Occupy Wall Street has a point, but will they stop being morons and make it?

On Tuesday, the ever-excellent Leah Gould (who is now officially famous on the Internet) pointed me to an amusing article in that most notorious of right-wing rags, New York magazine, in which Alex Klein asked fifty Wall Street Occupiers nine really rather simple economic questions. Honestly, they were the sort of thing any mildly interested person who's ever taken even the most basic macro course should be able to dispatch with ease; I wouldn't expect your average American, woefully undereducated in econ as he/she is, to be able to handle these questions, but surely somebody who's willing to camp out in Zuccotti Park for weeks on end to change a system has a rudimentary grasp of that system, right?

Yeaaaah . . . I don't think I need to tell you how that turned out.

Now, before I get lambasted, I am certainly not going to hang my hat on a single cheeky article in an effete niche periodical. It's obvious that there are far too many methodological problems for this to be considered a statistically valid representation of the economic knowledge of the Wall Street Occupiers as a whole (though I wouldn't be surprised if it's not far off). But it did get me pondering.

The more I consider the question, the more I come to think that maybe the Occupiers have got a legitimate beef here. Certainly, they've a right to be angry; I'm not going to begrudge anyone their dissatisfaction during the worst bout of unemployment in thirty years--n.b.: the first person to tell me Wolfram|Alpha doesn't constitute a legitimate source can go fuck him/herself with the capacitor from a TI-83--even though, as David Harsanyi rather wittily put it at Reason, maybe a Master of Fine Arts in musical theater writing with a minor in German wasn't the smartest career move (says the smug dickbag with the chemical engineering degree). And they've correctly identified part of the problem--let the record reflect that a libertarian has just said something bad about investment banks.

Which makes it all the greater a pity, then, that the Occupiers, having gotten that far, can't stop tripping over their own dicks (and quoting Friedrich Engels) long enough to finish the drill. You can't just yell "we are the 99%" (which you're not, actually--you're probably actually more like, at best, the 80%), something unkind about Vikram Pandit's mother, and a demand for government to screw the banks and expect anything meaningful to happen.

Because, you see (to borrow a phrase from Ronald Reagan and then use it in a way completely different than the one he meant), government is not the solution to your problem--government is the problem. I'm not even talking about the size of government (which is too large, but I'm not going to fight that battle today). I'm talking about the priorities of government, which have aligned with powerful interests--most notably, major banks--in a way that really does screw the little guy.

Some of the Occupiers get further than others down the Road to the Correct Conclusion and identify crony capitalism as the cause of their ills, but then they, too, get it wrong and decide that the bad word in that phrase is "capitalism." Capitalism is most decidedly not what's wrong with this country--indeed, it's what allowed it to prosper so fantastically in the first place--and even if it were, there is absolutely no way you're going to drum up the support of a substantial proportion of the American people (which, if you want to get anything done, you will need at some point, I assure you) with an explicit anti-capitalist message. No, the real naughty word in the phrase is "crony."

People, and companies, trying to make money is good (if you dispute this, I'm not wasting time trying to prove it until you go and take that Intro to Macro class, and you probably need Intro to Micro first). A centralized government making judicious use of power to stop people, and companies, from perpetrating fraud, unreasonably despoiling the environment, &c. is also perfectly reasonable--but that's not what the current government is about, is it? If you actually believe that the government is looking out for the poor downtrodden Average Schmoe, you're naive to the point of idiocy. Take, for example, the GAO's "revelation" that a substantial proportion of the Federal Reserve Board's members in recent years have had conflicts of interest by simultaneously being high-ranking executives in major banking firms. That's right: the people who determine how, and to/from whom, money is lent and borrowed and initially spent in this country have, at the same time, their hands on the levers that control how, and how much, money goes into the economy in the first place. The correct response to that, if you have the slightest acquaintance with the history of American monetary policy, is "well, no shit, Sherlock"--it has been like this since time immemorial--but it's only now that the economic situation has gone to DEFCON Whatthefuckisthisshit that anybody seems to have noticed.

A further, extended parallel is even more enlightening. Do you want to know one of the major reasons why the Deepwater Horizon oil spill was perhaps the worst environmental disaster in American history? It's because the government allowed--nay, provided for--BP to play both ends against the middle. To wit:

• BP, with its drilling/exploration activities in American waters being (ostensibly) regulated by the Minerals Management Service, had its risk-assessment-and-avoidance functions essentially subsumed by the federal government, meaning that it had, at least theoretically, a defense against negligence for any project to which MMS gave the green light.
• But gross incompetence and blatant conflicts of interest were the rule rather than the exception at MMS, one of the federal government's crown jewels of inefficiency and corruption. That was an open secret in the oil industry, and it meant that BP was regulated in name only.
• Here's the topper: federal law at the time of the Deepwater Horizon accident provided that oil companies' liability for spills in American waters was limited to clean-up costs plus $75 million in economic damages. (How in the world could that have happened? Couldn't be corrupt legislators striking a highly unethical bargain to obtain some sweet sweet petro-lucre from their Big Oil benefactors, now, could it?) $75 million is a drop in the bucket for a company like BP; $50 billion, on the other hand (one estimate of total economic damages resulting from the spill), is most certainly not.

So, in other words, BP successfully outsourced, in a legal sense, its consideration of risk to a government agency completely incapable of doing its job; was insulated from the losses it might incur if the dice ever came up snake-eyes (which they did, in a massive way); and knew, all the while, that when the torches-and-pitchforks types came after it, demanding it be more heavily regulated, it could protest, technically truthfully, "but we were regulated!" And it only did all this because it was responding perfectly rationally to the system of incentives with which it was presented. (What would you have done, had you been in BP's position?)

This is what your tax dollars buy you. And the proposed solution is . . . more tax dollars?

A narrative of governmental malfeasance, apart from having the distinct advantage of being true, is much more likely to resonate with your average American than "screw rich and powerful people for no other reason than that they are rich and powerful." The sooner the Occupiers discover that, the more successful they will be.