As I observed in my last post, I think that an OWS focus on debt, as Pamela Brown has been advocated, makes a lot of sense. We discussed this in the Wroclaw seminar. I continue to think about that discussion and how it relates to American electoral politics.

The issue of debt provides a way to keep focus on the frustration of the American Dream as it is part of the experience of many Americans, from the poor to the middle class to even the upper middle class. It is an issue of the concern of the 99%.

Yet, there are many activists in and theorists observing the movement who council against this, such as Jodi Dean. Debt is too individualized a problem. It would be better to focus on an issue of greater common, collective concern (e.g. the environment). The issue of debt is too closely connected to the right wing concern about deficits, and criticism of student debt can too easily become a criticism of higher education.

This presents a serious political problem. There is no broad agreement on debt as the central issue, and no leadership structure or decision making process which can decide on priorities. And of course, there are many other issues of contention. Primary among them, in my judgment, is the question of the relationship between OWS and American electoral politics.

It is here where the activists in OWS, like their new “new social movement” colleagues in Egypt and the Arab world more generally, are not prepared for practical politics. Coordinated strategy is beyond their capacity. One faction’s priority, debt or the reelection of President Obama, is not the concern of another’s, or even a position which it is forthrightly against. There are too many different positions within the movement for it to present a coherent sustained position. People with very different positions were able to join with each other and act politically thanks to the new media, but also thanks to that media, they were not required to work out their differences and priorities. They never developed the means to decide them.

Thus, the secular liberal and socialist activists of Tahrir Square have not played a major role in post Mubarak politics, and thus, OWS is struggling as it approaches its first anniversary of the occupation of Zuccotti Park. It is interesting to note that the serious comments to Brown’s recent article on debt discussed not the issue involved but the means by which the issue has been given priority (the other comments were by anti-OWS readers).  But the story doesn’t end here.  Activists continue their work beyond the glare of the attention of the media mainstream.

The problem of sustaining movements, as they are an outgrowth of the way they have formed, should be noted. Yet, while this all intriguing with interesting theoretical and practical implications, I do not think it is of critical importance. Movements don’t legislate and don’t elect Presidents and parliaments and members of Congress. Rather, they shape the political culture (something which I will reflect on more directly in my next post on new social movements in Russia and Israel). Indeed by helping shape the story people tell themselves about themselves, they lead to legislation and election, and sometimes this takes time. This is where the success of OWS is undeniable.

OWS changed the conversation. Inequality again became an issue of broad public concern in the U.S. and beyond. A simple calculation became a theme infusing discussion around the world: “the 99%”and “the 1%.” In lower Manhattan, a symbolic center of global capitalism, a small group of protesters globally unsettled things. While the speech and action within the movement is important, the way it influences the speech and actions beyond the movement is probably even more important.

This is quite evident in American politics. Under the influence of the Tea Party, the discussion in the midterm elections was about debt and deficits and the Democrats received a shellacking, as Obama put it. For a while Obama and the Democrats were humbled, influenced by the Tea Party movement and its momentum, and by the Republican victory. This changed thanks to OWS.

The President and his party found a new voice, often speaking of “the 99%” directly. There is a steadfastness when it comes to the issue of taxing the rich. Obama himself refused attempts by so called moderate Democrats to bend on the issue (instead of ending the Bush tax cuts for those making $250 thousand and over, ending them only for those making over $1 million), and now the issue of inequality is at the center of his campaign. Obama’s clarity, along with his party’s on the issue, along with the way they are trying to define Mitt Romney, all have an OWS accent.

The challenge for activists in OWS, such as Brown, is to extend and deepen this influence. She, like many others, is working to sustain the impact of OWS. I think she is right about this and about the substance of the matter. Debt is a key issue. For the last twenty years broad segments of the population have managed to keep the illusion of the American Dream alive by going into debt. Now payment is due, and the responsibility requires not only individual action, but concerted public efforts to change the rules of the game. And as the Tea Party is a force for capitalism and individualism run wild, it is important that a social movement works to present a clear alternative.

