beyond outrage - reich, robert b_

VINTAGE BOOKSA Division of Random House, Inc... Published in the United States by Vintage Books, a division of Random House, Inc., New York, and in Canada by Random House of Canada Limit

VINTAGE BOOKS

A Division of Random House, Inc.

New York

FIRST VINTAGE BOOKS EDITION, SEPTEMBER

2012

Copyright © 2012 by Robert B Reich

All rights reserved Published in the United States by Vintage Books, a division of Random House, Inc., New York, and in Canada by Random

House of Canada Limited, Toronto Originally published in somewhat different form as an e- short by Alfred A Knopf, a division of Random

House, Inc., New York.

Vintage and colophon are registered trademarks

of Random House, Inc.

Library of Congress Cataloging-in-Publication

Data Reich, Robert B.

Beyond outrage : what has gone wrong with our economy and our democracy, and how to fix it /

www.vintagebooks.com

Cover design by Abby Weintraub

v3.1

To the Occupiers, and all others committed to taking back our economy and our democracy

Kansas, December 6, 2011

(Annotated)

Acknowledgments

About the Author

Also by Robert B Reich

Introduction

’ve written this book to give youthe big picture of why and howour economy and our democracyare becoming rigged againstaverage working people, whatmust be done, and what you can do

about it I’ve called it Beyond Outrage for a very speci c reason.

Your outrage is understandable.Moral outrage is the prerequisite ofsocial change But you also need to

move beyond outrage and takeaction The regressive forcesseeking to move our nationbackward must not be allowed totriumph.

I have been involved in publiclife, o and on, for more than fortyyears I’ve served under threepresidents When not in o ce, I’vedone my share of organizing andrabble-rousing, along withteaching, speaking, and writingabout what I know and what Ibelieve I have never been asconcerned as I am now about thefuture of our democracy, thecorrupting e ects of big money in

our politics, the stridency anddemagoguery of the regressiveright, and the accumulation ofwealth and power at the very top.

We are perilously close to losing aneconomy and a democracy that aremeant to work for everyone and toreplacing them with an economyand a government that will existmainly for a few wealthy andpowerful people

This book is meant to help youfocus on what needs to be doneand how you can contribute, and toencourage you not to feel bound bywhat you think is politicallypossible this year or next You need

to understand why the stakes are

so high and why your participation

—now and in the future—is soimportant I’ve tried to arrayconcepts and arguments in a waythat you’ll nd helpful All the factsI’ve cited are from governmentreports unless otherwise indicated

In my experience, nothing goodhappens in Washington unlessgood people outside Washingtonbecome mobilized, organized, andenergized to make it happen.Nothing worth changing inAmerica will actually change unlessyou and others like you arecommitted to achieving that

change.

CONNECTING THE DOTS

The rst thing you need to do isconnect the dots and understandhow many troubling but seeminglyunrelated things are interwoven.The challenge we face is systemic.The fundamentals of our economyare out of whack, which hasdistorted our democracy, and thesedistortions, in turn, are making itharder to x the economicfundamentals Later in the bookwe’ll examine several of these dots

in detail, but now I’d like you tosee the big picture

The rst dot: For three decades

almost all the gains from economic growth have gone to the top In the

1960s and 1970s, the wealthiest 1percent of Americans got 9–10percent of our total income By

2007, just before the GreatRecession, that share had morethan doubled, to 23.5 percent Overthe same period the wealthiest one-

tenth of 1 percent tripled its share.

We haven’t experienced this degree

of concentrated wealth since theGilded Age of the late nineteenthcentury The 400 richest Americansnow have more wealth than theentire bottom half of earners—150million Americans—put together

Meanwhile, over the last threedecades the wages of the typicalworker have stagnated, averagingonly about $280 more a year thanthirty years ago, adjusted for

in ation That’s less than a 1percent gain over more than athird of a century Since 2001, themedian wage has actually dropped

