**This is only a draft for your consideration. I will flesh out points in the coming days***

Deep at  the heart of the OWS movement is a broken social contract. The contract after WWII wasn’t work hard and you’ll be rewarded the contract was work hard, stay with the company, be loyal, and you will be rewarded all your life and you and your family will be take care of well into your old age. In Europe they did that with socialism, corporatism, and government in America we put the burden on corporations to take care of people with employer sponsored healthcare and other “Benefits.” The recent movements of the Tea Party and Occupy Wall Street have brought several things to the fore: the political fringe and their fringe but now fashionable ideas, a voice of the silent majority and a deep frustration of an economy and a society out of control.

 

How did we get here?

The story of this recession is one the things that really starts along time before the life time of most of the protesters. I’m going to take us back to a time before capitalism as we know it today even started. We’re going to stard with the last major economic system called mercantilism. Mercantilism is really a socialists’ dream world. Under Mercantilism companies were licensed from the government to perform very specific government controlled tasks. The shining example of this was the British East India company. Licensed directly the crown the company was charged to trade with Asia by sea routes and other means. They landed in India and created a century of great trade for Great Britain. These companies had their own troops, their own laws, currencies, and much more. However, this system didn’t work for several reasons. The management was appointed duly by parliament and the crown which meant that often ineffectual people were put in charge. For the British East India Company it was so bad that eventually the British government itself took over the company’s land holdings in England and Asia and used that a springboard for the British rule of British India starting in the 1790’s. Besides bad management there was also systemic changes that were finally coming to fruition from the fall of feudalism which preceded mercantilism. As the “Trading” class began to expand not only did they agitate for greater political liberty resulting in a series of revolutions, reforms and other changes that racked continental Europe for the entire 19th century they desired a system in which they could freely go about trade, business, and commerce both locally and globally with as little governmental interference as possible. The pinnacle of these views was articulated by John Locke, Jacques Rousseau (to a lesser degree) and embodied within the creation of the United States of America. These principles were central to the creation of the country.  As the principles of private property, production, the means of production (a phrase made famous by Marx but used before him) and the idea of personal control of production and profits came to the fore, especially with the nascent beginnings of the industrial revolution in 1780 how this new class of people was going to be handled, how they were going to fit into society and most importantly how the government was going to respond became very important. Now, before history buffs call a foul, I do want to remark that what I call the trading class has a history starting with the fall of feudalism and the beginning of the southern renaissance in 1500 so by the time my narrative begins the winds of change were already underway. In fact one could argue that mercantilism was a result of trying to control the power of this class because of their tremendous wealth and that argue would be salient and sound but I will not discuss it at length here.