I am still jet-lagged, or is it a cold? I can’t tell. Whatever it is, I have not been up to par for the past few weeks. The trip to Europe, including visits with my daughter and her family in Paris and the seminar in Wroclaw, was more challenging than expected. Naomi, my wife and Deliberately Considered’s Art and Design Editor, and I slowed down in our posting. But now, we are back. I expect to regain my strength, and you, dear Deliberately Considered readers, can expect in the coming weeks more posts on Wroclaw and on American and global politics and culture. Here, today and tomorrow, my thoughts on OWS responding to the discussions at the Wroclaw seminar. -Jeff

The starting point of the Wroclaw Seminar was Occupy Wall Street. It then served as our primary case for comparative investigation throughout and informed our final conclusions. Seminar participants Pamela Brown and Sidney Rose suggested additional readings for the seminar when we focused on OWS — Rose on the link between Anonymous and OWS. She was particularly interested in the online pre-history of OWS. Brown, an Occupy activist, was focused on the present challenges and recent accomplishments of the movement.

Rose suggested a piece describing an embrace between Cornell West, the philosopher, social critic and activist, and Gregg Housh, a leading figure in the shadowy group, Anonymous, at an occupy demonstration in Boston. This informed our discussion about the virtual infrastructure that supported the embodied occupations. As we tried to understand what is special about the new “new social movements,” the interaction between virtual and the embodied was a topic we knew we needed to explore.

We discussed how events in the Middle East and North Africa, combined with virtual actions, led to Occupy Wall Street, and sparked a global social movement wildfire. Following the Arab Spring, OWS developed with an Adbusters initial proposal to occupy wall street on September 17, 2011 , supported by politicized hackers such as those associated with Anonymous. Suddenly, with a minimum of organizational planning, things changed. Thousands quickly made global connections. Governments fell. The economic order was challenged. A new power seemed to have emerged. Through the new and old media solid authority melted. The inevitable seemed vulnerable (Al Jazeera was crucial in the Middle East). Traditional autocrats were no longer secure. Economic plutocrats were fat targets for social outrage. Clearly the new media order contributed to this. Something very new had been brought into the world (i.e. Hannah Arendt’s idea of what politics can do).

While I think it is a mistake to consider these movements as having been created by the new media (“the Facebook revolutions”), it is hard to imagine their rapidly formed links and the coordination and organization of the movements without new media. Hierarchical organization, a command structure, a disciplined party organization and the like were no longer necessary. The “iron law of oligarchy” which Robert Michels analyzed in his classic study of social democratic parties , was made obsolete. Coordination could be and was more horizontally achieved. And many of the movements, OWS in particular, made this capacity a matter of principle. Decision through consensus promised to be not only an ideal: it was becoming also an operating reality.

Yet, this promise is not without peril, apparent in OWS and in many of the new “new social movements.” Without clear leadership, it is hard to know who actually speaks for the new “new social movements” and what their goals are. Those who live by the sword of new media may die by it. This is a primary challenge for the movements as they have attempted to go beyond their initial successes. Brown led us in our discussion of this issue.

It is one thing to observe that OWS changed the conversation. It is quite another to know what its enduring impact might be and to work for this.  For activists such as Brown, the challenge is to figure out what is to be done once major media attention is no longer there. She has been very engaged on the issue of student debt, a major American problem, and she is part of a group of OWS activists who believe that the debt issue is the one that will bring the movement forward, to make sure that OWS activists address the concerns of the 99% as  they speak in its name. She suggested that the group read a piece on a recent demonstration in N.Y. on this theme.  The article includes a link to an important article by Brown explaining the dimensions of the crisis: no less than the end of the American dream of upward social mobility.

