Wealth and Power in the U.S Out of Whack: Growing Income Disparities ‘Danger to System,’ says Former Clinton Labor Secretary.
(Review of Robert Reich’s documentary ‘Inequality for All.’)
By Michael Hirsch
Robert Reich, the intellectual giant, stands 4 foot 11 inches tall,
dripping wet. He jokes about it. He comfortably drives a Mini Cooper and
once co-hosted a talk show with terrifically tall and terrifyingly
conservative (except by Tea Party standards) ex-Wyoming Sen. Alan
Simpson (the show was called “The Long and the Short of It”). The author
of 13 books, he served in the Ford, Carter and Clinton
administrations—the later posting as secretary of labor from 1993 to
1996, a post he resigned from after losing one last intramural battle to
Treasury secretary and Wall Street princeling Robert Rubin. Among his
good senior hires: labor leaders Karen Nussbaum(SEIU Local 925) and
Joyce Miller (Amalgamated Clothing and Textile Workers). His
presentations come with equal parts easy-to-assimilate detail and a
self-deprecating, wry humor.
The peppery Reich considers
himself a center-left liberal, which may explain why he didn’t publicly
rebuke Clinton’s ending of welfare as we know it. “I have never been a
member of the Communist Party,” he tells one television interviewer
without prompting, but in his graying years he has become a leading
critic of cascading income inequalty in the United States .
His 2010 book, Aftershock: The Next Economy and America’s Future
and the recent documentary, “Inequality for All,” based on the book and
his presentations to standing room-only lecture-hall classes at the
University of California-Berkeley — whose number of graduate assistants
alone could explain any rise in the Bay Area employment rate — are
damning indictments of a corporate system that impoverishes tens of
millions even as it sabotages its own capacity to grow the capitalist
system. Anyone interested in understanding the hypertrophic gap
separating the super rich from not just the poor but also middle-income
households should see this film. Better still, read the book. The
picture he draws of a widening class divide and a growing plutocratic
threat to democracy is perfect in detail. (Here’s one nibble: how many
of us knew, for example, that the U.S. ranks 64th among nations on the
inequality scale — only slightly better than several war-ridden West
African nations. I did, and only because TV’s John Stewart showcased
that fact, courtesy of Reich.)
That’s just one sobering fact among scores Reich reveals, as he asks
“How much inequality can we have and still have capitalism?” That theme
works in the film the way creepy music does in a monster flick. You know
some rough beast is slouching toward center stage, and you know it by
But beware: Reich is no socialist. He says he loves capitalism, but
thinks it can be fixed if only the rich understand that income
inequality and the loss of buying power are bad for them, and that vast
income and wealth disparities — translated as declining purchasing power
— are themselves the cause of economic crises and the precursors to the
social order’s demise. That’s a social order over which they rule.
That frame is problematic. Leaving it in the realm of bad ideas and
not seeing exploitation as an intrinsic and systemic necessity, one for
which, as Marx said of the captains of industry, “Accumulate,
accumulate, that is Moses and the prophets,” is beyond sad. Urging the
super rich to adopt a self-correcting methodology lies, from a socialist
standpoint, somewhere between the naive and the delusional. And I mean
that with respect. Reich at least sees the problem.
His main point — correct as far as it goes and argued with his
characteristic flair — is that so-called middle class Americans (that
term, of course, is a horror) are responsible for 70 percent of U.S.
spending, and that consumer buying is the engine driving the economy. So
they, and not the captains of industry, the economic royalists and the
Wall Street stock manipulators, are the real job creators of the real
economy. But to fulfill that function they need more purchasing power,
which means higher salaries that enable them to be active and aggressive
consumers. It is they who gin up demand, allow industry to hire and
pump up tax collections. Hoarding wealth, offshoring investments and
giving the rich tax-rate treats is a threat to the system itself.
It’s the incapacity of a middle class to consume enough that causes
economic busts. It’s wages stagnating or declining even as the cost and
number of necessities, including decent child care for working families,
healthcare and housing compound the sort of pricey life-style choices
previous generations never had, that is the problem.
