Occupy Wall Street: Socialism by any name

In an op-ed piece on Foxnews.com Sally Kohn, founder and Chief Education Officer of the Movement Vision Lab, a left-wing radical think-tank, attempted to explain the Occupy Wall Street demonstrations. Ms. Kohn insisted that the key point of the protests “isn’t what protesters are for but rather what they’re against — the gaping inequality that has poisoned our economy, our politics and our nation.”

Ms. Kohn’s article was based on the precept, that while correct, tells a minute portion of the story: big business profits and CEO bonuses have soared while the average person’s salaries have declined. Certainly it’s the objective of business to generate profit and keep the profits growing. The CEO’s bonuses are generally tied to their ability to produce ever growing profits; this is a staple of capitalism. Let’s look at a particular example:

Joe Boss was hired to run General Widgets, a company that makes a valuable household widget that is always in demand. Mr. Boss’ first action was to do a thorough analysis of the operation of the manufacturing line that produces the widgets and determined that with additional automation the company can produce 30 percent more widgets. Mr. Boss also determined that the payroll was not in sync with experience or productivity. Mr. Boss renegotiated the contract with the union, reducing wages in lieu of laying-off significant staff.

Jane Employee works on the manufacturing line that produces the widgets. With the assistance of Mr. Boss’ upgrades she too becomes more productive; however a number of her coworkers lost their jobs, which makes Jane sad, but glad she’s still employed.

When Mr. Boss took the CEO position at General Widgets the company wasn’t doing so well; sales were good, but they were unable to meet demand, and, as such, profits had leveled out. The Board of Directors of General Widgets, wanting to incentivize Mr. Boss to make the company more productive and therefore more profitable, offered Mr. Boss a bonus tied to the company’s profitability.

Mr. Boss’ changes dramatically profits; the stockholders of General Widgets were thrilled. The stock price rose significantly, stock holders got a nice dividend and the board members were extremely pleased.

Based on the company’s performance, Mr. Boss got a nice fat bonus check. Mr. Boss earned a sizable salary because of his 30-year history of turning companies around; with his bonus, Mr. Boss is making in the top 1 percent of all CEOs.

If you take Ms. Kohn’s view you’re probably comparing the compensation of Jane Employee with Joe Boss; but you’d be comparing apples to oranges. Ms. Kohn, and apparently many among the Occupy Wall Street movement, fail to recognize that without Mr. Boss’ expertise and decisive action Ms. Employee may well have lost her job along with all of her coworkers.

Unions in the U.S. have done a wonderful job of escalating the pay of its members all the while crushing American manufacturing. Now that the chickens have come home to roost it’s easy to blame corporations and CEOs when a little more introspective view may be in order. When a street sweeper in New York earns 6 figures, and city councilmen in California earn in the millions, why is it only corporate greed that gets attention?

Has the gap between those at the top of the hierarchy and the average worker grown in the last 20 years? Yes. Has the gap between celebrities, sports figures and the average guy widened? Certainly. You don’t see the Occupy folks protesting outside Hollywood movie studios or sports franchise offices, do you?

“Most of the Occupy Wall Street protesters aren’t opposed to free market capitalism. In fact, what they want is an end to the crony capitalist system now in place, that makes it easier for the rich and powerful to get even more rich and powerful while making it increasingly hard for the rest of us to get by.”

There is no better example of crony capitalism than the billions given out in Obama’s stimulus packages. Are they protesting outside the White House? No.

“The protesters are not anti-American radicals. They are the defenders of the American Dream, the decision from the birth of our nation that success should be determined by hard work not royal bloodlines.”

The implication of Ms. Kohn’s statement is that those earning on the high end don’t deserve what they’re paid. They didn’t work hard, so therefore it’s wrong they be rewarded. These broad-brush type of statements so the speciousness of their view.

“Sure, bank executives may work a lot harder than you and me or a mother of three doing checkout at a grocery store. Maybe the bankers work ten times harder. Maybe even a hundred times harder. But they’re compensated a thousand times more.”

Ms. Kohn’s formula for deserving a particular salary is how hard someone works, therefore the highest paid persons in the U.S. should be migrant farm workers; they work more hours in extremely physically demanding labor, so they should all be millionaires. In Ms. Kohn’s world skills are of no value, only exertion; so much for higher education.

“The question is not how Occupy Wall Street protesters can find that gross discrepancy immoral. The question is why every one of us isn’t protesting with them.”

If Ms. Kohn, or any of the other Occupy demonstrators are offended by highly educated, highly skilled employees being paid more than the folks at the other end of the spectrum then take your business elsewhere. No one forces you to bank with a company that, in your eyes, overpays its executives; good luck with that. Automobile manufacturers pay their executives extremely well too; you could buy a bike, but their executives are probably paid way more than the folks bolting it together. You could walk, but Nike pays their CEO quite well.”

Ms. Kohn doesn’t understand capitalism at all and she doesn’t even realize that her views and those of the Occupy movement are, indeed, anti-capitalism. We could pay everyone from the top to the bottom the same, regardless of their value to a corporation. The disparity between the guy rolling cigars in Cuba and the guy that runs the factory there is much smaller than you’d find in America.

In Ms. Kohn’s world it isn’t about succeeding and reaping the benefits, it’s all about “deserving.” She wants to measure whether executives “deserve” their outrageous salaries. Frankly, it’s none of her business. The value of an executive is completely the judgment of the business itself.

“According to polls, most Americans support the 99% movement, even if they’re not taking to the streets. In fact, support for the Occupy Wall Street protests is not only higher than for either political party in Washington but greater than support for the Tea Party.”

Precisely what polls are Ms. Kohn talking about? Most Americans have no idea what the Occupy folks are protesting about.  Any poll would be meaningless.

“Americans today also support taxes. In fact, two-thirds of voters — including a majority of Republicans — support increasing taxes on the rich, something the Occupy Wall Street protests implicitly support. That’s not just anarchist lefty kids. Soccer moms and construction workers and, yes, even some bankers want to see our economy work for the 99%, not just the 1%, and are flocking to Occupy protests in droves.”

I’ve even met a number of Libertarians and Tea Party conservatives at these protests. So the critics are right, the Occupy Wall Street movement isn’t the Tea Party. Occupy Wall Street is much, much broader.”

Americans know what the Tea Party stands for: limited government, responsible budgets and living within our means. I challenge Ms. Kohn to ask a hundred people what the Occupy folks stand for. If you ask someone, “Are you opposed to the CEO of Bank of America making $3 million a year?” of course you’ll get two-thirds agreeing. How about asking them, “Do you think your government should not spend more than it takes in?” and you can bet it’ll be damn near 100 percent.

Ms. Kohn’s point, and perhaps the point of the Occupy folks, is the converse of American exceptionalism. Worry not about developing your skills. Don’t bother with advanced education. We shall each share equally from the bounty of our nation: From each according to his ability, to each according to his need.