Robert Reich gave a talk at UC Irvine on Feb. 5, 2015. This is a summary of that talk and the film that he showed. Robert Reich was Secretary of Labor for Bill Clinton from 1993 to 1997. He is now Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at UC Berkeley. He was formerly a Professor at Harvard and at Brandeis University. He is a well known political commentator and contributing editor. He has published fourteen books.
He showed the movie “Inequality for All” by Jacob Kornbluth, showing Prof. Reich in lecture along with video scenes and graphs.
There is a website for the movie called http://inequalityforall.com which includes a pdf of all the graphs from the movie, which one can download. The movie is on Netflix and iTunes.
There will be inequality because people have different talents, skills, education and goals. However, the question is “how much inequality?” It is getting to the point where the economy can’t function. The median wage has leveled out since the 1970’s.
What happened? What happened to democracy? Wealth translates into political power, which is used to get rid of campaign finance laws.
Don’t leave cynical. Get politically engaged.
Get educated on what’s gone wrong.
The top 400 wealthiest in the US have more wealth than lower half of the US population. The typical (median?) income of the top 1% is $1.1 million. The bottom of the top 1% is an income of $380,000 a year.
The 1928 crash and the 2007 recession both happened because of speculative investment bubbles. The middle class is in a debt bubble trying to keep up. Consumer spending is 70% of the economy. The economy needs the middle class.
To define the middle class, use the median income of around $50,000, and add and subtract 50% around that to give the range $75,000 to $25,000.
As far as the defense against taxing the rich as “job creators”, what the rich are saving goes around the world, wherever the good investments are, not necessarily to the US.
The customers are the real job creators. Prosperity depends on there being a middle class.
Prof. Reich started out by studying the rules by which a market functions.
Since the 70’s, the economy was growing and productivity was increasing. Yet wages flattened. There was a move to deregulate. The unions declined. There was an assault on unions by employers. There were many nonunion companies.
Since the 1970’s, Gross Domestic Product has risen to 250% of its starting value, but wages have stayed the same.
The rate of union membership declined more than 50% since the 70’s.
Globalization dispersed American jobs. Technology replaced jobs by robots. Examples were Amazon, and assembling companies.
As an example, whereas many think that iPhone costs go mainly to the US or China, iPhone costs go 34% to Japan, and only 3.6% to China, where parts from elsewhere are assembled. Only 6% goes to the US.
Workers were subject to reduced pay, not a loss of the number of jobs.
There has been rising costs of higher education, as states contributed less to funding education.
Many people have no savings.
Bill Clinton adopted helping the middle class by the policy of Putting People First.
(Here are some extra data that were not in the 45 minutes of the movie that we watched, but are in the associated slides. The average CEO’s salary has risen to 350 times that of the average worker. Household debt has risen from the same as yearly wages to 12 times that. Political polarization has increased.)
Following showing us half the movie, as much as time allowed, Prof. Reich answered questions.
There has been a decrease in upward mobility. 42% of those born into poverty will not get out. In Denmark the figure is only 25%. In Denmark there has been more investment in education. They have stronger unions, and the unions have more political power. They have more infrastructure investment.
The conditions of the Trans Pacific partnership or trade agreement have not been revealed. So far, it looks like the trade agreement may not be good for working people.
As far as Increasing income tax for the rich, the highest marginal rate was 70%. Then under Eisenhower it became 90%. Now it is down to 35%.
What can we do to raise income for the middle class? First, we need more basic research and development. This is done in Universities, the NIH, and DOE labs. Second, we need to invest in infrastructure needs. Third, we need to invest in education from K-12 to higher education. All investments need funding
How much can the minimum wage be raised? Raising the minimum wage gives consumers more money to buy stuff.
The current college generation can act politically to bring these advances about.
Reich sees three great threats to our civilization. First is nuclear proliferation. Second is climate change. These are tied together since climate change can lead to more competition for food and arable land. Third is income inequality.
Hilary Clinton needs the public behind her to bring about such changes.
He concluded saying that young adults should get engaged and involved if they want to bring about changes.