One of the reasons I've let this blog fall silent is that I feel I ought to explain my political beliefs before I comment on certain topics so people know where I stand, and to lay out a case for my impartiality and objectivity. But there is so much ignorant analysis of the Occupy Wall Street protests, I feel compelled to comment on them. Let me simply state that I consider myself Progressive. That is, I believe that there is always a way to make our country work better. Often that involves a stronger government, but just as often it involves trimming government, weakening the government, or exploring alternatives when the government isn't doing things efficiently. Perhaps my political position can be summed up concisely by stating that I think Obama is the best president we've had since Bush 41.
The biggest criticism I've heard of Occupy Wall Street is that many of the protestors are politically ignorant, naive, or incoherent. That anyone would make this criticism shows just how confused we've become about how a democracy works. They're protestors, not academics or politicians or bureaucrats or *gulp* members of the media. Their job isn't to come up with policies to cure our country's ills or even to necessarily be able to coherently define those ills. Their job is to protest and draw attention to a topic.
What has made me sad is how badly and uniformly pundits and purported journalists have failed to do their job and have made the Occupy Wall Street protests necessary. The problems our country is facing is economics 101, stuff I studied in high school, and I've yet to see these so-called experts, including many people with doctoral degrees in economics, even get close to the underlying problem in their analysis.
First, a little background. Free markets are good. We like free markets because they encourage competition. We like competition because it provides us with cheaper goods, it forces companies to innovate, and it generally makes our society more productive. There's a huge problem with free markets, though, one recognized by the father of capitalism himself, Adam Smith: Monoplies.
The logical end point of all free markets is a monopoly, a situation in which one company controls all of a certain product. That is the goal of every company, to either buy all of its competition or to drive them out of the market. Famous monopolies or near-monopolies include Standard Oil Trust, AT&T and Microsoft. Monopolies are very, very bad. When they exist, there is no competition in a given market any more. There is no incentive for a monopolistic company to price it's goods fairly or to innovate. It is almost impossible for a monopoly to fail or go out of business. The government is empowered to break-up monopolies because they can be so toxic to the well-being of our economy.
Related to the monopoly is the oligopoly, a situation in which a small number of businesses dominate a market. I'd give an example, but almost every commodity market in modern-day America is an oligopoly. From soft drinks to energy to car manufacturers to airlines to banks to cell phone carriers to software companies, our modern economic landscape is dominated by either oligopolies or monopolies. Oligopolies aren't necessarily bad, but they often lead to the same problems as monopolies. Those problems are poor price competition, failure to innovate, and companies becoming so entrenched they can't do anything dumb enough to fail. Beginning to sound familiar, right?
Thus the first half of our economic troubles can be summed up by two words: Monopoly and Oligopoly. How often have you heard those on the news lately? Pundits aren't entirely wrong when they talk about companies that are too big to fail being a problem. But that's really only identifying a single symptom of a deeper disease, and their mis-diagnosis explains why they uniformly have almost nothing productive to say about what might be done to fix the problem. Oligopolies and monopolies aren't only problems because the government sometimes has to bail them out, they're problems because they stifle innovation, overprice goods, and inhibit creative destruction (among other things). The later problems are far more dangerous than the first, especially if the government is able to negotiate favorable bailout terms in which most of the bailout funds are re-cupped (which is what happened in 2008).
More analysis to follow.