EWOT: Week 6

Despite being a very liberal socialist on almost every issue, I have had a hard time connecting with the message that the protesters in the “Occupy” movement have tried to convey to the nation.  Though the message has thus far been shady, the movement essentially wants an end to government corruption and for the “99%” that does not control the nation’s wealth to come together to bring change onto the country.  Furthermore, they wish to change the unequal distribution of wealth in America by increasing the tax burden for the rich, decreasing the ability of major corporations to influence elections, and the government to step in and regulate the actions of Wall Street.  The original movement, now a month old, is based in Wall Street, and the protestors are generally young and unemployed, many of whom are recently out of college and would be qualified to work if unemployment was not estimated to be 10%.  It has grown into a movement spanning 951 cities in 82 countries, though the core of the movement calls itself “Occupy Wall Street.” 

Several aspects of this movement reminded me of ideas we had learned recently in Econ 108.  The most basic idea that we have spent several classes examining is how people react to incentives.  The people in the Occupy movement are driven by a lack of jobs and the threat of poverty to try to change the economic system in their favor.  The government corruption they are fighting against is based on the idea that Congress is given extra incentive by major corporations and banks to keep their taxes artificially low because the largest donors for many major political campaigns are members of the richest 1% of Americans.  Marginal analysis can also be used in this situation, for the protestors see that there is greater marginal benefit in spending time protesting the lack of jobs rather than spending that time searching for one.

The law proposed by the Occupy Wall Street protestors have proposed to make the American economic system would most likely serve as an example of the Law of Unintended Consequences if enacted.  As mentioned last week in class, the central aspect of what drives people to work is incentive.  By having the government take a further role in the economy, we would be taking a step further away from the capitalist ideas which stress the need for incentive in workers.  If the people at Occupy Wall Street have their way, ending with a larger number of jobs created by the government using the money taken from tax increases to the top 1%, we will first be losing money to inefficiency that could have been used to fund economic growth, and also creating jobs in which the workers will probably have less incentive.  The richest 1% will be less willing to increase their investments in the American economy due to the increased tax burden and could possibly plan on investing their money in a foreign market where it will be taxed less heavily.  On a final note, the corruption that Occupy Wall Street wishes to rid the nation could have the unintended consequence of changing the dynamic of American elections, for a large percentage of American Congressmen and executive officials receive hefty donations from  the top 1% of the American economy.