Categorized | Opinion, Politics

The Election of 2012

It’s Inequality, Stupid

 

By Robert Reich
RobertReich.org

 

The most troubling economic trend facing America this Labor Day is the increasing concentration of income, wealth, and political power at the very top – among a handful of extraordinarily wealthy people – and
the steady decline of the great American middle class.

Inequality in America is at record levels.  The 400 richest Americans now have more wealth than the bottom 150 million of us put together.

Republicans claim the rich are job creators.  Nothing could be further from the truth.  In order to create jobs, businesses need customers.  But the rich spend only a small fraction of what they earn.  They park most of it wherever around the world they can get the highest return.

The real job creators are the vast middle class, whose spending drives the economy and creates jobs.

But as the middle class’s share of total income continues to drop, it cannot spend as much as before.  Nor can most Americans borrow as they did before the crash of 2008 — borrowing that temporarily masked their declining purchasing power.

As a result, businesses are reluctant to hire.  This is the main reason why the recovery has been so anemic.

As wealth and income rise to the top, moreover, so does political power.  The rich are able to entrench themselves by lowering their taxes, gaining special tax breaks (such as the “carried interest” loophole allowing private equity and hedge fund managers to treat their incomes as capital gains), and ensuring a steady flow of corporate welfare to their businesses (special breaks for oil and gas, big agriculture, big insurance, Big Pharma, and, of course, Wall Street).

All of this squeezes public budgets, corrupts government, and undermines our democracy.  The issue isn’t the size of our government; it’s who our government is for.  It has become less responsive to the needs of most citizens and more to the demands of a comparative few.

The Republican response – as we saw dramatically articulated this past week in Tampa – is to further reduce taxes on the rich, defund programs for the poor, fight unions, allow the median wage to continue to fall, and oppose any limits on campaign contributions or spending.

It does not take a great deal of brainpower to understand this strategy will lead to an even more lopsided economy, more entrenched wealth, and more corrupt democracy. 

The question of the moment is whether next week President Obama will make a bold and powerful rejoinder.  If he and the Democratic Party stand for anything, it must be to reverse this disastrous trend.

The Jobs Report and the Election

President Obama’s speech to the Democratic National Convention was long on uplifting rhetoric but short on specifics for what he’ll do if reelected to reignite the American economy. 

Yet today’s jobs report provides a troubling reminder that the economy is still in bad shape.  Employers added only 96,000 nonfarm jobs in August.  True, the unemployment rate fell to 8.1% from July’s 8.3%, but the size of the workforce continued to drop according to a Labor Department report Friday.

Unfortunately for the President — and the rest of us — jobs gains have averaged only 94,000 over the last three months.  That’s down from an average of 95,000 in the second quarter.  And well below the average gain of 225,000 in the first quarter of the year.  And compared to last year, the trend is still in the wrong direction: a monthly average gain of 139,000 this year compared to last year’s average monthly gain of 153,000. 

Look, I desperately want Obama to win.  But the one thing his speech lacked was the one thing that was the most important for him to offer — a plan for how to get the economy out of the doldrums.

Last week Mitt Romney offered only the standard Republican bromides: cut taxes on the rich, cut spending on programs everyone else depends on, and deregulate.  They didn’t work for George W. Bush and there’s no reason to expect they’ll work again.

But the President could have offered more than the rejoinder he did — suggesting, even in broad strokes, what he’ll do in his second term to get the economy moving again.  At least he might have identified the scourge of inequality as a culprit, for example, pointing out, as he did last December, that the economy can’t advance when so much income and wealth are concentrated at the top that the vast middle class doesn’t have the purchasing power to get it back on track. 

Undeniably, we have more jobs today than we did at the trough of the Great Recession in 2009.  But the recovery has been anemic — and it appears to be slowing.  We’re better off than we were then, but we’re not as well off as we need to be by a long shot.

* * * * * * * * *

The Humboldt Sentinel greatly appreciates Mr. Reich allowing us to share his column with our readers.  His previous column can be found here.

Mr. Reich is a political economist, professor, author, and political commentator. He served in the administrations of Presidents Gerald Ford, Jimmy Carter, and was Secretary of Labor under President Bill Clinton.

Mr. Reich is currently Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California, Berkeley. He was formerly a professor at Harvard University’s John F. Kennedy School of Government and professor of social and economic policy at Brandeis University.

He has been a contributing editor of The New Republic, The American Prospect (also chairman and founding editor), Harvard Business Review, The Atlantic, The New York Times, and The Wall Street Journal. He is chairman of Common Cause.

Time Magazine named Mr. Reich one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including the best sellers “Aftershock” and “The Work of Nations.”

His latest e-book, “Beyond Outrage” is now available in paperback.

Please visit Mr. Reich at RobertReich.org to see his other outstanding essays and videos concerning the nation’s economy and politics.

(Images by the Humboldt Sentinel.  Posted by Skippy Massey)

One Response to “The Election of 2012”

Trackbacks/Pingbacks

  1. [...] The Humboldt Sentinel greatly appreciates Mr. Reich allowing us to share his column with our readers.  His previous column can be found here. [...]


Leave a Reply

HumSentinel on Twitter

RSS Progressive Review

  • Department of Good Stuff
    […]
  • Why people hate the federal government
    Take Part - Out with the cupcakes, in with the fruit cups.At least that’s what the USDA envisioned when it came up with the “Smart Snacks in School” standards as part of the Healthy, Hunger-Free Kids Act of 2010. The guidelines—which set rules for treats sold on K–12 campuses outside the cafeteria during school hours, or “competitive foods”—went into effect […]
  • Why you shouldn't vote for a corporate executive
    Sam Smith - There is a widespread myth that corporate executives are exquisitely prepared to run other things, like community organizations, states or our nation.  This is a myth broadly enabled by large corporate media but it makes little sense. Here's why:Corporate executives can fire people, move them to new jobs, promote or demote them. You can […]
  • Preserving a Jewish state or the Jewish soul?
    From 50 years of our overstocked archivesSam Smith, 2006 - Vigdor Lieberman that nasty member of the Israel cabinet, wants to get rid of the Arabs so his country can remain a Jewish state. It's not a new idea; shoving Arabs around helped Israel get started. And it didn't work all that well. Fifty years of misery as the Israelis and the Arabs compet […]
  • Mid and late career teachers underpaid
    Center for American Progress: Mid- and late-career teacher base salaries are painfully low in many states. In Colorado, teachers with a graduate degree and 10 years of experience make less than a trucker in the state. In Oklahoma, teachers with 15 years of experience and a master’s degree make less than sheet metal workers. And teachers in Georgia with 10 ye […]
  • Photo of the day
    L'Osservatore Romano photo of Pope having lunch with Vatican workers […]
  • Stupid Washington Post tricks
    James Zogby, Arab American Institute - As the Israeli ground offensive was beginning, the [Washington] Post featured a front page headline, in large type, reading "Two Israelis Killed in Gaza Clash." In smaller type there was a subhead, "Death toll tops 330 as Hamas militants step up attacks." The story began, "Hamas militants intens […]
  • Furthermore. . .
    Gaza death toll now over 1,000Top Palestinian officials have accused Israel of war crimes in Gaza, filing a complaint Friday to the International Criminal Court in The Hague. […]
  • 2500 Ground Zero responders have come down with cancer
    NY Post - More than 2,500 Ground Zero rescuers and responders have come down with cancer, and a growing number are seeking compensation for their illnesses, The Post has learned.The grim toll has skyrocketed from the 1,140 cancer cases reported last year.In its latest tally, the World Trade Center Health Program at Mount Sinai Hospital counts 1,655 responder […]
  • Millenials down on marriage
    Alternet - | In a new Pew poll, researchers asked people of all ages how they felt about marriage and having kids. One question asked if society is better off if people made these goals a priority.....For respondents over 65, a strong 61 percent said yes, it’s in society’s best interest to prioritize marriage and kids. But that number gradually declined for […]
  • A bipartisan cause: universal income
    David Atkins, Washington Monthly -  One of the beautiful things about universal basic income: it has legitimate cross-partisan appeal, even if it seems wacky at first glance to centrists (who are often the very last people to recognize a good policy idea when they see one.)To a conservative, a direct money grant is an opportunity to shed cumbersome governmen […]
  • Pocket paradigms
    Unfortunately, complex failing systems have little capacity to save themselves. In part this is because the solutions come from the same source as the problem. The public rarely questions the common provenance; official Washington and the media honor it. Even a failure as miserable as that of Vietnam had little effect on the careers of its major protagonists […]
  • Word
    I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations -- James Madison […]
  • Mid East paradigms
    From 50 years of our overstocked archivesIsrael is a state like all the rest. AIPAC is just another political group like the National Rifle Association. It is not a religion but one more Washington lobby corrupting the political process and making American voters less powerful. The policy of the Israeli government is clearly distinguishable from the theology […]
  • Bringing politics home
    From 50 years of our overstocked archivesSam Smith[From Shadows of Hope, 1994]In 1816, Columbus, Ohio, had one city councilmember for every hundred residents. By 1840 there was one for every thousand residents. By 1872 the figure had dwindled to one to every five thousand. By 1974, there was one councilmember for every 55,000 people.The first US congressiona […]