The
spreading Occupy Wall Street movement, despite a vague worldview and agenda,
properly senses that something is dreadfully wrong in America. The protesters
vent their anger at the big financial institutions in New York’s money district
(as well as other big cities) for the housing and financial bubble, the
resulting Great Recession, the virtual nonrecovery, the threat of a second recession,
and the long-term unemployment — which averages over 9 percent but hits certain
groups and areas far more severely than others.

The protest
is understandable, even laudable, but there’s something the protesters need to
know:

Wall Street couldn’t have done it
alone. The
protesters’ wrath should also be directed at the national government and its
central bank, the Federal Reserve System, because it took the government or the
Fed (or both) to

• create barriers to entry, for
  the purpose of sheltering existing banks from competition and radical
  innovation

• then regulate for the benefit
  of the privileged industry

• issue artificially cheap,
  economy-distorting credit in order to, among other things, give banks
  incentives to make shaky but profitable mortgage loans (and also to grease
  the war machine through deficit spending)

• make it lucrative for banks —
  and their bonus-collecting executives — to bundle thousands of shaky
  mortgages into securities and other derivatives, knowing that a
  government-licensed rating cartel would score them AAA and that
  government-sponsored enterprises Fannie Mae and Freddie Mac and other
  companies would buy them

• insure deposits so that
  individual depositors had no need to worry about the risks their banks
  might be taking

• inflate an unsustainable
  housing bubble by the foregoing and other methods, enticing people to
  foolishly overinvest in real estate

• work closely with lending
  companies to establish a variety of programs designed to lure people with
  few resources or bad credit into buying houses they can’t afford

• attract workers to the
  home-construction bubble, setting them up for long-term unemployment when
  the bubble inevitably burst

• implicitly guarantee big
  financial companies and their creditors that if they got into trouble they
  would be rescued

• compel the
  taxpayers to bail out those companies and creditors when the roof finally
  did fall in.

No bank or
group of banks could do these things on its own in a freed market. It requires
a government–Wall Street partnership — the corporate state — to create such
misery and exploitation. The corporate state is nothing new in American
history. Politicians across the spectrum have long instituted policies that
benefit big banks and big business generally, and they have dressed those
policies either in free-market (Republicans) or progressive (Democrats)
rhetoric to lull the people into acquiescence. The result is an overgrown
government that bestows privileges on the well-connected and then regulates on
their behalf. The rest of the population pays and suffers.

Many
participating in Occupy Wall Street sense this, but they need sound economic
theory and economic history to see fully who the adversary is. Wall Street couldn’t have done it alone.
Greed without political power is boorish. Greed with political power is dangerous.

So
demonstrators, you are right. Something is dreadfully wrong. But your list of
culprits is far from complete. So go ahead and protest outside Goldman Sachs
and Bank of America. But also spend time (as a few already have) outside the
White House, the Fed, the Treasury, and the Capitol Building. Together they are
responsible for our current economic woes. These are the entities that control
our fate and over which we have no real say. This is not how America was
supposed to be. It’s time for things to change.

The freed market — embodying individual
freedom and autonomy, voluntary social cooperation, and peace — is the
alternative to the corporate welfare-warfare system you properly despise. All
you have to do is discover it.

* Sheldon Richman is senior fellow
at The Future of Freedom Foundation (www.fff.org) and editor of The Freeman
magazine.