This dream of a post is by my good friend Nicole Fende. Nicole Fende is President and Chief Numbers Whisperer of Small Business Finance Forum. As a credentialed actuary with experience as a former Chief Financial Officer, Investment Banker, and successful entrepreneur, Fende helps her clients reach their profit goals and learn how to effectively and enjoyably run the financial side of their business.
Picture taken by Mat McDermott
For the sake of full disclosure I would like you to know the following about me; I am a tree hugger, I am a capitalist, I recycle religiously, I own stocks, I don’t shop at certain big chains because of their labor practices, I worked as an investment banker, I helped found a fair trade association…
Get the picture? I straddle both worlds involved here. I’d like to believe that it makes me ideally suited to debunk the myths, and highlight the truths around #OccupyWallStreet.
Myth #1: There is one clear message
After I agreed to write this post for Margie I decided to start by identifying the message or goal behind #OccupyWallStreet. Should’ve been easy right?
Every news story I could find (and as Margie put in her post on Sunday there aren’t many) had different reasons, answers, and quotes. Look at the pictures of the event and you have the same problem with the signs people are carrying.
I was able to find a couple sites claiming they represented the self-proclaimed leaderless movement.
- http://coupmedia.org/occupy-vote.html (voting is still open)
Myth #2: The Big Banks Created This Mess
The protestors have this partially correct. Yes the big banks and financial institutions were part of the problem that led to the housing crash. Yes they bundled things into derivatives and sold them as far safer investments than they truthfully were.
Now let’s talk about the 800 pound gorilla in the room. All the people who took out loans they couldn’t afford. Whether they thought they could refinance, they could flip the house, or just didn’t care, if everyone had kept paying on their mortgages we would not have had a massive default in home loans.
No one was forced to buy a home. No one held a gun to their head and said, “You know you can’t afford it, but sign here now.” Each person who took out a loan they couldn’t pay back (or chose not to when the mortgage went underwater) needs to take personal responsibility for their actions.
For the record my home IS underwater and we are still paying on time every month.
Myth #3: 1% of the U.S. population controls 99% of the Wealth
Many of the people marching have signs that say, “I am part of the 99%”. Or “99% of the wealth is controlled by 1% of the population – look it up”. Good advice, so I did (and you can too right here http://www.census.gov/compendia/statab/)
You know what I discovered? Things are actually much better in the U.S. than 42 years ago! Families making less than $25,000 per year dropped from 29.9% in 1967 to 24.9% in 2009. That is a 16.7% drop.
The number of households that make more than $100,000 grew from 6.1% of the population to 20.1%! That is a 229% increase. Households bringing in more than $200,000 actually grew at a rate of 375%, going from 0.8% to 3.8%
Are there Uber Wealth people in this country like Bill Gates, Warren Buffet, Steve Jobs and Oprah Winfrey? You bet, and none of them were born billionaires. They’ve worked hard to create their empires.
Please note that all income numbers were inflation adjusted so they are real comparisons of dollar to dollar buying power.
Myth #4: Wall Street is Satan
Really? I seem to have misplaced my pitchfork. Since I worked as an investment banker (albeit in Asia not the U.S.), I must be the devil incarnate.
I categorically dispute that just because someone works on Wall Street or as a corporate executive they had their soul amputated. People are people. Some are good, some are bad and you can find each flavor in every industry and function.
Myth #5: I Am Not Responsible
One message that comes through loud and clear from everyone protesting is that they have no culpability for the current mess. Not true.
Wall Street is merely the bookkeeper and banker for big business. Big business is big business because so many people buy their products and services. If you agree with any of the following statements you too are in bed with big business:
- I own an iPhone, iPod or other Apple product (Fortune 100)
- I’ve flown on a Boeing airplane (Fortune 100)
- I use Microsoft Office (Fortune 100)
- I buy Kraft Foods products (Fortune 100)
- I shop at a big box store or chain rather than a locally owned mom and pop (because it’s cheaper)
- I own stocks, corporate bonds, mutual funds or have a 401K
If you are really against big business stop buying from them.
Myth #6: The Rich Don’t Pay Taxes
I’m sure the rich wish that was true, just like I’m sure those with signs telling me to “Look it up” wished I hadn’t. You can play along with me here http://www.irs.gov/taxstats/indtaxstats/article/0,,id=133521,00.html
Households with income of $200,000 or more paid 51% of all federal taxes in 2007. Households with income of over $10 million paid 9% of federal taxes.
Myth #7: The Protestors are Poor
Do you know what I call poor? Living in a shanty town with no running water, an open sewer running right underneath the so-called walkway and food you hope hasn’t gone bad. Have you ever been to a place like that? I have, when I worked with fair trade groups in Asia.
Poor people don’t drink Starbucks, have laptops, use smart phones or wear designer clothes. Want proof? Just do a search online for #occupywallstreet images (or heck look at the picture above).
Myth #8: Wall Street Decides Where and When We Go To War
I’m really trying not to sound snarky here, but I think I’m going to fail.
People the U.S. Congress decides if, when and where we go to war. The President is the Commander in Chief. Wall Street is not mentioned in the Constitution.
Myth #9: The Solution is Simple
I actually wish this one was true. I wish we could just do ________ and magically everything would get better. However every action has repercussions and those must be considered before we decide on a solution.
Two Truths in #OccupyWallStreet
Truth #1: Too Big to Fail is BS
I was vehemently opposed to bailing any bank or financial institution out. In a true capitalist economy those who make bad decisions can and should fail.
Truth #2: We Need to Make Changes
Having lived and traveled all over the world I can confidently state there is no place I would rather live than in the U.S.. That said there are still challenges and inequities in the U.S. that we can and should address.
I agree that there are many problems which need to be addressed in our country. Instead of marching in a rudderless protest why not do something proactive? Why not take your time and energy and work on just one of the issues you see in a coordinated, cohesive manner?
Nicole Fende is President and Chief Numbers Whisperer of Small Business Finance Forum. As a credentialed actuary with experience as a former Chief Financial Officer, Investment Banker, and successful entrepreneur, Fende helps her clients reach their profit goals and learn how to effectively and enjoyably run the financial side of their business.