PROJECT M
 
PROJECT M
Robert Reich

Robert Reich: Inequality for all

Political economist and commentator Robert B. Reich is out to expose the heart of our economic problems. For over 30 years inequality has been worsening

© Getty Images

Robert Reich: Inequality for all

Political economist and commentator Robert B. Reich is out to expose the heart of our economic problems. For over 30 years inequality has been worsening


PROJECT M

The book Aftershock and the film Inequality for All discuss widening inequality in the United States. How dramatic is the situation?

Robert Reich

Well, 95% of all the economic gains since the start of the recovery in 2009 have gone to the top 1%. The rest of America has shared the remaining 5%. The medium household income continues to drop, adjusted for inflation. This means even families with two wage earners are doing worse than they did before the recession. In other words, we haven’t seen this degree of inequality in a century.

PROJECT M

Going back to before the Great Crash of 1929?

Robert Reich

Actually, if you look at wealth as well as income, we haven’t seen something like that since the days of the robber barons in the 1890s.

PROJECT M

What are the mechanisms whereby society becomes more equal?

Robert Reich

The times in which the United States moved towards equality and more widespread prosperity were periods in which higher quality education was more widely accessible, when the nation made substantial investments in infrastructure, the top tax rate was much higher, financial regulations were stricter, the right to unionize was observed and companies were required to bargain in good faith with unions. And when money did not reach an overwhelming influence on the political process. Reforms between 1901 and 1916, 1933 and 1940, and also 1963 and 1969 all contributed towards widening prosperity in these ways. In other periods – the 1890s, 1920s and more recent years – the pendulum swung in the opposite direction.

PROJECT M

So what makes it swing back?

Robert Reich

Well, when the moneyed interests get a greater foothold in politics and begin to entrench themselves, we reach a point where capitalism goes so far off track that the public demands changes. In this country those changes have primarily been in the direction of reform rather than major political upheavals towards fascism, socialism or communism. Our preference, deeply ingrained, is to save capitalism from itself, from its own excesses.

PROJECT M

Are you saying that the democratic system has been corrupted by the rich?

Robert Reich

I am stating it unequivocally! You have never seen this amount of money in power, at least in living memory. You have to go back to the 1890s – when the lackeys of the robber barons would literally put sacks of money on the desks of legislators – to find anything similar. The Supreme Court in 2010, in a shameful decision called “Citizens United against the Federal Election Commission,” opened the floodgates to money and politics. It is now literally possible to purchase a president or a governor.

PROJECT M

America is not the only country where inequality is growing. Australia, Canada, the United Kingdom and others are experiencing growing inequality.

Robert Reich

The causes are similar. Among rich countries, the United States has witnessed the greatest lurch towards inequality, though others are close behind. The underlying dynamic has to do with globalization and technological displacement of workers. But other nations have developed political and institutional bulwarks against as much inequality as the United States has. Now, I am not suggesting the US move towards European-style social democracies. In my book and movie, I make a more modest proposal: that the US simply moves back to the society we had in the 1950s to early 1970s, when we had institutions and laws that dramatically reduced inequality and spread prosperity more widely.

PROJECT M

After the Great Crash of 1929, the Glass-Steagall Act was introduced. This is credited with ensuring stability in the financial system for decades, so it seems surprising that there is little agitation to have it re-introduced.

Robert Reich

As I speak to different community groups, labor groups, Democratic groups and occasionally even Republican groups, all I have to do is just mention Glass-Steagall and I get a round of applause. This is quite remarkable as, five or six years ago, no one even knew what Glass-Steagall was. The Clinton administration in 1999 made the mistake of joining Republicans and repealing Glass-Steagall. To ensure Wall Street won’t melt down once again, we need two things: not just to resurrect Glass-Steagall, but also to cap the size of the biggest banks. Unless we do both, we risk a repeat of 2008.

PROJECT M

Your net worth puts you in the top 1%. Does anyone question your credentials in speaking for the 99%?

Robert Reich

If you look back in US history, some of our greatest reformers have been wealthy: Franklin D. Roosevelt, Teddy Roosevelt, John F. Kennedy – all were from exceedingly wealthy families. Warren Buffett is in favor of much higher income tax on the wealthy. Bill Gates Sr. has led a charge for closing tax loopholes for the wealthy. There is no inconsistency in being in the top 1% and at the same time arguing that the organization of our economy is out of whack.

PROJECT M

In the book The Spirit Level, there is a line that says, “If you believe in the American dream, move to Denmark” – because upward mobility is no longer a feature of US society.

Robert Reich

Well, mobility has slowed considerably. Some 42% of children born into poverty in the United States will remain in poverty throughout their lives. This is a higher percentage than in any other rich nation, higher even than the UK with its history of class consciousness. Widening inequality would be far less of a problem if we had ease of upward mobility.

PROJECT M

Even though many US citizens have become poorer, they still cling tightly to the American Dream. That seems a triumph of fantasy over reality and is difficult to understand.

Robert Reich

It is quite simple actually. When Americans are afraid and frustrated, when they are anxious about their economic status even though they are working harder than ever, then they are vulnerable to demagogues on the right or left who seek scapegoats. Some of the scapegoating is directed at government, some at the rich and big corporations, some at immigrants and the poor, some at labor unions. In reality, the system has gone awry. The wealthy would do better with a smaller share of a rapidly growing economy than they are doing now with the large share of an economy barely growing. The reason why the economy has stopped is that the vast middle class doesn’t have enough purchasing power to keep it growing. And the reason it doesn’t have the purchasing power is that almost all economic gains are going to the top.

PROJECT M

Do you think equality is recoverable in the United States?

Robert Reich

We have done it three times over the last century. It is the matter of political will. The so called free market doesn’t exist in the state of nature. The market is based on rules, and those rules emerge from legislators, courts and agencies. There is nothing that dictates the inevitability of widening inequality. If we wanted to, if our political system was not engulfed in money, if Americans understood the problem we face, we would change those rules towards more widespread prosperity. We have done it before and we will do it again. The alternative is an economy that no longer functions and a democracy incapable of reflecting the public will.

Comments