Sunday, October 16, 2011

Occupy Wall Street: The Serious Demands

OK, the last time I posted it was in response to some of the sillier demands that were posted on You can read my previous post here.

I mentioned there that the demands read as if they were written by a child, or perhaps an Underwear Gnome. Well, a new list of demands has been circulating, and it looks as though the child has asked Dad with some help with his homework.

They're generally better thought out than the more puerile demands I previously commented upon.  A quick note, though... these are labeled as "official" demands. Please be aware that there are no "official" demands of the Occupy Wall Street movement, so they've started the discussion with a distortion of the truth. *SIGH*. Our expectations have been set accordingly.

These can be a bit lengthy, so with some exceptions, I'm only reproducing enough of the demand to identify it. Follow the link above to read the whole thing.
1. CONGRESS PASS HR 1489 REINSTATING GLASS-STEAGALL ACT.–Steagall_Act --- Wiki entry summary: The repeal of provisions of the Glass–Steagall Act of 1933 by the Gramm–Leach–Bliley Act in 1999 effectively removed the separation that previously existed between investment banking which issued securities and commercial banks which accepted deposits. The deregulation also removed conflict of interest prohibitions between investment bankers serving as officers of commercial banks. Most economists believe this repeal directly contributed to the severity of the Financial crisis of 2007–2011 by allowing Wall Street investment banking firms to gamble with their depositors' money that was held in commercial banks owned or created by the investment firms. Here's detail on repeal in 1999 and how it happened:–Steagall_Act#Repeal . If we wanted to have a BIG IMPACT and we were able to have only one slogan that we could paint on signs and chant during marches within earshot of press, it would be "PASS HR 1489. REINSTATE GLASS-STEAGALL" or "RE-IN-STATE the ACT GLASS-STEAGALL. IT MAKES THE WALL STREET GAMES ILLEGAL"
I reproduced this in full. I have no problem with the above demand, and have nothing to add to what's said here.
 People who broke the law SHOULD be prosecuted, and I'll even one-up this. Not only those that "clearly" broke the law should be prosecuted, but also those who did a fairly decent job of covering their tracks.

Just make sure in your zeal you don't railroad anyone who did NOT break the law, and and don't persecute those whose actions were clearly legal simply because their choices are not your choices.
3. CONGRESS ENACT LEGISLATION TO PROTECT OUR DEMOCRACY BY REVERSING THE EFFECTS OF THE CITIZENS UNITED SUPREME COURT DECISION which essentially said corporations can spend as much as they want on elections. ...
This is not exactly true, so let me take a moment to fill in the missing bits. THIS is the sort of news story they're reacting to: Note the difference between the headline and the text of the story. The headline is accurate... the story is 50% bullshit.

What corporations (and unions, by the way) can do is spend money to produce their own political advertisements. They can not spend any amount they want "on elections". That unfortunate wording would make you think that they are allowed to contribute enormous sums directly to candidates, and they can't. The amount they can contribute to a candidate is strictly limited. (Individual persons can contribute up to $2400 per candidate per election. For a primary + general election, this is $4800. A PAC (political action committee) is limited to $5000 per candidate per election.

That said, persons have always been entitled to free speech. The right to exercise that in elections is not new. This right was challenged before the Supreme Court in 1976 (Buckley v. Valeo -, and the Court ruled in favor of free speech. What the Court did in the more recent decision is recognize the 1st Amendment as applying equally to corporations and unions (which they were obligated to do under the 14th amendment, and we'll talk more about corporate personhood below).

Philosophically, free speech is Constitutionally protected, and I believe it would take more than Congressional legislation to deny it, once it's been recognized by the Supreme Court, as has already happened. So as stated this "demand" would appear doomed. It would need to be an amendment.

The pragmatist in me doesn't care at all whether such ads are allowed or denied so long as the rules apply equally to corporations and unions. Conceptually, a union and a corporation aren't that much different: both are aggregates of people working to a common goal. If you will, a union is like a corporation of laborers; a corporation is like a union of capitalists. That's a bit simplistic, but it pares it down to the essential core for this purpose. As entities, they either both have the right to free speech or they both don't.

I'm preparing a longer rant about Warren Buffett, so I'll pass on it here.