I think this direction is quite promising. Deep debt is the tie that holds much of the 99% together, from usurious payday advances, to credit card debt, to mortgage foreclosures, to impossible student loans. I think this is a theme that can carry OWS forward. Our seminar participants were quite intrigued by the details, especially concerning the prohibitive costs of American higher education and the consequences of this. They found it particularly surprising when I revealed that I, as a full professor, was not at all confident that my children would be able to attend the universities of their own choosing because of the threat of deep debt. Somehow, we managed, but that was because of some good luck, including the good fortune of timing. It was ten years ago when things were bad, but not quite as bad as they are now.

Yet, there has been sharp criticism within OWS of the recent moves to focus on debt as the central issue of OWS. Tomorrow I will report on this and its implications for the public in the movement and for the broader public, and how both work on the broader task of reinventing American political culture. The challenge is that the mediated capacity that first led to the formation of the movement may be an obstacle to future concerted action.

Figure 1 shows the extraordinary reallocation of national resources from the bottom 80 percent of the population to the top 1 percent, while those in between (81^st-99^th) have, as a group, shown no change in their share of total income.

FIGURE 1

Source: CBO Report “Trends in the Distribution of Household Income Between 1979 and 2007”

Not surprisingly, over the last three decades many households in the bottom 80 percent have faced sharp declines in their standard of living as the costs of health care, higher education, food and energy have risen far faster than the wage check. The result has been the accumulation of unprecedented levels of mortgage, credit card, and student debt.

I have argued that the roots of the economic crisis can be found in the shift in economic thinking and public policy toward free market fundamentalism in the 1970-80s, which fueled the rise in debt, financial instability, and extreme inequality. We’ve seen a toxic mix of financial deregulation, evisceration of protective labor market institutions (like collective bargaining and the minimum wage), a political system corrupted by campaign contributions, and an increasingly polarized education system that performs poorly for most of those in the 80 percent and terribly for the most disadvantaged communities.

But this is not at all the conventional wisdom. Rather, it has become widely accepted that the government is the root cause of the economic crisis of 2008-11 and the decline in living standards for the vast majority. The problem in this conservative vision is too much regulation, too much taxation, too much encouragement of home ownership for low-income families, and government workers (who take too much for themselves in wages, benefits and job security). And worst of all is fighting the economic crisis with deficit spending. Incredibly, many leading academic economists have lent support to this free market fantasy, which of course has the causation between unemployment and government spending exactly backwards.

In the free market vision, extreme inequality is not the real problem. It is government spending and regulations, and reducing both would induce employers to generate jobs, workers to get off unemployment benefits, and students to invest in their own education (as public spending for education is cut back). Mainstream economists have long been fixated on supply side solutions to inequality and low pay. It is a natural part of the package of free market orthodoxy: more education makes people more productive and in competitive labor markets workers get paid what they’re worth (otherwise known as their “marginal product”).

A good example of this free market vision can be seen in David Brooks’ recent column in which he argued that the “right” inequality to worry about is not what’s going to the top 1 percent, but instead it is the “chasm between college and high school grads.” And we get much more than just higher incomes from more higher education. As he put it: “Today, college grads are much less likely to smoke than high school grads, they are less likely to be obese, they are more likely to be active in their communities, they have much more social trust, they speak many more words to their children at home.”

Unfortunately, while college grads may, on average, have higher scores on all these good outcomes, it seems unlikely that an increase in college degrees would have any effect on any of them. Let’s say we increase in the 6-year graduation rate for Bachelor’s degrees from about the current abysmal level of 55% (see below). Should we really expect to see less smoking, less obesity, more social trust and more words spoken to children?  Actually, given the costs and benefits of college attendance spelled out below, we might reasonably expect these outcomes to worsen, as recent graduates with modest incomes realize that they are unable to pay off their  mountainous student debt.

So what is the payoff to getting a college degree? We can start with Figure 1. Since 30 percent of the population over age 25 had college degrees in 2010 (Department of Education, Digest of Education Statistics: 2010, table 8), not many college graduates could have been among the top 1 percent of winners.

Figure 2 provides a view of the timing of the growth in inequality at the top. Saez shows that all the action at the top has taken place within the top 1%, whose share of total income rose from about 14% in 1993 to 23% in 2007, and then declined to about 21% in 2008, as the financial system nearly collapsed.

