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#Occupy Wall Street!

I visited New York in October 2011. I didn't know in advance how safe it was likely to be wandering around with a camera and it was more of a social trip than a photographic trip so I just took a Fujifilm X100.

I'd never really done street photography before and I had in mind some of the images of Fahim at the time where he walks the streets of Africa or Asia and discovers compelling portraits. I quickly discovered that I am not Fahim and that the way I see and produce images on the street is quite different. New York is in any case probably not so suited to taking intimate portraits on the street. If I had any example on my mind it was Cartier-Bresson, though of course I'm not trying to compare myself with him. I just took what I found, in the way I saw it, to reveal such meaning as appealed to me.

It so happened I was there when Zuccotti Park was still a political event. It's now eighteen months later, but the underlying issues have changed little.

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On the 31st of October we visited Zuccotti Park, the focus of the Occupy Wall Street movement, still fully in place at this time. The occupation had begun a little over a month earlier, on the 17th of September. A fortnight after our visit, the police would clear all protestors from the park.

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The Occupy Movement is remarkable as a practical exercise in anarchy. There is a commitment to non-violent action and collective decision-making with no leadership and no hierarchy.

The people who gathered in Zuccotti Park were open and inclusive and provided food and shelter to all comers. One unanticipated though predictable consequence was that they became a magnet for people such as the homeless and the mentally ill who Society has largely abandoned. They did what they could to assist those people but they did not set out to be a welfare group and this often made political coordination more difficult.

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"We are the 99%" is the clarion call of the Movement. It refers to the vast inequality of income and opportunity in the United States in particular and Western societies in general. It is an issue of key relevance to the vast majority of people.

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The website Occupy Together also lists other key issues including excessive influence purchased by large corporations, student debt, home foreclosures due to irresponsible practices of banks, "too big to fail" banks, profiteering of private institutions in healthcare, a living wage to the 99% and budget cuts affecting the 99%.

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Starting here in Zuccotti Square, the movement spread across the world to 95 cities in 82 countries, with numerous Occupy camps such as this one. Though all the camps are now gone, they had considerable political impact and the movement continues in other ways.

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The USA has the most unequal income distribution of any developed country, far worse than the best examples of Japan and the Scandinavian countries. In the early 1970s, the top 1% of earners in the US earned less that 10% of national income; by 2007 this proportion had risen to nearly 25%. The contrast is even greater in terms of wealth. The top 1% own 43% of US wealth, while the bottom 80% own 7% only.

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We can see a peak in this graph for the share of the top 1% in US income in 2007, just before the global financial crisis. Tellingly, the previous peak was in 1928, just before the Great Depression and there has been a long fall and a sharp rise since then.

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Currently the top marginal tax rate in the US is 35% but it was not ever thus. At the end of the Second World War it reached a high of 94%. Through the Truman, Eisenhower and Kennedy years it stayed at 77%. Even in 1972 when the top marginal rate was still 70%, the unsuccessful Democratic candidate George McGovern was alerting the electorate to the fact that over a certain level of income, effective payment of taxation actually declined. By the end of the Reagan era the top marginal tax rate had declined to 28% and then it recovered somewhat to 39.6% during the Clinton years. Recent Republican Presidential candidate Mitt Romney provided a dramatic example of the extent to which very wealthy people can avoid taxation. He declared that he paid 13% in taxation as though this was a virtuous level of contribution to the US economy and people.

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At this point in time, it's hard not to characterise the US as a declining country. In 1950 the US accounted for 50% of world income; this has now fallen to somewhere between 17% and 18%. Yet the US still accounts for 50% of world military expenditure. This is likely to be a significant factor in the relative economic decline because military expenditure usually contributes little to economic growth. It is also self perpetuating because once in place, a large military generates demand for their own activities. This is also a relatively recent phenomenon. The Second World War was the first time that the USA did not demobilise after a war.

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It is common for many in the US to eulogise about freedom. Yet freedom without justice and equity is an illusion. Poor people who are effectively deprived in terms of education, health, housing and work opportunities can never be free to exercise the same choices as the wealthier members of their communities. This kind of dispossession is what a deterioration in the distribution of income produces. It's not unique to the US but the US is leading the way and it's not a good form of leadership. This is not just a social concern. Such inequalities mean that opportunities are equally uneven and in the long term all will suffer as fewer opportunities are available to capable people in the vast majority of the population. Consequently, the overwhelming proportion of those who vote to support trickle-down economics are directly undermining their own welfare.

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I think that remedial action should include to bring back a 70% top marginal tax rate and to change the tax structure so that something equivalent applies in the private sector. Also, to devise some effective restrictions on the salaries of those who can effectively determine their own levels of payment - politicians, judges, management in large companies. Then there would be scope for providing genuine opportunities for all, building up infrastructure, repaying debt and crucially, making more progress on sustainable development.

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The same factors apply to Australia and most other countries in the developed world, albeit so far to a lesser extent. It is of course easier to point out the problems than to specify effective remedies that are politically feasible, particularly since the small minority with an excessive share of resources will resist, together with the institutions that represent them. Even so, public opinion can make a big difference and the situation has been much better previously so maybe it can be again.
 

Jerome Marot

Well-known member
A very nice set of pictures and a good documentary of the demonstration. I especially like the first ones taken in the streets.

(And yes, if only a fraction of the population concentrates a major size of a nation wealth, it is a problem. I am not entirely sure what problem it is or how to solve it, but there are countless historical examples of similar situation and they generally lead to social unrest.)
 

Jerome Marot

Well-known member
And yes, definitely a problem that's easier to identify than to fix.

