Articulating the issues of Occupy Wall Street and possible solutions

The Problems with Occupy Wall Street

Whenever I see the news about the demonstrations on Wall Street, commentators ask questions about demands and conclude with statements like ”the demonstrators have no clear demands” but frequently point out that they share common frustrations.

The challenge lies in the complexity of the situation which has several underlying and intertwined causes. Although they perceive an injustice somewhere in the economic structure, they don’t know exactly where to place the blame, and they don’t appear to know what to do about it other than voicing their anger. I have yet to hear any suggestion on what they want done or who they expect should do it.

In this article, my attempt is to articulate what I believe are some of the underlying issues and a few potential solutions along with who should take action.

The problem with Wall Street arguments

The Wall Street supporters have an equal sense of outrage. They argue that the people in the streets have no legitimate argument, that they are asking for something they don’t deserve. They justify their actions by arguing that they’re doing the best they can to create jobs and they conclude that the government is ultimately at fault for imposing taxes on corporations and wealthy individuals.

While it is true that businesses must have sufficient revenues in order to cover their expenses, and that excessive taxation could, theoretically, stifle business and investment, that fact alone does not guarantee that lower taxes will result in more employment. And simply accepting this solution without examining empirical evidence would be just as foolish as bowing to unclear demands of demonstrators.

So who’s right and how do we know?

The situation involves complex social relationships between investors (business owners), executives, employees, management, politicians, government employees and ultimately everyone else in our global society, each of whom has their own personal story and their own motivations. But it also involves other factors like advances in technology, changes in education systems, credit crunches, global infrastructures, governmental relations, international trade, global inequities, environmental degradation and a lack of hope.

Each group feels they are being unfairly targeted. And ironically all are partly right but for very different reasons.

The demonstrators are right because many are in a no win situation. In order to get jobs, they must be able to fill the roles that are being generated. In order to fill those roles, they must be able to afford the education that will close the knowledge and experience gap. In order to pay for that education they must take a substantial risk in taking student loans without any guarentee of a job that will help them to pay for the loan. But here’s the kicker. In many cases, the education they are getting will prepare them for job opportunities which are being automated or outsourced. This leads to debt that they cannot pay for, jobs that they do not want, or unemployment, and a deteriorating standard of living.

Investors are right in the sense that they should also have an opportunity to earn money from the risks they are taking with their invested money. Otherwise, why bother? They also deserve to live with a reasonable standard of living. In addition, we shouldn’t think that all investors are rich. Those of us who have mutual funds, pension funds or 401k’s are also investors. The problem for investors is that they blindly put their money in the hands of investment managers with only one mandate, which is ultimately to earn a profit. Investment managers with that mandate vote their shares in favor of executives that use every available tool to increase profits including automation, mergers, productivity tools, salary reduction, and outsourcing. Each of these has a consequence on the living standards and working conditions for workers.

Executives are right in the sense that making profits is their mandate. In addition, it is necessary to make profits in order to keep the interest of the investment community. Business realities require profit, or at least, no sustained losses, in order to continually pay employees and production expenses. Executives are also justified in wanting to earn a reasonable living. However, some also believe that they are justified in receiving salaries which are reflective of a status which outranks kings and rulers. They fail to realize that the ability to control wealth is a priviledge that is granted by current norms of society. It is not an absolute right. The achievements they have made on behalf of their shareholders may, in fact, not be in the best interest of the society at large. That they run their corporations in order to generate profits is reasonable, but the means by which they do this should reflect the needs of the broader community.

But, if the system isn’t working, who needs to make changes? Are the societal issues the sole responsibility of CEOs or investors? I would argue that they are partly responsible but that the brunt of the responsibility lies elsewhere.

So who has the power to make changes?

Contrary to the popular belief of demonstrators, the power in a democratic society is ultimately held by the voters, not by the CEOs. The demonstrators may, in fact, be better served by learning more about what influences the economy, by finding good unbiased research, by presenting their research to their local representatives, and by sharing their findings with the rest of society. In order to exercise the power of democracy, voters first need to become educated.

Voters would be wise to learn how to distinguish between reality and marketing during election campaigns.

Using your vote to make a better society

A review of recent corporate and employment trends will highlight some of the societal issues and provide a few ideas that might help to improve the situation.

Trend 1) Computers and Technology are advancing at the rate commensurate with Moores law, roughly doubling capability of automation every year.

