C Gopinath

‘Wall' between rich and poor

Updated on: Oct 23, 2011

The protestors in New York, Boston and elsewhere are demanding policies that address rising inequalities.

Those who are metaphorically oriented may well say that what began as an Arab Spring has now revealed itself as an American Fall. I am referring to the various protests in major cities in America this Fall season (as autumn is referred to here).

If you stand in the middle of Dewey Square Park in Boston's business district, you'll see impressive buildings and signs towering all around you. There is the Federal Reserve (i.e., US central bank), Citizen's Bank, Fiduciary Trust Building, and so on.

Then lower your gaze and you will see a milling tent city or protestors and signs like ‘We are the 99 per cent' and ‘Re-enact Glass-Steagall' (the law which was repealed and thereby loosened restrictions on banks which some say fuelled the financial crisis in 2008). The crowd gathered here has termed its protest as ‘Occupy Boston'.

The protests are peaceful, and a grassroots government has emerged to manage the donations flowing in, and to supply food, and so on. There is even a life-size Mahatma Gandhi statue among the tents to provide inspiration.

Newspapers report that there are over a hundred such similar, but loosely affiliated, protests around the country and that it is spreading in Europe. The one in New York City, which began mid-September, calls itself ‘Occupy Wall Street' and is just a few blocks from its symbolic target, the stock exchange. The protestors there have marched past wealthy homes, shouting ‘tax the rich'.

Many unions have declared their support for these protests; politicians and other celebrities with an eye towards the front pages have also joined in support by visiting and addressing the protestors.

RISING INEQUALITY

The signs and slogans show a diversity of demands. Newspaper interviews of some of the protestors give us interesting data on the motives. Those without a job want one; the homeless want homes; some are demanding the ‘end of corporate control of government'. Some are currently employed but angry at the government's policies that seem to benefit the 1 per cent of the people at the top.

This refers to a newly released study using government tax data to show that between 1993 and 2008, the top 1 per cent of families captured 52 per cent of total income gains. A Pew Research Centre poll shows that about 45 per cent of the people now think that the country is divided between the ‘haves' and the ‘have-nots'.

Since 1968, the Gini score, which measures income inequality, has been worsening. The US with its history of pioneering settlers has always viewed itself as fairly egalitarian and a land of opportunities for those who want to work hard and come up in life. More and more people are realising that it is not so true anymore.

It's not that the rich are insensitive to this issue; Warren Buffett, a well known and personally wealthy investor has supported the US President's challenge that the top income earners need to be taxed more. But surprisingly, the bulk of the conservative groups are stuck so deeply in their ideology that any talk of tax increase makes them break into a rash.

The leading Republican candidate for nomination to contest the Presidential election next year has been going around the country arguing for lower tax rates, and wants all these protestors to not complain but get out there and do something on their own to improve their situation. Clearly, he has been stuck in a time warp and perhaps his only previous memories are of people who got into a wagon, went west, threw out the native tribes, and built their farms.

CLASS DIVIDE

The Arab spring began in Tunisia when a vegetable vendor decided to set fire to himself in protest against harassment by local authorities. The unhappiness at the grassroots level with the ruling elite quickly grew into a political movement. Public expressions of discontent moved on elsewhere in the Middle East and North Africa, making a brief stop in the UK and now reaching the US.

The ruling elite in the US (in government, or politics, or in corporations) would do well to reflect on what message they need to take away.

The British, who saw a wave of protests and rioting not too long ago, managed to arrest and punish several of the rioters but are left wondering about what sparked the riots and what should change.

A lot of the passers-by in Boston and New York who are currently employed by ‘big business' or the financial services industry are full of scorn for the protests, and yet filled with consternation. They fail to understand the ire of the protestors. They yell ‘get a job' while briefly lowering their car window as they drive past. There are several events that seem to have directed the current disappointment towards the corporate world. Unemployment is stuck at above 9 per cent. Companies continue their knee-jerk job cuts at the drop of a share price while at the same time paying their top management unseemly sums as compensation.

Some conservatives harrumph at those who support the protestors saying they are promoting class warfare. That's right! This is class warfare: One class that feels disadvantaged enough to want to protest against another class that does not seem to change its behaviour.

JOB CUTS

The protestors are taking aim at corporate practices, bank bailouts, and tax policies that seem to only favour a few at the top. Efforts to broad-base benefits through health care reform, or a bill to promote jobs and hiring are bitterly contested on the floor of Congress. Can you blame the perception of the protestors that the rich have captured the government?

A new report released by the Comptroller of New York State says that profits in the securities industry have fallen sharply and job losses will continue.

Investment banks, brokerage houses, and others have been losing jobs since the financial crisis they started in 2008, and are expected to lose another 10,000 jobs by end of 2012. The protestors who are trying to ‘Occupy Wall Street' can look forward to a swelling membership.

(The author is professor of international business and strategic management, Suffolk University, Boston, US.)

Published on March 09, 2018

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