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Book Review: Robert Reich “Beyond Outrage”

February 13, 2016

Another must read, in showing what’s going on in economics, and from around the time of Obama’s relection.

Some notes:

•(He was, surprisingly connected to Robert Bork, one of the most egregious dog whistlers, at least in Slouching toward Gomorrah. I wonder how he came to be so politically opposite then).

•Answers “risktaking” argument and “big govt. draws big money”.

•Makes it sound like all “conservatives” are against corporate control, when many support it based on their “meritocracy” ideal.

•Great treatment of William Graham Sumner and Social Darwinism

•(Says Reagan wasn’t a true regressive, and pins GOP regressiveness mainly on Gingrich)

•Mentions Democrats being “timid” in defending strong government as allowing conservative Social Darwinism to take hold

•Public vs private morality (“What Americans do in their own bedroom is their own business. What corporate executives and Wall St. Financiers do in boardrooms and executive suites affects all of us”)

In “What [we] Need to Do”:

•We should not be in an ideological bubble where everyone agrees and we are not challenged. (Says progressives often fall into this, which would be another explanation of conservative rhetoric going unchallenged for so long).

•In one illustration, he has “TAX the wealthy; financial transactions, ~and~ CUT corporate welfare; the military, then INVEST in schools, higher ed, early childhood ed, roads, bridges, parks, the environment, public health, health care, our future.
He says “use Medicare to control soaring health-care costs”, and “fight for Medicare for all”, and from there to use the added revenues and budget savings to invest in public goods like education and infrastructure, and also to regulate banks, including capping their size, and to get big money out of politics.

He specifies a 70% tax on the rich, including 2% surtax on top .5%. (Says it’s currently 17%, which is less than most of the middle class).

I can understand people opposing most of their earnings being taken like that. (And we can see why they would so strongly deflect the focus to “undeserving poor” as getting everything). Though it seems there is nothing else that can be done, short of doing nothing, and allowing them to recreate a true plutocratic oligarchy of virtual slavery, because “the market” (i.e. unbridled nature) determined it. (And then, it proves all the people were lazy, and those with the most “character” naturally got their rightful rule).

He didn’t seem to address their recourse of abandoning the market and taking the money (and jobs) elsewhere. I guess the answer to that is the “Corporate Pledge of Allegiance”. “If the Supreme court and most regressives insist big American corporations are people that deserve to be treated as American citizens, and be given tax breaks and special advantages to create jobs here, we should expect those corporations to show some loyalty to this country.” (And conservatives are always questioning people’s “loyalty” to the country, but these corporations they defend never seem to enter into the equation for that. They’re screwing the country because of unAmerican leadership taxing and regulating them too much). So why not have them take a pledge of allegiance, that’s voluntary and not a legal requirement. They could say in their advertisements “we pledge allegiance to the United States”, and American consumers would be free to boycott those that don’t take the pledge.

The model pledge he gives includes creating more jobs in the US than outside of it, no more than 20% of total labor costs be outsource, and giving better severance packages if they lay off when they’re profitable; keeping a lid on executive pay so no executive is paid more than 50 times the median pay of American workers, including salary, bonuses, health and pension benefits, deferred salary, stock options, and any other form of compensation. They would also pledge to pay at least 30% tax, and not to use money to influence elections.

“This isn’t too much to ask, is it?” It would let us “know which corporations that enjoy the benefits of American citizenship act like American citizens”.
He concludes on a great speech by President Obama in Osawatomie, Kansas in 2011, where Teddy Roosevelt gave his “New Nationalism” speech 101 years earlier, which he believes “will be remembered as the most important economic speech of his or any modern presidency in terms of connecting the dots, laying out the reasons behind our economic and political crises, and asserting a willingness to take on the powerful and the privileged who have gamed the system to their advantage.”

(You can see the entire transcript here: https://www.whitehouse.gov/the-press-office/2011/12/06/remarks-president-economy-osawatomie-kansas )

Today, we’re still home to the world’s most productive workers. We’re still home to the world’s most innovative companies. But for most Americans, the basic bargain that made this country great has eroded. Long before the recession hit, hard work stopped paying off for too many people. Fewer and fewer of the folks who contributed to the success of our economy actually benefited from that success. Those at the very top grew wealthier from their incomes and their investments — wealthier than ever before. But everybody else struggled with costs that were growing and paychecks that weren’t — and too many families found themselves racking up more and more debt just to keep up.

Now, for many years, credit cards and home equity loans papered over this harsh reality. But in 2008, the house of cards collapsed. We all know the story by now: Mortgages sold to people who couldn’t afford them, or even sometimes understand them. Banks and investors allowed to keep packaging the risk and selling it off. Huge bets — and huge bonuses — made with other people’s money on the line. Regulators who were supposed to warn us about the dangers of all this, but looked the other way or didn’t have the authority to look at all.

It was wrong. It combined the breathtaking greed of a few with irresponsibility all across the system. And it plunged our economy and the world into a crisis from which we’re still fighting to recover. It claimed the jobs and the homes and the basic security of millions of people — innocent, hardworking Americans who had met their responsibilities but were still left holding the bag.

And ever since, there’s been a raging debate over the best way to restore growth and prosperity, restore balance, restore fairness. Throughout the country, it’s sparked protests and political movements — from the tea party to the people who’ve been occupying the streets of New York and other cities. It’s left Washington in a near-constant state of gridlock. It’s been the topic of heated and sometimes colorful discussion among the men and women running for president. (Laughter.)

But, Osawatomie, this is not just another political debate. This is the defining issue of our time. This is a make-or-break moment for the middle class, and for all those who are fighting to get into the middle class. Because what’s at stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home, secure their retirement.

Now, in the midst of this debate, there are some who seem to be suffering from a kind of collective amnesia. After all that’s happened, after the worst economic crisis, the worst financial crisis since the Great Depression, they want to return to the same practices that got us into this mess. In fact, they want to go back to the same policies that stacked the deck against middle-class Americans for way too many years. And their philosophy is simple: We are better off when everybody is left to fend for themselves and play by their own rules.

I am here to say they are wrong. (Applause.) I’m here in Kansas to reaffirm my deep conviction that we’re greater together than we are on our own. I believe that this country succeeds when everyone gets a fair shot, when everyone does their fair share, when everyone plays by the same rules. (Applause.) These aren’t Democratic values or Republican values. These aren’t 1 percent values or 99 percent values. They’re American values. And we have to reclaim them.

You see, this isn’t the first time America has faced this choice. At the turn of the last century, when a nation of farmers was transitioning to become the world’s industrial giant, we had to decide: Would we settle for a country where most of the new railroads and factories were being controlled by a few giant monopolies that kept prices high and wages low? Would we allow our citizens and even our children to work ungodly hours in conditions that were unsafe and unsanitary? Would we restrict education to the privileged few? Because there were people who thought massive inequality and exploitation of people was just the price you pay for progress.

Theodore Roosevelt disagreed. He was the Republican son of a wealthy family. He praised what the titans of industry had done to create jobs and grow the economy. He believed then what we know is true today, that the free market is the greatest force for economic progress in human history. It’s led to a prosperity and a standard of living unmatched by the rest of the world.

But Roosevelt also knew that the free market has never been a free license to take whatever you can from whomever you can. (Applause.) He understood the free market only works when there are rules of the road that ensure competition is fair and open and honest. And so he busted up monopolies, forcing those companies to compete for consumers with better services and better prices. And today, they still must. He fought to make sure businesses couldn’t profit by exploiting children or selling food or medicine that wasn’t safe. And today, they still can’t.
And in 1910, Teddy Roosevelt came here to Osawatomie and he laid out his vision for what he called a New Nationalism. “Our country,” he said, “…means nothing unless it means the triumph of a real democracy…of an economic system under which each man shall be guaranteed the opportunity to show the best that there is in him.” (Applause.)

Now, for this, Roosevelt was called a radical. He was called a socialist — (laughter) — even a communist. But today, we are a richer nation and a stronger democracy because of what he fought for in his last campaign: an eight-hour work day and a minimum wage for women — (applause) — insurance for the unemployed and for the elderly, and those with disabilities; political reform and a progressive income tax. (Applause.)

Today, over 100 years later, our economy has gone through another transformation. Over the last few decades, huge advances in technology have allowed businesses to do more with less, and it’s made it easier for them to set up shop and hire workers anywhere they want in the world. And many of you know firsthand the painful disruptions this has caused for a lot of Americans.

Factories where people thought they would retire suddenly picked up and went overseas, where workers were cheaper. Steel mills that needed 100 — or 1,000 employees are now able to do the same work with 100 employees, so layoffs too often became permanent, not just a temporary part of the business cycle. And these changes didn’t just affect blue-collar workers. If you were a bank teller or a phone operator or a travel agent, you saw many in your profession replaced by ATMs and the Internet.

Today, even higher-skilled jobs, like accountants and middle management can be outsourced to countries like China or India. And if you’re somebody whose job can be done cheaper by a computer or someone in another country, you don’t have a lot of leverage with your employer when it comes to asking for better wages or better benefits, especially since fewer Americans today are part of a union.

Now, just as there was in Teddy Roosevelt’s time, there is a certain crowd in Washington who, for the last few decades, have said, let’s respond to this economic challenge with the same old tune. “The market will take care of everything,” they tell us. If we just cut more regulations and cut more taxes — especially for the wealthy — our economy will grow stronger. Sure, they say, there will be winners and losers. But if the winners do really well, then jobs and prosperity will eventually trickle down to everybody else. And, they argue, even if prosperity doesn’t trickle down, well, that’s the price of liberty.

Now, it’s a simple theory. And we have to admit, it’s one that speaks to our rugged individualism and our healthy skepticism of too much government. That’s in America’s DNA. And that theory fits well on a bumper sticker. (Laughter.) But here’s the problem: It doesn’t work. It has never worked. (Applause.) It didn’t work when it was tried in the decade before the Great Depression. It’s not what led to the incredible postwar booms of the ‘50s and ‘60s. And it didn’t work when we tried it during the last decade. (Applause.) I mean, understand, it’s not as if we haven’t tried this theory.

Remember in those years, in 2001 and 2003, Congress passed two of the most expensive tax cuts for the wealthy in history. And what did it get us? The slowest job growth in half a century. Massive deficits that have made it much harder to pay for the investments that built this country and provided the basic security that helped millions of Americans reach and stay in the middle class — things like education and infrastructure, science and technology, Medicare and Social Security.

Remember that in those same years, thanks to some of the same folks who are now running Congress, we had weak regulation, we had little oversight, and what did it get us? Insurance companies that jacked up people’s premiums with impunity and denied care to patients who were sick, mortgage lenders that tricked families into buying homes they couldn’t afford, a financial sector where irresponsibility and lack of basic oversight nearly destroyed our entire economy.

We simply cannot return to this brand of “you’re on your own” economics if we’re serious about rebuilding the middle class in this country. (Applause.) We know that it doesn’t result in a strong economy. It results in an economy that invests too little in its people and in its future. We know it doesn’t result in a prosperity that trickles down. It results in a prosperity that’s enjoyed by fewer and fewer of our citizens.

Look at the statistics. In the last few decades, the average income of the top 1 percent has gone up by more than 250 percent to $1.2 million per year. I’m not talking about millionaires, people who have a million dollars. I’m saying people who make a million dollars every single year. For the top one hundredth of 1 percent, the average income is now $27 million per year. The typical CEO who used to earn about 30 times more than his or her worker now earns 110 times more. And yet, over the last decade the incomes of most Americans have actually fallen by about 6 percent.

Now, this kind of inequality — a level that we haven’t seen since the Great Depression — hurts us all. When middle-class families can no longer afford to buy the goods and services that businesses are selling, when people are slipping out of the middle class, it drags down the entire economy from top to bottom. America was built on the idea of broad-based prosperity, of strong consumers all across the country. That’s why a CEO like Henry Ford made it his mission to pay his workers enough so that they could buy the cars he made. It’s also why a recent study showed that countries with less inequality tend to have stronger and steadier economic growth over the long run.

Inequality also distorts our democracy. It gives an outsized voice to the few who can afford high-priced lobbyists and unlimited campaign contributions, and it runs the risk of selling out our democracy to the highest bidder. (Applause.) It leaves everyone else rightly suspicious that the system in Washington is rigged against them, that our elected representatives aren’t looking out for the interests of most Americans.

But there’s an even more fundamental issue at stake. This kind of gaping inequality gives lie to the promise that’s at the very heart of America: that this is a place where you can make it if you try. We tell people — we tell our kids — that in this country, even if you’re born with nothing, work hard and you can get into the middle class. We tell them that your children will have a chance to do even better than you do. That’s why immigrants from around the world historically have flocked to our shores.