If you’re not sure this is true, I would be happy to provide additional references. And to be fair, it would be worth doing some additional empirical research on the number of roles automated each year, however, it seems evident that research in the fields of robotics, nanotechnology, computing, miniaturization, communications, Artificial Intelligence and other technologies is being relentlessly pursued and it is unlikely that this trend will change. As each of these fields advance, the ability to automate more and more complex roles is inevitable.

Suggestion: Vote for candidates who recognize this technological trend and who understand the implications.

 

Implication 1) Automation can replace more people at higher skill levels every year.

Automation in itself is not a bad thing. It can provide an easier life for all of us. The challenge of increasing productivity becomes one of figuring out how to distribute less and less work amongst more and more people.

It is true that increasing technology provides new opportunities, but gradually, as more and more needs are met by technological solutions, less actual work is required by humans in order to meet our basic needs. The question remains, will there ever be a sufficient number of roles for everyone to play and will those roles pay enough money for them to live a dignified life? The simple answer lies in knowing what is required in order for people to live a dignified life. They must feel that they are contributing in some meaningful way to others, they must continue to learn from life experience, they must have access to basic needs such as shelter, safety, health, food and clean water, they must have the right and ability to make conscious and beneficial decisions, and they must have time to enjoy some leisure with friends and loved ones.

People do not need to work every hour of the week and they do not need to be rich to be happy. But without these basics, life becomes difficult and, at times, unbearable.

Suggestion: Vote for candidates who will provide tax incentives to companies who promote successful job sharing schemes to increase the number of jobs and decrease working hours.

 

Implication 2) Unemployed workers cannot advance as quickly as automation.

Technology has the tendency to roughly double in capability each year. Accordingly, technology is more likely to fill a role than education. Here are a few examples:

1) Supposing a job has the requirement of reading out loud. To train a person to read takes many years. To develop software to perform that same function also takes many years of research and development. However, in order to duplicate that capability in another person, one needs to train another individual over many more years. In order to duplicate that capability in a computer, one only needs to copy the software. (Free Natural Reader and Odigio, the software used on this web-site, are example). How does this and voice recognition software affect jobs? The need for executive assistants is becoming less and less because each individual can do more than previously possible wit.h the help of their mobile devices and computers. Soon, booking rooms and airlines simply by talking to your phone without intervention of booking agents will be common place. What will happen to higher level roles in the travel industry?

2) In order to learn the skills of translating a language, many years of training are required. But once the translation process is developed in software, it becomes completely automated and it is now becoming completely portable. Many web-browsers and phones already have the capability to instantaneously translate from many languages to many other languages and every year the translations are becoming more accurate. What will be the long term implication for translators who now play a crucial role in communications? Bear in mind that there are many positive impacts to this technology, but from a jobs perspective, that is less clear.

3) To drive a car well takes years of experience. And safety is dependent on things like emotional stability, wakefulness, awareness and other factors. But already, many companies have vehicles that can drive themselves. These vehicles are not subject to human failings such as distraction and sleepiness, and these technologies can be built into any new vehicle thus eliminating the need for human drivers. Google as, as example has self driving cars that have logged more than 40,000 miles. Nevada is the first state in the US that has agreed to allow policy development for self driving vehicles. Once the technology has been proven and has been determined safe for moving small vehicles, what happens to the Taxi industry that as been the fallback of so many immigrants? What happens to transport vehicles around the country and what might happen to truck or bus drivers? While it is true that these technologies are still not licensed, it is only a matter of time before such technologies take their place in cities of the future. It would be nice to put many of those taxi driving doctors back to work as doctors but only if they can be upgraded and re-licensed. Will that happen? Only if they are given the opportunity and the necessary funding.

The simple fact is that every year, new technologies will displace more workers and retraining them for higher roles will become more difficult, so will require more effort.

Suggestion: Vote for candidates who support reasonable minimal living standards for everyone, who encourage incentives for education and for work, and who promote a sufficient level of taxation to balance the budget (no matter how high it needs to get), especially collecting higher taxes from companies that generate higher profits while eliminating workers and from those who already have sufficient wealth.

 

Trend 2) Free educational materials are becoming more available but recognized education costs more than before.

