Wednesday, October 26, 2011

On "Occupy Wall Street"

To discuss "Occupy Wall Street" without going into the details of whether private property owners must accept squatters who seek to proclaim a political message without regard to the maintenance needs of the property, or whether protesters are unduly paranoid in their interpretation of effort to vacate areas to enable maintenance and public health operations (interesting; here and here), it seems attractive to discuss it in comparison to its opponents.

About OWS Itself
"Occupy Wall Street" proponents assert that the movement represents the views of the 99% of the population whose incomes aren't in the top 1% of incomes. These proponents include some advocates who are rather more articulate than those sent to interview them. Being articulate in exposing flaws in some opponent is excellent marketing, and is wonderful for argument ad hominem, but what does it do in connection with the movement's thesis?

Does OWS have a thesis?

The site contains a sympathetic video that nevertheless suggests that movement participants may have no idea what they will do next, or even what result they hope to achieve through their action. (If true, how will they know it worked? Or will any subsequent development be seized as proof the movement accomplished valuable objectives? Will this end up like Crichton described junk science environmentalism, with no need for data, just a press strategy?) Many of the individual quotes accompanying photos of OWS participants reflect a theme of disappointment with existing government and a desire for an undefined "change". Some suggest hopelessness, and others a call to action to combat the apathy that enabled government to get to its current unsatisfactory state. The apparent unifying feature is disappointment with the status quo; what seems lacking is a specific proposed fix.

The lack of any articulated "condition of victory" is rather a problem in evaluating an intervention's effectiveness. While claiming to represent the 99% who aren't busy raping the land and destroying the economy for personal gain (an apparent meme of OWS), OWS doesn't seem to have expressed any solution to whatever evil it is OWS asserts the government should address. And getting the government to address some evil seems to be OWS' hope: that someone will eventually, inspired by the throngs napping on the local parks and streets, devise a solution to the ills that upset them. Claiming to represent 99% of the nation that generates the most patented inventions on the planet, these folks seem to be singularly bereft of concrete solutions.

Representativeness is a tricky thing. Revolutionaries in the late 1700s famously chafed at taxation without representation, and denied that the democratic government in London was capable of representing colonists obliged to live within that government's law. An anonymous poll conducted at was given to CUNY sociologist Héctor R. Cordero-Guzmán, who declared that "the 99% movement comes from and looks like the 99%" -- a nice tautology if ever there was one. Are the bottom 99% of US incomes 70% politically independent, as revealed by the OWS poll? According to Rasmussen Reports, two thirds of the U.S. population consider themselves members of either the Republican or Democratic parties. (Despite that multibillionnaires such as Steve Jobs and Warren Buffett were Obama supporters in the last presidential election, it's probably not safe to assume that the entire top 1% of incomes has a party affiliation. Even subtracting the top 1% from the party-affiliated population, one seems to find that adding 1% to the 32.4% of the politically-unaffiliated population – down from 33.5% in August – brings it nowhere near the OWS threshold of 70%.) Where is OWS drawing a sample that is 70% independent? What part of the bottom 99% of incomes does it represent?

First, let's look at the other side of the question.

Who is the 1%?
While we occasionally get enforcement for criminal wrongdoing among the financial executives (or those that receive improper tips, or even obstruct investigations into tipping schemes), and it's easy to lay blame on financial-industry executives whose reckless schemes cost so many investors their lives' savings and resulted in a publicly-financed bailout intended to thwart a broader economic collapse, the fact is that most of the top 1% of earners in the United States aren't even members of the financial industry. Among the larger groups of top-1% earners, for example, are physicians (1.85%). Attorneys follow (1.22%). The largest group fall into a category called "executives, managers, and supervisors (non-finance)", which occupies a 6.35% slice of the top 1% of U.S. incomes. Financial professionals only explain 2.77% of the top 1%. Some of the "financial professionals" are surely actuaries that help price life insurance policies, and other highly-compensated specialists whose unexciting but skilled work offers little prospect for social injustice.

What is really going on here? If the OWS video is evidence, the participants aren't in on the secret yet and we must look elsewhere for insight.

According to Univ. Michigan's blogging professor of economics and finance Mark J. Perry, the top 5% of incomes are responsible for 57% of U.S. taxes despite earning 33% of U.S. income. The slant is a bit higher as you reach the thinner air of the 1% earners – which, at present, means an income just north of $340K/y – who earn 19% of all declared income in the U.S. but pay 37% of all U.S. taxes. This isn't to say these high-earning individuals have a rough time of it – they arguably are getting more benefit from public infrastructure and the rule of law than folks whose earnings (or disability checks) barely cover their subsistence. Paying more may be perfectly just.

