By Wiha Powell
Spreading across America like a wildfire, the ‘Occupied Wall Street Movement,’ which has been protesting for several weeks, has now sparked a worldwide movement. Their motto: “we the 99% are fed-up with the greed and corruption of the 1%”. Their goal: “restoring the balance of democracy within the U.S.”
Question, what is fueling this movement? Corporations are ruling and influencing the government, with the government providing bailouts, tax breaks, and other harmful and detrimental governmental policies alongside the corruption of the Federal Reserve.
Chanting the slogan – similar to that of the Tea Party – but undeniably for different reasons, “The banks got bailed out, I got sold out,” the Movement appears to be anti-capitalist, believing that bank profits reflect the exploitation of the 99%. However, the problem Americans are facing is not totally ‘capitalism’, which is an economic system where private individuals or corporations own production and distribution. Rather, the problem stems from ‘crony-capitalism’, which is the portrayal of a capitalist society but is based on the close affiliation between private individuals or corporations and the government.
As a result, the success of the economy is determined by the success of the corporations, instead of basing it upon the free market and the law. The success of these corporations is solely reliant upon the favoritism shown by the ruling governmental party, which comes in the form of tax breaks, government grants and other incentives.
In 2008, under the Bush Administration, the Senate passed a Bill that gave a $700 billion bailout to financial institutions. The ulterior motive of the Bush Administration was to buy up $700 billion in troubled assets, which was mostly mortgage-related that caused a crisis in the financial market. Their goal was to free up the banks to start lending again.
In July 2010, a year and a half later, Congress under the Obama Administration passed another bill relocating the financial market’s power back into the hands of the government and taking it away from Wall Street in order to prevent future financial crisis. Afterward, the Obama Administration poured billions into automobile companies, i.e., General Motors and Chrysler, to keep their head above water. Then to make matters worst, the President created an Auto Task Force headed by Steven Rattner, a Wall Street investor, to supervise the auto companies. Note, Rattner has no automotive experience but has plenty in raising campaign money.
This reform, according to critics, did not repair; it only created a stronger relationship between private corporations and the government in turn, inviting big banks that have enough capital to influence legislation and the agenda of centralizing power in Washington. This is a clear-cut example of the government rewarding bad decisions made by Wall Street while putting taxpayers at risk.
With the government reforming and bailing out private corporations, it has proven to be harmful to small businesses and consumers who do not have the capital or government connections to navigate the rules and bureaucracy to influence any legislation that is being proposed by the Congress. It is apparent that the continuation of crony capitalism has allowed private corporations to roam freely without any regulations and has brought about the current financial and economic crisis that the U.S. faces today.
Instead of playing favoritism, i.e., crony capitalism, the federal government has a significant role to play in ensuring that the financial markets are fair and transparent and holding those accountable who violate the rules. The purpose of a reform is to restore and repair the markets’ principles, which will ensure the freedom to participate, continued attachment to risk, and the sense of responsibility that guarantees that those who seek to reap the gains also bear the full risks of losses.
Presently, there are millions of Americans who are still feeling the pain and who still are being affected from the last financial crisis. Undoubtedly the financial sector needs a major reform but with private corporations having too close of an affiliation with the government, the current reforms are making matters worst, creating a new wave of crony capitalism within the American economic and financial landscape.
Furthermore, with new life bred into crony capitalism, there is now a rise in the conflict of interest between private corporations and the government. Inevitably, what were once economic decisions are now becoming political decisions. Moreover, the constant dismissal of market principles and regulations of the U.S. profit-and-loss free market system, has resulted in the involvement of government bureaucrats and private corporations determining the winners and losers of the economy. So, in the words of the Wall Street Movement, “we the 99% are fed-up with the greed and corruption of the 1%”.
The views expressed in the blogs are those of the authors, not the American Society of Public Administration.