Automation and technology is providing us an opportunity to create more and better educational on-line programs that are affordable for the masses and, in some cases, even free. Examples of free educational material are available on the Internet. The Khan Academy is one example, but there are others. However, most free courses do not allow for evaluation or certification.

Research dollars spent on automating education of all kinds could benefit learning and development. However, successful implementation still requires a collaborative effort from researchers, educators, technologists, linguists, student participants and others, in order to create materials that will meet the needs of a global audience. Such learning materials would ideally include instructional videos suitable for playback on portable devices and would provide a means for interactive discussion and testing.

In addition, digital education should focus on development of skills that are most necessary in creating a dignified life for everyone. These include topics such as sustainable housing and infrastructure,  health care, agriculture and food research, sustainable energy development and implementation, logistics, transportation, business skills, political science, human rights, social sciences and arts. While there is not necessarily a shortage in needs, there is a mismatch between current levels of education and current needs.

Educational automation for the masses is possible through collaboration and would benefit at all levels in all languages. Less developed countries would benefit by creating more educated consumers, a more knowledgeable workforce and stronger economies. Our local economy would benefit by having alternate consumer bases.

Will this make Teaching obsolete? Not necessarily. Human society will progress only as we do research and create educational material based on that research. Therefore, a much higher portion of society should be involved in research of all types, and teaching of all types where it concerns research.

Suggestion: Vote for candidates who 1) encourage incentives for automating educational instruction and accreditation where appropriate in order to lower education costs, 2) include broad based development of translation technologies for global applications thus lowering the cost of education for developing countries and 3) see education as a universal right thereby supporting the development of infrastructure and communications for education globally.

 

Trend 3) Corporations are having more difficulty in finding people with sufficient skill levels.

To say that jobs are not available is not exactly right. Many jobs are not being filled. However, part of this is due to trends related to automation.

A simple example of this is corporate administrative assistants. Managers in the 1950s had secretaries who specialized in typing their letters and memos and arranging their travel. This function was eventually replaced by managers who could type on their own using highly flexible word processing and analysis software (e.g. MS Word and MS Excel) and who had access to travel agents and travel web-sites. It is increasingly being replaced by voice recognition software, mobile devices, Artificial Intelligence, and interconnected systems. Apple’s latest release of the iPhone 4S, for example, has a built-in personal assistant that connects to e-mail, messaging, GPS and the Internet for various functions.

While an executive assistant may be re-trained to take on higher skills jobs such as software design, technology improvements eventually enable more people to design and develop their own web-sites, thus leading to less need for generic software developers and the need for even more specialized skills such as knowledge of Artificial Intelligence and robotics. The trend is always towards greater productivity by more automation and fewer people.

Here’s another example. Mail delivery has been largely replaced by e-mail. What do the mail delivery people get re-trained for? Assembly line workers have been replaced by robots. What do the assembly line workers retrain for?

Corporate executives are given incentives to generate profits, not jobs. If automation can lead to greater profits, the casualty is employment. As more complex work is demanded, technology is increasingly able to deliver solutions. Companies that are able to successfully automate tend to dominate in the market. So if we limit our thinking and believe that corporations provide the only solution to economic stability, we will find ourselves in a downward spiral.

Suggestion: Vote for candidates who consistently strive to make high level education available, ideally at a very low cost on-line or free for countries that can’t afford to pay, and who encourage funding for general research roles including those related to both private and public sector work.

 

Trend 4) As more people are replaced through automation, or unseated by broken economies, more profits are currently shared by fewer people.

Corporate profits under the current laws benefit only those who have control over them, namely, the shareholders, the executives and the specialists. The long term outcome of this approach to ownership and control is obvious. Those who have power will continue to gain and those who do not, will continue to lose.

There is a choice that must be made by the vast majority of voters in democracy. Do we stick with the current model of ownership which is leading to further declines in wealth for the majority, or do we decide that ownership of this planet and it’s vast wealth must be equitably shared by all of its inhabitants. In order to accomplish the latter scenario, a decision must be made by voters to change the rules of the game, where ownership is not an absolute entitlement, rather it is a priviledge, and it is given only when it leads to equitable sharing.

There are several models of wealth distribution. Experience tells us that voluntary wealth distribution by the generosity of individuals only works some of the time and still leaves the control and decision making in the hands of a few individuals. It is clear also that many people hoard wealth and need reminders that properity is not necessarily an absolute right. Considering that much of their wealth was given to them purely by good fortune, they are not as deserving of it as they might think.

