It has been nearly three months since Occupy Dartmouth set up camp in front of the Collis Center. Despite bitter cold and some harassment, members of Occupy remain determined to stimulate discussion about political and economic inequities. While student protesters can be commended for making the world's troubles their own, they are mistaken in pointing blame at corporate greed and free market capitalism.
Corporate greed is not in itself the problem. Greed will always be with us so long as people are pursuing their own separate interests. The beauty of the free market is that it tends to harness greed for the benefit of society. In order to earn money, corporations must provide goods or services that others value. Although there are legitimate concerns about misleading advertising and environmentally destructive practices, self-interested corporations do make amazing contributions to society.
The main problem is that government intervention often keeps the market economy from working. Contrary to popular belief, the recent subprime mortgage crisis was not so much a product of corporate greed as dangerous government policies. More than 70 percent of weak or subprime mortgages were held or guaranteed by Fannie Mae, Freddie Mac and other government-controlled institutions. The government's intervention helped poor people achieve the American dream of owning a home, but it also contributed to reckless lending to unreliable borrowers.
Financial institutions tend to engage in riskier behavior if they think the government is holding a safety net under them. Indeed, a recent study by the University of Michigan found that banks that received bailouts in 2008 have since taken on greater risk. Today, the six largest U.S. financial institutions are even significantly larger than they were before the financial crisis. The next time a major bank gets in trouble, will we yet again be told that it is too big to fail? The financial system won't be able to stand on its own two feet if the government keeps propping it up.
Many Americans have been misled into believing that the country would be up a creek without a paddle if the government had not been around to sort through the economic mess. Instead of calling for less regulation, Occupy protesters demand that the government get its act together and provide effective solutions. In reality, the government is woefully incapable of managing the economy. Giving the government additional regulatory powers would only lead to more of the same incompetence and favoritism that we have already seen so often.
The free enterprise system is hardly perfect, but it is the best way of improving the lot of both the rich and poor. It is because of capitalism that obesity is a bigger concern than hunger for most poor Americans. Among households classified as "poor" by the U.S. Census Bureau, 92 percent have a microwave and 80 percent have air conditioning. In 1970, just 36 percent of all Americans had air conditioning. According to the Congressional Budget Office, the bottom quintile of earners experienced an 18 percent increase in after-tax income between 1979 and 2007. This modest income growth has been vastly outpaced by improvements in standards of living.
Although the notion that the poor have been getting poorer is patently false, people are understandably concerned about growing income inequality and the exorbitant earnings of corporate executives. Unfortunately, many Occupy protesters support executive pay caps which would prevent companies from competing with each other for the most talented leaders. If executive salaries were capped, the CEO of Apple could make as much as some local business owners. As a result, leaders like Steve Jobs would not have the monetary incentive to take the positions that make the best use of their abilities.
Occupy protesters rarely appreciate the unintended consequences of government intervention and often blame those consequences on supposed flaws in the free enterprise system. What we have right now is not a free market economy, but rather a highly undesirable mixture of government and business. The solution to our problems lies in getting the government out of the marketplace, not in occupying Wall Street and screaming at corporate executives who help provide us with all the modern conveniences we take for granted.
