While the”Occupy Movement” has become a big news item recently, this movement has really failed to grasp many realities of economics and business. Further, with it’s leaderless and directionless protests, it has completely failed to achieve any of it’s vague objectives such as making the economic system more fair. Not a single bank has reformed any of it’s rules related to fees, acquiring loans, or other policy as a result of the protests. On the contrary, many banks have hired extra security to prevent problems from persons associated with the “Occupy Movement” such as breaking windows, etc. and now passed these extra costs off to the customers. As a social movement, the “Occupy Movement” has so far been a complete failure compared to more focused social movements such as those movements that ended slavery or opposed the Vietnam War.
Some of the wrong assumptions about the business community that the “Occupy Movement’ continues to banter as fact is some myth is that the business community or wealthy somehow don’t pay their fair share of taxes. This myth certainly isn’t held up by reality. Cash strapped local, state governments as well the federal government have all looked for new ways to tax businesses or higher income individuals over the years. Further, much of the reason that government has increased taxes on those that produce income or wealth for the economy is to pay for services for those who produce little or no taxes or income for the economy. In some states, as much as 20% or more of persons on the SNAP(formerly Food Stamp) Program for example. Add to this those individuals on public housing assistance programs or government paid for health care programs, and the tax burden on those who produce income is tremendous. In some states, if you add up all the persons who draw income from the government through jobs, using public services such as public health care, draw pensions or Social Security benefits, it equals sometimes more than a third of the public. All of this means that two productive workers in the economy need to work to pay for benefits, salary or programs for a third person in the economy who produces little or nothing for the economy.
Some states have come up with some outrageous tax schemes to pay for the cash shortfall to pay for public services. In Oregon, voters approved an outrageous tax proposal from the state legislature that levied a $40,000 minimum tax on any small incorporated business whether or not the business was making any money or not. This means that a small mom and pop business that is losing money because of the bad economy that incorporated as a Subchapter S business because of the former liability benefits that a Subchapter S brought, is now forced to pay $40,000 in minimum taxes. Outrageous. But, this tax proposal came from some myth that the wealthy and corporations aren’t paying their fair share of taxes. Proponents looked to some large companies such as Portland General Electric that corporations aren’t paying their fair share of taxes, ignoring the fact that everyone who work for the company from the power line repairman to the company CEO are paying taxes to fund government services and programs. The company itself had some very expensive equipment upgrades, often because of government mandates and new regulations, which lowered it’s corporate tax liability. Further, any proposal for a company to spend substantially more on taxes only results in a vicious cycle where customers now pay more for products. making products less affordable, actually reducing the wealth of customers, creating more inflation as well. Consumers don’t win in a vicious cycle like this.
People in the “Occupy Movement” also have no grasp of an important principle in business called “risk”. During this last Summer, some huge movies with giant budgets such as COWBOYS & ALIENS and the remake of CONAN each lost around $60 million from the production costs invested to make the films. In fact, producing films is one of the most risky business ventures there is. And , many other businesses entail huge “risk” factors when they produce something. In the recording industry, on average of just one artist out of ten acts makes enough money to cover their production costs to launch an album on the market. That means that these few successful artists must earn enough income to keep a recording company in business. At some point, many film companies, such as MGM, or record companies, simply lose enough money on projects that many go out of business. MGM bankruptcy, for example, has delayed the production of the latest James Bond film by about two years. That’s significant.
One film company, Ace Studios, produces films for Full Moon over in China right now in order to cut their film production costs from millions of dollars down to as little as $75,000 a picture. At one time many film companies looked to Vancouver, Canada to save money. Now, China is increasingly become an attractive alternative. High labor costs, high government film permits and licensing fees, etc. have all helped to outsource the American movie business to China. By cutting their “risk” value so much, a company like Full Moon is now virtually assured of making a profit on a movie even if it only goes direct to DVD and bypasses movie theaters altogether.
Something that the “Occupy Movement” doesn’t comprehend is that those with more money fund business ventures and take “risks”. “Risk” is exactly what the name entails. A wealthy person can lose everything when they take a “risk”. The “risk-taker” then provides jobs, which in turn generate income and taxes, for persons who put up no “risk” at all. Yet, the “Occupy Movement” argues that those with money should pay more in taxes, which would only weaken new investment in the economy, when it certainly follows that “risk” provides jobs for those who invest nothing in the company and stand to lose nothing more than their jobs if the business venture fails.
