Robert B. Reich's Blog, page 43

Why We Need to Break Up Big Tech The combined wealth of...

Why We Need to Break Up Big Tech

The combined wealth of Facebook’s Mark Zuckerberg, Amazon’s Jeff Bezos, and Google’s Sergey Brin, and Larry Page is larger than the combined wealth of the bottom half of the American population.  

They are the leaders of a second Gilded Age – ushered in by semiconductors, software and the internet – which has spawned a handful of hi-tech behemoths and crushed competition. 

Facebook, Amazon, Google, Apple, and Microsoft now have the highest market values for all public corporations in America. 

As of today, only three countries in the world have a GDP higher than these companies’ combined market value of approximately 4 trillion dollars.

America’s first Gilded Age began in the late nineteenth century with a raft of innovations – railroads, steel production, oil extraction – that culminated in mammoth trusts run by “robber barons” like J.P. Morgan, John D. Rockefeller, and William Vanderbilt.

The answer then was to break up the railroad, oil, and steel monopolies.

The answer today is the same: Break Up Big Tech.

First: They have a stranglehold on the economy. 

Nearly 90 percent of all internet searches now go through Google. Facebook and Google together will account for nearly 60 percent of all digital ad spendingin 2019 (where most ad money goes these days).

They’re also the first stops for many Americans seeking news (93 percent of Americans say they receive at least some news online). Amazon is now the first stop for almost half of all American consumers seeking to buy anything online.

With such size comes the power to stifle innovation.

Google uses its search engine to promote its own productsand content over those of its competitors, like Yelp. Facebook’s purchases of WhatsApp and Instagram killed off two potential rivals. Apple stifles competition in its App Store.

Partly because of this economic concentration, the rate that new job-creating businesses have formed in the United States has almost halved since 2004, according to the Census Bureau.

Second: Such size also gives these giant corporations political power to get whatever they want, undermining our democracy. 

In 2018, Google, Amazon, Facebook, Apple, and Microsoft spent 70.9 million dollars on lobbying and supporting candidates.

As a result, Amazon – the richest corporation in America– paid nothing in federal taxes last year. Meanwhile, it held a bidding war to extort billions from states and cities eager to have its second headquarters.

Not to mention, these companies have tremendous influence over how Americans receive information. And as we’ve seen, Facebook and Google have enabled the manipulation of our elections.

Third: Giant tech companies also hurt the environment. 

Many are failing to reduce greenhouse emissions, as they promised, and are unwilling to commit fully to renewable energy.

Finally: Their huge wealth isn’t being shared with most of their workers. 

Nine in 10 workers in Silicon Valley make less now than they did in 1997, adjusted for inflation. And many are part of the “working homeless.” That is, people who work full time and yet are still homeless.

The answer is to break them up. That way, information would be distributed through a large number of independent channels instead of a centralized platform. And more startups could flourish. 

Even one of Facebook’s founders has called for the social media behemoth to be broken up.

Senator Elizabeth Warren has introduced a proposal to do just that. It would force tech giants to open up their platforms to more competition or break up into smaller companies.

Other countries are already taking on Big Tech. The European Union fined Google nearly 3 billion dollars for antitrust violations in 2017.

Let’s be clear: Monopolies aren’t good for anyone except for the monopolists, especially when they can influence our elections and control how Americans receive information. 

In this new Gilded Age, we need to respond to them as forcefully as we did to the monopolies of the first Gilded Age and break them up.

THE “CENTER” OF AMERICAN POLITICS IS ON THE LEFTDonald Trump,...

THE “CENTER” OF AMERICAN POLITICS IS ON THE LEFT

Donald Trump, Fox News, and Republicans in Congress label proposals they disagree with “fringe,” “radical,” or “socialist.”  Well, let’s see where the American people actually stand:

On the economy,76 percent of Americans favor higher taxes on the super-rich, including over half of registered Republicans. Over 60 percent favor a wealth tax on fortunes of $50 million or more. Even Fox News polls confirm these trends.

What about health care? Well, 70 percent want Medicare for All, which most define as Medicare for anyone who wants it.  60 percent of Republicans support allowing anyone under 65 to buy into Medicare.

92 percent want lower prescription drug prices. Over 70 percent think we should be able to buy drugs imported from Canada.

On family issues, more than 80 percent  of Americans want paid maternity leave. 79  percent of voters want more affordable child care. And that includes 80 percent of Republicans.

60 percent of Americans support free college tuition for those who meet income requirements.

62% think climate change is man-made and needs addressing.

84 percent think money has too much influence in politics. 77 percent support limits on campaign spending. And that includes 71 percent of Republicans.

I could go on. 

So why do the powerful call these policy ideas “fringe,” or “radical,” or “socialist?” 

Money. Many of these initiatives would cost them – requiring either higher taxes on the rich (many could be achieved by repealing the giant Trump tax cut for the wealthy and corporations), or regulations that might cut into their corporate profits. 

So you can bet that as these proposals become even more popular, the powerful are going to intensify their attacks.

But just remember: the “center” is not halfway between what most Americans want and what big corporations, Wall Street, and the super-wealthy want.

The “center” is what the vast majority of Americans want.  

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THE 7 BIGGEST FAILURES OF TRUMPONOMICSDonald Trump and...

THE 7 BIGGEST FAILURES OF TRUMPONOMICS

Donald Trump and Republicans in Congress keep crowing about the economy, when in reality Trumponomics has been a disaster. Here are its 7 biggest failures:

1. Trump promised to bring down America’s trade deficit “as fast as possible.” Instead, the trade deficit has hit an all-time high. The United States is now purchasing more goods and services from the rest of the world than we sell abroad than at any time in history.

2. As a presidential candidate in 2016, he said he could completely eliminate the federal debt in 8 years. Instead, the federal debt has exploded thanksto Trump and the GOP’s $1.9 trillion tax cuts for the wealthy and corporations. They’re already using the growing debt to threaten cuts to Social Security, Medicare, and Medicaid.

3. He promised to boost the wages of American workers, including a $4,000 pay raise for the average American family. Instead, wages for most Americans have been flat, adjusted for inflation. Meanwhile, over the same period, corporate profits have soared and the rich have become far richer, but the gains haven’t trickled down.

4. His administration said that corporations would invest their savings from tax cuts. Instead, corporations spent more money buying back shares of their own stock in 2018 than they invested in new equipment or facilities. These stock buybacks provide no real benefit for the economy, but boost executive bonuses and payouts for wealthy investors.

5. He promised a tax cut for middle-class families. Instead most Americans will end up paying more by 2027.

6. He promised to keep jobs in America and crack down on companies that ship jobs overseas. Instead, his tax law has created financial incentives for corporations to expand their operations abroad. Trump’s trade wars have also encouraged companies like Harley Davidson to move production overseas.

7. He promised to “drain the swamp” of Washington lobbyists. Instead, he’s put them in charge of health, safety, and environmental protections–which has endangered most Americans while increasing corporate profits even further.

The real recipe for economic growth is to invest in Americans–in their health, education, job training, and infrastructure.

But Trumponomics has exploded the deficit, hurt ordinary Americans, and lined the pockets of the wealthy and corporations. 

Don’t let Trump and Republicans claim otherwise.

The Same Old Scare Tactic about SocialismI keep hearing a lot...

The Same Old Scare Tactic about Socialism

I keep hearing a lot about “socialism” these days, mainly from Donald Trump and Fox News, trying to scare Americans about initiatives like Medicare for All, a Green New Deal, universal child care, free public higher education, and higher taxes on the super-wealthy to pay for these. 

Well, I’m here to ask you to ignore the scaremongering.

First, these initiatives are overwhelmingly supported by most Americans.

Second, for the last 85 years, conservative Republicans have been yelling “socialism” at every initiative designed to help most Americans. 

It was the scare word used by the Liberty League, in 1935when President Franklin D. Roosevelt proposed Social Security.

In 1952, President Harry Truman noted that “Socialism is the epithetthey have hurled at every advance the people have made in the last 20 years….” 

