Occupy Wall Street and China, Research Paper Example

May Day has come and gone. For a few hours, it looked like the Occupy Wall Street (OWS) movement might be reignited. Maybe that will still happen in the weeks and months to come. For now though, the world protest movement that began in September of 2011 in Manhattan seems now to have run its course as an object of great media attention. We now may be in a position to examine the movement with less passion of the moment. Reviewing it now, can OWS best be explained in micro- or macro-economic terms, or in political terms? My own interest takes it another step: what did it and does it mean for China? Occupy Beijing never took place. But very briefly, China did have its own Jasmine Movement. Is it over too?

One of the things that everyone noticed about Occupy Wall Street was that it was many things to many people. News clips showed different kinds of protesters chanting and talking about lots of issues. Clearly, they didn’t have much in common. This is typical of political street gatherings. Anyone can join, and for a few months last year, it seemed like anyone did. Then the protests gradually faded away. People found other things to do, like go back to school. (The OWS movement started in September, the month when students start their new academic year). To me, this is the key point in any discussion about widespread street movements: if people have to get on with their lives to keep their standard of living or get an income at all, then their protest movement will end. It is only when enough people have nothing else to do that the problems really start. Then, the authorities must resort to increasing repression. Ultimately, that kind of repression can’t withstand the pressure of a permanent mass movement. The government must either solve the immediate problems or be overthrown. That’s what happened in Egypt, Libya, and Tunisia. The governments couldn’t solve the most pressing problems because the governments themselves were the most pressing problems.

When you look around the world, even in the Mideast with its own Arab Spring, most of the people affected by the insurgencies had other things to get back to when the immediate victory was won. They had to work to eat, if only just barely. Or they couldn’t endanger for too long the food subsidies that made food affordable at all. They could stage a mutiny, but they couldn’t run the ship of state aground. But the Arab Spring violence doesn’t apply in the United States. And it doesn’t apply in China either.

In those two countries, most people are reasonably satisfied, although by radically different standards. And so they have lives to get back to, and many of the OWS protestors in the U.S. and Europe, being basically middle-class people, grew tired of the hardship and boredom of living in tents. Also, a free press can end up working on the side of any government under siege. This is because the press must always give its full attention to new events happening in that country and the world. If there is a big political scandal, or a terrorist act, or a new band or singer starts attracting attention, the media turns its spotlight away from older news events. When that happens, a movement like OWS can end up turning into just a bunch of people sitting around in a park with no cameras there to record everything they do. Ignored by passersby, many participants just decide to go home. That’s what happened to OWS.

This leaves unanswered the question of why these movements got started at all if they weren’t strong enough to keep on going. Didn’t the protesters know that their movement, whatever its goals really were, could not possibly succeed? Didn’t they know they would need an organization and a specific set of policies to make a lasting difference? In other words, didn’t they know that they would have to become a new political faction, like the Tea Party?

The Roots of Occupy Wall Street

Economics helps people evaluate the tradeoffs of different public policies. To that extent, OWS was definitely an economic phenomenon (George). However, I don’t see it technically in micro- or macro-economic terms. Any attempt to interpret it exclusively either way falls apart. For example, people were not protesting specifically against high prices or low supply of goods and services. In fact, housing prices have plummeted in both America and Europe. That fact should have made many of the protestors happy, since homelessness was one of the issues they were protesting. Since many of the OWS protestors are either unemployed or underemployed, the movement may at first be viewed as a protest against current high unemployment or underemployment caused by the current recession in the American economy (and around the world). It can also be said that the movement is, indirectly, about the lack of growth in the Gross National Product (GDP). But it’s not as if most (or any) of the protesters are chanting about the GDP or for another extension of Federal unemployment compensation.

Most observers agree that OWS is an outgrowth of the bailout of some of the largest financial companies in America following the stock market “meltdown” in 2008. That was the public policy that ignited the protest. The economic trade-off didn’t satisfy the protesters. The perception had been growing across America that the taxpayers had been forced to pay for the risky speculations that banks and brokerages (known collectively as “Wall Street”) had been taking in the American subprime housing market. Also, there was growing anger of the use of increasingly complex and risky financial transactions known as derivatives and credit default swaps. These speculative operations had resulted in a financial bubble, especially in housing, and in 2008 the bubble began to burst. That’s when people began to hear the phrase too big to fail again. (It had been around since at least 1984). The thinking was that many of the companies involved in these big bets were too big to be allowed to go bankrupt because of the risky investments they had made because they assumed (some of them correctly) that they were too big to fail. To let those bankruptcies happen would threaten the American and world financial system. Then another old slogan began to be heard in the media: private profit, public risk.

The bailouts were an example of private profit, public risk and too-big-to-fail. But there were many earlier examples that had been growing in Americans’ consciousness over the decades: Lockheed Aircraft got $250 million in government loans in 1971; automaker Chrysler in 1980 got $1.5 billion in guaranteed loans; from 1986 to 1995 the savings and loan industry’s deposits had to be protected with $124 billion in taxpayer money; in 2008, insurance giant AIG received a $182 billion bailout; in 2009 the U.S. Treasury had to transfer $50 billion to General Motors in exchange for a 60% stake in order to forestall the company’s bankruptcy (Focus.com).

