Occupy Wall Street is Wrong about Capitalism

MISLEADING CLAIM: Capitalism is bad because all of these people die every year from poverty, vacant homes go unfilled while homeless are on the street, people starve while food is stockpiled, and households are submerged in debt.

REALITY: This bit of propaganda was posted by Occupy Wall St. As you can see, they’ve attributed annual deaths-by-capitalism to THREE TIMES the number of Jewish people killed in the Holocaust. All of these “statistics” are sourced according to the original post. Of course, their claims are “accurate” to the degree that they’re reported, but it’s easy to see how they’re misleading if you care to double check. Let’s take a closer look.

VACANT HOMES: This claim is patently false. It is sourced from Amnesty International who is reporting CNBC information retrieved from the US Census. What does the Census say?

For starters, here’s how they define a “vacant” home, per the question on the actual Census :

1. For rent
2. Rented, not occupied
3. For sale only
4. Sold, not occupied
5. For seasonal, recreational, or occasional use
6. For migrant workers
7. Other vacant

As you can see, only ONE of those options actually means vacant.  There are 11% of housing units considered “vacant” as cited by the meme, but at the same time 3.5% of housing units are vacant for reason #5. Per the Census, “Most of the states with the highest gross vacancy rates also had the highest proportions of vacant units classified for seasonal, recreational, and occasional use”. Someone still owns this property. It is not abandoned.

STARVATION: They’ve asserted global food production is 1.18 times that of the population. How did they reach this conclusion? FAO reports on global food production in metric tons and they compared it to the global population (b). When you do the math that way, they’re not wrong, but the story isn’t over.

When food is produced it is not used solely for consumption. Livestock needs to be fed, corn is used a biofuel, and sugar can be used for many applications. Agricultural production is a lot different than how much food is actually available for consumption.

So is the world starving? There has obviously always been hunger in the world, but it is currently at record low levels. As of May 2015, the number of hungry people has dropped to 785 million – a decline of more than 200 million since 1992.

In developing regions, undernourishment has declined to 12.9% – down from 23.3% a quarter of a century ago. A majority of FAO-monitored countries – 72 out of 129 – have achieved their “Millennium Development Goal” target of halving the prevalence of undernourishment by 2015.

What challenges efforts to reduce world hunger? Again, from the UN, “political instability and civil strife…crisis environments characterized by weak governance and acute vulnerability to disease”.

What is the driving force behind reductions in world hunger? Agricultural productivity growth and developments in the global economy, or not tearing down capitalism. In fact, the UN and OECD lay out multiple different hunger reducing strategies that would align with a market approach – free trade, economic growth, investment, and innovation.

To be clear, the UN is where this claim originated and they’re saying PRODUCE MORE food – not allocate it equally as implied by this meme.

DEBT: Here we have another accurate statistic, but it is equally incomplete and meaningless. In order to interpret this statistic, you need to understand what they consider “debt”, how they measure it, and what it means. First, know that anyone can have debt for any number of reasons and it’s not necessarily a bad thing.

I could earn $70K per year and have $2K in outstanding credit card debt. I have debt on my books, but it’s not likely I will default. More importantly, anyone with a mortgage is considered “in debt”. Are we to believe that they are ipso facto going to default because capitalism has put them in a precarious financial position?

According to the New York Fed, 70% of ALL household debt is a mortgage. Houses are usually the largest asset on your typical household books. It stands to reason it would also be a major debt as well. Again, there’s no indication this debt will NOT be repaid, which is when debt becomes a problem.

In the same Fed report, less than 3.4% of mortgages are 90-days delinquent and that has been consistently improving since 2008/2009 recession. For credit card debt, the delinquency rate is only 10%. These are hardly alarming levels of debt delinquency considering 2009 saw less than 10% mortgage delinquencies.

Their “1 in 7 pursued by debt collectors” claim is also accurate. About 14% of consumers have outstanding third party collections . It’s important to know a fact about third party collectors: even if you are paying back your debt, you are still paying to a “third party collector” who then takes a commission of your payments. The recent boom in debt collection remains as fall out from the 2008/2009 recession, not a sudden undertaking of bad debt.

Nonetheless, as you can see, most debt delinquencies have been a result of student loans. Guess what? The federal government holds most of those – not a greedy capitalist financier.

GLOBAL DEATHS: Countries with extreme poverty conditions leading to massive annual deaths are anything but capitalist. They’re mostly located in Africa and the Middle East where tribal war, tyranny, and oppression reign.

Yes, people die every day. However, it seriously undermines the REAL cause of their death to simply dismiss it as “capitalism”. Their statistic is accurate, but their claim is far from it. There are obviously numerous “poverty related deaths” – war, starvation, disease, home destruction, oppressive government, or any other plague of the third world. None of these are systemic within a free market society. I challenge you to find me an economist who calls one of these countries “capitalist”, especially in Africa and the Middle East.

The streets of capitalist countries are not lined with dead poor people as this meme seems to imply.

CONCLUSION: This is a sensationalist meme intended to distort statistical categories in order to make a vague point about “capitalism”. By further investigating these claims and thinking beyond stage one, we can easily find the faults in their logic and reasoning.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s