Bloomberg News

Real Grievances Fuel Occupy Wall Street Protests: Albert R. Hunt

October 23, 2011

Oct. 24 (Bloomberg) -- The anti-Wall Street movement has confounded Republicans, Democrats and analysts alike.

The take on the right is that Occupy Wall Street is the same old riff-raff of leftist anarchists, unlike the grassroots conservative Tea Party; seen from the left, it’s an authentic uprising against the huge income disparity in America and a call for redistributing the wealth.

Actually, it is part of a combustible global protest that goes beyond the professional rabble rousers. There is a focus on income inequality; “Tax the Rich” is a favorite slogan. The protesters are diverse and seemingly directionless.

Income and wealth inequality in America have been growing for decades with little public outcry. The catalyst for the movement now is that during the worst financial crisis since the Depression, there is a perception that Wall Street and the wealthy were taken care of while average folks suffer. That isn’t a fringe view.

Wall Street generally has flourished since the government rescue of 2008 and the big banks have posted record profit and booming bonuses. Although Goldman Sachs Group Inc. reported a rare quarterly loss last week, Lloyd Blankfein, its able chairman and chief executive officer, was paid $19 million for his work last year, up 50 percent from the year before. JPMorgan Chase & Co.’s Jamie Dimon was awarded $23 million in compensation. A prime target of the protesters in New York is John Paulson, the hedge fund billionaire who made a fortune betting on the mortgage debacle, assisted by a sweetheart deal from his banker.

Taxpayer Resentment

In good times it’s considered class warfare to rail against successful leaders who’ve added value. There have been few complaints about the wealth that accrued to Microsoft Corp.’s Bill Gates, Apple Inc.’s Steve Jobs or Jack Welch of General Electric Co. When taxpayers directly facilitate that success and firms then lavish massive payouts on executives, it would be naïve not to expect public resentment.

One of the critics of the Wall Street demonstrations cited a survey showing that three-quarters of the protesters favored higher taxes on the rich. In major U.S. media polls -- by the Wall Street Journal/NBC News and Bloomberg News/ Washington Post -- two-thirds of the public agree.

American politicians are dancing around the issue. Two Republican presidential candidates, Ron Paul and Jon Huntsman, said the anti-Wall Street protests have struck a responsive chord. The frontrunner, Mitt Romney, initially blasted the anti- Wall Street rallies as “dangerous” and “class warfare.” Within a week, he said he understood “how these people feel.”

‘Really Dumb Ideas’

Newt Gingrich said the protests were a “natural outcome of a bad education system teaching them really dumb ideas.” Then, in a debate at Dartmouth College two weeks ago, he was asked whether anyone should have gone to jail for their role in the crisis. His answer: not Wall Street executives, but Congressman Barney Frank of Massachusetts and former Senator Chris Dodd of Connecticut.

Gingrich cited the mortgage Dodd obtained from Countrywide Financial Corp., the failed mortgage-lending company. The former senator may have gotten generous, though totally legal, terms; Angelo Mozilo, the chief executive officer of Countrywide, who Gingrich didn’t mention, had to settle a Securities and Exchange Commission suit alleging securities fraud for misleading investors even as he made $140 million through stock sales and was driving his company into the ditch. It was the fact that Mozilo and his ilk created devastation for so many people and walked away free and rich that fuels so much of the populist sentiment.

Contributions to Democrats

The Democratic Congressional Campaign Committee recently urged its supporters to back the Occupy Wall Street protests. This gave heartburn to the committee’s fundraisers who rely disproportionately on the financial community for donations.

President Barack Obama, who has raised millions from Wall Street, has sought to embrace the protesters, saying they are “giving voice to a more broad-based frustration with how our finance sector works. The American people understand that not everybody’s been following the rules.”

Who sets the rules today? There are reasons Democrats aren’t entirely comfortable identifying with the anti-Wall Street crowd.

For all the corporate griping about reregulation, the Obama administration in 2009, led by White House economics aide Larry Summers and Treasury Secretary Tim Geithner, eschewed a hard line on Wall Street and was soft on excessive executive compensation.

The other fear is that the Occupy Wall Street protests could get out of hand, turn violent, creating a political backlash. That occurred during the anti-Vietnam War protests a couple of generations ago.

Tea Party Echoes

There have been a few raucous or ugly scenes, and there are remnants of the radical left; anti-Semitic signs have been spotted.

It’s instructive to look back at the Tea Party, circa 2009. They disrupted congressional meetings, and their ranks included kooks, vestiges of the old John Birch Society, and racist sentiments surfaced.

Ultimately the movement got smarter and provided an infusion of energy for Republican candidates in the 2010 elections. After that success, the popularity of the Tea Party steadily declined.

No one knows if the Occupy Wall Street movement will chart a similar course. A visit to the protest’s Washington’s outpost, in McPherson Square, is illuminating. There are more than 100 tents pitched and there are some characters who resemble disciples of Che Guevara. On a small bookshelf, there’s a copy of “Das Kapital.” That same bookshelf has a copy of David McCullough’s biography of Harry Truman and of “The Gamble,” a book on the Iraq war by noted defense author Thomas Ricks.

‘Moment of Possibility’

There are a few Ron Paul-supporting libertarians, and there are people like Hillary Lazar, an earnest 33-year-old anti- poverty worker. She says the crash and its aftermath crystallized an American economic, social and political dilemma.

“Our political system is beholden to powerful corporations and financial interests, and the current system of wealth and income distribution is unimaginable,” she says. Rather than despair, Ms. Lazar insists, this is “a moment of possibility.”

When a cold Washington winter arrives, most of these tents are likely to fold up. It’s not as likely that the sentiments will disappear.

(Albert R. Hunt is the executive editor for Washington at Bloomberg News. The opinions expressed are his own.)

--Editors: Max Berley, Mark McQuillan.

To contact the writer of this column: Albert Hunt in Washington at ahunt1@bloomberg.net

To contact the editor responsible for this story: Max Berley at mberley@bloomberg.net.


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