Abu Dhabi, UAEMonday 28 May 2018

A fundamental crisis will strengthen the Wall Street protests

Tens of thousands have taken to the streets across the US and around the world, and a stubborn legacy of economic and social inequality is driving the train.

During the Great Depression, the US communist folksinger Woodie Guthrie penned his anthem This Land is Your Land, This Land is My Land. That song is still taught to elementary pupils all over the United States, albeit stripped of its more sharp-elbowed verses. Like the one that goes: "Maybe you've been working / Just as hard as you're able / scrounging the crumbs off / some rich man's table / maybe you've been wondering / is it truth or fable / that this land was made for you and me?"

As tens of thousands of Americans take to the streets across the nation - and in like-minded demonstrations across the world - to challenge economic and social inequality and the political status quo that threatens growing poverty for many Americans, the ghost of Guthrie is haunting America's cities.

Unemployment in America is at its highest since the Great Depression: some 26 million people either have no job at all or are forced to settle for part time work. This when corporate profits are higher than they have ever been, and CEO pay, which has trebled since 1990, is 350 times that of the average worker (whose pay increased just 4 per cent over the same period).

The wealthiest 1 per cent of Americans own 42 per cent of the country's financial wealth - increase the sample to the richest 5 per cent of the population, and it owns 70 per cent of the country's financial wealth. And this at a time when taxes on the top earners are the lowest they have ever been.

The US political system is dominated by Wall Street, which is why, many believe, President Barack Obama's 2009 bank bailout has left them in rude health, generating hundreds of billions in profits but failing to loan the money to reinflate the economy and without any accountability for the reckless investing that caused the crisis.

Romney Beating Obama in the Race for Wall Street Cash was the headline in The New York Times last weekend, highlighting what may be a dilemma for a president who hopes to raise $1 billion (Dh3.7 billion) to finance his re-election. Indeed, Mr Obama's desire to accommodate both Wall Street and its critics makes for some mealy-mouthed rhetoric. Dr Martin Luther King Jr "would remind us that the unemployed worker can rightly challenge the excesses of Wall Street without demonising all who work there", Mr Obama said last weekend.

Of course, the inequality and economic degeneration that has drawn people onto the streets has, in fact, been underway for three decades, although the effects were ameliorated by easy credit and a property bubble. But an economy that funnels most of the wealth it generates into the hands of a tiny elite will stumble, sooner or later, for lack of consumer demand. America's middle class has been slowly shrinking as more and more people slide into poverty; almost one in four US children now lives below the poverty line.

And the problem facing the political elites of both parties is that Americans have woken up to the reality that they're living in a country whose inequality ratio is similar to that of many in the Third World. Go to school and college, work hard, play by the rules and it's highly unlikely you'll have a better standard of living than your parents.

Hoping to rally the street behind him, Mr Obama recently proposed a tax hike on Americans earning more than $1 million a year, prompting howls of "class warfare" from Republican presidential hopefuls. It has been deemed downright subversive, since the days of Senator Joe McCarthy, to even acknowledge the existence of social class in America. But the billionaires are struggling to hide the evidence. As a popular slogan on placards across the country notes: "It's only class warfare when we fight back."

Yes, but what do the protesters want? That's the question being asked with increasing anxiety in the political and media establishments looking to harness the energy to drive election campaigns. But Occupy Wall Street - and its national and global cousins - are constantly spinning away from the embrace of would-be suitors.

Sure, they don't have clear demands or a coherent organisational strategy. That may be a strength: Occupy Wall Street represents a more profound challenge to the system than this or that policy tweak or election campaign. Protesters want to change the national conversation: they are not claiming that they have the answers; instead, they insist that the important questions are not being asked in Washington. The questions are the same as those posed by Guthrie about what Americans want America to be.

And poll after poll suggests most Americans support Occupy Wall Street. In fact, those who pay most attention to polling are beginning to take note. The Washington Post reported last weekend that "Obama and his team have decided to turn public anger at Wall Street into a central tenet of their re-election strategy", even as he tries to keep donors from the 1 per cent on board.

But even if they can be persuaded to vote for Mr Obama again, many of those on the streets are unlikely to halt their campaign. The lesson they draw from his first term is that Mr Obama will again capitulate unless protesters hold his fee to the fire. Occupy Wall Street will change form and tactics, and go through a number of iterations in the months and even years to come. But the underlying impetus isn't going to go away, for the simple reason that there's no prospect of a resolution any time soon to the fundamental economic crisis.

Or, as one protester wearing a V for Vendetta movie mask noted on his placard last week: "The Beginning is Nigh."


Tony Karon is an analyst based in New York. Follow him on Twitter @tonykaron