Truman went on to say,“Socialism is what they called public power…social security… bank deposit insurance. ..free and independent labor organizations.,, anything that helps all the people. Truman concluded by noting “When the Republican candidate inscribes the slogan ‘Down With Socialism’ … what he really means is, ‘Down with Progress.’”

Third, if we don’t want to live in a survival-of-the-fittest society in which only the richest and most powerful can endure, government has to do three basic things: regulate corporations, provide social insurance against unforeseen hardships, and support public investments such as schools and public transportation.

All of these require that we pool our resources for the common good.

Regardless of whether this is called democratic socialism or enlightened capitalism, all are necessary for a decent society.

Fourth and finally, America spends very little on social programs compared to other industrialized nations. As a result, almost 30 million Americans still lack health insurance,nearly 51 million households can’t afford basic monthly expenses including housing, food, child care, and transportation. And we’re the only industrialized nation without paid family leave. 

Our infrastructure is literally crumbling, our classrooms are overcrowded and our teachers are paid far less than workers in the private sector with comparable education.

We can and must do more. 

So don’t let them scare you with words like “socialism.” These policies are just common sense.

The Gig is Up

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What Does Oligarchy Mean?“Oligarchy” means government of and by...

What Does Oligarchy Mean?

“Oligarchy” means government of and by a few at the top, who exercise power for their own benefit. It comes from the Greek word oligarkhes, meaning “few to rule or command.”

Even a system that calls itself a democracy can become an oligarchy if power becomes concentrated in the hands of a few very wealthy people – a corporate and financial elite.

Their power and wealth increase over time as they make laws that favor themselves, manipulate financial markets to their advantage, and create or exploit economic monopolies that put even more wealth into their pockets.

Modern-day Russia is an oligarchy, where a handful of billionaires who control most major industries dominate politics and the economy.

What about the United States?

According to a study published in 2014 by Princeton Professor Martin Gilens and Northwestern Professor Benjamin Page, although Americans enjoy many features of democratic governance, such as regular elections, and freedom of speech and association, American policy making has become dominated by powerful business organizations and a small number of affluent Americans.

The typical American has no influence at all.

This is largely due to the increasing concentration of wealth. In a 2019 research paper, Berkeley economics professor Gabriel Zucman determined that the richest 1 percent of Americans now own 40 percent of the nation’s wealth. That’s up from 25 to 30 percent of the nation’s wealth in the 1980s.

The only country Zucman found with similarly high levels of wealth concentration is … Russia.

America has had an oligarchy before – in the first Gilded Age, which ran from the 1880s until the early 20th century. 

Teddy Roosevelt called that oligarchy the “malefactors of great wealth,” and fought them by breaking up large concentrations of economic power–the trusts–and instituting a progressive federal income tax.

His fifth cousin, Franklin D. Roosevelt, further reduced their power by strictly regulating Wall Street, and encouraging the growth of labor unions. The oligarchy fought back but Roosevelt wouldn’t yield.

“Government by organized money is just as dangerous as Government by organized mob,” he thundered in 1936. “Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred.”

But the American oligarchy has returned. We are now in a second Gilded Age. As the great jurist Louis Brandeis once said, “We can have democracy in this country or we can have wealth concentrated in the hands of a few, but we cannot have both.”

We must, once again, make the correct choice and reduce the economic and political power of the American oligarchy.

Why We Must Legalize MarijuanaThe federal prohibition on...

Why We Must Legalize Marijuana

The federal prohibition on marijuana has been a disaster. For decades, millions of Americans have been locked up and billions of dollars have been wasted. It’s also deepened racial and economic inequality. 

We must end this nonsensical prohibition.

The facts are staggering. In 2017, more Americans were arrested for marijuana possession than for murder, rape, aggravated assault and robbery combined.That’s one marijuana arrest every minute.

The costs associated with enforcing this ban – including arrests, court costs, and incarceration – reach nearly $14 billion a year. 