I am not so sure that the problem is easy to identify. We know the gap has caused problems in the past, but the poorer part of the population was not able to live (starving, etc...). OTOH, if my neighbour is filthy rich and I am not, but I still get the basics covered, is that a real problem? Should I care that my neighbour is living on champagne, caviar and foie gras, if I can live comfortably on pasta, hamburger and vegetables?

At present, in developed countries at least, the situation of the less rich is worrying, but not really explosive. Which may explain why movements as "occupied wall street" did not really bring much results.

Besides, richness is not obvious to define. I have read that the total wealth in banks, funds and derivatives is estimated to be something like 40 times the total value of what physical goods you can buy on this planet. So basically, the rich are filthy rich, but just on paper. There is no real counter value, which is the definition of a "bubble", actually.
 
True.

The situation in the developed countries will become more acute in the longer term if the income disparity erodes the health and education of most of the population. I don't know the figures but some developed countries already have significant sections of their population below the "poverty line". It will also become more of an issue if the economic or ecological situation deteriorates significantly.

That is an interesting point about total holdings. It has often occurred to me to wonder whether the US dollar, most of which must be held internationally, might be such a bubble should it lose its sheen as a world currency.
 

Jerome Marot

Well-known member
That is an interesting point about total holdings. It has often occurred to me to wonder whether the US dollar, most of which must be held internationally, might be such a bubble should it lose its sheen as a world currency.

Let me ask you a question: how long has the US been living on credit?
 
Murray Foote said:
That is an interesting point about total holdings. It has often occurred to me to wonder whether the US dollar, most of which must be held internationally, might be such a bubble should it lose its sheen as a world currency.
Let me ask you a question: how long has the US been living on credit?

Hmmm.

First let’s look at world reserve currencies being a prime medium of exchange. This dates to the end of Bretton Woods regulation in 1971. I’d assumed that the dollar was the prime world reserve currency, but this is not case. It’s mainly the dollar, the yen and the Euro in roughly equal measures, and it’s been pretty stable so far. I think the benefit of being a reserve currency is not so much credit as gratuitous income when those countries or regions print money that other countries buy. A slow decline in one of those probably wouldn’t matter very much because it would just be taken up by other currencies. A sudden collapse would probably mainly affect financial institutions but also cause a collapse in the exchange rates for that country or region and rapidly increasing import prices. Not so much a credit issue, though.

US Federal government has been running deficits since the late 50s except for a few years under Clinton. In postwar years, these deficits were largest in the Reagan and G W Bush eras. There were also huge deficits in the lend lease period and at the end of the First World War.

US domestic debt is interesting. Unlike in Australia where private debt has ballooned (mainly due to house mortgages), it has not increased all that much in the US. However debts in the financial sector have increased greatly from 20% of GDP in 1982 to over 120% in 2009. I presume this means banks and lending institutions and is a consequence of poor regulation.

Foreign debt has generally been rising steadily as a proportion of GDP since 1970. The biggest increases have been in the GW Bush period, presumably due to the wars. Foreign debt as a percentage of GDP increased from 43% in 1999 to 95% in 2007.

Credit is part of the normal functioning of capitalism as people borrow money to build or buy houses or set up businesses. I take the term living on credit to refer to an excessive and irrational reliance on credit. It’s difficult to answer how long the US has been living on credit because it depends on whether you are looking at external debt, domestic debt, individuals, institutions or government. The answers may differ in each case. As a generalisation though, I think I’d say that the US has been living on credit since the Reagan era. It is not a problem that is unique to the US, however, and the US does not stand out as much for its level of debt as it does for its poor income distribution.
 

Jerome Marot

Well-known member
Credit is part of the normal functioning of capitalism as people borrow money to build or buy houses or set up businesses. I take the term living on credit to refer to an excessive and irrational reliance on credit. It’s difficult to answer how long the US has been living on credit because it depends on whether you are looking at external debt, domestic debt, individuals, institutions or government. The answers may differ in each case. As a generalisation though, I think I’d say that the US has been living on credit since the Reagan era. It is not a problem that is unique to the US, however, and the US does not stand out as much for its level of debt as it does for its poor income distribution.

Credit is part of the normal functioning of capitalism indeed, but is then considered as an investment. For example: one borrows to buy tools so as to build goods and sell them. One borrows to buy a house and save on rent. For a state, this could be measured as to the level of infrastructure, since this is what a "State" invest in its future. Would you say that the US state infrastructures are in good shape compared to other developed countries (communications, roads and rail, power distribution, schools, hospitals, etc...)?

Another problem arises when you measure the level of debt compared to the GDP of a country and it is that measuring the GDP itself is a difficult task. Finance is a large part of the US GDP, don't you think that the billions that the finance "industry" has created out of thin air may have skewed the results a little bit?

There is also the paradox of the T-shirt. Walmart imports 10 thousands T-shirts from China at 10 cents a piece, that makes 1000$ for China's GDP. When Walmart sells each T-shirt at 10$ a piece, they have suddenly created 99 000 $ of GDP for the US economy.

As I said: I don't have the answer, I only know there is a problem.
 

fahim mohammed

Well-known member
I see gold is down.
Brent crude is down.
Copper is down.

Leica lens prices are up. With the 50/2.5 summarit showing the highest price increase!
Food prices are up.

Real estate, at least in quite a few regions in the US ( that I monitor ) is beginning to pick up.

Talking about credit...I once had a senior executive from Europe join my bank. An IT guy.
I was the finance guy. He had to get a budget approved. He came to me. We discussed about his project. I told him to go ahead, we would write a check for the equipment. Not to worry.

' But, do you have the money? ' , he asked me worried and concerned. It was a tidy sum.
' No ' , I said. ' That's why I shall sign the check for the suppliers '.
I do not have to have money, I am the bank. I create the money!!!

He was perplexed, but began to understand how the system works.
 
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