Addressing the Grievances of the 99 Percent

I finished my undergraduate degree this week, and my last assignment was specifically written as a response to the Occupy Wall Street protest that is in its second week now, with only scant media coverage to help get the word out. I did quite a lot of research for the paper I wrote, and what I found really set my wheels in motion. The entire course did, actually – it was geared toward understanding wealth and power in our country. In this post I will share a bit of the research data that I found, and will pull heavily from the paper I wrote since it is so pertinent to what I hope will be a successful movement.
Freedom is the most basic tenet of the American way of life. This concept extends to include economic freedom, which has produced the capitalist free market model underlying the U.S. economic system. Yet as the protest Occupy Wall Street continues into its second week in the wake of similar protests across the globe in Greece, Egypt, and Spain, the need to respond to growing unrest about the income gap in society is quite clear. The Obama administration, via a statement from Secretary of State Hillary Rodham Clinton, responded to similar protests in Egypt by admonishing the Egyptian government to take advantage of the opportunity to "implement political, economic, and social reforms to respond to the legitimate needs and interests of the Egyptian people" (Reuters, 2011, para. 3).

Ideally, government interference in economic markets should remain low, serving only to maintain fairness and limit unethical business practices, but the presence and persistence of the Wall Street protestors is clearly indicative of a definite and severe problem. Change within the economic system is necessary, and Congress needs to implement a plan that allows for yet limits income inequality and still encourages social mobility. The plan would provide for economic sustainability and repair the current downward spiral found in the health of the U.S. economy.

Higher social class and greater wealth far reduce the number of supporters a group must acquire to influence policy changes within the United States. Individuals with few resources may still effect change on a national level with a sufficient number of supporters and effective tactics. Martin Luther King, Jr., was not a rich man, but he successfully led hundreds of thousands of citizens in peaceful protest and collectively they were able to effect changes in public policy.

Too much domination in any one community leads to feelings of oppression and civil unrest, and millions of Americans are increasingly unhappy with the income distribution in the United States. Thousands of these unhappy Americans are presently situated in the nerve center of the country’s financial system, protesting the egregious income gap that exists between the income earned by the top one percent of wage earners and the income earned by the bottom 99 percent. A main contention of these protestors is that large corporations and their executives enjoy huge profits while the majority of Americans can only hope to meet their basic needs on a weekly basis.

Self-interest on the part of corporations and the wealthy is the result of a capitalist mindset prevalent in the United States, but the mindset spurns actions that result in lack of cohesiveness, well-being, and financial stability for those Americans left behind. Another side effect of the self-interest mindset is that the policy-making process in the United States also relies on competing interests. Political representatives are initially sworn to exercise votes according to what they feel the majority of their constituents desire, yet in actuality these representatives often vote along party lines or according to the wishes of their largest financial supporters.

This point gives rise to an additional concern addressed by the Occupy Wall Street protestors, which is that corporate entities and the individuals who control the resources of these entities have entrenched themselves within the political system of this country. Contributions to political campaigns, pressure and influence directed toward individual politicians, and legislative bargaining are all tactics used to secure legislation favorable to the interests of corporations and their owners. Additionally, the interlocks that exist among varying corporations extend into the political arena. Corporate executives often hold political office eventually, and politicians often sit on the boards of directors for large corporations.

Corporations are frequently on the receiving end of favorable legislation that furthers their profitability. This results from the ability of corporations and top executives to fund elections and political campaigns for candidates. Without support of these wealthy entities, many would-be politicians would not have the resources to launch a successful campaign. Unfortunately, with so much influence and political power in the hands of corporations, the concerns of individuals further down the socioeconomic ladder are rarely represented.

Income inequality is not the root of the issue presented by Occupy Wall Street protestors. The size of the gap between the wealthiest Americans and the poorest Americans is the root of the problem. As the gap grows, increasing numbers of Americans are not able to meet their needs or provide a basic level of comfort for their families. As the purchasing power of the richest few who control over half of the nation’s wealth increases, the purchasing power of the remaining population decreases. This creates a cyclical conundrum where prices must increase because businesses cannot meet their budget expenditures with reduced sales income. The result is that even more Americans cannot afford their products, especially when the increased revenues of the corporations go toward basic operating costs and maintaining current wages – including the gap between high executive salaries and the hourly wages of support workers. This occurrence inevitably leads to higher prices again, as demand for even more expensive products decreases.

The United States experienced an economic expansion in the five years between 2002 and 2007. During this time, the lower 99 percent of wage earners saw a steady increase of 1.3 percent in their average incomes. During the same time frame, the top one percent of wage earners in the United States saw growth in their average incomes of 10.1 percent (Saez, 2008). According to calculations based on research presented in Brigid Callahan Harrison’s Power and Society (2011), the lowest quintile of Americans earned less than 4 cents of income for every dollar the top 5 percent earned in 2006, and less than 9 cents for each dollar the remaining 15 percent of the top quintile of the population earned. This means that the poorest 20 percent earned an average of 6.7 cents for each dollar the top 20 percent earned. Put in perspective, Americans paid barely more in sales tax in 2006 than American businesses paid their cheapest labor.

