They are mad as hell and not going to take it anymore. Many in the financial industry and corporate world seem to be mystified as to what "they" -- the "Occupy Wall Street" squatters in Zuccotti Park downtown New York -- are protesting. At the World Business Forum 2011, a 30-something techpreneur addressed the 5,000 strong corporate crowd with a familiar echo reverberating across the financial media: "No one knows what they are angry about!"
Actually most of us watching do know what they are angry about, even if the 20-something unemployed college grads can't articulate it. They are outraged, because as Starbucks CEO Howard Schultz relayed it, "We don't have the same access to the American Dream that our parents had."
These are folks who were caught in the economic downdraft and then cut out of the Wall Street upswing. They have been left behind and until they began to voice their objections loudly -- nobody listened. But the chord they are striking now is resonating with millions of Americans who are mad as hell at the one-sided economic "recovery."
Such ignorance of the roots of current economic inequity is not only shocking, but dangerous. The more you ignore it, the more desperate it becomes. According to former President Clinton, there are 20 million people officially out of work and millions more not counted in the rolls. Federal Reserve Chairman Ben Bernanke called the state of unemployment a "national crisis." It emphasizes the need to educate ourselves on where we are in our economy, how we got here and how we can get out. Perhaps a little history lesson will help.
The Short History
Only three years ago, our entire financial system was on the brink of collapse. Bear Sterns, Fannie Mae, Freddie Mac, Lehman Brothers, Merrill Lynch, AIG, Countrywide, Washington Mutual, Wachovia, Indy Mac among others crashed and burned. Like economic dominoes, the contagion spread to Goldman Sachs, Morgan Stanley, Bank of America, and Citigroup. These banks continue to struggle with the irrational exuberance of the past decade.
After the October 1929 crash, it took three years for the full effect that Hoover's policies and the stock market crash had on the nation to result in the election of Franklin Roosevelt. By that time, the damage was severe and deep.
In 2008-2009, Bernanke, a student of the Great Depression, wanted to avoid Hoover's disaster and took swift bold action by liquidating the banking system with billions of borrowed dollars. The off-balance sheet policies and behind-the-scenes lending programs have amounted to trillions of dollars in emergency funds to restart the credit and lending cycle.
There was only one teeny weenie problem: there were no strings attached to enforce that mandate. So the money stayed where it went: at the top levels of the Fortune 1000 corporate sector and the biggest Wall Street banks and lending institutions. And now our government claims we are broke. Sorry... we will have to cut Social Security...
The Longer History
Revolutions are often fought over economic inequality. Think Arab Spring.
But go further back than that to our own history and the abusive disregard for equal economic opportunity that birthed our nation. France not only funded our British defeat, but was set on fire by the miraculous victory of a disorganized, rag tag army over the greatest Empire of the modern world.
With America's success fresh in their minds, the long-suffering French underclass was encouraged to challenge centuries of history. Late 18th century France was experiencing a devastating economic crisis. Unending war, food shortages, growing national debt and increasing tax burdens on the lower classes to support the opulent lifestyle of the top 2% tested the reserve of the have-nots. The growing anger of the bourgeoisie and peasantry forced the ineffectual King Louis XVI to attempt to increase taxes for the nobility. However, the nobles refused to share the burden and continued to indulge themselves in outrageous gluttony as the lower classes' struggled to survive. The result, as we know, was a bloody civil war and complete restructuring of the status quo.
The moral of the story is that desperate people do desperate things. But even more to the point is that true democracy depends upon economic opportunity as much as any other freedom. Janis Joplin sang to 1960s protestors, "Freedom's just another word for nothing left to lose." In case of the unemployed penniless OWS squatters, they must feel they have little to lose.
Follow the Money
Despite the insensitivity of a handful of elite, the simple fact is that many in the financial and business community sympathize with the protestors. The over-60 crowd must surely remember how they felt in their own raging youth burning draft cards, flags and bras. They were mad as hell and didn't want to take it anymore. Their passion fueled a social revolution we still enjoy today. They rewrote the rules of the game, because the rules were simply unfair.