FIGURE 2

Nothing like this sort of take-off in inequality appears in the earnings data organized by educational attainment. Figure 3 shows that real earnings for those with only a college degree rose modestly in the 1990s and not at all since (in 2007 dollars).  At the peak of the last business cycle, in 2000, the average college graduate wage was $25.86 and increased to $26.40 the next year. Six years later the college wage was $26.51. Measured from 2001 to 2007, the Bush “boom” increased the average college wage by a full 11 cents.

It is true, as Figure 3 reports, that average wages have been much higher for college than high school graduates. But while the average college graduate earns about 1.7 times more than the average high school graduate, this ratio has remained unchanged since 1998: the payoff to a college degree stopped increasing over a decade ago.

The share of young people (25-29) with a college degree rose in the 1990s, but this measure of rising educational attainment has been flat in the 2000s: 29.1% in 2000, 29.6% in 2007 and 31.7% in 2010 (Department of Education: Digest of Education Statistics: 2010, Table 8).

But while many more students have sought post-secondary degrees, the reality of low wages for recent graduates and high costs of schooling have produced dismal graduation rates. Students entering a four-year college in 2003 had a graduation rate of just 55.5% six years later. Even worse, community colleges offering a two-year Associate’s degree report a three year graduation rate of just 29.2% for the 2006 entering class (NCHEMS Information Center, from Department of Education data).

The fact is that many students do not complete college, perhaps partly because they are pretty good at weighing the benefits and costs. Figure 3 graphically illustrates the tiny payoff to going to college and not finishing a four-year college degree. On average, the wage increase from “some college” over a high school degree was $1.85 per hour in 1998, $2.03 in 2000, and $1.92 in 2007.

FIGURE 3

Real Hourly Earnings by Educational Attainment, 1979-2007 (2007 dollars)

Source: Economic Policy Institute

If we succeed in getting more students out of college with diplomas, nearly all will get paid far less than the average college graduate (since they are younger and will come from the lower part of the high school performance distribution). Figure 4 compares the median annual earnings for high school graduates in 2010 with the average annual earnings of those in the 1^st quartile of the college graduate earnings distribution (those with earnings in the bottom 25% of earnings for all college grads). The increase for undertaking an additional four years of schooling is $5,600 for women and $4,850 for men.

Ignoring the complications of discounting, let’s say it cost $10,000 per year in tuition and related costs, and opportunity costs of $25,000 (foregone earnings, at slightly below the median high school graduate rate). Let’s further assume she won’t need to bear any costs of student loans (an entirely unlikely scenario – generally only possible for those whose parents are in that top 1%…).

Under this scenario, she’s got $140,000 invested in her college degree ($35,000 x 4). If her payoff is the average one ($5,600), it will take her about 25 years to break even.

This simple example illustrates the reality that the payoff to getting a college degree isn’t so obvious, given a labor market paying low wages to almost one-third of all workers and costs of education that are rising far faster than the overall inflation rate. This helps explain not just the dismal graduation rates mentioned above, but also why the percentage of 25-29 year olds with a college degree or more has hardly budged over the last decade (29.1% in 2000, 29.6% in 2007, and 31.7% in 2010; Department of Education, (Digest of Education Statistics: 2010, table 8).

It will take some radical institutional changes before we get to a more egalitarian and productive economy, as Brooks would have us do. We would need substantial reductions in the incidence of low pay and the burden of post-secondary education costs on less well-off families. Progressive change requires reversing the inequality revealed in figure 1: let’s start by giving back those 10 percentage points of national income to the bottom 80 percent of the American people. One critical step is to reduce the incidence of low pay without reducing job opportunities. Some say this is not possible, but France has shown that it can be done. I’ll make that case in the next post.

FIGURE 4

Median Annual Earnings in 2010 for High School Graduates and Average Earnings for College Graduate in the 1^st Earnings Quartile (Usual weekly pay X 50)

Source: Bureau of Labor Statistics

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