For Reich, the essence of the New Deal was creating the conditions
where the majority could spend more. It meant a jobs program to create
demand to get the sluggish capitalist behemoth up to speed. That’s
wisdom not only the Englishman John Maynard Keynes understood but also
FDR’s Federal Reserve chief Marriner Eccles, the Morman banker and
businessman extraordinaire, who sold Roosevelt on the idea that, as
Reich puts it, “excessive spending has nothing to do with the 1929
collapse.” It was, instead, the lack of spending by the many.
It was, as Eccles saw it, “the vast accumulation of income in the
hands of the wealthiest people in the nation, which siphoned purchasing
power away from the rest.” It’s also what led to the 2007 Great
Recession, Reich says, as he demonstrates that the greatest disparities
in wealth in US history were, and not by coincidence, in 1929 and 2007.
Film maker Jacob Kornbluth even trots out a billionaire to
acknowledge these home truths. Nick Hanauer, founder of Seattle-based
venture capital company Second Avenue Partners, runs among his many
holdings a successful pillow company, though his real money came from
his ground-floor investing in Amazon.com and the myriad tech companies
he later sold off to Microsoft. Running against his own class’s grain,
Hanauer supports public education, considers his low income-tax rate
preposterous, and decries the self-congratulatory rubbish behind the
label “job creator."
"When somebody calls themselves a job creator, they aren't
describing the economy, although that's what it sounds like. What they
are really doing is making a claim on status, privilege and power,"
Hanauer tells Kornbluth in the film. He argues that “only the middle
class and the poor are job creators. It’s their spending that makes it
happen.” He even reinforces Reich’s argument that the wealthy alone
can’t spend the economy into a permanent recovery. “Even the richest
individual has no need to buy thousands of pillows,” Hanauer says.
So what’s wrong with this? What Reich doesn’t get, or can’t
acknowledge, is that the idea that workers are worth their hire didn’t
just come out of scripture or because Marriner Eccles persuaded FDR and
Treasury Secretary Robert Morganthau to intervene in 1933 — and he and
they doubtless did — but because a militant social movement was making
demands that the social order needed contained if not also housebroken.
Instead, Reich lectures and writes as though greed and inattention were
the problems and not abiding class interest.
That’s not to challenge Reich or Eccles or even Lord Keynes’
veracity, but to show that their ideas were listened to precisely
because enough of the corporate class got it that they otherwise had no
alternative but either turn toward liberalism or embrace fascism.
Even that understanding was scarcely universal; many, like Ford and
the DuPonts, were ready to endorse fascism, some enthusiastically. As
Kim Phillips-Fein shows in Invisible Hands: The Businessmen’s Crusade Against the New Deal
key sections of American capital never bought into the kind of decent
sharing commonly taught in kindergarten, nor were FDR’s Depression era
policies successful in themselves in doing what Eccles hoped they would
do. It was war spending and the U.S. coming out of World War 2
uncontested as an imperial power that allowed for the sort of booming
economy that grew a middle class. The “social compact” that allowed
income inequality to narrow, including The Treaty of Detroit, which
briefly established high wages for auto workers and labor peace for the
Industry, had little to do with an enlightened elite and everything to
do with U.S. business having little competition abroad. That all ended
in the 1970s.
Reich is also frustratingly weak on just how to get capital’s
overlords to become more like him. He wants unions to grow and workers’
wages to rise, fearing a “political polarization” that will threaten
their ability to rule. But there’s no strategic implication coming out
of his analysis for those most harmed by the great wealth and power
divide. He doesn’t talk the language of class struggle but only of
suffocated buying power, as though the income disparities were not the
outcome of a rapidly proletarianizing nation.
That may be too much to expect. Reich would never say, in the words
of The International, that “The emancipation of the working class is the
task of the workers alone.” Still, it’s stunning that a former top
federal administration official, now carrying the university title
Chancellor’s Professor of Public Policy has so little to say about which
human agencies could turn even his good-natured policy recommendations
into facts on the ground.
[Note: If I haven’t dissuaded you from seeing “Inequality for All” —
and it should be seen; its strength outweighs its weaknesses — it’s
readily available. Released for general viewing in late September and
still in wide circulation, it will go on sale in DVD and Blue-Ray
format in January, as well as on VOD. Netflix will feature it later in
the year. Go HERE
for more information, including access to lesson plans and discussion guides.]
Michael Hirsch is a member of New York City DSA and an editor of
Individually signed posts do not necessarily reflect the views of DSA as an organization or its leadership.
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