The American housing market is another case. The Federal National Mortgage Association (known as Fannie Mae) and the Federal Home Loan Mortgage Corporation (known as Freddie Mac) are hybrid private-public companies. They had implicit government support for decades. Everyone on Wall Street and Main Street knew that the U.S. government would provide whatever money was needed to keep them in business, no matter how many mortgages they owned lost value. That finally began to happen on a massive scale starting in 2008. By October 2010, in the biggest bailout of all, the U.S. government had already spent $135 billion to rescue Fannie and Freddie (as they are often called), and a Washington Post article warned that over $100 billion more could be needed if the economy were to begin shrinking again (Focus.com).

I now return to a question I asked earlier: what does all this have to do with China? At first glance, one might think that OWS has little to do with China. There were no widespread demonstrations or sit-ins to be found there. On October 9, 2011, there was one supposedly pro-OWS demonstration in Zhengzhou, the capital of Henan province. But it was very likely government-supported. The demonstrators, middle-aged workers from a local state-owned company, were wearing armbands saying things like Absolutely support the American people’s great Occupy Wall Street revolution! One marcher said that the USA is so bad that it bullies any countries as it wishes. Bullying others with its rod of liberal democracy, it interferes with the internal affairs of other countries and overthrows the regimes of others. (DongXia). But even this so-called movement disappeared, and by October 24, the following terms were among those blocked by the Chinese government from search-engine results: Occupy Beijing, Occupy Shanghai, Occupy Guangzhou, Occupy Xi’an, Occupy Chongqin, Occupy Tianjin, Occupy Urumqi, Occupy Lhasa, Occupy Changsha, Occupy Wuhan, Occupy Nanchang, Occupy Fuzhou, Occupy Nanjing, Occupy Dalian, Occupy Hangzhou, Occupy Harbin, Occupy Chengdu, Occupy Kunming, Occupy Hohhot, Occupy Haikou, Occupy Zhengzhou, Occupy Changchun, Occupy Shenyang, and Occupy Xining (Kanalley). Clearly, we can conclude that the Chinese government had a change of heart when it came to supporting OWS. It’s not difficult to see why.

China exemplifies the abuses that many OWS demonstrators were protesting about. It has countless state-owned enterprises that are supported with taxpayer money even as they lose that money while their managers and Party leaders get rich. The Chinese government-private enterprise connection if rife with corruption and abuse. Local and national Chinese Communist Party leaders are wealthy far beyond that of the Chinese people themselves. The government manipulates the currency to suit the needs of state-owned manufacturers of goods for export. Unions are not allowed. Safety regulations are poorly enforced, if at all. In short, in spite of its outward prosperity, China is a country still very deeply divided along economic lines. It really isn’t even a truly communist country anymore, instead being a kind of increasingly sophisticated kleptocracy, a hybrid with the worst aspects of communism, old-fashioned crony capitalism, and free-world capitalism but without a free press. Yet, in spite of everything wrong with China, there is one major new development that shows something very good is happening: it is growing an increasingly strong and rich middle class. The government is building a host of new cities in formerly rural areas to try to make that middle class even bigger. And so now, China’s communist government finds itself feeding the tiger while holding on to its tail.

That tiger will present a growing quandary and threat to Communist Party rulers. One the one hand, the middle class is a sign that, in spite of China’s corruption and waste, its system is actually working for millions of its people, who are now far richer and better off than they were ten years ago, or even five years ago. The growth of the middle class also promises to turn China into more of a consuming economy, away from its current emphasis on being an export economy. On the other hand, a growing middle class presents a threat. It is educated and urban. It is mobile. It is increasingly sophisticated politically, and increasingly insistent that its civil and economic rights be protected. And that is the problem. China’s middle class will insist on a rule of law and not of men. But can a communist country really provide a rule of law in the Western sense? Can there even be another kind of rule of law? This are key questions, because in the West the rule of law is absolutely founded on private property. But in China, there really isn’t private property you can count on having. In the West, the government can’t just seize your house, business, or land without resorting to due process, specifically what is called eminent domain. In China, the government can and does seize land and assets and then sells them to enterprises that use state power to gain a local (or national) monopoly to get rich.

There is another aspect to OWS that is obvious to anyone familiar with it: the role of technology, especially the technology of the Web, and especially social-networking sites on the Web. It might even be said that OWS is itself an expression of the blending of the Web and street protest. OWS couldn’t have happened the way it did without Google, Facebook, and Twitter. China has its own versions of those programs. The spread of that technology presents a big problem for the Chinese government. Its urban population now slightly exceeds its rural population, and, as happens in other countries (like Mexican migrants who work in America), much of that urban population sends money to its rural families. That money can buy cell-phones and Wi-Fi and broadband. So it is only a matter of time before China’s rural population will be as wired as its urban population is now and will be even more in the future.

