a little over $30,000. So much for a “middle” class. If you want to dive into the data and see how comprehensive this problem is, take a look at the range of charts here at Business Insider. People will debate different analyses, but it is now so extreme the details don’t change the conclusions. That’s why so many prominent economic commentators are supporting many of the Occupy movement’s arguments.

But these problems haven’t just arrived, so why the public focus now? Partly it’s the strategic brilliance of Occupy Wall St. I have run and observed activist campaigns for 35 years, and this is a very smart campaign. For a start the lack of leaders and the lack of clear demands is not disorganisation, it’s a brilliant strategy. Anyone can join, as long as you’re part of the 99% and feel the system has let you down and isn’t fair. Given the numbers above, that makes the “target market” pretty much everyone.  It’s not exclusionary by supporting particularly political positions and its lack of clear leaders, means the many contradictions inherent in such a broad coalition can’t easily be confronted. This is modern, distributed and resilient campaigning at it’s best. My hats off to them.

But the underpinning driver behind this movement is the context. And it’s this context that should frame our understanding of the emerging crisis and how we manage it and move through it.

The world is an integrated system. So when we look at individual issues – these protests, the debt crisis, inequality, resource constraint, food prices, the recession, money’s influence in politics or accelerating climate chaos – we mistakenly see them in isolation. In fact it’s the system, our system, in the painful process of breaking down. Our system – of economic growth, of ineffective democracy, of overloading planet earth – is eating itself alive.

Occupy Wall St is simply the kid in the fairy tale, saying what everyone knows but has, until now, been afraid to say – the emperor has no clothes – we have system failure. They’ve given focus to what people were already seeing and feeling; that our problem is not just debt, or inequality, or a recession, or corporate influence or ecological damage. It’s the whole package – the system is profoundly broken and beyond incremental reform.

Think about the promise of global market capitalism – the unspoken contract with the people. If we let the system work, if we let the rich get richer, if we let corporations focus on profit, if we let pollution go unpriced and unchecked, then we will all be better off.  It may not be equally distributed but the poor will get less poor, those who work hard will get jobs, those who study hard will get better jobs and we’ll have enough wealth to fix our environmental and resource challenges. And the result will be better lives – for us and our children.

What we now have – most extremely in the United States but in many countries – is the mother of all broken promises.

Yes, the rich are getting richer and the corporations are making profits – with their executives richly rewarded. But meanwhile most people in the US are worse off, drowning in housing debt and-or tuition debt. Many who worked hard are unemployed, many who studied hard are unable to get good work and environmental damage now threatens system collapse. To top if off, people are realizing their kids will be worse off than they are.

To put a human face on what this feels like, at least in the United States, take a good slow look at the stories on the “We Are The 99%” website. Remember as you do that this is not “the poor”, this is life for hundreds of millions of Americans. It’s a sobering insight. It’s not just the environmentalists, or the poor, or the unemployed. It’s most people, including the middle class, who are feeling the failure of the system. And with parallel ecological and resource constraints making endless economic growth impossible, we can now clearly see the potential for system wide collapse.

This particular round of protests may build or may not, but what will not go away is the broad coalition of those who feel the system’s failure has been exposed – the emperor has no clothes. As a banner at the Occupy protests said: “Dear 1%. We fell asleep for a while, just woke up. Sincerely, the 99%”. In this regard, the Occupy Wall St protests have already won – the big issue, the system, is firmly on the agenda.

So is the answer some kind of utopian socialism? No it’s not. In my book I have a chapter called “Ineffective Inequality” where I argue that inequality can be a powerful driver of good things. I refer to the military or universities where the top leaders get 15  – 20 times as much as their lowest paid members. They attract and motivate great leaders and this inequality is “effective” – it drives people to work hard, to study hard, to be entrepreneurial, to improve the lives of themselves and their family. But when inequality gets too far out of control as it has in the US, where the average CEO earns hundreds of times as much as the average worker, then inequality is no longer effective but rather a cancer that eats at the soul of the system.

So what’s the answer? Are we right to attack the 1% as “the enemy”, the cause of all our problems?

While it’s comforting to be able to divide the world into the righteous vs the sinners, life’s rarely quite like that.  What I call “righteous campaigning”, of which I’ve done plenty in my time, is very effective. That’s why enemies are demonised in wars and painted as inconceivably horrible. Some, like Hitler or Gadhafi, make that easy by being that way.  In present day U.S. politics there are certainly some of the rich who are clearly abusing their wealth and power to manipulate the political process for personal gain. The best example are the Koch brothers, who are the corporate bad guys from central casting.

Mostly however, righteous campaigning is a beat up – a tactic proponents for change on all sides of politics use to mobilise people and keep their base emotionally engaged.  And besides the way forward is not likely to be a revolution with the 99% marching into New York and beheading the 1% or, perhaps worse, exiling them to a Scandinavian social democracy….

But are “the 1%” really acting in their own interests? Can they secure even their own future this way? In reality, we now live in a globalised and highly connected world and there are no castles for the rich to hide in. While it sounds plausible and makes good rhetoric to paint a picture of the rich hiding away in their gated communities with private security, this is not practically sustainable. Consider the lessons of various leaders in the Middle East who recently had their castles plundered and their militaries turn against them.

Besides we now know that extreme inequality doesn’t work for anybody. There’s plenty of evidence that highly unequal societies are not good places to live, even for the rich. They are more likely to elect extreme governments and they are less safe, less healthy and less stable.

So it’s time for “the 1%” to engage. Ironically, if they listen carefully, they might even find in Occupy Wall St the movement that saves capitalism from itself. Markets when properly constructed and guided by governments who are acting for the collective good are a powerful way to bring many positive things to society. But uncontrolled markets, where greed takes over and social benefit takes a back seat, are more than capable of causing systemic collapse. Then we will all lose and there’ll be nowhere for anyone to hide.

We can choose this moment of crisis as the time to ask and answer the big questions. To build a different kind of society that behaves like it plans on staying around. In New York and now all over the world, groups of smart, young, highly educated activists have gone to the heart of the problem, the centre of the current system, and held up a giant mirror. The emperors of capital need to take a long hard look in that mirror and ask themselves what kind of world they want to live in, because there is only one.

Remember, when things are unsustainable, they stop. So change is coming. The only question is how it comes and where it takes us. Choices we get to make. The clock is ticking.