This connects to…

The second dot: The Great Recession was followed by an anemic recovery Because so much income

and wealth have gone to the top,America’s vast middle class nolonger has the purchasing power tokeep the economy going—not, at

least, without going deeper anddeeper into debt But debt bubblesburst The burst of 2008 ushered in

a terrible recession—the worsteconomic calamity to hit thiscountry since the Great Depression

of the 1930s—as middle-classconsumers had to sharply reducetheir spending and as businesses,faced with declining sales, had tolay o millions We bottomed out,but the so-called recovery has beenone of the most anemic on record.That’s because the middle class stilllacks the purchasing power to keepthe economy going and can nolonger rely on borrowing

While at the same time…

The third dot: Political power ows

to the top As income and wealth

have risen to the top, so haspolitical clout Obviously, noteveryone who’s rich is intentionallycorrupting our democracy Forthose so inclined, however, theprocess is subtle and lethal Inorder to be elected or reelected,politicians rely greatly onadvertising, whose costs have risen

as campaign spending escalates.They nd the money where moreand more of the money is located—with CEOs and other top executives

of big corporations and with

traders and fund managers on WallStreet A Supreme Court dominated

by conservative jurists has openedthe oodgates to unlimitedamounts of money owing intopolitical campaigns The wealth ofthe super-rich also works its wayinto politics through thecorporations they run or own,which employ legions of lobbyistsand public relations experts Andtheir wealth buys direct access toelected o cials in informaldinners, rounds of golf, overnightstays in the Lincoln Bedroom, andfancy boondoggles

Which connects to…

The fourth dot: Corporations and the very rich get to pay lower taxes, receive more corporate welfare, and are bound by fewer regulations.

Money paid to politicians doesn’tenrich them directly; that would beillegal Rather, it makes politiciansdependent on their patrons inorder to be reelected So when topcorporate executives or Wall Streettraders and managers wantsomething from politicians theyhave backed, those politicians arelikely to respond positively Whatthese patrons want most are lowertaxes for themselves and theirbusinesses They also want

subsidies, bailouts, governmentcontracts, loan guarantees, andother forms of corporate welfare,and fewer regulations The tax cutsenacted in 2001 and 2003—andextended for two years in 2010—in

2011 saved the richest 1.4 milliontaxpayers (the top 1 percent) moremoney than the rest of America’s140,890,000 taxpayers received intotal income

of government have fallenprecipitously This has led to amajor squeeze on public budgets atall levels of government The resulthas been deteriorating schools, lesscollege aid, crowded andpockmarked highways, unsafebridges, antiquated publictransportation, unkempt parks,

fewer police o cers, fewer socialworkers, and the decline of almosteverything else the broader publicrelies on.

Which connects to…

The sixth dot: Average Americans are competing with one another for slices of a shrinking pie There is

now more intense competition for

a dwindling number of jobs, asmaller share of total income, andever more limited public services.Native-born Americans arethreatened by new immigrants;private sector workers are resentful

of public employees; non-unionizedworkers are threatened by the

unionized; middle-class Americansare competing with the poor.Rather than feel that we’re all in ittogether, we increasingly have thesense that each of us is on his orher own.

Which leads, finally, to…

The seventh dot: A meaner and more cynical politics prevails.

Because of all these occurrences,our politics has become nastier,more polarized, and increasinglyparalyzed Compromise is more

di cult Elections are morevenomous, political advertisingincreasingly negative Angry votersare more willing to support

candidates who vilify their

scapegoats Talking heads havebecome shouting heads ManyAmericans have grown cynicalabout our collective ability to solveour problems And that cynicismhas become a self-ful llingprophecy, as nothing gets solved

Connect these dots and youunderstand why we’ve come towhere we are We’re in a viciouscycle Our economy and ourdemocracy depend on it beingreversed The well-being of yourchildren and grandchildren requiresit

In Part One, I describe how thegame is becoming rigged againstaverage working people and infavor of wealthy plutocrats andlarge corporations In Part Two, Iexplain the rise of the regressiveright, a movement designed not toconserve what we have but to takeAmerica backward toward thesocial Darwinist ideas thatprevailed in the late nineteenthcentury In Part Three, I suggestwhat you can do to reverse thisperilous course.

Part One

The Rigged Game

receive many e-mails from peoplewho have read my columns orwho have seen me in the media.Some e-mails are very friendly;others are hostile But almost allshare a common feature Thewriters believe the game is rigged.Here’s a composite of several I’vereceived from people who describethemselves as Tea Partiers:

Mr Reich,

I saw you on television just now You want to raise taxes on the rich so there’s more money for education and infrastructure You’re a stupid ass When taxes go up, it’s people like me who end up paying more because the rich always nd ways to avoid paying.