An apparent commonality among the average Occupiers is their almost complete ignorance of what a corporation is. They seem to think it's a business, larger in scope, but similar in structure to your corner hot dog stand. They sell something, the money flows to the top and into the CEO's pocket. That's completely wrong. Again, I have a longer piece to prepare on this, so I'm going to skip most of it for this "Reader's Digest" explanation:

A corporation is not owned by the CEO... in fact, the CEO is an employee, like any other employee. Although his job is to be "the boss", he is hired by a board of directors, who are elected by shareholders, and it is the shareholders who own the company.

And who are the shareholders? Well, there are a few people who do hold a large number of shares by virtue of the fact that the corporation was their idea in the first place. They're the original owners of all the shares. There are a few who hold a large number of shares because they have bought them, and continued to buy them. The majority of shareholders everywhere, though, are plain, ordinary citizens who have invested in a 401k or a mutual fund, or have bought shares on the stock market.

My twins' grandmother bought them shares of Disney as their first Christmas present, so my kids own Disney, in every sense. It's not a big stake in the ownership, but it's there, and you can consider this my disclosure statement. When you're talking about soaking the corporations, you're talking about soaking my kids. And the neighbors' kids. And the neighbors themselves. And everyone with a 401k. When we talk about corporations maximizing their profit, these are the people to whom that profit flows. Their retirement, their future.

It's not enough that the politicians have ruined Social Security, we now want to go to Washington with pitchforks and torches and demand that they ruin private retirement plans as well? I think not.
5. CONGRESS COMPLETELY REVAMP THE SECURITIES AND EXCHANGE COMMISSION and staff it at all levels with proven professionals who get the job done protecting the integrity of the marketplace so citizens and investors are both protected. This agency needs a large staff and needs to be well-funded. It's currently has a joke of a budget and is run by Wall St. insiders who often leave for high ticket cushy jobs with the corporations they were just regulating. Hmmm.
The intent here is clear, but the mechanics are somewhat lacking. We're supposed to hire "proven professionals' who aren't "Wall St. insiders", so it's not at all clear how these professionals are supposed to have proven themselves. There are bits here that make sense, if by "revamp" we mean to go through the existing regulations; clear out everything that is obsolete, redundant, and contradictory; and re-state in clear, unambiguous language those regulations that should remain. (In programming we call that "re-factoring")

The SEC should be well-funded for the reasons stated. Also, I think that while there shouldn't be an outright ban on moving to the private sector, individuals should be made to sit through a waiting period before working for any company they've previously regulated. In my industry a one-year non-compete contract is pretty common.
Eliminating the lobbyists is a common refrain among both Republicans and Democrats who want to connect to the masses. It's convenient to cast unnamed "special interests" as villains. Nobody wants those mean old "special interests" to have "undue influence."

Unless, of course, the "special interest" is you. 

You learn pretty quickly that anybody who doesn't agree with you is more than ready to paint your concerns as those of a "special interest". You may be just another wage-earner, concerned with your family's future, but that concern alone makes you a special interest. Only the schmucks who don't give a shit about anything, the ones that flunk Jay Leno's man in the street interviews, are "average Americans".

I'm against this demand for two simple reasons:

1. No law is needed. There isn't any PAC or lobbyist anywhere who has the ability to introduce legislation. All legislation comes from our elected legislators. And they can simply not take the advice of a PAC if they want. But PACs and lobbyists exist for a reason. I don't care if you're Republican, Democrat, or a member of the Silly Party: it is the duty of every legislator to represent his constituents, and it is the purpose of a PAC to communicate the desires of the constituents to a legislator. It is a pure exercise of free speech and Democracy to band together, express grievances, and appoint a spokesman to go see your Senator or Congressman. Nothing should interfere with that. It is that Senator or Congressman who listens and who decides for himself whether he should or should not adopt a position. It is he who decides what language to submit as a bill. He alone is responsible for his legislation, no matter who actually drafted it.

2. We already have a mechanism in place to deal with legislators who do not act in their constituents' best interests; it's call an election.
7. CONGRESS PASSING "Revolving Door Legislation" LEGISLATION ELIMINATING THE ABILITY OF FORMER GOVERNMENT REGULATORS GOING TO WORK FOR CORPORATIONS THAT THEY ONCE REGULATED. So, you don't get to work at the FDA for five years playing softball with Pfizer and then go to work for Pfizer making $195,000 a year. While they're at it, Congress should pass specific and effective laws to enforce strict judicial standards of conduct in matters concerning conflicts of interest. So long as judges are culled from the ranks of corporate attorneys the 1% will retain control.
I have a bit of a problem with this, in that it operates under a false premise... that being that 'expertise' necessarily equals 'conflict of interest'.

