Time's up for the Occupiers

The global Occupy Wall Street movement has outstayed its welcome and is likely to peter out in the next few days.

Acting on instructions from mayor Michael Bloomberg, hundreds of police in riot gear moved in before dawn to arrest about 200 protesters and clear Zuccotti Park for sanitation workers to begin a major cleanup.

While the protesters pledged to continue their two-month campaign, city authorities elsewhere in the US carried out similar operations to remove illegal occupiers.

Some high-profile protests, such as the one outside St Paul’s Cathedral in London, look likely to continue despite eviction notices being served some weeks ago. Reuters reports new legal actions are under way.

"We are getting reports about vulnerable people, cases of late-night drinking and other worrying trends, so it's time to act. It will clearly take time but we are determined to see this through," says Stuart Fraser, policy chairman of the City of London Corporation.

In New Zealand, no forcible actions have been taken yet, despite attempts to persuade the protesters to move on in Dunedin and Wellington. Auckland Council says the costs of the small tent city in Aotea Square has hit $200,000, so the price of freedom is rising.

Myths about the rich
Unlike Wall Street, the local Occupy movement has attracted little sympathy or public support, perhaps because of its lack of imagination in being largely a copy-cat exercise.

Certainly, it lacks the data to prove its contention that the rich are getting richer and the poor poorer. In the US, such statistics have attracted much debate.

The Congressional Budget Office's just-published Trends in the Distribution of Household Income Between 1979 and 2007 found an increasing concentration of income over that period, ranging from 275% income growth for the top 1% of households and 65% growth for the rest of the top 20% down to 18% growth for the lowest 20% of household incomes.

But as Gary Galles points out in an analysis for the Von Mises Institute, the timing of the data in a year of a housing bubble and stock boom says little about inequality in the current, very different post-bubble world.

But there is a bigger issue that makes CBO figures less than useful. Professor Galles quotes economist Thomas Sowell to back this up:

Although such discussions have been phrased in terms of people, the actual empirical evidence cited has been about what has been happening over time to statistical categories — and that turns out to be the direct opposite of what has happened over time to flesh-and-blood human beings, most of whom move from one category to another over time.

Another US study, by the Treasury on income mobility in 1996-2005, was based on individuals’ tax returns. This found that those with the very highest incomes in 1996 — the top 1/100 of 1% — had their incomes halved by 2005.

In other words, people moved out of the top category later in life. This, Professor Galles observes, “hardly shows a class of rich growing ever richer at the expense of other classes.”

Funny money men
A side-effect of the Occupy Wall Street movement has been its embrace by a clutch of funny money theorists and wacko economists.

Having dispatched New York Times columnist Thomas Friedman as a dangerous neo-liberal a few weeks ago, Kim’s Club on Saturday morning radio welcomed a couple of dotty ideas men and provided them with generous air time.

First up was Ravi Batra, who advocates Proutism (PROgressive Utilizsation Theory), which depicts speculative financial capitalism as a highly destructive force that threatens the planet.

Batra has written in support of the OWS movement, saying it backs his earlier predictions of a revolt against Wall Street greed and crony capitalism.

In a series of doomsday-style books, Batra links concepts based in Hindu idealism about the need to be in harmony with nature, each other and other life forms to ways that could reduce the gap between rich and poor.

He says he isn’t anti-capitalist or anti-market – he predicted the demise of Soviet communism – but he does promotes raising incomes with the sole purpose to increase their consumption.

Next up was Christchurch man Raf Manji, who has founded the Sustento Institute. Again, Manji says the OWS movement is a phenomenon he foresaw with his diagnosis of economic ills:

Our current system externalises as many costs as possible, has institutions corrupted by money, and has lost any sense of meaningful values, other than monetary gain. Not only has our economy become monetised, so has our society.

More solutions seeking problems
These ideas are not new and belong to a long tradition. Manji, for example, is an enthusiast for monetary reform that wants to socialise debt. That idea goes back to CH Douglas’ Social Credit, which launched an influential political movement that achieved power in Canada and was popular here well into the 1980s.

Another alternative theory about money can be found in Monetary Circuit Theory, which was popularised by Italian economist Augusto Graziani and based on ideas developed in Austria and Germany during the 1930s.

Then there’s Chartalism or New Monetary Theory, which has been described by Brad DeLong as less than a theory and more of a tautology. Nevertheless, NMT has attracted some heavyweight advocates, known as post-Keynesians, who see little problem with government deficits.

Mr Friedman's fellow columnist at the New York Times, Nobel Prize winner Paul Krugman, has challenged their ideas and says

It matters whether the government can issue bonds or has to rely on the printing press. And while it may literally be true that a government with its own currency can’t go bankrupt, it can destroy that currency if it loses fiscal credibility.

A disturbing common thread among these monetary theories is a strong conspiracy flavour about the role of banks. In some cases (like Douglas), it verges on anti-Semitism.

Mr Friedman has confirmed he is still coming for next year’s Writers & Reader’s Festival in Wellington. It remains to be seen who will next be ushered on to the air waves with heterodox solutions to conventional problems.