 Fundamentally, mercantilism was a way for government to keep a tight lid on business and most importantly absorb profits therefrom into itself. Capitalism on the other hand did the exact opposite. Capitalism, the basic system of which the USA was founded upon, is quite simple an open system of supply and demand based markets that is loosely regulated and taxed by government. In fact, in the early days of the industrial revolution there were little or no government regulations on business of any kind. Backdoor deals, collusion, monopolies and much more were commonplace than they are now especially in coal, railroads, and later in oil and other resources. Safety regulations were the responsibility of the business and depended wholly on the desire of the business owner to building something “safe” accidents of a wide variety were common and there were several private charities and public initiatives to help make everything from machinery to buildings more safe. It was a free for all of business, anyone, literally anyone could open any business at any time and make a go at it. That lead to several remarkable success stories. However, the only quality and safety control was based on people’s experiences. If you someone made a good product people bought more of it, if the product was not very good the business quickly went under and that was the only regulation. There was no consumer reports or other reporting agencies to control this kind of thing.  It was entirely based on market preference. Morever, government’s role was even less. Local governments were left with the power of infrastructure and formal road building projects didn’t become common place until 20th century. Concepts like the “public will” and such ideas came as a reaction to the runaway markets of the 19th century and how companies treated people. It took progressive social changes to institute everything from work place safety standards to an 8 hour day and a 6 day and later a 5 day work week.  In the 20th century politicians and other instituted reforms that brought capitalism under a more manageable heel so that many of the wild swings and whims of an unforgiving market would be mitigated for the public good. Regulations were rampant throughout the 20th century until 1981 when Reagan took power with the idea of low taxes, few regulations, and letting business operate as they chose with as little public interference as possible. Things have never been the same. Now it is worthy noting that part of the reason Reagan’s policies struck a chord with the people of America was due to the fact that the economy had been on life support since 1962. The rush of economic activity after WWII had slowed. In fact President Kennedy famously lowered taxes in order to boost the economy in 1962. The remainder of the 1960’s although racked with social changes remained economically good. However, the 1970’s were not to have the same premise. Between oil embargoes, rising energy prices, and the amount of regulation (at this time everything from airline tickets to cab fares was regulated) businesses were looking at a way to still make money and cumbersome regulations that had been a necessity not 20 years before came under fire especially as corporations failed, people lost their jobs and the pall of recession set in over the country from 1975 through 1982 in various forms. The need for reform of the Keynesian economic model that had dominated from the 1930’s became even more prevalent with the Savings and Loan crisis as well. By 1981 people we’re ready for a change, it wasn’t without reason that the idea of something different resonated with so many people.

Where Does that Leave Us Now?

I’ve said all that to say that between feudalism, mercantilism and capitalism each system was progressively opened wealth and the potential to create it to more and more people. Under feudalism it was only open to the nobility, under mercantilism it was opened to the “landed aristocracy” and under capitalism it was opened to anyone with enough pluck to go out and make it big doing whatever it took to make their happen. In the United States our entire social system was built on this highly mobile system and there were plenty of success stories of people starting as ditch diggers and ended up as wealthy millionaires. Especially in the 20th century with a variety of trades, professions, businesses and such becoming available the only thing keeping anyone (particularly men and later women) from becoming a success was their own desire to, or to not work. Things in Europe were a little different because of the rigid class structures that existed until after World War I which caused Marx to demand that the proletariat unite against the class regime.  Many Europeans immigrated to America because of our more open system of economics.

 

Capitalism has its benefits and its own pitfalls:

  1. Open market access for anyone without the regulation of guilds, governments, trade organizations, unions etc.
  2. Freedom to generate new ideas, products, and technology
  3. Freedom to sell goods at a price to whomever
  4. The freedom to invest in companies creating great products
  5. The freedom to keep profits from investment and earnings and reinvest those or keep them for personal gain
  6. The freedom from excess regulation, rules, trade rules, quality rules, and other cumbersome expecatations.
  7. The freedom to hire anyone at any time with the skills that you need for an agreed upon price of employment. (There used to be rules about that in 17th century Europe to limit the amount of new tradesmen)
  8. The freedom to sell goods wherever, to whomever, at any price based solely on the customer’s desire to pay (yes they had rules about that too especially for agriculture).
  9. Massive economic growth as people increased their wealth and bought even more goods
  10. Increased government investment in arms for military deployment

 

A few disadvantages:

  1. Horrific economic swings
  2. Over production leading to wild swings of employment and unemployment
  3. Massive exploitation of resources
  4. Massive income inequality
  5. Over-production of farms leading to barren land and poor land use (think dustbowl)
  6. Massive exploitation of human resources (injuries on the jobs, long hours for low pay, lack of advancement)
  7. Collusion between companies
  8. Monopolies
  9. Price gouging
  10. Trade in-balances and protectionism
  11. Colonialism
  12. Slavery
  13. Technological in-balances between nations
  14. Arms races

I’m sure that this is not a complete list of advantages and disadvantages and I’m sure people would argue and debate upon my take on the advantages and disadvantages I’m sure. However, I think most can agree that this list is a good jumping off place and that many countries under the capitalist system have suffered and enjoyed some combination of the above benefits and pitfalls of this system. Now that I’ve explained the basic history of how we got here and where that leaves us the question then begs, “So what is the occupy movement really protesting against?”