The re-distribution of wealth needs to address four questions.

  • First, how much wealth is there in the world?
  • Second, how much can we create on an on-going basis?
  • Third, how do we want wealth to be generated?
  • Fourth, how much wealth is each person entitled to and how do we ensure maximum benefit for the greater good?

Only when these questions have been answered will we be able to come up with tax policies that meet the needs of everyone. However, a starting place is a recognition that universal human rights are not being met by the current system. A second step is in recognizing that no system is perfect but that only unbiased research will provide the optimal solutions to questions about proper levels of taxation. Eliminating bias in research is a key. Once the question of basic entitlement has been answered, taxes can be designed to start the process of re-distributing wealth accordingly for our long term needs.

Suggestion: Vote for candidates who recognize the need for better wealth distribution policies and who are willing to look at all options.

 

Trend 5) Corporate executives receive incentives to make profits so they invest many millions in marketing campaigns which encourage behaviours that increase profitability.

We know that executives act in ways that are consistent with shareholder directives and their personal goals. Their goal is to increase revenues and decrease expenses in order to maximize profit.

Part of this effort involves creating products more competatively. The other part involves using psychology in advertising to optimize messages which encourage people to take actions that increase their profitibility. But advertising isn’t limited to products. Advertising is also used to increase brand strength and company reputation, whether it is deserved or not. In addition, corporations increase profits by contributing money to political campaigns that advertise in favour their agenda (namely to increase profits by lowering taxes). But they don’t attach their names to these campaigns. Instead, they support candidates that will tell you that lowering corporate taxes will benefit you because it will create jobs. By taking a hands off position, they are free to cut jobs while also getting tax cuts.

Marketing messages are carefully designed to make us believe that we will be happier if we listen to them. Unfortunately, marketing is not factual knowledge, it is highly motivated communication. And the question that we must always ask is what is the motivation? In the case of corporate sponsored politicians the motivation is always profit or control.

The question is, how do we get better and more unbiased information about the outcome of government policy so we know how to vote? The only way to do this is to elect someone who is willing to support the elimination of corporate sponsorship of candidates during elections. Each candidate should have equal funding provided by taxation. Elections are no place for corporate influence.

Suggestion: Vote for candidates who will support the elimination of corporate lobbies and corporate sponsorship of election campaigns and who support public only funding for campaigning and policy research.

 

Trend 6) Elected representatives do as they have promised based on a platform even if it’s contrary to public good.

Especially if a candidate is supported by a corporation, they will do their best to cut taxes for the rich and for corporations if they have received money from those corporations or private donors. Why? Because, whether they believe it is the right thing to do or not, they have allowed themselves to be influenced by those contributions.

Suggestion: Vote for candidates who refuse corporate donations, who are willing do what they believe is right, who demonstrate the ability to reason with other representatives across political party lines, who are willing to change their mind if they are proven wrong, who act on moral conviction, thoughtfulness, and truthfulness rather than according to a set political platform.

 

Conclusion

In a democracy, the power ultimately lies with each individual voter, and the first step in making a permanent change is by educating the voters.

Millionaire business leaders proclaim the current personal tax rates too high at a marginal rate of 25% and yet, the marginal tax rate was 90% and when reduced to 71% produced many new jobs. The employment rate has not returned as a result of moving the tax rate from 70% to 25%. So let’s question the assumption that lower taxes leads to more jobs. Some studies point out that higher taxes leads to lower tax revenue per GDP. But this fails to take into account the fact that higher taxes also lead to greater GDP contributions from the public sector, which naturally leads to this conclusion.  However, does not mean that there are more jobs with lower taxes. It only implies a different distribution of jobs between public and private sector.

Voters are not ignorant people. Rather, they are dealing with an extremely complex situation and a very powerful advocate (i.e. the corporate community). People all have similar needs, they want good jobs, they a dignified life, health, security and happiness. They all have the capacity to learn and develop. And it natural to vote for those who claim that they will help you achieve your goals.

But we also have human failings and limitations. Our humanness makes us susceptible to well devised marketing messages. So we need to understand the difference between marketing and reality. We need to clearly understand that the corporate agenda is profit, not jobs, and we must understand the implications in terms of our voting decisions.

Feel free to make constructive comments, even if you don’t necessarily agree.

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