Robert Reich interview on Fresh Air: Blames Economy's Woes On Income Disparity

[mod mom]

September 29, 2010

Economist Robert Reich isn't surprised at the anemic economic recovery from the meltdown in 2008. His new book, Aftershock: The Next Economy and America's Future, argues that the economy isn't going to get moving again until we address a fundamental problem: the growing concentration of wealth and income among the richest Americans.

"I think that we have not fundamentally reformed Wall Street," he tells Fresh Air's Dave Davies. "We have not done what we needed to do. Derivatives are still relatively unregulated. There are big, big holes in that Wall Street financial reform act — holes big enough for Wall Street traders to drive their Ferraris through. We didn't bust up the big banks. ... We have not in any way helped the mortgage market. ... I think we're going to be left with a Wall Street that continues to grow more and more powerful and richer relative to the rest of the United States economy."

Reich says the last time income was so concentrated at the top was before the Great Depression, and he thinks that's no accident. Until the fruits of the economy are more broadly shared, he says, the middle class will lack the buying power to restart America's economic engine.



" can't go deeper and deeper into debt. They can't work longer hours. They've exhausted all of their coping mechanisms," he says. "And people at the top are taking home so much that they are almost inevitably going to speculate in stocks or commodities or whatever the speculative vehicles are going to be. ... Unless we understand the relationship between the extraordinary concentration of income and wealth we have this in country and the failure of the economy to rebound, we are going to be destined for many, many years of high unemployment, anemic job recoveries and then periods of booms and busts that may even dwarf what we just had."

(Robert Reich is currently the Chancellor's Professor of Public Policy at the University of California, Berkeley.)

http://www.npr.org/templates/story/story.php?storyId=130189031

Hat tip to Dover who posted this in the economy forum where it probably won't get much notice. Excellent interview. Worth listening to and spreading on FB (where some of your right leaning friends might learn something. ;) !

[white cloud]

1. K & R

Thanks

[exboyfil]

2. Name one manufacturing or even Intellectual Property Service

entrepreneur on Obama's economic team. Even the Secretary of Commerce is a lawyer and life long politician. The Secretary of Agriculture is a lawyer and nearly life long politician. Except for Wall Street types everyone is an Ivory Tower intellectual. Has anyone ever run a business that needs to meet payroll, deal with a complex tax and regulatory code, deal with unions, have to meet the demands of customers, try to obtain financing for a business, and actually make something besides words (Chu is the exception).

More to the point has anyone on the team ever started a business from scratch and built it into something. Those are the types of businesses we need in this country to employ people. Would someone with that experience be useful on an economic team running a country whose greatest problem is the lack of businesses that generate wealth that can employ people?

Looking for suggestions?? Look through the economic team and tell me we have any sort of diversity. Lawyers, educators, economists, and/or politicians. A couple of doctorate engineer/scientists, but researchers and not entrepreneurs. These two are stuck in the technology ghetto. Holdren's research is in Climate Change which is really not product specific (can tell you what not to do but has little understanding on how to tell you how to do something).

http://en.wikipedia.org/wiki/United_States_National_Economic_Council

[mod mom]

3. 8 years of * saw governmental advisors all industry and what did we end up with?

More deregulation and outsourcing and BLATANT greed-larger disparity of wealth! Letting foxes (industry insiders) run the hen house...you know the saying. We need leaders willing to create jobs, even if the creation means an FDR style jobs program. Killing off the middle class (ie lack of jobs) benefits no one. The rethuglicans who are hoping it means cheap labor, will only find themselves living behind gates and needing protection. Robert Reich is correct, we need to tackle the disparity. Since 8 years of rampant greed (tax cuts & de-regulation) didn't create jobs here in this country, then it time our government did (and pay for it with increased taxes on those who can most afford it.

[exboyfil]

4. Wall Street types are not the ones I am talking about

I am not saying Bush's economic team was any good. I am not saying that the solution is reduced taxation on income or dividends. I think a return to Clinton tax rates would be a prudent thing to do. I just think that these wild eyed cries for 80%+ marginal tax rates are insane. Our tax rates need to reflect the reality of global movement of capital and individuals. You price it to high then you can be sure you won't have to worry about capital ownership or high income individuals except those who actually do have to work in the U.S. (after sports stars few actually need to live in the U.S. to generate income, and income buys citizenship anywhere with a better tax climate). Many doctors can go offshore Most investment types can as well. Lawyers that don't need to appear in court also can. Why do corporate offices and the high salaries associated with them need to be located in the U.S.?

I don't know of an entrepreneural type in Bush's administration either. Is it too much to ask to have a different set of eyes? Whether you want to accept it or not ultimately taxes that makes things like job programs etc go come from the generation of wealth. You got manufacturing, service manufacturing (IP wealth generation I like to call it - developing IP goods for purchase), farming, mining, energy generation - any other sources of wealth? Guys like Ted Waitt have put a lot of food on the table for a lot of people over the years. Yes he got wealthy from making PCs, but he had meaningful jobs for lots of people.

I don't see how you can have a de facto importation of poverty (our immigration policy) and not think that it would put a strain on the system. This Whitman thing is a classic example - everytime Cobert or somebody talks about undocumented immigration it is terms of poorly paid agricultural workers. At $23/hr. Whitman's housekeeper was cheap labor??? I don't understood why Colbert didn't go to Iowa during detasseling season and watch all the High Schoolers earning money for college - maybe he could mock them for working so hard. Those jobs Colbert mocked, without downward pressure on the salaries, might be attractive to someone trying to earn money for college etc.

Can you look at the financial legislation coming out of the Obama administration and even think it does anything but make the Goldman Sachs, Citibank crowd smile?

I am only asking for one person who started a manufacturing business from the ground up in the sea of economists and lawyers? Just one.

[mod mom]

5. If you don't have a middle class, you don't have a base for purchasing power

You'll also have a whole lot of disgruntled unemployed not to mention desperate types. Do we really want to become a place where you have to live behind locked gates and travel with armed guards? I don't think so.

The * administration as illegitimate as it was was a haven for industry insiders. Just take a look at MMS for example. How did that work out for us? As far as off shore asset movement, with today's IT capabilities, we need to manage the movement so that they are not allowed to be hidden in safe havens/fake shells of corporate offices. I also think there needs to be tremendous penalties for using such ways to escape paying fair shares.

I am NOT happy with the Clintonesque team Obama propped up to handle Wall Street nor the corporate insiders used to develop the healthcare "reform" I had much bigger hopes for Obama but once he started adding names from the "best Republican president since Reagan" those hopes rapidly dissipated.

This is not the time for gradual change. We need fast action imho. :hi: