[Congressional Record (Bound Edition), Volume 157 (2011), Part 13]
[Senate]
[Pages 18399-18400]
[From the U.S. Government Publishing Office, www.gpo.gov]




                          WALL STREET PROTESTS

  Mr. LEE. Mr. President, I ask unanimous consent to have printed in 
the Record an article written by Mallory Factor and published in Forbes 
magazine.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

              Occupy Wall Street . . . Next Stop, Athens?

       In the past few weeks Americans have watched with interest, 
     bemusement and anger as protests and sit-ins on Wall Street 
     have sparked similar demonstrations around the country. With 
     vague goals of combating corporate greed and calls to rectify 
     all manner of social and economic inequality, this movement 
     seems, to the press at least, to capture a mood of deep 
     discontent among the American people.
       But if you think a thousand protesters on Wall Street is a 
     trouble sign for our nation, wait until you see the civil 
     unrest that follows the reforms and cuts to government 
     programs needed to bring our national debt under control. 
     Just look at Greece, where government is being reformed, 
     drastic cuts are being made--and the society is unraveling. 
     In Greece a series of severe austerity measures has been 
     imposed as conditions for

[[Page 18400]]

     recent bailouts by the International Monetary Fund and the 
     other members of the single European currency, the euro. Yet 
     the economy continues to spiral downward.
       And with each new round of reforms in Greece, misery and 
     unrest are on the rise. Strikes and angry street protests are 
     a daily occurrence, as unions fight decreases in pay and 
     benefits for their workers, students protest the lack of 
     opportunity and ordinary citizens resist reforms and tax 
     increases. The confrontation with authorities is impeding 
     business and destroying tourism, deepening the crisis 
     further.
       Some of that struggle is for naught. The Greek government 
     couldn't reduce austerity measures if it wanted to. Fiscal 
     policy is now out of its hands and likely to remain so for 
     decades, perhaps generations.
       And while most Greeks agree the bloated state must be 
     streamlined, they're stiffening their resistance to reform. 
     That's why many in the euro zone believe Greece must default 
     in order to rebuild a more efficient government.
       America isn't in that predicament--yet. But there are 
     cautionary lessons to be lifted from the outraged streets of 
     Athens. As the Greek example shows, government largesse is 
     easy to expand but difficult to cut back without inflaming 
     people.
       For years our politicians have framed increases to 
     government benefits as compassionate and obligatory. Now all 
     that overspending must be pared back and government programs 
     reformed to curb the federal deficit. But each round of 
     needed cuts and reforms will likely cause misery--in an 
     amount substantially greater than the happiness generated by 
     spending increases.
       Behavioral economics, which uses social and psychological 
     factors to predict a population's decision-making behavior, 
     captures this paradox in two fundamental principles.
       First, the principle of ``loss aversion'' explains that 
     people hate to lose something more than they value receiving 
     something. So, even if many Americans don't value existing 
     government programs and spending very highly, they will 
     likely be very unhappy about the loss of those same goods and 
     services.
       Second, even if you streamline our government and make 
     programs more efficient, the ``endowment effect'' predicts 
     that people will still oppose changes to the benefits they 
     receive. This is because people tend to value the goods and 
     services they have more than they do equivalent replacement 
     goods and services. The endowment effect makes it very 
     difficult to exchange existing benefits for new ones and thus 
     to ``reform'' government programs.
       Whether we cut spending and make reforms now or later, 
     course correction will be difficult and even potentially 
     dangerous to our nation's stability. Just look at the 
     resistance of public employees in Wisconsin, Indiana and 
     elsewhere to relatively minor cuts to see how people will 
     contest vigorously any decreases to their benefits and 
     programs.
       Behavioral economics teaches us that any time we make 
     changes and reduce government benefits and programs, we can 
     expect people to be very upset about those decisions--and 
     likely resist them. Still, we need significant reforms and 
     deep cuts to put the U.S. on track toward a balanced budget.
       Paring back government will undoubtedly cause misery and 
     social dislocation. However, ``death'' by a thousand small 
     cuts will intensify civil unrest and may produce 
     revolutionary fervor unlike anything we've seen in America in 
     our lifetime. Our nation will be better off by reforming our 
     system radically, in a single dramatic turn, rather than 
     piecemeal--or face something very like the furious streets of 
     Athens.

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