But they're not paying more because they are causing social inequity; they are paying more because the Internal Revenue Code of 1984 as amended requires persons who declare earned incomes of that scale to pay the highest taxes levied in the nation. Whether a person is a crime boss who declares no income at all, or a fatcat exec whose largess is rendered from the carcasses of innocent victims, means nothing at all under the Internal Revenue Code. You pay taxes based on declared income, period. Well, maybe not period – there's a semicolon and lots of subparagraphs of deductions and income categories (gambling winnings, earnings from the trade of collectibles, long-term capital gains, income subject to Alternative Minimum Tax – all kinds of things complicate the calculation of tax liability, and offer room for high-income enterprises to restructure operations so as to realize income in a lower-taxed category).

Tax liability isn't a social punishment, it's the price of success. Whether obtained through means vile (e.g., deliberately destroying competitors with better products by leveraging market power to prevent fair competition, deceiving the public about impending product launches to prevent the growth of competitors' sales due to fear of their destruction, using monopoly power to contractually bar competitors from being able to obtain retail shelf space or software pre-installation ... I'm looking at your company, Bill) or virtuous (e.g., delivering products and services that participants in an informed market were happy to buy, at prices based on what the market would bear in the absence of antitrust violation, like most of the rest of the country but in particular like Steve's firm), income tax doesn't ask whether you are nice or good but what you earned and in what categories. Because of the various tax credits and deductions available to U.S. filers, only 53% of the population actually pays federal income tax in the United States. The other 47% aren't especially virtuous, they're just sufficiently under-employed that Congress has, for their sake or that of their dependents (or perhaps for the sake of a vote), called off the IRS.

Who is the 53%?
Those who actually pay income taxes in the United States – not those with undeclared crime jobs, or undeclared off-the-books cash work; and not those whose income tax obligation is swamped by personal deductions, dependent deductions, earned income tax credits, home buyer's tax credits, and every other deduction and credit afforded filers under the Internal Revenue Code – are diverse. Interstate truck drivers and local road crews. Doctors and nurses. Employers and employees. Supervisors and supervised. Immigrants and local-born. Self-employed and salary[wo]men. Americans.

(Some of the foreign-born Americans' stories are interesting, like above and here.)

There's a Facebook page dedicated to the 53% who actually pay taxes, filling with comments by those who don't agree with what the Occupy Wall Street crowd appears to advocate. The tumblr link contains self-portraits of self-identified taxpayers (including some whose jobs just evaporated) who believe in personal responsibility rather than government handouts, displaying on one sheet of paper what it means to be part of the 53% who have been paying for everything government claims to provide. To the extent these statements have a theme, it seems to be that however dire their situation, they expect to bear the consequences of their actions and to succeed by the dint of hard work rather than handouts – and they have no expectation that government should be in the business of saving them from their debts or their choices or even their hardships. They expect to keep working even inglorious jobs and to continue paying the taxes that make possible.

Substance Behind the Rhetoric?
Since the Occupy Wall Street group does not represent the 53% – the object of at least this fraction of it is to distinguish themselves from OWS – and OWS appears to disclaim the 1% at the top, it seems we need some math to discern whether OWS represents 46% of the population, or some other fraction. Without some unusual math, it seems unlikely that OWS represents 99% of the population, when the 53% are plainly against seeking the sort of government action apparently hoped for by OWS. (As it happens, the Pew Research Center conducted a poll with a 4% margin of error that suggests that OWS support/opposition recently stood at 40%/35% among Americans.)

Without even a proposed fix, the OWS movement seems a demonstration of a throng that feels more powerful huddled together than back home where toilets are available, and who prefer to complain loudly than to toil for the improvement of the lot of man. The greatest likelihood assigned by the Jaded Consumer is that a political force with superior strategic prowess will co-opt "Occupy Wall Street" for some purpose previously unknown to OWS, and sell participants (at least those on camera, and at least long enough that the cameras catch it) on the snake oil being peddled by the parasite that worked out how to feed from a host too dim-witted to defend itself.

(Dim-witted in this case isn't intended as a disparagement of individual participants, but of the collective, which is investing substantial time and energy in an enterprise with no identified objective. Whoops. I'd give this post more serious treatment, but ... I have to work.)

Irony Award
"If this doesn't stop soon I will be out of business." quoted in BusinessWeek by Charles Mead and Esmé E. Deprez, who wrote on the effect of crowd-control efforts on the ability of local vendors to conduct their otherwise profitable businesses that employ Americans. Whoops again. (On the other hand, a newsstand with a working toilet was doing great business among the protestors. You win some, you lose some.)


No comments: