David Rohde

By David Rohde

The views expressed are his own.

Update: On Dec. 6th, Occupy protesters began a new tactic of rallying around homeowners trying to resist foreclosures in several cities. Read more here and here. The following column was published on Dec. 1st.

The Occupy movement is flirting with irrelevance. While press reports trumpet the movement’s introduction of the phrase “we are the 99 percent” into the political conversation, the group’s largest encampments have been razed. On Wednesday night, Los Angeles and Philadelphia joined New York, Oakland, Detroit and St. Louis in clearing out its protesters. Small demonstrations continue, but the movement now needs to turn catch-phrases into political change.

This week, Manhattan’s Zuccotti Park was a symbol of the movement’s potential dissolution. On Tuesday afternoon, a dozen Occupy Wall Street protesters held a quiet discussion in one corner of the park. In another, a lone office worker sat at a small, marble table and ate his lunch. Christmas lights glistened on trees that once sheltered protesters. Scores of police blocked anyone with a tent from entering the area.

Generating debate and media coverage are significant achievements, but Occupy’s real test is whether it can convince Reagan Democrats — the working class Americans who began voting Republican in the 1980s — to abandon the Gipper’s progeny.

Despite all the talk of the “99 percent,” the Occupy movement remains light years behind the Tea Party in terms of sparking political change. In a remarkably short period, the Tea Party translated intense media coverage of a small, fervent protest movement into real political power. The Tea Party and other factors shifted the Republican party dramatically to the right in 2010.

The question of 2012 is whether Occupy can do the same with the Democrats. Occupy’s lifeline is clear: unions. With their large memberships and deep political war chests, uniting with unions is Occupy’s best chance at producing the change it demands.

The power of unions was clear during this fall’s protests in New York. On a given day, Occupy protests generally attracted several hundred or thousand people, a hodgepodge of students, older liberal activists and the poor. The largest rallies, by far, occurred when organized labor joined in and produced crowds of 20,000 to 30,000.

In recent interviews, Occupy and union representatives praised one another and talked of a conversion of interests. Chris Policano, Public Affairs Director for the American Federation of State, County and Municipal Employees, the country’s largest public employees union and a top funder of Democratic causes, credited Occupy protesters with re-energizing — and potentially unifying — the left.

“Eighteen months ago, the right wingers were getting away with pitting $40,000-a-year folks against each other while protecting the ultra-wealthy,” Policano said in an email. “But Wisconsin and Ohio and Occupy have profoundly changed the narrative, and that’s a major accomplishment we will build upon.”

Yet while Republicans quickly embraced the Tea Party, President Obama and many Democrats have kept Occupy at arm’s length. The President’s caution will come back to haunt him. Whatever the movement’s political liabilities, it articulates the deep frustration of many middle class Americans.

In recent appearances, Obama has tried to tap into that sentiment. In a speech in Scranton, Pennsylvania Wednesday, the president used the term “fight” repeatedly and rhetorically asked of Republicans, “Are you willing to fight as hard for middle-class families as you do for those who are most fortunate?” But his language was tepid compared to that of Occupy activists.

The gap between Obama and the Occupy protesters is about more than rhetoric: it reflects the failure of a pragmatic and effective political movement to emerge from the fractious left. After initially faring well in public opinion polls this fall, the Occupy movement is losing support. A nationwide poll conducted from Nov. 10th to 13th by Public Policy Polling, a Raleigh, N.C. based Democratic polling firm, found that opposition to the group’s goals rose from 36% in October to 45% in November, while support dropped from 35% to 33%.

When asked whether they had a more positive view of the Tea Party or Occupy movements, 43% of those polled chose the Tea Party while 37% favored Occupy. A month ago, the results were roughly the opposite, with a slightly higher number supporting Occupy.

The firm said in its analysis of the results that many Americans still support Occupy on the issues, particularly rising economic inequality in the United States. But controversy over the movement’s tactics has reduced support.

“What the downturn in Occupy Wall Street’s image suggests is that voters are seeing the movement as more about the ‘Occupy’ than the ‘Wall Street,’” the firm said in a statement. “The controversy over the protests is starting to drown out the actual message.”

That dynamic played out last Monday night at the Baruch College campus of the City University of New York. Students bitterly complained after police forcibly ended their protest against proposed tuition hikes, unleashing billy clubs and arresting fifteen.

Using language reminiscent of pre-Reagan America, students defended the concept of a free public university, which CUNY was until the 1970s. Many of them had participated in Occupy Wall Street protests and been energized by it. Educational opportunity was slipping away from middle class Americans, they said. Money, not merit, now ruled the country.

“We see the money in our education,” said Denise Romero, a 19-year-old student who holds down two part-time jobs and an unpaid internship while taking classes full-time. “We see the money in our politics and we’re all against it.”

A few minutes later, a policeman standing nearby dismissed the student protesters and their cause. When a passerby asked him why they were protesting, he derisively said the students “don’t want to pay tuition.”

The Gipper’s hold on working class America remains strong. If the Occupy movement fails to reach out to unions and do a better job defining itself, its moment will pass.

Last Friday morning, a 24-year-old New Jersey woman told me why she joined Occupy Wall Street. Around her, balding activists in their 50s tried to rekindle 1960s-era protests. Young Marxists flew red Che Guevara flags. The young woman, though, was different. 

She commuted to the protests, she said, while holding down two part-time jobs. She lived at home and helped her schoolteacher mother, who also worked two jobs, support her jobless, 60-year-old father. She asked to be identified only by her middle name – Susan – because she feared her bosses would fire her for attending protests. She didn’t talk of revolution. She talked of correction.

“Like any great nation and country, there are also hitches in the plan,” she told me. “And things that need to be changed.”

Corporate America has gained the upper hand on the American middle class, she told me. A year after graduating from college, she was working as a part-time manager at two different retail chains in New Jersey. The companies use part-time managers, she said, so they don’t have to pay benefits.

“It’s their policy,” she said, “which is why I’m here.”

Beneath the online vitriol swirling between supporters and opponents of Occupy Wall Street  lies a central question: Does Wall Street help or hurt the American middle class?  A variety of forces are slowly gutting the middle class – and a paucity of values on Wall Street is one of them.

The problem is not every bank. It is a growing slice of the financial sector that has become a vast, computerized casino where staggering fortunes can be won or lost in minutes, with taxpayers left holding the bag.

Members of the middle class, of course, played as well. They bought houses they could not afford, dallied in day-trading and saved too little during an era of limitless credit.

“Finance had become the new American state religion,” University of Michigan Prof. Gerald Davis writes in his book “Managed by the Markets: How Finance Reshaped America.” “All the world was a stock market, and we were all merely day traders, buying and selling various species of “capital” and hoping for the big score.”

The middle class, though, is still waiting for its bailout.

As recently as twenty years ago, middle America saw the country’s financial system as its ally. For decades after World War II, a carefully regulated Wall Street – and the American financial industry as a whole – helped create a growing middle class, according to Yale University political scientist Jacob Hacker. A stable financial industry was a vital part of a vast economic boom, reliably providing home, car and college loans to average Americans, as well as capital to the companies that employed them. Not every banker was malevolent; nor was every corporation evil.

The transformation of Wall Street and America over the last thirty has been meticulously documented. The traditional, Jimmy Stewart notion of American banks and business, where companies built products, reputations and payrolls over time, has been eclipsed by a byzantine, non-transparent and insider-dominated financial industry.

The middle class – for me the 60 percent of American household that make $30,000 to $80,000 a year – have seen their median household incomes shrink in real dollars since the Great Recession ended, while Wall Street salaries have surged. A new study by the New York State Comptroller cited by The New York Times found that the average 2010 financial industry salary was $361,330 — five and a half times the $66,120 average salary of other New York City private sector workers. Thirty years ago, financial salaries were only twice as high as those of other professionals.

Suspicion of Wall Street is not limited to the dozens of large cities where small protests have emerged. When I visited Bowling Green, Kentucky last week to gauge how the American middle class was faring in one small city, local businessmen lamented the role of the financial industry in the demise of several local companies. Executives used easy credit to rapidly expand firms, companies over-extended over time and eventually collapsed.

The anger in Bowling Green and Lower Manhattan is about  excess: excessive risk, excessive ambition, excessive compensation. Companies should make profits, average Americans told me. Skilled executives should be rewarded. And businesses should be viewed as irreplaceable engines of economic growth.

Wall Street, though, should not be an all powerful force that pressures companies to live-and-die by their daily stock value. It should not assign inflated values to fledgling companies. And it should encourage, not deter, companies from developing, innovating and employing over the long-term. Most of all, the financial industry should be held accountable for its performance, like everyone else.

That core moral element – the sense that Wall Street is making money for nothing – is the financial industry’s gravest threat. Recent surveys conducted by Edelman public relations found that Americans’ trust in banks plummeted from 71 percent in 2008 to 25 percent in 2011, a dizzying decline of 46 percent. As this chart from the study shows, the public’s trust in the technology industry, meanwhile, remained high.

The response to Wall Street in Washington has been ideological, petulant and tedious. The left has declared all Wall Street suspect. The right has declared the government – and nothing but the government – evil. The Volcker rule announced this week is an imperfect, but positive step forward. As much as possible, average Americans should be shielded from high-risk trading.

In another era, middle class Americans might be less incensed by the vagaries of Wall Street. The shift of retirement savings, though, from pensions to 401(k) stock plans has hurled middle America into the markets. During the 1929 stock market crash, only 2.5% of Americans owned stocks. Today, when 401(k)s and other financial products are included, the number stands at roughly 50%.

As a result, an increasingly volatile American financial industry is helping and hurting average Americans to an unprecedented extent. The middle class is more entangled in Wall Street than ever before in U.S. history. And the American middle class is losing.

Photo: Men dressed in suits walk past members of the Occupy Wall Street movement as sleeping materials hang on a clothes line in Zuccotti Park near the financial district of New York October 13, 2011. Protesters with the Occupy Wall Street movement threatened on Thursday to block efforts to clean up the Lower Manhattan park where they set up camp nearly a month ago, raising concerns of a showdown with authorities.  REUTERS/Lucas Jackson