Here's a scenario for you: Pfizer, wanting to hire the most highly qualified corporate officers they can in order to assure compliance with government regulations, hires a former government regulator. However, under this plan Pfizer couldn't hire the qualified individual for the job. Nor is this fair to the government worker, who spent a lifetime building skills which are rendered completely unmarketable by legislation. These are government employees, not government slaves. A better solution in my mind is to allow the hire, but prohibit the employee from directly contacting the agency for which he used to work. And again, a waiting period may be in order.

The same thing goes for judges. We want the very most qualified judges we can possibly get... the ones who know the law better than any other. It's completely expected that these individuals, prior to being appointed judges, got that experience as lawyers. It's completely expected that if they actually have the qualifications we seek then they will be highly successful lawyers, at that. Yet here we people suggesting that these people must be excluded from consideration. This can only be because they haven't thought it through. Otherwise they might as well just admit that they want unqualified and ignorant candidates only.
The Canadian documentary, "The Corporation", makes much of the fact that the 14th Amendment of the US Constitution was passed to protect the rights of slaves, and concludes that it's therefore improper to apply the rights gained for people to "persons" under the law. What this ignores is that corporations were considered "persons" long before the 14th Amendment was passed, and for very good reason. This was decided during James Monroe's presidency, in 1819, when many of the founding fathers were still alive.

Corporations are aggregates of people, and those people may come and go. CEOs come and go, Chairmen of the Board are elected and replaced; but the corporation lives on. Despite what the "The Corporation" would have you believe, though corporations in former times were often of limited duration, this wasn't always the case. A notable example was the East India Trading Company, which had a lifespan of 274 years. (fun fact: the East India Trading company was incorporated in 1600, 112 years before Thomas Newcomen's steam-driven pump was invented. Just keep that in mind when you're watching "The Corporation").

The persistence of a corporation beyond its inception is in the public interest when the tasks they are incorporated to perform are on-going. It isn't enough for GE to build a hydroelectric dam... it must also be operated and maintained. It isn't enough for them to be incorporated to build one dam; we want their experience to apply to the next one. So long as there's a demand for a corporation's products, there's a need for the corporation to fulfill that demand. By considering the corporation as a person, it gives you -- the citizen -- the right to sue a corporation without having to track down all the faceless execs who may have been in charge at the time of your grievance. It gives you the ability to enter into a contract with a corporation and to have that contract be binding on the corporation as well as yourself.

The 14th amendment states, in part, "...nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws..." Do not forget that Corporations and all corporate assets are owned jointly by the shareholders, and that shareholders are people. Anybody can be a shareholder of a publicly traded company, and millions of Americans do, in the form of investments made by the administrators of their retirement accounts. Publcly traded companies are exactly what we're talking about when we say "Wall Street". If the protections of the 14th amendment were denied to corporations, then there would be a convenient loophole for the government to steal and redistribute the property of these millions of citizen shareholders without any legal recourse on the part of the victims.  When you listen only to half-truths, this demand has the appearance of common sense, but when you consider all of the "whys" of corporate personhood, this demand -- as stated -- isn't reasonable at all.

Now, you and I both know that the "personhood" of a corporation is just legal fiction, so we as a society can decide how much of this fiction we choose to adopt. As I've shown above, there are many societal advantages to treating the corporation as a person. However, as we all know it's not a "natural person", it's reasonable for Congress to sit down and actually decide in legislation exactly what are the limits of that personhood. Then we don't have to depend on the interpretations of judges on the matter, and judges will themselves have a guideline for their decisions.
The word "re-establish" here is puzzling and unnecessary. The public airwaves do exist. I don't have cable TV anymore, having discarded it for a simple antenna + the Internet. These frequencies are not the property of the stations using them; they license the use from the government. I have no problem with requiring stations to set aside time for each candidate during the campaign season. "Reasonable intervals" is one of the devil details that needs to be defined.

Coming up...

My Warren Buffet rant, and where wealth really comes from.

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