Those in the “Occupy Movement” continue to argue for a more fair economy. Yet, some countries such as the old Soviet Union experimented unsuccessfully with a Communist system that was actually a form of state capitalism, where the government attempted to manage every phase of the economy, from planning to production of goods. It only resulted in an economy with few goods to sell of poor quality. In 1953, the entire economy of the Soviet Union was only able to supply one well stocked giant department store out of the entire nation, the GUM general merchandise department store. Most other small stores in the entire nation were not only scarce, but poorly stocked with goods. As late as the 1970’s, even singer David Bowie remarked what a desperate mess the Soviet economy was in because even buying a chocolate bar was difficult as well as expensive if you wanted to stand in a line long enough to really buy one. Only by moving toward private managers as well as an open economy has the GUM department survived to this day. Today, it is like a high end product mall with over stores in the giant building located in Red Square. Further, other Communist economies such as those in China and Vietnam have moved toward huge economic reforms and private investing in order to improve their economies, and to provide jobs as well as consumer products, both at home and for export.
Those in the “Occupy Movement” continue to argue that capitalism has somehow failed. Yet, the truth is that while our economy is not without serious problems, including poverty, etc., it still has worked far better than other economic systems such as Communism which was completely failed to provide the needed goods and products for a comfortable lifestyle for those workers in that economic system.
For the most part, many of the persons involved in the “Occupy Movement” are broke and without a job, yet they freely want to offer advice to other persons who are far more effectively managing their lives on how to manage the economy.
Beyond, failing to have any grasp of how economics works most successfully, the “Occupy Movement” also hasn’t got a clue on how to manage a message or to effectively protest. Last weekend’s protest in Portland, Oregon involved probably about 7,000 people and perhaps just one, “Tax The Wealthy” sign for the entire protest. I guess taking the effort to simply make some sort of sign is too much work or something. But, unlike other protests of the past, it’s difficult for any viewer to grasp what the movement supports or is against.
And some persons in the “Occupy Movement” are having a real problem managing their conduct at the occupation sites without serious problems. In at least four cities, sex offenders were arrested for crimes such as rape associated with the protest sites. In Portland, Oregon, rape crimes not only increased because of the protest, but overall crime increased by 39% in the area. Further, four near death drug overdoses finally forced Portland’s liberal mayor to have to take action against the protest.
When the police were called in to reclaim a downtown park from the “Occupy Portland” protesters, thousands of persons flooded into downtown creating a tense and serious situation. Some agitator threw fireworks at a mounted police office on a horse, causing the officer to be injured. This created a dangerous situation where police might have mistaken the noise for gunfire and turned violently on the crowd. But, that’s what some agitators want. To create a riot situation that involves persons being injured or killed so that they can claim some sort of victim status and agitate more riots. Fortunately, the Portland Police acted very professionally and there were few arrests. However, a smart persons stays away from protests where police are dressed in riot gear, where the potential to get beat up or arrested is very high. The Kent State shootings at a Vietnam War protest was used by the antiwar movement to create a victim complex by protesters to end the war. Crosby, Stills, Nash & Young even wrote the hit single, “Ohio” about that tragic event. But, unless American “Occupy Movement” really want to get involved in some Libya or Egypt type revolution to really change the economy or even the government, then they’re really just getting involved in a potentially dangerous event by attending protests with no intent really change anything but the potential to be involved in violence or arrest is high. The potential for some of these events turning violent is just too high. Stay home, and write or get involved in creating peaceful change instead.
Sometimes riots do result in change, such as the Boston Massacre, by British soldiers of five American colonists who protested some of the British rules and taxes. This riot helped to create the American Revolution. But, not without significant injury and loss of life to many persons.
In Portland, Oregon and other cities, news crews and reporters were freely allowed to cover the event. However, in New York City, police actually banned news coverage of the event as well as arrested reporters. That’s a very dangerous infringement on the free press as well as a potentially serious situation for the protesters. An openly covered event in the free press is a much safer event with far less likelihood of the situation turning violent.
Further, likely few of those involved in the “Occupy Movement” even bother to vote, let allow register to vote. Many are unemployed and hardly any role model of success to hold up. The business community likely won’t change any business policies due to the “Occupy Movement” either. The outrageous of the “Occupy Movement”may even backfire because of a public backlash against the lawlessness of the movement, resulting in an even more conservative government or police, who take a much tougher line against such protests who block public streets or cause other problems. That’s not the kind of change these people want.