Occupy Wall Street’s Wrong Path

The central tenet of the Occupy Wall Street (OWS) demonstrators is that wealth is unevenly distributed in this country and that all workers should have a share of the wealth that is sufficient to meet their needs, as they determine them to be. 

The demonstrators’ 1% versus 99% proclamation reflects their fundamental misunderstanding of how the free market system works and totally disregards the concept of business ownership and remuneration for work in America.  OWS believes that a person has a right to a business’ money because they exist and therefore they need it.  Their argument disregards the fact that they neither earned that wealth nor own it. 

In a free market system, wealth is created through the successful investment of capital (money) into a business.  The sole purpose of a business is to make money for its owners and investors.   Labor, who are the workers that comprise the 99 percent in the OWS protests, is a component of the cost of the goods or services that a business produces.  Labor costs – wages, health insurance, pensions and benefits, added to the other business expenses (which broadly are); materials, facilities and equipment and taxes, are subtracted from the businesses’ total income.  The remainder is a business’ profit.  This is what the demonstrators want redistributed.

To better understand how business generates income for both the owners and the workers, readers and OWS demonstrators should read The American-Conservative’s earlier articles Capital is the Workers’ Best Friend, Parts I and II, which provides a more thorough explanation of investment in the free market system and the expectation of financial gain.  What the OWS demonstrators are demanding is to take the profit from a business.  Doing this, in turn, would be a disincentive to investors to put their money into a business.  Without investors, businesses do not have the capital (money) to start up, expand and hire people.  In other words, the act of taking money out of businesses and out of the hands of the people who have enough money to invest actually reduces total employment!

For the most part, businesses are owned by you and me.  A public company, one that issues and trades stocks, is owned by the stockholders.  Each share of stock is a fractional ownership of the business.  The profits of the business are either reinvested into the business (think Apple’s development of the i-Pad) or they are distributed to the owners, who are the stockholders, in the form of dividends.  Mutual funds own shares of many businesses.  Your 401k, IRA or retirement plan may hold stock or have money in mutual funds.  Each share of a mutual fund that you have is a piece of the company that is hopefully making a profit.  The OWS crowd wants to take the money that you have in those businesses, even if you are not a Wall Street fat cat who makes millions of dollars a year.  Any money that they take from the business diminishes your wealth.

What then should be done about the issue of social justice?  Workers have the right to a fair wage.  The disagreement is the definition of what is fair.

In the free market system, a man’s worth is based on his skill and what it is worth to a business.  With the exception of the minimum wage that is set by the government, a worker’s pay is based on how much a business can afford to pay, how many people in the labor market have the needed skill and how good the worker is at his job.  A janitor who sweeps the floors and dumps the trash will not be paid as much as the surgeon who is operating on your brain.  Yet the OWA crowd does not want the free market to determine wages.  They want businesses to pay more money for a worker than the market will support for the job based on their definition of need.

Jesus talked about this problem in Matthew, Chapter 20.  In this parable, the landlord went out and hired workers for his vineyard.  Later, the landlord hired other workers for the same wage.   The first workers complained that they worked longer for the same pay.  The landlord’s reply is that he was not unjust to them because they agreed to work for the usual wage.  This is the OWA demonstrators’ complaint.  The workers want more money because they feel that the business owners have more to give.

Steve Jobs was undoubtedly a genius of our time.  He was also an entrepreneur, the founder of Apple Computers, and a multi-billionaire.  He chose to invest his time, talent and money into a business that he believed in and rather than take a paycheck, he chose to be compensated with shares of stock.

As the OWA crowd types their demands on their i-Pads, none of them believe that Jobs should have given up his wealth and not created all of the marvelous devices that we use daily.  And yet in the free market system, there is no difference between Steve Jobs and the head of any other major business.  If the directors of a company chose to hire a person and pay him millions of dollars to run their business because they are convinced that this person can generate billions of dollars in revenues for the business, then what concern is that of anyone?  As Jesus said in his parable, you were not treated unfairly.  You were paid your usual wage for the work that you did.

And yet there are legitimate complaints.  Every day we see the cost of affordable housing, education, food and health care go up beyond the reach of many Americans.  We look to our government to solve our problems but we should be looking to ourselves.  Politicians spend their careers trying to perpetuate their time in office.  Neither party will seriously sit down and address the problems facing this nation.  Rather, each jockeys for political advantage over the other, casting scurrilous accusations against each other in the hopes of securing their reelection. 

The Catholic church teaches that “remuneration for work should guarantee man the opportunity to provide a dignified livelihood for himself and his family on the material, social, cultural and spiritual level, taking into  account the role and productivity of each, the state of business and the common good.” (Catechism of the Catholic Church, 2434). 

We are in an economic malaise that severely damages the ability of business to provide this level of material compensation for the millions who are unemployed or under-employed.  The answer is not to destroy businesses, as the OWA demonstrators would do with their demands.  The solution to our problems is to let the entrepreneurial spirit soar, free of encumbrances from government, free from regulatory threats that stifle expansion, free from legislation that cripples businesses’ ability to grow. 

With growth comes employment.  With employment come fair wages, dignity and self-worth.  What stands in our way is government that choses to act in the interest of its own self-preservation and expansion rather than in the interest of the citizens that allow it to exist. 

Demand from your government that business be free to expand.  It is the answer to the OWA complaints.  Your well-being, your livelihood, your freedom requires it.

Believe

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