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Where did the Occupy movement get it wrong?

Banking should be on the periphery of the economy, not sitting at its heart.

Banking should be on the periphery of the economy, not sitting at its heart.

I was half tempted to pitch in and join the Occupy movement until the tent city got hijacked by rent-a-ranters, that rather smelly lunatic fringe who are against everything. Random nihilism may have its place, but it would be nicer if that place originated in the shower – with soap.

The movement didn’t gain much traction, because it lacked visionary leadership and failed to pick a clear target to hit. By and large, people had a grudging respect for the notion – a lot of people think it feels kind of right.

There’s a growing public disquiet about unfair wealth distribution, and the general aims of the occupy movement do appeal to our innate sense of fairness. But it was too vague. Protest needs focus. Spraying bullets around indiscriminately tends to make bystanders nervous.

The rallying cry of the movement, “99 percent”, purports to represent the voice of the vast majority of the population, railing against the excesses of the remaining one percent – the greedy capitalists. But in a country where about 85 percent of us either own or work for small businesses and are therefore capitalists or its beneficiaries, it triggers the thought, “Hang on, that’s me – and pretty much everyone else I know.”

Righteous indignation has erupted at the wretched corporate excesses exposed with the global financial crisis, but while it may well have been perpetrated by the one percent, it was financial manipulators in particular, not capitalists in general, who caused the wheels to fall off. Investment bankers should be the specific target of the occupy movement, not manufacturers and traders.

The problem is that over the past few decades, finance and banking has assumed a central position in the economy, a space that should surely be occupied by manufacturing and trade. Those who create wealth by making and doing stuff should be centre stage, not those who slide paper around and skim large percentages off the top in doing so.

Financial manipulators just add cost without creating wealth. Banking should be on the periphery of the economy, lubricating the wheels of commerce, not sitting in the middle, siphoning off a large percentage of its fuel.

I don’t pretend to be an economist but I did study economics at university for a couple of years, and while not being its most attentive student, I’m sure Professor Danks taught us that money is a medium of exchange and shouldn’t have a value in itself.

Trading in it is unearned income and demonstrates the arcane ability of a few, who use special knowledge or monopolistic relationships, to benefit at the expense of the rest of us. I’m really bemused by the fact that we allow money to be bought and sold rather than used to simply facilitate trade. It eventually creates crippling interest and mountainous debt that kills individual enterprise and sometimes whole economies.

Excessive profit or interest charged on money is usury and at times and places in history it was prohibited. At best there is
a case for it to be banned again, or at worst be strictly proscribed. From Pope Leo XIII’s dictum in 1891 that “voracious usury [is] an evil condemned frequently by the Church but nevertheless still practised in deceptive ways by avaricious men” to 1995, when economist Margrit Kennedy said that interest acts like cancer in our social structure, we have seen warning signals and pleas for monetary reform.

Even Adam Smith, father of free market capitalism, was in favour of the imposition of curbs on interest rates. He was nervous that most of the money lent would be borrowed by reckless investors, who would pay high interest rates for risky, speculative ventures, thus sucking money away from more socially beneficial investments. Smith might have foreseen the recent property boom and subsequent bust.

We accept the current state of affairs because we’ve been conditioned to do so. We can’t imagine life without banks. It’s an example of the boiled frog syndrome – it happened so slowly that we haven’t realised our predicament.

Yet there are some clever people raising insights into other options. Close to home, Raf Manji of Christchurch, a former investment banker from London who set up the Sustento Institute, was interviewed by Kim Hill on Radio NZ and gave an alternative view of money and banking. Raf puts it very succinctly and compellingly.

Then you too might consider pitching a tent in Queen Street.

Mike Hutcheson is a director of Tangible Media, a former Saatchi & Saatchi grand fromage, and often thinks up revolutionary movements whilst showering – with soap.