Fiscal Responsibility and Occupy Wall Street – The Proper Outlook

Imagine there is a nail sitting upright on the floor. You step on it, and your foot gets punctured. The result is a lot of pain, and possibly an infection. I want to take a second to ask who should be blamed for this situation. Do we blame the nail? Obviously not, as the nail’s purpose is to exist and be a nail. It did not actively seek to cause your foot pain. It was just being a nail. It is your responsibility not to step on the nail.

The problem with Occupy Wall Street is that it takes the wrong approach to viewing Wall Street. Wall Street should not be viewed as an active entity with volition. That perspective divests the individual and the consumer of all responsibility. Instead, Wall Street, and its turning gears, should be viewed as just that, turning gears. Wall Street is a machine that operates on the profit motive, with people working to make profits. It is inevitable that these people will do what it takes to make money and gain power. It is our responsibility as consumers, citizens, and political participants to be wise in the decisions we make.

Take a look at predatory lending for example. For those of you who don’t know, the practice is fairly straightforward. I, as the banker, will give you a loan for a home that you obviously cannot afford, knowing that you will default. Once you default, I will take the home (which is worth the amount of the loan) and whatever money you have managed to pay thus far. Therefore, I will make money in the end. This is one operation of the machine that is Wall Street. Now, the Occupy Wall Street folks will tell you that this is an unscrupulous practice which needs to be regulated and stopped by the government. I do not share the same view. My argument is that you, the consumer, should not try and buy the $750,000 dollar that they obviously will never be able to pay off. Instead, settle for a rent to own 2 bedroom. The same can be said about car loans. Do not try to purchase the $70,000 BMW. Buy a used Civic instead that you can pay off in 2 years time.

A good number of Americans live under the fallacy that having a college degree makes you deserving of having a career which pays at least $80,000 per year. I’m sorry, but if your GPA was 2.7, and your chief extracurricular activity was smoking marijuana, you have no right to expect a luxurious life. Youth in this country exist in a bubble of excess spending and poor financial management. If you already have student loans to pay off, what are you doing maxing out your credit cards, ruining your history, and accumulating debt? It is not difficult to get a job, nor is it difficult to make enough money to live a decent life. This is especially true if you live in places like Cleveland, Baltimore, Atlanta, or any of the plain states. The only thing is that the first job you get may not be the dream multi-million dollar executive salary position you want. And, because you watched too many romantic comedies, you thought it was alright to get married and have a child by the age of 23. You really think you can support a family on your $35k per year entry level job?

Hard work is rewarded in this country and in this economy. The problem is that it is not rewarded instantly, and it is not rewarded simply. You have to be good at politiking, and you need initiative. You need to be experienced, talented, and highly qualified to land the top level executive positions. Chances are, however, you’re not going to get to that point until at least your late thirties. If you need to get a job busing tables, then that’s what you have to do. It is nothing to be ashamed of. The reality is that a full time minimum wage worker makes roughly $1000 per month. Go from minimum wage to $10 per hour, and you make $1600 per month. Just five more dollars per hour, and that becomes $2400, which is enough to live comfortably if you live within your means. Blue collar vocational positions also pay very well. A mechanic at a Lexus dealership can make upwards of $25 per hour.

The problem is not Wall Street. They are just doing their jobs, and they are doing them very well. The problem is that American society breeds a culture of false entitlement and frivolity. Students spend their time partying instead of building their resumes, getting experience, and getting good grades which will allow them to have successful futures. I’m not saying that all enjoyment should cease in lieu of hard work and industriousness. Rather, it is more appropriate to lead a balanced life. There is a time for play, and there is a time for work. Unfortunately, for too many, work time turns into play time, and then all time turns into play time. Companies will always hire people who work harder and have more impressive resumes over people who do not. This is just a fact.

