November 2011
October 25, 2011

Reich: We can't accept wealth gap

Author: Bernie Mulligan
Source: NYSUT United
Robert Reich

Robert Reich

Robert Reich has long been an influential voice in the discourse over the American economy and the politics that shape it.

As Secretary of Labor under President Bill Clinton, Reich was able to gain passage of the Family and Medical Leave Act, raise the minimum wage and persuade Congress to pass the School-to-Work Jobs Act.

Reich has written 13 books. His most recent work, Aftershock: The Next Economy and America's Future, investigates the stagnation of the middle class and offers economic reforms, including a progressive income tax. Reich supports the labor movement and has said that attempts to take away workers' rights only undermine the American economy. He appears frequently on television as a political commentator; his columns are featured regularly in major newspapers and online news sites. His blog can be read at www.robertreich.com. Reich spoke to NYSUT United's Bernie Mulligan from his office at the University of California, Berkeley, where he is a Chancellor's Professor of Public Policy.

NU: Why is a healthy middle class so important to our economy?

Reich: If you define the middle class broadly to include what we used to call the working class and also many of the poor, who want to become better off, this nation is richer than we've ever been in history. To assume that we're broke is a lie.

The problem is that almost a quarter of all income and wealth is now going to the top 1 percent. We haven't seen anything like this degree of concentration since 1928, just before the Great Crash. A healthy middle class is therefore critically important to maintain what economists call "aggregate demand" for all the goods and services the economy could produce at or near full employment.

NU: What does an ever-widening income gap mean for our country?

Reich: It has profound and disturbing consequences for the ability of the nation to come together over large issues that affect all of us because the very wealthy are drifting off into their own world. They have less and less to do with the rest of Americans. It also cripples the economy when so much income and wealth are going to the very top. The rest don't have enough purchasing power to keep the economy going.

During the era I call "The Great Prosperity" — from the end of the second World War to the mid-1970s — everyone grew together. Since then, we've been growing apart.

In the 1950s, 35 percent of all working Americans in the private sector were in a union.

This gave them huge bargaining leverage to get a fair share of the gains of economic growth. Now, fewer than 8 percent of private-sector workers are unionized. In effect their bargaining leverage has been terribly damaged.

NU: How can middle-class Americans, like NYSUT members, influence public policy, especially at a time when CEOs and corporations have great political influence?

Reich: Never underestimate the power of regular Americans when they join together, when they're organized and mobilized to seek change. Money at the top can only go so far. Politicians don't only respond to campaign contributions. They also respond to their constituents when those constituents are energized and mobilized. That means that average working people and retirees should do even more now to become politically effective.

NU: Why is the fight to maintain public schools and public services so important?

Reich: Our democracy is founded on free, universal, public education. If our children don't receive it, if we lose that ideal, we imperil our democracy. It's not just economic; it's fundamental to the future of this country.

NU: President Obama is a champion of billionaire businessman Warren Buffett's proposal to tax the super-wealthy at a higher rate than they're currently paying. Given the political climate in Washington, is this doable?

Reich: Anything is doable if enough people want it to happen. Our greatest danger right now is broad-based cynicism. If people believe nothing is possible then nothing is possible. Remember, right now, not only does the top 1 percent take home almost a quarter of all income and control about 40 percent of all wealth, they're facing the lowest tax rates since the 1920s. At the same time we are stripping public services, cutting back on education, infrastructure and other functions that people depend on. We are increasing sales tax and we have increased Social Security taxes, both of which take a bigger bite out of the paychecks of average working people than they do the rich. This is not acceptable.

NU: What are the things President Obama needs to do to get the country back on the right track?

Reich: For the long-term unemployed he's got to resurrect the Works Progress Administration (WPA) and the Civilian Conservation Corp., which hired people directly to rebuild America.

Beyond that, we need at least half a trillion dollars in infrastructure spending. We need to upgrade and repair public schools and the federal government needs to make interest-free loans to the state governments so they can reverse the tragic direction states and localities have been going in terms of firing teachers, firefighters, police officers, social workers and others whose work is so important to average working families. At times like these they are the last who should be fired.