Robert Reich: U.S. Won't Recover Until The Country Tackles Inequality

THE 5 percent of Americans with the highest incomes now account for 37 percent of all consumer purchases, according to the latest research from Moody’s Analytics. That should come as no surprise. Our society has become more and more unequal.

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Comments

[mashtoe]

10:42 AM on 09/07/2011

I love how Reich can not bring himself to admit free trade with communist China, H-1b work visas, and open borders is the 600lb gorilla in this debate. Disparity arises when there is a flood of labor supply. And all the policy choices of the past 30 years have designed to inflate the labor supply which devalues labor.

The solutions are mostly free: end free trade with communist China, end all work visa programs, and end the wars and put 110,000 troops on the southern border. The fact that neither party will talk about these solutions should be shocking. It tells us that neither party has any intention of addressing the problems.

Instead they will propose wealth redistribution which they know is silly because the rich will just transfer their wealth out of the US. Or they move their wealth into investments overseas. Either way you will end up jus taxing other US workers as we all go down.

[Thumbody]

11:58 PM on 09/06/2011

Robert, which country were you referring to? Don't hold your breath for this one, third world status is the goal.

[jsgaetano]

11:33 PM on 09/06/2011

I wonder what Gooptards have to say about the top 20% owning more than 85% of America?

[wsdave]

11:32 PM on 09/06/2011

"During periods when the very rich took home a much smaller proportion of total income — as in the Great Prosperity between 1947 and 1977 — the nation as a whole grew faster and median wages surged."

We also ate more fruits and vegetables per capita then we do now.

Sorry, but correlation is not causation.

[jsgaetano]

11:34 PM on 09/06/2011

But causation does demonstrate correlations.

[hobo62]

06:25 PM on 09/06/2011

I do admire the common sense of this man.

[dansup]

06:08 PM on 09/06/2011

http://www.youtube.com/watch?v=acLW1vFO-2Q

truer words were never spoken

[pjkozy]

05:26 PM on 09/06/2011

The problems seem to be well documented from many corners. What we need is a good old fashion TODO list. Limit the number to twenty five issues. Check them off when they are complete and add another to the list. Any ideas for the list of twenty five folks?

[dansup]

06:05 PM on 09/06/2011

# 1 campaign finance reform - without it nothing changes

[pjkozy]

06:43 PM on 09/06/2011

That's #1 on my list also.

[hobo62]

06:23 PM on 09/06/2011

#2 Re-instate the Glass-Seagall Act.

[pjkozy]

06:45 PM on 09/06/2011

A great #2. A #3 anyone? Come on folks, this is no joke.

[ebanks84]

05:01 PM on 09/06/2011

Tackling inequality in this country is not going to happen any time soon, at least until we can vote out every "old" politician in Washington so we can start afresh. This country has grown to be too selfish to change now and it will take years to reacquaint the people to equality the way it should be.

[ElliottPhD]

04:52 PM on 09/06/2011

Nice piece, especially the history. However, you left out the solutions. Just how would you achieve greater equality, especially in today's political climate? Are you advocating an increase in marginal tax rates? Subsidies for the poor? An increase in unionization? And with T-party members rabidly fighting against their own self-interest, how do you envision such people ever acting rationally enough to support anything that will help either themselves or the country as a whole?

[getsit]

03:41 PM on 09/06/2011

Why isn't Obama listening to economists like Reich? Why does he have all corporate floozies on his watch? So far that HASN'T WORKED. In the past that's only worked to send the money up to the richest.

Doesn't he realize the people in this country are looking for real leadership?

[dansup]

06:07 PM on 09/06/2011

the corporate floozies financed his campaign, that's why

[themainpoint]

08:39 PM on 09/06/2011

Which is why we need to lobby our STATE reps and STATE government to initiate a Constitutional Amendment to get the money out of campaigns.

[jsgaetano]

11:36 PM on 09/06/2011

Because Obama is a hardline Friedmanista. His belief in conservative ideology is unwavering.

[JessCostello]

01:44 PM on 09/06/2011

Unequality is a result of the problems, not a cause.


What you need is the skills and job training needed to make the middle class globally competitive again, so we're not relying on government manufactured housing booms to prop up the economy.

[Nobody78]

02:17 PM on 09/06/2011

You don't get it!!! Skilled and educated people can't find jobs at the moment. It has nothing to do with skills, it has everything to do with the majority of the people in this country do not have disposable incomes to purchase goods to keep the factory lines running.

[JessCostello]

03:43 PM on 09/06/2011

Hey fool, did you notice for one second that while we have millions out of work, we have millions of jobs that go unfilled because the skillsets needed to fill them are not in large supply?

[wsdave]

11:28 PM on 09/06/2011

You're assuming that folks with disposable income would be buying American.

My bet is that you're wrong.

[eugik]

02:44 PM on 09/06/2011

Note, "During periods when the very rich took home a much smaller proportion of total income — as in the Great Prosperity between 1947 and 1977 — the nation as a whole grew faster and median wages surged." In my opinion, this was because everybody was in the same boat (of course, relatively speaking). With the widening gap, rich have less incentives to fix the problems, because they are not affected that much (of course, the gap would to social unrest, but they do not get it). In addition, with simple labor arbitrage (where jobs are shifted to the low-wage countries), simple retraining does not do much, because, there simply may not be enough jobs available.

Having said that, if certain industries are growing, then re-training can be done to "redirect" the people to those industries. And I think the government job is to support such training, that's what government is for: to balance the society.

[Y3rMawm]

01:40 PM on 09/06/2011

Jobs aren't coming back until the debt saturation issues are resolved, and the government gets out of the way of people attempting to do business, and live life.

[Nobody78]

02:21 PM on 09/06/2011

Debt has nothing to do with jobs, debt is a problem of the future.

"government gets out of the way of people attempting to do business, and live life"

I think the government got out of the way of banks, maybe you forgot that is how we got in this mess to began with.

[pjkozy]

05:42 PM on 09/06/2011

We cannot afford to let "government get out of the way" Not as long as "greed" is the mantra of business. It should be "service" like it used to be. Then we wouldn't have to depend on getting a BBB report every time we seek a service in the business sector. Believe me, it didn't used to be this way. We seniors remember those times. Oh, and we all did pretty well because of it.

[Ice4you]

02:56 PM on 09/06/2011

Debt issue is easy. End the wars, end the Bush tax cuts, End tax loopholes for jet owners, oil companies and wall street. Increase tax on dividends to 20% and medicare for all. This would take care of our debt in 10-15 years. Problem solved.

[pjkozy]

05:43 PM on 09/06/2011

You hit those nails squarely on the heads.

[dansup]

06:15 PM on 09/06/2011

works for me - pretty plain to see, but how does that make the rich richer? Therein lies the problem..........

[SoylentGreenIsPeople]

12:07 PM on 09/06/2011

“PAUL CRAIG ROBERTS, served as an Assistant Secretary of the Treasury in the Reagan Administra­­­tion.

"The US economy is in a deepening recession from which recovery is not possible, because American middle class jobs in manufactur­­­ing and profession­­­al services have been offshored and given to foreigners­­­. US GDP, consumer purchasing power, and tax base have been handed over to China, India, and Indonesia in order that Wall Street, shareholde­­­rs, and corporate CEOs can earn more.
http://www.counterpunch.org/2011/07/22/an-economy-destroyed/

[wmnorton]

11:52 AM on 09/06/2011

What gets overlooked in the statistics is that when you raise taxes on the wealthy that alone stimulates the economy. I believe the reason for that to be true is that the wealthy hate to pay taxes as much as the rest of us, but unlike the rest of us there are things they can do to cut their taxes. First they can convert much of their income to those things that get favorable tax treatment like have more of their income come from capital gains or dividends. Fortunately, in most cases that approach is limited, since the wealthy already have most of their wealth in real estate, stocks and bonds. The next thing they do is increase their charitable contributions. The wealthy won't spend the money but the charities will, and usually as fast as they can get it. Another thing the wealthy do is instead of giving the money to the government, they give it to their employees. These people will spend that money so the economy is stimulated by their increase in pay. I believe that there is a limit to this approach and that limit is laid out by the Laffer curve.

[Mondayboy]

01:35 PM on 09/06/2011

I wish my employer will raise my salary so that I can stimulate the economy :)

[wmnorton]

02:58 PM on 09/06/2011

Write your congress person and ask them to raise the taxes on the wealthy, that is the only way it will trickle down.

[wmnorton]

11:52 AM on 09/06/2011

The Laffer curve in spite of what some on the right want you to believe tells us that the top tax rate should always be 50% (theoretical limit) practical statistics shows that the number is probably closer to 60%. I personally like 50% because there seems to be something wrong with a system where the government gets more of your income than you do. Returning the top tax rate to 50% would almost by itself get us out of the malaise we are in. The only question should be, where to start the 40% rate, the 45% rate and the 50% rate. I would leave the current rates where they are now then I would start the 40% rate at $500,000, the 45% rate at $1,000,000, and the 50% rate at $5,000,000.

[SoylentGreenIsPeople]

12:08 PM on 09/06/2011

To maximize real economic growth in the United States, the top marginal income tax rate should be about 65%, give or take about ten percent. Prepostero­us, right? Well, it turns out that’s what the data tells us. Read the numbers for yourself. There are three parts.

http://www.presimetrics.com/blog/?p=268

[wmnorton]

01:53 PM on 09/06/2011

Although you are correct that 65%is where the statistics tell us that the maximum income would come from, I still have an aversion to anyone, even some greedy billionaire, having to pay more to the government than he gets to keep.

[JessCostello]

01:45 PM on 09/06/2011

I suggested making another tax bracket. Don't those making over 250,000 belong to the same tax bracket as those making 250,000,00?

[wmnorton]

02:01 PM on 09/06/2011

Currently you have to make over $379150 to get into the 35% bracket. so my suggestion is for there to be a 40%, a 45% and a 50% bracket.