Prohibition also hurts the economy in terms of lost wages. And Americans with criminal records have a harder time finding a job and getting the education they need.

On the other hand, legalizing, taxing, and regulating is good for the economy and creates jobs. 

By simply levying a tax on marijuana like we do cigarettes and alcohol, state and local governments could raise more than $6 billion a year. This doesn’t even include additional revenue from taxes on the marijuana industry. 

States like Colorado and Washington that tax and regulate marijuana have already generated millions of dollarsfor health care, education,and other public investments.

But this is more than an economic issue. It’s also a matter of racial justice and equality. 

The federal prohibition on marijuana dates back to anti-Mexican sentimentin the 1930s.  In large part, it was nothing more than another way to criminalize communities of color. 

Today, black and brown Americans are still much more likely to be arrested for marijuana than white Americans, despite using marijuana at similar rates.

Given the racist legacy of these laws, it’s particularly important that the economic gains of legalization extend to communities that have been most harmed by the war on drugs.

Support for marijuana legalization has surged in recent years, with two-thirds of Americans now in favor of it. Even a majority of Republicans are in support, and more states are taking action to reform their laws and move toward legalization.

Yet Donald Trump and his administration are trying to turn back the clock. They’ve even formed a task force to weaken public support for legalization and help spread misinformation about so-called“marijuana threats.”

Just as with the prohibition on alcohol in the 1920s, the federal prohibition of marijuana has been unnecessarily cruel – wasting billions of dollars, unjustly harming millions of lives, and furthering racist policies. 

It’s time to legalize marijuana.

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Why We Need a Wealth TaxThe crisis of income inequality in...

Why We Need a Wealth Tax

The crisis of income inequality in America is well-known, but there is another economic crisis developing much faster and with worse consequences. I’m talking about inequality of wealth.

The wealth gap is now staggering. In the 1970s, the wealthiest tenth of Americans owned about a third of the nation’s total household wealth. Now, the wealthiest 10 percent owns about 75 percent of total household wealth. 

America’s richest one-tenth of one percentnow owns as much wealth as the bottom 90 percent.

Wealth isn’t like income.  Income is payment for work.  Wealth keeps growing automatically and exponentially because it’s parked in investments that generate even more wealth.

Wealth is also passed from generation to generation. An estimated 60% of the wealth in the United States is inherited. Many of today’s super-rich never did a day’s work in their lives.  The Walmart heirs alone have more wealth than the bottom42 percentof Americans combined.

America is now on the cusp of the largest intergenerational transfer of wealth in history. As wealthy boomers die, an estimated $30 trillion will go to their children over the next three decades.

Over time, this wealth will continue to grow even further – without these folks lifting a finger. This concentration of wealth will soon resemble the kind of dynasties common to European aristocracies in the seventeenth and eighteenth centuries.

It’s exactly what our Founding Fathers sought to combat by creating a system of government and economy grounded in meritocracy.

Dynastic wealth puts economic power into the hands of a relatively small number of people who make decisions about where and how to invest most of the nation’s capital, as well as which nonprofit enterprises and charities deserve support, and what politicians merit their campaign contributions. 

That means their decisions have a disproportionately large effect on America’s future.

Dynastic wealth also magnifies race and gender disparities. Because of racism and sexism, women and people of color not only earn less. They have also saved less. Which is why the racial wealth gap and the gender wealth gap are huge and growing.

Today, government is financed almost entirely by income taxes and payroll taxes – totally ignoring the giant and growing wealth at the top.

So how do we address the crisis of wealth inequality?

A wealth tax, as proposed by Senator Elizabeth Warren, would begin to tackle all this by placing a 2 percent tax on to wealth in excess of 50 million dollars. 

According to estimates, this tax would generate 2.75 trillion dollars over the next decade, which could be used for health care, education, infrastructure, and everything else we need.

Not only would a wealth tax raise revenue and help bring the economy back into balance, but it would also protect our democracy by reducing the influence of the super-rich on our political system.

We must demand an economy that works for the many, not one that concentrates wealth in the hands of a few. A wealth tax is a necessary first step.