Tag Archives: wall street

Thomas Sowell tells it like it is


To Occupy Wall Street protesters: Are you sure you’re fighting the right battle?

Many protesters in the Occupy Wall Street movement have roundly denounced any and all forms of capitalism as the source of all our present ills. That’s one of the reasons they chose Wall Street as the place to make their angst known.

But while they march and chant and propose lists of endless demands I can’t help but wonder, are those who are so outraged clear on who their enemy really is?

Its the wedding of a select few corporations to the government combined with a lack of accountability that is the problem. The father of capitalism, Adam Smith, was opposed to the notion of joint-stock companies which enjoy limited liability, enforced by the state  (ie. the East India Company) for many of the reasons the Occupy Wall Street protesters are now upset. He didn’t believe corporations should be considered legal entities in themselves (from which we get the modern view that corporations are persons). And he was opposed to the separation of ownership and management which he rightly predicted would end up harming both the owners and managers.

So who was for this joint-stock system which has blossomed into what we have today?

Many of the Occupy Wall Street movement are openly sympathetic to socialistic notions. What those protesters likely fail to understand is that the same movement which supported socialistic economic policies also supported joint-stock companies because they believed that by allowing the common man to own stock he would have a better chance to become wealthy but in order to encourage the common man to take such a risk his liability needed to be limited. And Smith, among others, accurately predicted the problems that limited liability would produce. Its really not fair to place all the blame on CEOs for accepting golden parachutes when the real problem is that such a disconnected ownership structure provides the perfect environment in which to draft such contracts.

So if the protestors want to be consistent they need to read their history to understand that 1. capitalism is not their enemy nor the cause of the corruption they are rightly upset over and that 2. the fault does not lie solely with corporations in general (not all companies that are listed on the NASDAQ or the Dow Jones Industrial Index are evil) or even corrupt corporations but with the toxic mix of a select few corporations which enjoy government favor and protection.

What essentially needs to happen is for the Tea Party to mix their hatred of the government with the  Occupy Wall Street’s hatred of corrupt businesses. I’m pretty sure the two would be pleasantly surprised at the result.

Here’s a funny video from 1949 on “What is a corporation?”