The GenX-ers and younger Boomers that came later never had to challenge the status quo. Theirs has been a privileged life with the American Dream wide open for over three decades -- until September 15, 2008 when the Good Ship Lollipop hit a massive glacier.
Let's not pretend that there is no economic crisis devastating tens of millions of Americans. We know our world is in trouble and the easy prosperity we once enjoyed every day looks further from our reach. The growing distress and un-American wealth divide give us an opportunity to right the wrongs of the past.
Wall Street understands how bad the crisis is -- many in the industry got hurt too. The collapse was caused by one sector: the mortgage securities markets. Large portions of the debt and equity markets had nothing to do with it. Yet collectively on Main Street and Wall Street we pay the price. That's just the way it is in an economy we share.
At the Bloomberg 50 Markets Summit a few weeks ago, leaders of private equity firms and hedge funds, including a vice-chairman of asset management firm BlackRock, voiced concerns about the lack of circulation of capital and credit. "Everyone is sitting on cash." These firms know where the money is. It's in the vault at the big shops. One fund manager claimed, "Corporate balance sheets are more flush with cash than ever."
I spoke with a senior executive at a mid-level energy company who explained why his firm is stashing cash. "We don't know what's coming down the road... so we are just waiting to see what happens next." The uncertainty of Europe, the new regulatory environment and the inefficiency of Washington has locked corporate America into a deer-in-the-headlights stance. And while that makes the recovery harder -- who can blame them for holding onto their money?
Hedge fund manager Don Brownstein spoke of the "moral perspective" behind the widening distribution of wealth and income. He said, "If your neighbor loses his job, it's a recession. If you lose yours, it's a depression." Investment banking CEO Ralph Schlosstein spoke of his concerns for "the generation just starting their careers and not finding jobs." Bloomberg Media host Kathleen Hays spoke of the inadequacy of current "trickle down" policies. Wall Street legend Pete Peterson sympathized with the "anger, unfairness and suspicion of the middle class" and echoed billionaire Warren Buffet's plea for shared burden by the nation's 1%.
These guys just get it. How about the rest of us? Do we have to wait until the crisis worsens to understand the seriousness of it? In order for our economy to fuel American prosperity again, capital has to circulate freely through all levels of the system. But right now it's stuck -- at the top.
Over lunch with a senior manager at a private equity firm whose job is to manage the unwinding of Lehman's mortgage mess, he explained, "We lived an illusion. An illusion of wealth." His firm has taken three years to follow the money and they aren't half way finished. Much of the Lehman paper is close to worthless. They have no idea where the money went.
The simple truth is our perceived wealth was an illusion -- even more, it was a delusion. Aristotle said that making money from money is "unnatural." There has to be something of value that it is based upon. In the mortgage market frenzy, America levered up together and came crashing down on Main Street and Wall Street. Only Main Street didn't have a cushion.
We have inherited a serious social and economic problem that requires all of us -- on and off the Street -- to solve. At this point, it is not as much who is to blame as it is how do we fix it? The very foundation of our democracy hangs in the balance.
The indifference of privileged critics mocking disenfranchised college kids sleeping on the ground near the great halls of commerce will only garner sympathy for their innocence and conviction. They do have something to say, even if we have to say it for them.
The growing discord between the 1% and 99% is an opportunity to start a national conversation on what kind of America we want to live in. One that is worthy of an 18th century king or one that honors our sacred pledge for equal opportunity?
We can build a bridge from Main Street to Wall Street and work together on getting the economic engine started again. We can invest in small to medium sized enterprises, fuel their expansion by guaranteeing SME loans, commit to tax reform, create job programs, subsidize higher education, support new technologies, entrepreneurship and innovation and force our dysfunctional government to earn its keep. It's not about replacing capitalism; it's about making it better, so it works for everyone.
It took a small group of down-on-their-luck college kids with nothing to lose to wake America up. As the crowds in Zuccotti Park, DC, LA and across the country grow larger and make their voices heard, maybe this time we will be listening.
Monika Mitchell is the CEO of "Good-b" (Good Business International) in New York, a leader in socially responsible business news and co-author of the upcoming book: "Conversations with Wall Street: The Inside Story of the Financial Armageddon and How to Prevent the Next One." firstname.lastname@example.org
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