On the 31st of October we visited Zuccotti Park, the focus of the Occupy Wall Street movement, still fully in place at this time. The occupation had begun a little over a month earlier, on the 17th of September. A fortnight after our visit, the police would clear all protestors from the park.
The Occupy Movement is remarkable as a practical exercise in anarchy. There is a commitment to non-violent action and collective decision-making with no leadership and no hierarchy.
The people who gathered in Zuccotti Park were open and inclusive and provided food and shelter to all comers. One unanticipated though predictable consequence was that they became a magnet for people such as the homeless and the mentally ill who Society has largely abandoned. They did what they could to assist those people but they did not set out to be a welfare group and this often made political coordination more difficult.
“We are the 99%” is the clarion call of the Movement. It refers to the vast inequality of income and opportunity in the United States in particular and Western societies in general. It is an issue of key relevance to the vast majority of people.
The website Occupy Together also lists other key issues including excessive influence purchased by large corporations, student debt, home foreclosures due to irresponsible practices of banks, “too big to fail” banks, profiteering of private institutions in healthcare, a living wage to the 99% and budget cuts affecting the 99%.
Starting here in Zuccotti Square, the movement spread across the world to 95 cities in 82 countries, with numerous Occupy camps such as this one. Though all the camps are now gone, they had considerable political impact and the movement continues in other ways.
The USA has the most unequal income distribution of any developed country, far worse than the best examples of Japan and the Scandinavian countries. In the early 1970s, the top 1% of earners in the US earned less that 10% of national income; by 2007 this proportion had risen to nearly 25%. The contrast is even greater in terms of wealth. The top 1% own 43% of US wealth, while the bottom 80% own 7% only.
We can see a peak in this graph for the share of the top 1% in US income in 2007, just before the global financial crisis. Tellingly, the previous peak was in 1928, just before the Great Depression and there has been a long fall and a sharp rise since then.
Currently the top marginal tax rate in the US is 35% but it was not ever thus. At the end of the Second World War it reached a high of 94%. Through the Truman, Eisenhower and Kennedy years it stayed at 77%. Even in 1972 when the top marginal rate was still 70%, the unsuccessful Democratic candidate George McGovern was alerting the electorate to the fact that over a certain level of income, effective payment of taxation actually declined. By the end of the Reagan era the top marginal tax rate had declined to 28% and then it recovered somewhat to 39.6% during the Clinton years. Recent Republican Presidential candidate Mitt Romney provided a dramatic example of the extent to which very wealthy people can avoid taxation. He declared that he paid 13% in taxation as though this was a virtuous level of contribution to the US economy & people and even then he was highly evasive.
At this point in time, it’s hard not to characterise the US as a declining country. In 1950 the US accounted for 50% of world income; this has now fallen to somewhere between 17% and 18%. Yet the US still accounts for 50% of world military expenditure. This is likely to be a significant factor in the relative economic decline because military expenditure usually contributes little to economic growth. It is also self perpetuating because once in place, a large military generates demand for their own activities. This is also a relatively recent phenomenon. The Second World War was the first time that the USA did not demobilise after a war.
It is common for many in the US to eulogise about freedom. Yet freedom without justice and equity is an illusion. Poor people who are effectively deprived in terms of education, health, housing and work opportunities can never be free to exercise the same choices as the wealthier members of their communities. This kind of dispossession is what a deterioration in the distribution of income produces. It’s not unique to the US but the US is leading the way by a wide margin and it’s not a good form of leadership. This is not just a social concern. Such inequalities mean that opportunities are equally uneven and in the long term all will suffer as fewer opportunities are available to capable people in the vast majority of the population. Consequently, the overwhelming proportion of those who vote to support trickle-down economics are directly undermining their own welfare.
I think that remedial action for the US should include to bring back a 70% top marginal tax rate and to change the tax structure so that something equivalent applies in the private sector. Also, to devise some effective restrictions on the salaries of those who can effectively determine their own levels of payment – politicians, judges, management in large companies. Then there would be scope for providing genuine opportunities for all, building up infrastructure, repaying debt and crucially, making more progress on sustainable development.
The same factors apply to Australia and most other countries in the developed world, albeit so far to a lesser extent. It is of course easier to point out the problems than to specify effective remedies that are politically feasible, particularly since the small minority with an excessive share of resources will resist, together with the institutions that represent them. Even so, public opinion can make a big difference and the situation has been much better previously so maybe it can be again.
31 October 2011