It's easy to hate Wall Street. In movies, bankers are portrayed as heartless, greed-driven jerks. Some people blame the recent financial crisis and the recession that followed on Wall Street duping Americans into signing up for predatory mortgages. Others say that these rich bankers, traders, and investors don't pay enough money in taxes. These and other anti-Wall Street attitudes have led to a protest in Lower Manhattan that continues to grow. But for a variety of reasons, it isn't likely to accomplish anything.
Its Goals Are Unclear
Any protest that hopes to accomplish some goal needs, well, a goal. If a demonstration like this lacks concrete objectives, then its purpose will be limited at best and nonexistent at worst. At this time, all the protest really appears to stand for is a general dislike of Wall Street. But what does that mean?
Wall Street Doesn't Care
There's a key difference between the Occupy Wall Street movement and the Tea Party movement. The Tea Partiers' anger is directed squarely at the U.S. government. It began due to dismay at the bailouts and the massive Obama stimulus package. The Tea Party wanted less government interference in the economy.
But the Occupy Wall Street movement's anger is directed at bankers. Here's the problem: they really don't care. These protesters are not Wall Street's customers. In many cases they aren't even their customers' customers.
Over the weekend, I saw a YouTube video of some Wall Streeters sipping champagne as they watched the protests from a balcony above. This is an extreme example, but such bankers who fit the stereotype that the protesters hate obviously aren't moved by the demonstration. In reality, the vast, vast majority of bankers, traders, and investors aren't out to rob the poor to feed caviar to the rich. They are doing honest work that holds together the global financial industry. That large majority of Wall Streeters will walk by the protesters and shake their heads at the crowds' misunderstanding of what they do.
The Protesters Can't Sway Congress
The Tea Party accomplished something very key: it helped to significantly alter the makeup of Congress through the 2010 election. It had a goal -- to put out of power the big government candidates -- and it accomplished that goal. The Occupy Wall Street cannot hope for any result as significant.
As mentioned, it doesn't have a clear set of objectives. But let's say, for argument's sake, that it has some general fringe-left goals. Some that have been suggested include new taxes on Wall Street and much stronger financial regulation. The problem is that these views aren't likely to catch on in Congress: even when the mix was much further to the left in 2009 through 2010, a relatively mild financial regulation bill was passed and even the Bush tax cuts remained intact.
The reality is that the U.S. is a center-right nation, and Congress reflects that. While some cities are farther to the left than others, they already have very progressive representatives. Meanwhile, the message of Occupy Wall Street isn't likely to catch on and affect any change in more center-right regions like the Tea Party did.
Their Timing Is Off
Even if the U.S. were to embrace the message of these protests, Congress would not act. The bailouts were hugely unpopular with voters, but they occurred anyway. That's because there are times when Washington just needs to be practical. When unemployment is stuck above 9% is such a time.
Enacting new financial transaction taxes or even more burdensome regulation will not be good for the economy in the short-run. Even many Democrats are worried that such aggressive actions threaten the recovery. That's the main reason why the Bush tax cuts were extended. As the banking industry remains fragile, the government isn't likely to wallop it with new fees, taxes, or regulation just because a few thousand protesters in Lower Manhattan are making some noise. The last thing we need is another financial crisis.
Banking is a Vital Institution -- Especially to the U.S.
Hating banks is counterproductive. You simply can't live without banks in a modern, sophisticated economy. Wall Street investment firms are equally essential. Capital markets and debt markets allow businesses to function smoothly. Without them, growth and progress would be much slower.
But the U.S., in particular, needs to maintain its healthy, vibrant banking system. During the financial regulation battle least year, a lawyer I know who works with banks and investors lamented the effort. He worried that Congress would go to far. Banking is one of the few industries the U.S. has left where we're a global leader, he said. He is absolutely right.
Finance is one of the few sectors where Americans can still find good-paying jobs at all levels. It's also responsible for a very significant portion of U.S. GDP. If Congress were to create burdensome new rules or taxes for the industry here, then the business would just move somewhere else. It could easily do so: there's nothing about finance that requires it to have a major presence in the U.S. Congress knows better than to risk the U.S. losing its competitive edge in such an important sector.
For all of these reasons, we aren't likely to see the Occupy Wall Street effort accomplish much. It doesn't have a clear focus, and practical realities will prevent it from achieving any vague objectives it might have. Those angry with Wall Street should seek more effective means of affecting change than this.
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