Obama’s anti-capitalist moment

Occupy Wall Street is a movement that began as a bunch of stragglers with no coherent message which has become a far more potent group that is spreading across the US with the implicit support and connivance of the American President, but still with no coherent message.

What set it off was a $5 debit account fee announced by Bank of America which was introduced after the American Congress put a cap on the fees banks can charge retailers when such debit cards are used. Every service has a cost to its providers so if the service is to continue someone has to pay. If not the retailers then the users of the cards. 

But it was when the American President bought into the controversy that the occupation began. Obama stated that the Bank of America does not have a right to a certain level of profit, more or less agreeing with those who were put out by the Bank’s decision. 

We have therefore had the “occupation” and protests around Wall Street for the past three weeks which has now spread to other cities where similar “protests in the park” are going on. 

The fact that the American economy remains moribund almost three years after Obama became President requires a political answer, not just to the circumstances themselves but to the Tea Party assessment of what has gone wrong. From the Tea Party perspective, the American economy is unable to recovery in large part because of the massive level of public spending and the mounting level of public debt. The Tea Party has made a judgment on what is wrong and has a solution which is to cut the level of spending. 

For the Democrats, having been responsible for the spending, an alternative narrative is needed which the OWS protests provide. It is corporate greed and capitalism itself that are the problems in need of solution. In a news conference, the President said that the protests showed a “broad-based frustration” among Americans about how the financial system worked, very likely here giving his own personal sense of frustration. As reported: 

“I think it [the protest] expresses the frustrations that the American people feel,” Obama told reporters at a White House news conference on Thursday. 

Obama said the leftist protest movement was echoing the public’s frustration at seeing banks and financial institutions oppose his administration’s efforts to impose greater financial regulations, adding that people blame Wall Street financiers for the financial crisis and do not like seeing them oppose the government. 

“That we had the biggest financial crisis since the Great Depression, huge collateral damage all throughout the country, all across Main Street — and yet you’re still seeing some of the same folks who acted irresponsibly trying to fight efforts to crack down on [the] abusive practices that got us into this problem in the first place,” said the president. 

This is a dangerous moment and it is being fed and fueled by the President. This is part of what is a very clear desire on his part to increase the central direction of the American economy. 

The notion that Wall Street is just one large casino with money poured through its channels essentially no different from the roulette wheels of Las Vegas is something easily peddled to those who know nothing about the role of finance in directing economic activity. 

In roulette, there is no risk involved until one chooses to bet. It is the betting itself that creates the risk. In finance, the risk is in the world. It is always there. What finance attempts to do is provide avenues for businesses and individuals to unload or at least share some of that risk with others. 

No matter what the American President does, the riskiness of running a business or financing activity will not disappear. But what may well disappear is the ability for Wall Street banks to take that risk on themselves. 

The bailouts in the way they were structured were a mistake. Risk has now been transferred from the private sector to the government. As with just about everything else that governments do, they are, to say the least, not as good at tasks that are meant for the private sector. 

With the attack on Wall Street and the finance industry coming from the very top, here is one very major additional way our economies are being made less responsive and less able to provide the momentum for future growth.