Wall Street’s 1 Percent Meets 2 Billion Seeking Answers
Oct. 19 (Bloomberg) — It’s all about location, location, location, as they say in real estate. Protests, too.
There were more obvious places for Tokyo’s Occupy Wall Street protest to converge on Saturday than the nightlife district of Roppongi. It could have begun in Nihonbashi, home to the Tokyo Stock Exchange; Nagatacho, Japan’s Capitol Hill; or Ueno, where droves of Tokyo’s homeless congregate.
Instead, activists chose the city’s hedonistic melting pot of hipsters, strippers, gangsters, expatriates and bankers. Not just any bankers — Goldman Sachs ones who work in the swanky Roppongi Hills complex. Amid the hundreds of activists, I saw signs saying “No Greed,” “Taxiderm the Rich” and my favorite, held by a 20-something woman: “Stop Vampire Squids.”
It was a reference to Goldman Sachs Group Inc., which was labeled a “great vampire squid wrapped around the face of humanity” in a 2009 article in Rolling Stone magazine. For better or worse, Asians see Goldman Sachs both as the gold standard of investment banks and a byword for how incestuous ties between banks and government concentrate wealth in the hands of a few.
When this sentiment reaches egalitarian Japan, you know it has legs. Like-minded protests are popping up in Australia, Hong Kong, India, New Zealand, the Philippines, South Korea and Taiwan (one planned in Singapore was pre-empted by police).
Those who dismiss this groundswell of anger thousands of miles from New York do so at their own peril. And those seeking clarity on Occupy Wall Street’s focus and goals can find it in Asia: The widening gap between rich and poor is threatening the very tenets of capitalism and democracy.
Asia’s development is becoming more and more lopsided. Economies growing 5 percent or 7 percent a year fail to distribute the spoils with any semblance of balance. The well- off and politically connected get more and more, while everyone else feels left behind. As the world slides anew toward recession, this rich-poor deficit will expand.
This region could be as wealthy as Europe by the middle of this century. It’s not because Europe’s living standards are falling as we speak, but because Asia is booming. To get there, Asia must address poverty, make economic opportunities accessible to all, attack corruption, improve education and health care, and encourage entrepreneurship.
The price for dragging its feet in recent years can be counted on the streets, where protesters are becoming more vocal. Their numbers are modest so far, but the power of social media ensures crowds will grow. Expect demands ranging from the establishment of 40-hour work weeks; more equitable pay and benefits; and better health, safety and environmental standards.
The ‘1 Percent’
Of course, Asia’s rich like the status quo. Most in the region get wealthy via rising stock and property prices. While protesters rail against the huge bonuses that bankers receive, Asia’s nouveau riche would probably prefer even bigger ones. That way, you keep the top end of the market — which protesters call the “1 percent” — happy with larger and larger bonuses, and all’s well.
On the ground, things look very different as economies slow. Asians are still miffed at the events of 2008, when over- leverage and irresponsible policies in the West led to a financial crisis that damaged regional markets and living standards. There are hard feelings that the U.S. employed every policy it told Asia to avoid in the late 1990s, including devaluing its currency. The U.S. and Europe have yet to fix underlying weaknesses in their economies.
If things get as bad as pessimists Nouriel Roubini and Nassim Taleb warn, Asia might face social instability as high food and energy costs meet falling incomes and rising unemployment. The only bull market will be in inequality.
The ’99 Percent’
In Japan, the media portrayed Saturday’s demonstrations as anti-nuclear in nature. With the Fukushima plant still leaking radiation and Tokyo Electric Power Co. as incompetent as ever, anti-nuke protesters were in the mix. Yet the real story was the so-called 99 percent calling for more equality.
Japan long prided itself as an egalitarian Mecca, yet that’s fast changing as deflation deepens, public debt rises, the population ages and China’s competitiveness grows. In an August report, the government said almost 40 percent of workers are now “irregular.” That means they get lower pay, fewer pension benefits and less job security.
In China, the Communist Party must narrow its rich-poor gap if it is to retain legitimacy and avoid instability in the years ahead. Officials from Seoul to Jakarta face great challenges, too. And while few want to abandon capitalism, Asia’s masses increasingly fear its side effects, including a replay of the 2008 meltdown.
What China’s environmental disasters and train crashes have in common with Japan’s Fukushima crisis, India’s dysfunction, Indonesia’s depletion of resources and deadly floods in the Philippines is corruption. In Asia, it’s often hard to tell where the public sector ends and the private sector begins, and vice versa — just as it increasingly is with Wall Street and Washington. Locations change, but the underlying problem doesn’t.
The key is genuine accountability, transparency and steps to give the 99 percent more say and a bigger share of the spoils. Those who want to dismiss Occupy Wall Street should consider that a couple of billion Asians, or more, aren’t about to.
(William Pesek is a Bloomberg View columnist. The opinions expressed are his own.)