The average American now is having trouble keeping up with inflation, even though inflation rates are hovering around only 2 percent. This is because average incomes decreased .7 percent from 2008 to 2009, and likely dropped another .3 percent last year (Sun-Times Media, 2011). Even those resting snugly in the 80-95th percentiles earned only 42 cents for every dollar earned by the top 5 percent in 2006 (Harrison, 2011). These figures give credence to the familiar axioms "it takes money to make money," and "the rich get richer while the poor get poorer."

Corporate tax breaks are another source of contention among the majority of Americans. As policy analyst Sima J. Gandhi points out (Kocieniewski, 2010), "We’re giving tax breaks to highly profitable companies to do what they would be doing anyway[…] That’s not an incentive; that’s a giveaway” (para.16). Some argue that tax breaks and tax cuts stimulate economic growth because individuals and corporations will have more money to save and invest. However, in an op-ed piece printed earlier this year, billionaire Warren Buffet urged congressional members to increase taxes for the wealthiest Americans – including himself (Buffet, 2011).

In the same article, Buffet also specifically refuted the idea that lower taxes increase job creation for average Americans. This observation is evident through analysis of income gap statistics. Corporations and the wealthy that own them are not reinvesting their money into activities that increase the economic growth of the nation’s largest base of citizens. Indeed, a larger share of income by the richest 10 percent results in a lower GDP per-capita growth in the United States and other countries. (Andrews, Jencks, & Leigh, 2011).

Despite indicators to the contrary and a desire held by nearly 50% of Americans to levy higher taxes on the rich to redistribute wealth, this is not the solution to the income gap, although increased taxation for high-income Americans has solid merit as a debt reduction tactic and should not be ignored. The Occupy Wall Street protestors, leaderless but determined, have yet to propose a plan for economic reform. For change to occur, the movement needs a plan: specific requests that, if fulfilled, can boost American confidence in the support of their government, reduce the income gap between the top percent and the other 99 percent, increase the standard of living for the lowest quintiles of American earners, and create a sustainable domestic economy.

This is that plan – a call to the government for legislative changes that will address the concerns of the protestors on Wall Street and the large percentage of Americans they represent. Americans need to rally behind this call to congressional members and demand changes to existing legislation, as well as the enactment of new legislation that protects the interests of lower- and middle-class citizens while providing for the health and sustainability of the U.S. economy. Ideal legislation changes include:

1) End election contributions from corporations while maintaining a reasonable cap on individual contributions. Part of this legislation change requires that corporations no longer be recognized as "persons." People were given the right to participate in the government of this nation, by way of our founding fathers. Not corporations, which are comprised of the workers (yes, this includes the top executives) whose efforts the corporations are built upon. If corporations should have a voice in political matters, then let the voice come from all of the workers that contribute to the company, in the form of individual votes or contributions.

2) Reform the public funding program (view FAQ here) for elections to make it more likely that multiple political parties may run for office. Either fund them all equally or fund none at all. Americans deserve choices. We cannot continue to elect the least of two evils.

3) End election contributions from corporations while maintaining a reasonable cap on individual contributions.

4) Put an end to allcorporate tax breaks and subsidies for companies grossing over $1,000,000 annually.

6) Eliminate tax breaks for registering company offices overseas.

7) Increase IRS audits for corporations and individuals with incomes of $500,000 or more before tax deductions.

8) Prohibit outsourcing or tax heavily in return for the practice.

9) Mandate complete corporate fiscal transparency for every publicly-traded entity.

10) Limit the gap between the highest wages and the lowest wages. This last recommendation intends not to put a cap on earning potential, but to impose a limit on salaries as a percentage of gross business earnings and a floor on entry-level and blue-collar or agricultural workers as a percentage of executive or owner compensation. Executives are free to enjoy heightened income in relation to the profitability of their businesses but will no longer be able to exploit the labor of the workers who support or increase their wealth without giving these individuals a fair share of the benefits reaped by their productivity. Mobility between the top and bottom rungs of the social stratification ladder will not be inhibited by this measure, and such a move would still foster motivation to do so.

This year, the majority of Americans are experiencing moderate to severe economic difficulties. The nation is battling recession, and congressional members are feuding over the best approach to maintaining a balanced federal budget. Political leaders advocate making sacrifices for the good of the nation, whether the sacrifices involve shedding party expectations or personal interest. As President Obama eloquently pointed out in a 2009 speech,

"… there are some who advocate for democracy only when they are out of power; once in power, they are ruthless in suppressing the rights of others. No matter where it takes hold, government of the people and by the people sets a single standard for all who hold power: you must maintain your power through consent, not coercion; you must respect the rights of minorities, and participate with a spirit of tolerance and compromise; you must place the interests of your people and the legitimate workings of the political process above your party. Without these ingredients, elections alone do not make true democracy." (Obama, 2009).

The measures recommended above will require corporations to become more responsible in the management of their operating budgets and reporting of accounting transactions, especially those in control of such a large percentage of the nation’s wealth. Additional benefits of these measures include American job security, a reduction in U.S. poverty levels, increases in federal revenue, and a reduction in the quantity and strength of interlocks between corporate directors and political leaders. These recommendations will allow for true governance by the people rather than the wealthy, and ensure economic stability for all Americans rather than the top earners.


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