So what does all of this in China have to do with OWS? The answer is that OWS is a protest movement, but a protest movement in the West is not the same thing as a protest movement in the East. In America and Europe, a movement like OWS is only about economic and legal reform. It isn’t about regime change. But in China, a movement like OWS can never be just about reform. That’s because China can still act like a hard-line communist country. The problem with acting like a hard-line communist country is that its citizens don’t like it. Historically, people have always been tricked and forced into communism, whether it was in Russia after 1917 or Cambodia after 1975 — or China after 1950. This can especially be seen in what is always found in communism countries: collective farming.

You can’t reform a communist system very far without calling into question the system itself. China did just that when it began to dismantle its collective farm system after 1978, allowing farmers to essentially “own” their own plots and sell surplus crops to the then-recently allowed free market (which had the effect of increasing the food supply for China’s growing urban population). The question people are facing more and more in China is just how much it can change and still be a communist country at all. One thing is for sure, for China’s leaders to maintain their power, wealth, and position in a communist country, whatever substantial change that occurs must always be controlled by the government itself. That is what happened when the collective farms were dismantled. Right now, the only way the government can control social media and OWS-type movements is to suppress and ban them using filtering/blocking technology that it currently buys from Western companies. The question now is, how long can the government (any government) control Web-based grass-roots movements?

In the West, nearly everybody has a fairly good idea of what a hacker is. In China, the term is diannao chong, literally computer insect. Today in the West, any kind of web-based protest movement is going to have hackers affiliated with it. That is also going to be true in China in the future. This is going to present a special problem to the government when its own computer specialists in the security forces begin to lose their loyalty to the system that employs them. This will probably be every repressive-country’s increasingly weak link. Lower-level computer specialists know a lot more about computer systems than their political bosses do. But can such specialists be kept in line through fear and intimidation alone? Perhaps, but at this point, it’s not likely that even China could do that. But there is one country that still can.

We can get a sense of the whole OWS-problem by comparing China to North Korea. Let’s imagine that suddenly, to everyone’s surprise, there is a brief Occupy Pyongyang movement there, or a local Occupy Pyongyang website suddenly appeared where an official North Korean website was before. Imagine what such a thing would mean to the leaders of North Korea. It would be a severe wake-up call that changes were occurring. As long as that sort of thing isn’t happening in North Korea, than we can be sure that its computer security forces are well under control. If that control should drop its guard at all, even slightly, than we will see signs of it on the Web, and then in the streets of Pyongyang or the Demilitarized Zone.

When looking at this issue in terms of China alone, it’s easy to lose sight of the fact that China is North Korea’s most important ally. It is also its biggest trading partner, a source of Chinese fuel, food, and arms (Bajoria). However, China is also an important trading partner with South Korea, giving that country a $32.5 billion trade surplus (World Biz). That trade is expected to grow on both sides. Due to North Korea’s missile shots and other provocations against South Korea, the traditionally strong relationship between China and North Korea under a strain. If that relationship were to break apart, then we could end up seeing the kind of fake, government sponsored Occupy Pyongyang demonstration just like the fake OWS-support demonstration I noted earlier. Again, it is all about controlling current events to help control the future.

OWS was about both economics and politics. Both disciplines are about choices and their consequences. One tallies, the other talks. Possibly as a result of the Occupy movements around the world (and even in China), the choices facing governments in the future will be changed to reflect a new consensus. However, exactly what that consensus is remains as confused as the collective hope and anger that caused those protests. In the West, the question is: what will next be too big to fail, and how much will taxpayers have to pay those whose attempt to get even richer caused the failure in the first place? As for China, it is now an economic powerhouse, but not a fully functioning political entity in the Western sense. This is what it comes down to: in the West, people can protest, there is private property, there are civil rights. Occupy movements only rock the boat, and not very much, at that. In China, they could sink the boat, and probably will.

Works Cited

Bajoria, Jayshree. “The China-North Korea Relationship.” Backgrounder. Council on Foreign Relations, 27 Oct 2010. Web. 7 May 2012.

DongXia, He. “Citizens of China rally to support Occupy Wall Street movement.” China Hush News. China Hush, 09 Oct 2011. Web. 7 May 2012.

Focus.com. “The History of Too Big to Fail.” Focus, 2012. Web. 7 May 2012.

George, Michael. “Group Endorses Walk Out in Economics 10.” The Harvard Crimson. The Harvard Crimson, 02 Nov 2011. Web. 8 May 2012.

Kanalley, Craig. “‘Occupy Blocked In China, Joins Banned Search Terms On Microblog.” Huff Post Occupy Wall St. The Huffington Post, 24 Dec 2011. Web. 7 May 2012.

World Biz. “S Korea posts record-high trade surplus in 2009.” China Economic Net, 14 Jan 2010. Web. 7 May 2012.