Occupy Wall Street, All About Incentives

Occupy Wall Street and Occupy Everything has been gaining momentum since the lackluster beginning Sept 17. The media basically ignored the event(s), dismissing them as a bunch of hippies and iPad toting youth. They have a disadvantage because of the "scattered" message. The question I ask is why? Why, are these folks from all over the country protesting. What is the common denominator? It would be easy to query all the issues they are against, but I feel it is much more than this. This movement is much more important, even if it doesn't look that way at the present time. This is the beginnings of a sea of change. The US, it could be argued, pre-2008 was a capitalist society. Then the banks, and their bad-risk taking were bailed out. Now it is true the TARP returned a profit. Hey, Hank Paulson was a good hedge fund manager with your money. After this happened......Capitalism=Profits / Socialism=Losses There has been a disconnect between Wall Street and Main Street since the beginning of this crisis. The economy continues to struggle, no jobs, new college graduates (in HUGE DEBT) with no jobs, no jobs, and did I mention no jobs. Meanwhile the financial sector and corporations, in general, continue to post record profits. Huh? Corporations cut costs to the bone. They are super "efficient" at this point. The demand for their products (not counting Apple) are sluggish. This is the main reason the economy will not grow. They cannot hire if demand is not there. Financial Institutions continue to use the easy monetary policy to their advantage, continue to trade on leverage, and continue to pay out huge bonuses. Now here we go, stay with me. This OWS anger is focused on the Wall Street Banks. Why? INCENTIVES. Now if a company like, let's say, APPLE makes a product, sells the product, huge DEMAND, sells some more, makes a ton of profit......that IS CAPITALISM. Good incentives all around. The market's need is fulfilled. Now Banks move money around to make profit, basically take risk, to make money. At some level this is NOT essential. The incentive to take risk, use leverage to make money is useless (unless you work for the Banks/Hedge....collect bonuses). No one had a problem with this, UNTIL they lost money. They refused to take the loss. That is WHY we had/and continue to have a crisis. This is where the anger is focused. Make a popular product to advance society-good, manipulate money for profit (and not recognize loss)-bad. The Sea Change is coming. Banking should be a utility industry, not a trading shop or hedge fund. But, currently making money from money is worshiped. Some of the largest fortunes have been made this way in the last few decades. These protests are telling the financial sector that incentives must change. These current incentives are outdated and will ultimately take down the world economy (see Europe). I don't have the answers. The protests will continue until incentives change. We have passed over the tipping point. This is what OWS says to me. Many smart folks want to participate in the economy, but the jobs aren't there, because the incentives are not there. Creative destruction will help. When the system clears, a new incentive structure will appear. This is exciting. How about teachers making more than bankers? How about scientists making more than Hedge Funders? How about workers of a successful business making more than a Washington Lobbyist? Follow the money in a society, and it is a pretty good mirror for society as a whole. What the Occupy movement is telling us is: Our current society must change and the incentives for society must change with it. http://faholofx.com