

Rage against the machine - cawel
http://www.economist.com/node/21533400

======
cawel
I thought the formulation of the OWS's protests was both succinct and
accurate:

 _The Anglo-Saxon model claimed that free markets would create prosperity;
many voters feel instead that they got a series of debt-fuelled asset bubbles
and an economy that was rigged in favour of a financial elite, who took all
the proceeds in the good times and then left everybody else with no
alternative other than to bail them out._

But it's painful to see The Economist recasting the problem along the lines of
state interference (especially at the end of the article: _Western governments
have failed their citizens once_ ) whereas the issue here is the co-optation
of the political sphere by the financial sphere (the repeal of the Glass-
Steagall Act under Clinton in 1993 being only one example).

~~~
CWuestefeld
_the repeal of the Glass-Steagall Act under Clinton in 1993 being only one
example_

The removal of a regulation is quite different from co-opting the government
to do the industry's bidding. Certainly, there are plenty examples of business
having undue influence in government. But likewise, there are examples of
government having undue influence in business[1].

The one thing I've heard anyone in OWS suggest that I can get behind is a
separation of business and state.

Too often, the regulatory machine helps business (see Regulatory Capture[2])
-- and this cuts in many directions, like the governmental support of labor
unions, as in the recent Boeing case. But it would still be a mistake to go to
the other extreme and have the behemoth of government _driving_ business.

It seems to me that the Economist is right, and getting the government to just
get the heck out is the best solution. They shouldn't do anything to help or
hinder[3] business.

[1] How often have we heard various content industries (movies, music, video
games, comic books) promise to "self-regulate" lest government pass some
threatened laws.

[2] <http://en.wikipedia.org/wiki/Regulatory_capture>

[3] short of ensuring that business is conducted fairly, e.g., protecting us
from fraud, helping ensure disclosure, etc.

~~~
cawel
_The removal of a regulation is quite different from co-opting the government
to do the industry's bidding._

In 1993, the Clinton administration repealed the Glass-Steagall Act under
pressure from Wall Street because Clinton wanted to secure Wall Street's
financial support for his coming reelection. Wall Street money effectively
contributed to shape the financial system in Wall Street's favor, that is,
towards less financial regulation.

With this perspective, I see the removal of the Glass-Steagall Act regulation
as an example of co-optation.

~~~
SkyMarshal
Minor correction, Glass-Steagall was repealed in 1999 by the Graham-Leech-
Bliley Act. (It was originally signed into law in 1933, which might be where
your 3 is coming from...).

<http://en.wikipedia.org/wiki/Glass-Steagall_Act>

But otherwise, yes Clinton signed it ostensibly for the reasons you mention
(needed Wall St. campaign funds for Dems), but it was led by Sen. Phil Graham,
poster boy for the revolving-door between Wall St. & Washington (and now on
the board of UBS).

~~~
cawel
I stand corrected. 1999 it is. Thanks for caring about historical accuracy.

------
padobson
"It is worth remembering that the epicentre of the 2008 disaster was American
property, hardly a free market undistorted by government. "

This was the line of the piece for me.

CWuestefeld gets a +1 for mentioning regulatory capture, which, in our current
system, is the actual status quo.

Government will be unable to fix the various financial and regulatory problems
we're facing so long as corruption continues to run as deep. There is no major
industry in the country that doesn't have the lobbying and campaign finance
dollars to capture its own regulatory bodies. Until we can solve this problem,
any government led effort to regulate our marketplace will fail.

Taxing the rich is also something that only appeals to the ignorant. You can
raise the taxes on the rich all you want, but the rich aren't going to pay
more taxes. Complicating the tax code actually empowers the rich because they
have armies of lawyers and accountants at their disposal. Complicating tax
codes just creates a glass ceiling for the middle class.

Given the level of corruption and the services that the wealthy have at their
disposal, the best we can hope for now is a level playing field. Get
government out of the way, weaken it, starve the beast, whatever. The idea is
not so much to deregulate, but to make the return on investment for serving
the American people ( or at least customers! ) greater than that of buying
lobbyists and politicians.

~~~
cma
You can raise taxes without complicating the tax code.

~~~
padobson
You'd be hard pressed to find a piece of legislation regarding the tax code
(or anything, for that matter) that has made its governance simpler.

------
muhfuhkuh
OWS anger at corporate bailouts, lack of work, and wealth inequality.
Economist's answer? Lower marginal tax for the rich and higher retirement age
for workers.

Would you expect anything less?

~~~
HeXetic
You are misquoting the article, which actually proposes to "boost the tax take
from the wealthy by eliminating loopholes while simultaneously lowering
marginal rates."

In other words, make the rich actually pay more by eliminating loopholes used
to avoid taxes entirely. Compensate somewhat for the increase by lowering the
actual tax rate.

~~~
muhfuhkuh
"Compensate somewhat for the increase by lowering the actual tax rate."

Why should we be "compensating" anything? "The Rich" promised to hire
vigorously if we kept Bush tax cuts. They didn't hire then and they aren't now
and it's still the same rate.

~~~
HeXetic
Because the Economist's point is that so much of the potential tax revenue is
getting excluded due to loopholes that eliminating those loopholes without
reducing the marginal tax rate at the same time would amount to an enormous
wallop. Maybe "the rich" can bear it, maybe not, but the point is effecting
change of that sort would make them pay more, and that regardless of what
actual tax rate we want to target, it would be better to start from a position
where the actual tax paid by any individual is straightforward to calculate.

Only at that point does it become reasonable to figure out at exactly what
number to set the tax rates, because until then you don't really know how much
tax you're going to get from the person, since they may or may not have
avenues of escape.

------
devtesla
> In Seattle, for instance, the last big protests (against the World Trade
> Organisation, in 1999) looked mindless. If they had a goal, it was
> selfish—an attempt to impoverish the emerging world through protectionism.

Wow. While a case can be made that the anti-globalization movement would of
had that effect, that was not its goal. I really should stop reading the
Economist.

~~~
jholman
Protectionism has always been ONE OF the goals of the anti-globalization
movement, especially insofar as that movement has had union support.

This is just one more aspect of the general rule that these protests do not
have a unified agenda, because they're composed of diverse individuals with
diverse goals. And in my ignorant opinion, a lot of those diverse individuals
demonstrably have no clue what they're talking about, except of course in the
domain of their personal misery and frustration. I recall, then as now, lots
of anti-WTO (and anti-APEC 2 years earlier) protesters who had some pretty
blurry ideas about what they were fighting for. There was lots of thinly-
veiled "trade will steal our jobs" rhetoric in there - of course along with
the environmental concerns, the third-world human rights concerns (Suharto was
a big issue in the APEC '97 protests), the concerns about capital flight and
race-to-the-bottom, etc.

------
bpolania
The Economist makes a great point in noting the over-simplification of macro-
economic policies and the danger of populism, fears that seems justified when
you read people saying that "society can afford a hell of a lot if managed
correctly": what does exactly means "afford"? Must the society write a check
to anyone who needs it? is the objective of the protest to create spaces where
people can work and get themselves out of the whole or is to get the
government to bail everyone out? Are western citizens entitled to more and
more benefits that will definitively be paid by our sons or grandsons, or are
we entitled to clean governments and smart politics?

------
upgrayedd

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      T