And yet, over the last few decades, the rungs on the ladder of opportunity have grown farther and farther apart, and the middle class has shrunk. You know, a few years after World War II, a child who was born into poverty had a slightly better than 50-50 chance of becoming middle class as an adult. By 1980, that chance had fallen to around 40 percent. And if the trend of rising inequality over the last few decades continues, it’s estimated that a child born today will only have a one-in-three chance of making it to the middle class — 33 percent.

It’s heartbreaking enough that there are millions of working families in this country who are now forced to take their children to food banks for a decent meal. But the idea that those children might not have a chance to climb out of that situation and back into the middle class, no matter how hard they work? That’s inexcusable. It is wrong. (Applause.) It flies in the face of everything that we stand for. (Applause.)

Now, fortunately, that’s not a future that we have to accept, because there’s another view about how we build a strong middle class in this country — a view that’s truer to our history, a vision that’s been embraced in the past by people of both parties for more than 200 years.

It’s not a view that we should somehow turn back technology or put up walls around America. It’s not a view that says we should punish profit or success or pretend that government knows how to fix all of society’s problems. It is a view that says in America we are greater together — when everyone engages in fair play and everybody gets a fair shot and everybody does their fair share. (Applause.)

So what does that mean for restoring middle-class security in today’s economy? Well, it starts by making sure that everyone in America gets a fair shot at success. The truth is we’ll never be able to compete with other countries when it comes to who’s best at letting their businesses pay the lowest wages, who’s best at busting unions, who’s best at letting companies pollute as much as they want. That’s a race to the bottom that we can’t win, and we shouldn’t want to win that race. (Applause.) Those countries don’t have a strong middle class. They don’t have our standard of living.

The fact is this crisis has left a huge deficit of trust between Main Street and Wall Street. And major banks that were rescued by the taxpayers have an obligation to go the extra mile in helping to close that deficit of trust. At minimum, they should be remedying past mortgage abuses that led to the financial crisis. They should be working to keep responsible homeowners in their home. We’re going to keep pushing them to provide more time for unemployed homeowners to look for work without having to worry about immediately losing their house.

In his annotations, he largely agrees, of course, though wishing “he didnt lump the Tea Party in with the Occupiers. The former hates government; the latter focuses blame on Wall street and corporate greed, just where the president did a moment ago”. He also says he should have been “stronger” on the “they” who are suffering “collective amnesia”, which include many of the privileged and powerful who have gained enormous wealth by using their political muscle. “In other words, it’s not simply or even mainly amnesia. It’s clear and concerted strategy, and it continues to pay off for them while imposing significant risk on the rest of the economy”.
He praises him for using the term “wrong” to describe Wall steeet’s antics and the failure of regulators to stop what was going on, and that “This is the first time the president—any president—has publicly and unequivocably emphasized this grotesque trend”.

“Here finally, was the Barack Obama many of us thought we had elected in 2008. One hopes this message will be taken to heart by Americans, and those whome we elect to the highest offices in the land will reverse the growing inwquities and game-rigging pratices now undermining the American economy and American democracy.
But they cannot and will not do this on their own. We must make them”.

This was four years ago, and I imagine he probably believes Bernie Sanders is the best shot (you can see him praise him here:
“Robert Reich: Bernie Sanders Tells the Truth” http://www.alternet.org/economy/robert-reich-bernie-sanders-tells-truth ).

The big news these days is how both Sanders and Trump are actually winning in the polls. It shows people on both sides are really fed up with the establishment and the way things always go.

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5 Comments
  1. Lopez’s take on Reich and his video on economic ineqiity:

    Robert Reich breaks it down: the core question is whether government and the economy works for “the few” or “the many.”

    Still, race remains missing from his story. Are “the few” the rich, as he says? Of course! But reactionary politicians and their billionaire backers have convinced a majority of whites that instead “the few” are the minorities–the undeserving welfare recipients, the dangerous criminals, the illegal aliens.
    We will not again pull government and the marketplace back onto the side of “the many” until we confront and defeat dog whistle politics, creating a new American majority FOR each other rather than fearful of each other.

  2. House flippers triggered the US housing market crash, not poor subprime borrowers
    https://qz.com/1064061/house-flippers-triggered-the-us-housing-market-crash-not-poor-subprime-borrowers-a-new-study-shows/

    I just think of all those moralizing lectures on “responsibility” and good decisions to those who got screwed the most!

    Related, and even more connected to these past few weeks’ news:

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