Occupy Wall Street: Nearing the End of the Opening and the Start of the Middlegame

As hundreds of Americans have been arrested in the ongoing Wall Street protests and the phenomenon has now gotten national attention in the media in spreading across the country, perhaps we are approaching the end of the opening and are now looking forward to the middlegame of the Occupy Wall Street movement.

Of course, the opening portion of these Wall Street protests could go on for another several months, but as we peer into the prospective future going forward, it remains unclear how both sides will progress.

The Protesters' Side of the Chessboard

From the side of the protesters, many of whom have been saddled with thousands of dollars in student loan debt and no job prospects, there is all the time in the world to protest. This is going to be a major problem for the establishment going forward. When you have a bunch of young people sitting around bored with nothing to do as life passes them by, there are going to be problems. Even if hypothetically the Wall Street protests were to end next week, the Occupy Wall Street movement has already satisfactorily manifested itself as a show of force and a proverbial "animal on the loose" in American society undesirable to the establishment.

I believe the Occupy Wall Street phenomenon is simply a matter of economic karma playing out at this point. There comes a point when non-productivity (unemployment) becomes counterproductivity (riots and protests). Where you have these society-wide pyramid and/or Ponzi schemes ranging from higher education to Social Security, did people really expect the bottom of the pyramid (who were forced into the bottom of the pyramid at birth) to humbly succumb to their position without some sort of retaliation? The Occupy Wall Street protests signal that it is time for American society to take a look in the mirror.

When you have thousands of youngsters and "whippersnappers" rising up to protest the status quo across the country and possibly disrupting the current equilibrium of commerce, there are going to be societal problems. These societal problems ranging from excessive debt to delayed life transitions of young adults to unemployment can possibly spill into other areas of functionality, tradition, and social norms. Such problems could evolve into generational resentment & anger and/or what philosopher Herbert Marcuse termed as "the Great Refusal" that would effectively unchain the American populace from the status quo way of life where individuals would, in practice, simply & subtly reject the current socio-economic & political schema.

Of course, the Occupy Wall Street movement is not limited to the younger generations, but the essence of the movement appears to be rooted in America's youth.

The Establishment's Side of the Chessboard

From the side of the government, much of the problem is that American society is reeling from many other issues currently. It is as if older generations can say, "You think you kids have got problems; we've got problems of our own! Suck it up!" Like a Kafkaesque "beetle in the bedroom" it is as if the establishment and older generations would rather ignore and avoid the issues facing younger generations altogether. That being the case, American society is indeed undergoing a metamorphosis.

Where politicians in Washington appear to be in a sort of gridlock or in a wait-and-see mode, the Occupy Wall Street protests come at an opportune time for young adults to voice concern on the path of Washington. Unfortunately, on the issues of student loan debt and unemployment for younger generations, it is uncertain what exactly the US government could do to remedy the problems. It would appear that the time for remedying those issues has long since past; maybe the time for fixing such problems was in yesteryear.

Of course, the fact that Washington is in a stalemate and has its hands tied does not take away from the fact that student loan debt and youth unemployment remain imminent problems in American society. One way or another, the establishment and American society as a whole are going to have to face up to these major issues.

Occupy Wall Street is a Socio-Economic Phenomenon, Not Merely a Political Phenomenon

While the Occupy Wall Street protesters have remained true to Ghandi's charge regarding non-violent protests that "First they ignore you, then they laugh at you, then they fight you, and then you win”, the movement has retained a sense of credibility. The main headline on Drudge Report on Sunday evening linked to an article on Alex Jones' Infowars website discussing how some Occupy Wall Street protesters support the re-election of Pres. Obama.

Even so, as my Benzinga colleague Scott Rubin wrote: "On the surface, these demonstrations appear to be a leftist cause, and to be sure, many of the represented groups could be described as liberal. Many true conservatives and libertarians, however, are standing in full support with the protesters and their cause." Being an Austrian School adherent, I personally would not mind seeing a few posters featuring the face of Ayn Rand at these protests.

Thus, far from being merely a political phenomenon, the Occupy Wall Street movement is a socio-economic phenomenon. The movement cuts to the heart of American society: America's youth and the future leaders of the country. This is an entire "lost generation" we are talking about. Occupy Wall Street asks the bold question to the establishment, "What is the future of America?"

One might ask, "In this time period, isn't politics intertwined with economics?" Yes, to some degree, but in the end any possible political solution will necessarily involve the willing participation of individual economic actors; Obamacare is a testament to this fact. Any possible political solution should have to take into account substantial economic analysis on possible effects to changes in policy. For example, what if there were a bailout of all student loans? Would this be a good solution? Freakonomics contributor and economist Justin Wolfers suggests that forgiving student loans would be a bad idea. That being the case, what is to be done when an entire "lost generation" is unemployed, living with their parents who are already financially stretched, and unable to pay back thousands in student loan debt? It may be easy to look at such issues as being merely political, but we cannot lose sight of their economic ramifications.

On an economic level, I think American society is going to have to make some very difficult choices in the years to come. As the topic of student loans has been a significant one for the Occupy Wall Street movement, I think even without forgiving student loans, something is going to have to give. I really think the issue of student loans and higher education is an "elephant in the room" with respect to the Occupy Wall Street protests as student loans intensify other issues like delayed life-transitions and unemployment. When you have removed the option of bankruptcy for student loans, graduating students are unable to find jobs to pay back their student loan debt, and there is no prospect of financial resolution and/or closure to the simple fact that this excessive amount of debt is not going to magically go away, something has to give. At the end of the day, there is just going to be this massive pile of debt that no one can pay.

In order to solve these socio-economic problems, I believe that we are going to need a fundamental change in our economic thinking. Where economists like Paul Krugman have already conceded this notion, it is time for the way we look at economics and politics to change; dare I say it, we need new economists and genuinely new economic theories. In the aftermath of the Crash of 2008, we need to revolutionize the way we think about economics. I shall hopefully explore these issues at greater length in a future article.

With respect to the Occupy Wall Street movement, it is simply too soon to say what the middlegame and endgame of this chess match will look like. The middlegame could feature moments where either the Occupy Wall Street movement or the establishment is knocked down or where the government steps in to attempt to cool down the fires, but given the lack of clear, specific demands and the nebulous organization of the Occupy Wall Street movement, it is unclear how the phenomenon will evolve. Where the movement has survived thus far in the opening, there is yet hope for change. Nevertheless, at some point that desire for change is going to have to take the form of specific, articulable demands and positions.

As long as Occupy Wall Street stays true to Ghandi's charge, I think that there is a good chance that the movement will persevere all the way to pragmatic success in the future. Only time will tell.