Remember the recent Republican debate, when Republican candidate Herman Cain said that Occupy Wall Street has “basically targeted the wrong target” and “should be [protesting] against the failed policies of this administration, not Wall Street”?
Well, in some sense, Cain was correct. The Occupiers wish to draw attention to the growing income gap between the 99 percent and the top one percent and have chosen to target financial districts across the country due to their nature as symbols of wealth and affluence. But financial districts, while they may appropriate symbols, fail to hold up as actual sources for solutions to the problems spurring the popular frustration.
It is in the legal charter of corporations to pursue profit for shareholders. Every large company, be it in finance or otherwise, aims to internalize profits and externalize costs. Big finance and corporations didn’t create the economic inequality we see today. Rather, they pursued their mandates and played the legal system to their advantage. In contrast, it is the responsibility of the government to regulate the economy to protect the most vulnerable during economic downturns, and if so desired, maintain a certain degree of equality. So it seems intuitive that blame should be laid squarely on the government’s shoulders when it fails to act in pursuit of these goals.
Yet in another sense, Cain is completely missing a key part of the point the Occupiers are trying to make. The world's top one percent now controls 39 percent of global wealth, according to the Global Wealth Report from Credit Suisse. This is on par with America’s super-rich, who currently control 35 percent of total wealth and have captured roughly half of the total growth in income since 1993. Of course, we can’t demonize these individuals for their success, but we can’t ignore that these facts do bring up particularly prickly questions of political equality.
It is true in both common sense and political science that highly concentrated wealth confers unequal political power. Members of the top one percent, and more importantly, the top .1 percent, have the ability to influence politics in a way that normal citizens cannot. It is almost as if they play by completely different rules. As Northwestern political economy professor Jeffrey Winters argued a recent article for The American Interest, “the one-person/one-vote principle does little to prevent [American] oligarchs from exercising the power of money in a manner that is profoundly unequal.” Winters goes so far to argue that levels of material inequality that exist today parallel levels seen during the height of Roman oligarchs, and although today we have universal suffrage and liberal freedoms, it is undeniable that due to the connection of wealth and political power, “the American political economy is both an oligarchy and a democracy.”
Some of you may be saying to yourselves, "That’s ridiculous! There are no oligarchs in the United States, only wealthy people." But this cannot be true as long as consolidated wealth begets unequal political influence and as long as those who control the consolidated wealth choose to exert their unequal political muscle to protect it and the political benefits that it brings.
The disproportionate political power of the most wealthy Americans and corporations manifests itself in a number of ways. Besides the hordes of lobbyists that outnumber state legislators on average five to one, the most obvious example is the seeming impossibility to raise taxes on the super-rich despite current majority support in public opinion polls for more progressive and redistributive tax codes.
The less obvious but arguably more problematic example is the issue of regulatory capture. The SEC, the agency that was supposed to be regulating the finance industry in the lead-up to the financial crisis, has been accused of being overly submissive and subservient to the industry that they were charged with regulating by journalists and financial analysts alike.
A good number of SEC regulators have left the agency for lucrative private sector jobs with the very firms they were meant to regulate, and for still-unknown reasons, the SEC decided to destroy documents related to Goldman Sachs, Lehman Brothers, Citigroup, Bank of America and other major Wall Street firms that were central players in the 2008 financial crisis and ensuing bailout. It is no secret that there is a serious revolving door problem in American politics, and it may be that the institutions that are meant to protect the public good are being manipulated for private gain.
So, now we can go back to Cain’s remark and attempt to answer a key question: Are the Occupiers confused in thinking that finance and big corporations are the problem? Or are the oligarchs with whom they are angry actually culpable?
The answer isn’t as clear as we would like it to be. It is difficult to blame corporations or the super-wealthy for the current levels of inequality as it is in their nature to pursue profits and protect their wealth, and it is easy to blame the government for failing to act responsibly to protect the public interest as that is exactly what government is supposed to do. But what connects the two is the existence of massive economic inequality, which confers massively unequal political influence to the most powerful corporations and individuals.
This political inequality can cause our government to be increasingly influenced by a smaller sector of society and tip policy decisions like taxes or regulation in their favor, which may produce legislation and outcomes that are great for them, but not so great for the rest of society. So while the exact distribution of blame for current inequality is unclear, it follows that both government and powerful private interests are to blame and that the real problem is the corruption of public institutions for private gain, rather than the use of these institutions for the protection of the public good.