Occupy Wall Street overly fixated on scapegoating

In the United States, World War II was followed by the Cold War and the growing threat of nuclear warfare. It was a pretty discouraging time that created some pretty disgruntled people.

It also was a time of optimism expressed in things like the Broadway musical “South Pacific,” in which Mary Martin sang these words:

“I have heard people rant and rave and bellow

That we’re done and we might as well be dead

But I’m only a cock-eyed optimist

And I can’t get it into my head.”

The drumbeat of poor economic news from around the world has created a lot of disgruntled people these days, as well. That’s been evidenced by the Occupy Wall Street movement in a variety of forms, most of which express anger over rich people and institutions of this country.

The problem is the movement’s members are looking for villains instead of identifying the problems in our economic system and identifying what can be done about them.

Among the more depressing economic news events recently was a relatively quiet protest at Harvard University where some 70 students walked out of professor N. Gregory Mankiw’s economics class to protest his views on income inequality.

What was so depressing about this event was not just its being staged with assistance from the “Harvard Crimson,” the school newspaper, although that would have been sufficient.

In an editorial, the paper wrote that, “The walkout should be seen in the context of Occupy Boston and the Occupy movements nationwide.” The editorial then revealed that the real problem bothering the paper was not the course content but that Mankiw had worked for a while as an economic adviser to President George W. Bush.

With apologies to Elizabeth Barrett Browning, how is this depressing? Let me count the ways.

First, it tells us what is happening, or has happened, to school newspapers. When a paper perceives itself as a skilled organizer of protests, or wants others to perceive it so, it has clearly slipped its moorings as a journalistic enterprise.

Second, Mankiw seems such an unlikely target for this kind of protest that it makes you wonder if the students knew anything about him or were simply told of his onetime work as an economic adviser to someone they disliked. The reality is that Mankiw is one of those rare economists who believes in teaching and in his students. He teaches the foundations course — the kind of introductory course that most academic economists try to avoid at all costs — because he believes it is important.

Third, the walkout’s association with the Occupy people strongly suggests that the students hadn’t been paying attention in class when they were there. The Occupy movement, whatever its merits, has displayed a level of misunderstanding of economics that sets it apart even from most protest movements.

Their one specific economic objective, in fact, seems to be the introduction of student loans that need not be repaid.

There are more reasons, but that in itself is reason enough to stop at the conclusion that the Occupy movement isn’t going to be much help in fixing our economic problems, including the increasingly unbalanced income distribution which provides so much of their organizational energy and slogans.

This is a serious problem in our economy, but we are not likely to solve it with a posselike approach to catching bad guys.

One of the fundamental characteristics of economics is the absence of villains. In a free market system you don’t need black hats to produce a questionable or even a bad outcome. Even Karl Marx, the godfather of modern economic revolution, understood this.

There are inherent as well as structural economic forces in a market system, for example, that interact with technology to encourage consolidation, even to the point of monopoly and economic inefficiency. The process does not require active villainy or extraordinary greed anymore than an automobile collision requires the complicity of Isaac Newton and his laws of motion.

An individual or a movement cannot change anything unless this basic characteristic of market-driven economic systems is understood. Otherwise, like the Congress, most often you end up chasing villains and changing nothing.

We certainly don’t need to launch a surveillance satellite to hunt down economic news to be depressed about. It’s everywhere.

But somehow even all of that news is not enough to erase the belief that we can and will get through this, not by fooling ourselves but by the traditional virtues of hard work, smart work, energy and optimism.

James McCusker is a Bothell economist, educator and consultant. He also writes a monthly column for the Snohomish County Business Journal.