 

Fundamentally it is as follows:

  1. Broken social contract
  2. Lack of buy-in into capitalism (loss of belief in a system that benefits everyone)
  3. Exploitation of the environment
  4. Exploitation of people
  5. Marginalization of people who can’t fit into the capitalist system
  6. Expansive and rising corporate profits at the expense of society
  7. A separation of “society” (as defined as experts, educated people, and others) from business
  8. Lack of economic freedom
  9. Rising prices
  10. Lack of rising wages
  11. Lack of social welfare

I think the most pressing trouble is that the Occupy movement itself does not know what it is actually protesting against. Our country is like a sick patient, and occupy is protesting against the symptoms and not the disease. The actual disease is endemic within the system and the system is the highly modified almost socialism/communist capitalism under which we now operate. I’m not saying that this is bad but really the country has two options. Go to full and competent management over the economy or competently return to a true free for all economic system as we experience in the 19th century. There are arguments for both and arguments against both. I choose neither, I choose what I like to call the globalist solution. There are a few things to remember about my own brief and highly truncated history that I listed above the most pertinent of which was the lack of globalization as we now know it. Through each system, feudalism, mercantilism, and capitalism global trade increased in each case. However until 1948 with the advent of the GATT global trade was a highly regulated and coordinated dance between nations often handled at the highest levels of government. In 1948 that all changed. I won’t bore the reader with the finer points of GATT as I had to suffer them in College and Grad school but my point is that in 2012 trade and economics are very global, if one falls they all fall as this past recession has proven. Based upon that how do we craft an economic system that is deeply global, gives freedom to people, creates opportunity (not jobs, opportunity for wealth creation) and helps our system compete on an international level and do it well.

So how do we bring practical solutions to what I’ve spent the past 5 pages talking about? The answer appears to be quite simple but not easy to explain.

  1. Get used to the new normal and the new standards of “work”
  2. Marketing America abroad as a land of investment and opportunity, economic numbers would support this.
  3. Lower wages and prices to a level that is more competitive
  4. Institute a flat tax system where everyone would pay in a small flat rate, no deductions, no exceptions. An easier political method would to simply eliminate tax refunds altogether. It would save the government 800 billion USD a year. Also, give new businesses a 5 year hiatus on taxes.
  5. Give companies incentive to hire American
  6. Reform the education system to produce skilled, independent thinking workers capable of functioning in a knowledge based economy.
  7. Find industries and ways for America to compete and negotiate trade policy at the highest levels to benefit those industries.
  8. Expand retraining of workers using local schools, community colleges, and universities for skills that companies need. Have companies sign up to supplement tuition in trade for a certain number of years of employment of a newly-skilled worker.
  9. Retool the credit system to accommodate more people working as contractors, independent workers, and individual companies. (This would include flexible payments, payment scheduling, and payment hiatus for up to three months).
  10. Reform immigration to invite more skilled workers to the United States
  11. Invest in the middle of the country and move investment away from the coasts
  12. Invest in new infrastructure particularly data and cellular networks.
  13. Invest in natural resources and market them worldwide (that means relaxing regulation a great deal)
  14. Abandon green energy until the technology develops (continue research but quite trying to force it to market)
  15. Put a cap on college tuition
  16. Raise student loan amounts to match tuition of actual colleges, universities and trade schools
  17. Encourage more students to seek out trade schools and partner with employers to help make this possible.
  18. Institute at least 3 foreign languages to be taught in all schools and at least 1 semester of foreign exchange.
  19. Institute a national curriculum and national school standards that are classroom based and that empower teachers to teach their students without interference.

As you can see none of these are easy political, socially or otherwise but I think that everyone of them is absolutely necessary to an absolute reformation of the country.

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