The most beautiful thing about this approach of individual fiscal responsibility is that it is the best way to end unethical practices on Wall Street! We sometimes forget that free market forces still matter somewhat in this country. The “unscrupulous Wall Street tycoons” that the people in the park settlements are all riled up about prey upon irresponsible Americans who do not understand how to responsibly use their money. Predatory loans became fashionable because a lot of people were getting them. If Americans take the time to better understand how money works and how to use it better, then predatory economic practices will stop because there will be no market for them. If nobody bothers to get a ridiculous loan for a Maserati they can’t afford, then these loans will inevitably stop existing. The interest rates will decrease as well. As a population of consumers, it is our job to make it more profitable for the financial institutions to be ethical. It is not easy to be responsible, but it is the real way to fix this economy.

After all, the nail will always be there. You are the one who needs to watch where you step.

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7 responses to “Fiscal Responsibility and Occupy Wall Street – The Proper Outlook

  1. I agree with some of your points. Yes, we as individuals need to be careful with our actions and behave sensibly; this is the approach I take with my work, particularly with regards to OHSA issues. However, your statement here misses two key points, both of which flow from the fact that people by necessity make decisions based on incomplete information. The benign example is when people make decisions based on a projection of the world proceeding one way and the world actually doing something different. Investing just before a market crash, buying a house before being unexpectedly downsized – these “black swans” are beyond individual control or predictive power, and is a legitimate example of being a victim of fate. A more sinister example is when one party deliberately obfuscates information or outright lies in order to make a profit. Can you explain a “credit default loan swap”? I can’t, but I have been told that financial constructs like that are partially to blame for the housing crash. A conversation with a former finance analyst revealed to me that these financial constructs were engineered with safety factors in the range of .6-.8. In true engineering projects, valued of 5 (for minor products) to 1000’s (milspec

  2. … (milspec, medical devices, etc.). So, there was an element of corporate misconduct which individual decisions had no possibility of correcting. In this example, there is both a victim and victimizer.

    My final point is that you raise the example of a less-than-model student having nobody to blame for their failure to succeed post-graduation. I would like to counter with my own experience: I graduated around this time last year, from CASE, completing my engineering degree a semester early. I graduated with teaching experience, research experience, leadership experience, a full year of industry experience, and an honors GPA despite a rigorous curriculum compared to my classmates. For the next 6 months, I proceeded to get turned down from the next 20 or so jobs I applied to, despite willingness to negotiate on compensation and demonstrated interest in the companies to which I applied. In fact, out of those 20 applications, I got 2 interviews (not including discussions held when informally). My point is that the opportunity is not there to the extent to which it used to be, and even relatively qualified people can still have difficulty in today’s economy, and that is not something for which you can necessarily blame the job seekers for.

    • I agree with most of what you are saying. My intent is to point out the opposite side of it. I agree that financial institutions intentionally mislead consumers. I also agree that this job market is difficult. However, I am not prepared to remove the blame entirely from the consumer and the job seeker.

      The problem I have is that many people are unwilling to seek actual information for themselves. They do not know how to evaluate credibility of sources, and they are often taken advantage of. This is particularly true of young adults. Understanding and wisdom cannot be earned by government and economic regulation. We can fix the institutions, but this will all just happen again unless the consumer population fixes its behaviors.

      I am also speaking in generalities. There are exceptions to everything. There are of course people who are qualified and have difficulty finding employment, and that difficulty is exacerbated in this economy. On the whole, however, I would argue that this isn’t the case.

    • And we should stop treating Wall Street like it has a choice. Instead, we should just accept that it will always operate under the profit motive and do whatever shady things are necessary to make more monies. The consumers need to behave accordingly.

  3. I agree that consumers should be aware of their choices, and what goes on with their money. However, lets look at other people that will always be operating under the profit motive: thieves. They do whatever is necessary to make more monies, and what they do is immoral. And the common person knows that if you leave your car unlocked, your radio is more likely to get stolen. We seek to stamp out crime, but, in this post, treat Wall Street like it is an immutable establishment.

  4. Exactly! We lock our cars, lock our doors, and have security measures because we know thieves will try to steal things. That doesn’t mean what they’re doing is right, but you should still be responsible enough to take the necessary precautions. The best way to eliminate thievery is to make it impossible for people to steal things! Also, the things Wall Street does are generally not unlawful; they are just unscrupulous, and most would agree they are unethical. The practices do remain legal, however.

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