There was an Bloomberg Op Ed today (November 22, 2011) – Protesters Ignore American Love of Entrepreneurs – by Harvard economist Edward Glaeser. It is an attack on the OWS movement and an appeal to how great American entrepreneurship is. The ideas resonate with some recent work I have been doing on the impacts of national income redistribution under neo-liberalism on aggregate demand and the role of the financial sector. The link is that entrepreneurship in the US is not what it was and it is an illusion to think that the past two decades or so bears much similarity to the heyday of US entrepreneurship, whatever your view of the latter is. The entrepreneurs are disappearing in American and being replaced by rapacious wealth shufflers who add nothing to productive capacity or general prosperity. I was talking to one of my PhD students about the way nomenclature is used in different ways. When an economist talks about “investment” – the term is being used to describe the flow of spending that is aimed at augmenting productive infrastructure – more equipment, buildings etc.
Buying a government bond or a share in a listed company is not investing to an economist. Entrepreneurs invest, hedge funds rarely invest. That distinction helps to understand why the Glaeser article misses the point.
Glaeser asserts that:
The Occupy Wall Street movement is fighting an almost unwinnable battle against the ghost of Steve Jobs.
America’s love affair with entrepreneurship complicates any attempt to mount an effective European-style war of have-nots against haves. To be successful, the new economic populists must connect their message with the American embrace of those, like Jobs, who become rich by improving our economy and the world.
While the OWS movement and the related general anger in the community might be, in part, a cry about income inequality and high incomes per se I consider it to be much broader than that.
I don’t just see the “Occupiers” as being “angry that President Barack Obama didn’t do more to eliminate the inequities of American life”. I see them angry about an elite that has hijacked the economic system and made it work less productively than before while redistributing more of what is working to themselves. So it is not just a distributional issue.
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