E-Kantipur

Soon after the present and past US presidents visited New York’s Ground Zero to observe the 10th year of the destruction of the World Trade Centre’s Twin Towers, this writer had an opportunity to visit the site early last month. As we made our way towards Wall Street, a peaceful sit-in was taking place against what is considered to be excesses of the business community, particularly the banking sector.

A little further away was a young lady, topless and with a moustache crudely drawn on her upper lip and a few strands of beads equally crudely drawn, coming to take part in the protest. The attempt apparently was to attract attention to the Occupy Wall Street protest that has been going on for months now. When it began, US President Obama, according to the then US media reports, is reported to have said that he understood the feelings of the protestors. The US president’s sentiments might have been more political than real since the Republican Tea Party and their opposition to the US president were grabbing all the headlines.

But in the months that followed, the Occupy Wall Street movement has caught the attention of the world; and is being followed as an example to fight gross economic injustice — whether real or just seeming. There have been reports that just 1 percent of rich Americans hold sway over 40 percent of America’s wealth. This is certainly not a very inspiring, especially when viewed against the background that 25 years ago, it was 12 percent of rich Americans controlling just 33 percent of the nation’s wealth.

Middle-class Americans were said to have seen their real incomes fall while those in the upper bracket

saw their incomes and wealth rise 18 percent. (No wonder, it is light-heartedly said that the US system is

of the 1 percent, by the 1 percent and for the 1 percent.) As a result, there is growing inequity of income among Americans, and in the words of a Columbia University professor, the inequity of income in the US “is like that of Russia and Iran”.

The financial crisis of 2008 that led to closures and bankruptcy of financial institutions in the US cost taxpayers dear. President Obama spent over US$ 800 billion in economic stimulus packages, most of the money going to financial institutions. The housing market in the US slumped, and there were numerous foreclosures as homeowners were unable to repay their mortgage. As financial institutions became unable to recover the loans given to the housing market, their bankruptcy was a certainty.

The US bailout package given to many financial institutions including the Bank of America and the Citibank Group was said to be directed at not merely pulling them out of the crisis but also ensuring that Americans did not have to go unemployed. The financial meltdown affected not only the US but also many countries including European countries where a number of banks closed down. There are now predictions that there will be a repeat of the 2008 financial crisis towards the end of 2012 or in 2013.

One of the important outcomes of the 2008 global financial crisis was the rise in unemployment in the US from which the country is yet to recover. The complaint of the Occupy Wall Street movement, which has spread to other major and even small cities in the US and crisis-hit parts of Europe, has been that the taxpayers’ money used to bail out financial institutions has not succeeded in bringing down the unemployment rate in the US.

Many critics are of the opinion that the bailout provided by the US government was used by the executives of major financial institutions to fatten their own pockets rather than in helping the overall economic growth of the nation. Major banks and

other financial institutions that were on the verge of closure regained their footing after the bailout, and it was expected that those receiving the funds would adapt themselves to new realities. Instead, they followed the same old tradition with the result that bonuses for the staff were announced by the very institutions that were about to go bankrupt.

The Occupy Wall Street and occupy so many other places in the US and in Europe are a reaction to the inability of governments and major financial institutions including central banks to bring about necessary reforms in the economy and in the distribution system. The inequitable distribution of income is, unfortunately, not prevalent only in the developed West, but is more pronounced in the developing countries like Nepal.

The salary gap between top executives and lower staff of most major banks in this country is rather too broad. A chief executive of a major commercial bank based in Kathmandu, for instance, draws as much as Rs 15 million annually in salary and allowances excluding the Dashain allowance, provident fund and other benefits. (This is not something secret, but is published in the annual report of the bank that is distributed to shareholders.)

What, one might ask, would a teller in the same bank draw in salary, allowances and other benefits? Obviously nowhere near the top executives of that bank. And this is true not merely of one single major bank but is generally applicable to most banks in the country. A CEO obviously deserves a much higher salary than a teller, but the gap between different tiers of employees should not be such that the gap creates animosity and dissatisfaction. With the country’s economy at present in the doldrums (thanks mainly to the political situation), the central bank might deem it prudent and fit to try to narrow the salary gap between different tiers of employees of banks and other financial institutions. Banks and financial institutions need to do more to encourage real industrialisation of the country so that people who seek jobs overseas can securely stay home and feel confident that they will not be unemployed.

The topless young lady and others protestors of Occupy Wall Street were seeking changes in the attitude of banks, financial institutions and big businesses in the US as indeed other protestors in Europe were aiming at the same goal. The responsible authorities may or may not heed the message of the Occupy Wall Street movement, but countries like ours need to take heed of the message before businesses grow too big and reach such a position as to prevent positive action from being taken by the government.

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