If you think the money will go to helping average Americans, you’re even dumber Government is run by Wall Street traders, the CEOs of big corporations, and military contractors They’ll get the bene ts Where were you when my taxpayer dollars were used to bail out fucking Wall Street? The answer is less government, not

more Do me a favor and shut up.

I don’t recall so many people,regardless of political party orideology, expressing so muchoutrage and cynicism about oureconomic and political system

The presidential candidate MittRomney said free enterprise is ontrial He’s right, but it’s not on trial

in the way he assumed The attack

on it is not coming from the left.It’s coming from the grass roots ofAmerica—right, left, and center.And it’s been triggered by anoverwhelming consensus that WallStreet, big corporations, and the

very wealthy have rigged it to theirbene t Increasingly, the rewardshave gone to the top, while therisks have been borne by middle-and lower-income people At thesame time, the very wealthy aregetting a greater share of totalincome than they did at any point

in the last eighty years Their taxrates are lower than they’ve been

in a generation Republicans want

us to believe that the central issue

is the size of government, but thereal issue is whom government isfor Public institutions aredeteriorating We’re saddled by themost anemic recovery from the

worst economy since World War II,while the basic bargain linking pay

to productivity continues to comeapart

FREE ENTERPRISE ON TRIAL

In the late 1980s, I noticed atroubling trend A larger and largershare of the nation’s income andwealth was going to the very top—not just the top 1 percent, but thetop of the top 1 percent—whileother Americans were dividing up ashrinking share I wrote up myndings, and my tentative

explanation for this trend, in a

book called The Work of Nations.

Bill Clinton read the book, andafter he was elected president, heasked me to be his secretary oflabor He told me he wascommitted to reversing the trend,and he called for more investment

infrastructure, and health care inorder to make the bottom half ofour population more productive.Clinton and his administrationworked hard, but we were neverable to implement his full agenda.The economic recovery of themiddle and late 1990s was strong

enough to generate twenty-twomillion new jobs and raise almosteveryone’s wages, but it did notreverse the long-term trend Theshare of total income and wealthclaimed by the top continued togrow, as did the political clout thataccompanies such concentration.

unaware

But now the nation is becomingaware President Obama has made

it one of the de ning issues of his

nonpartisan Congressional Budget

O ce has issued a major report onthe widening disparities The issue

has become front-page news Forthe rst time since the 1930s, abroad cross section of the Americanpublic is talking about theconcentration of income, wealth,and political power at the top.

Score a big one for theOccupiers Regardless of whetheryou sympathize with the so-calledOccupier movement that beganspreading across America in thefall of 2011, or whether you believe

it will become a growing politicalforce in America, it has had aprofound e ect on the nationalconversation

Even more startling is the change

in public opinion Not since the1930s has a majority of Americanscalled for redistribution of income

or wealth But according to a New York Times/CBS News poll, an

astounding 66 percent ofAmericans say the nation’s wealthshould be more evenly distributed

A similar majority believes the richshould pay more in taxes.According to a Wall Street Journal/NBC News poll, a majority

of people who describe themselves

as Republicans believe taxes should

be increased on the rich

I used to be called a class warriorfor even raising the subject of

widening inequality Now it seemsmost Americans have become class

warriors Or at least class worriers.

And many blame Republicans forstacking the deck in favor of the

rich In that New York Times/CBS

News poll, 69 percent ofrespondents said Republicanpolicies favor the rich (28 percentsaid the same of President Obama’spolicies)

The old view was that anyonecould make it in America withenough guts and gumption Webelieved in the self-made man (or,more recently, woman) who rosefrom rags to riches: inventors and

entrepreneurs born into poverty,

generations of young men fromhumble beginnings who grew up tobecome president, like AbrahamLincoln We loved the novellas ofHoratio Alger and their moremodern equivalents—stories thatproved the American dream wasopen to anyone who worked hard

In that old view, which was a kind

of national morality play, beingrich was proof of hard work, andlack of money was proof ofindolence or worse

A profound change has comeover America Guts, gumption, and