Robert B. Reich's Blog, page 87

Reality Check

The other night I phoned a former Republican member of Congress with whom I’d worked in the...

The Rigging of the American Market

Much of the national debate
about widening inequality focuses on whether and how much to tax the...

On Leaders and Demagogues

Among the current crop of
candidates for president of the United States, who exhibits leadership and...

THE 4 BIG LIES ABOUT IMMIGRANTS – AND THE TRUTHDonald...

THE 4 BIG LIES ABOUT IMMIGRANTS – AND THE TRUTH

Donald Trump has opened the floodgates to lies about immigration. Here are the myths, and the facts

MYTH:  Immigrants take away American jobs. 

Wrong. Immigrants add to economic demand, and thereby push firms to create more jobs. 

MYTH: We don’t need any more immigrants. 

Baloney. The U.S. population is aging. Twenty-five years ago, each retiree in America was matched by 5 workers. Now for each retiree there are only 3 workers. Without more immigration, in 15 years the ratio will fall to 2 workers for every retiree, not nearly enough to sustain our retiree population. 

MYTH: Immigrants are a drain on public budgets. 

Bull. Immigrants pay taxes! The Institute on Taxation and Economic Policy released a report this year showing undocumented immigrants paid $11.8 billion in state and local taxes in 2012 and their combined nationwide state and local tax contributions would increase by $2.2 billion under comprehensive immigration reform. MYTH: Legal and illegal immigration is increasing. 

Wrong again. The net rate of illegal immigration into the U.S. is less than zero. The number of undocumented immigrants living in the U.S. has declined from 12.2 million in 2007 to 11.3 million now, according to Pew Research Center.  

Don’t listen to the demagogues who want to blame the economic problems of the middle class and poor on new immigrants, whether here legally or illegally. The real problem is the economic game is rigged in favor of a handful at the top, who are doing the rigging.

We need to pass comprehensive immigration reform, giving those who are undocumented a path to citizenship.

Scapegoating them and other immigrants is shameful.

And it’s just plain wrong.

The Morality of a $15 Minimum

Have you noticed how often
conservatives who disagree with a policy proposal call it a “job...

AUSTERITY 101: The Three Reasons Republican Deficit Hawks Are...

AUSTERITY 101: The Three Reasons Republican Deficit Hawks Are Wrong

Congress is heading into another big brawl over the
federal budget deficit, the national debt, and the debt ceiling.

Republicans are already talking about holding Social Security
and Medicare “hostage” during negotiations—hell-bent on getting cuts
in exchange for a debt limit hike.

Days ago, U.S. Treasury Secretary Jacob Lew asked whether our
nation would “muster the political will to avoid the self-inflicted wounds
that come from a political stalemate.”

It’s a fair question. And there’s only one economically sound
answer: Congress must raise the debt ceiling, end the sequester, put more people to work,
and increase our investment in education and infrastructure.

Here are the three reasons why Republican deficit hawks are wrong. (Please watch and share our attached video.)

FIRST: Deficit and debt numbers are meaningless on their own.
They have to be viewed as a percent of the national economy.

That ratio is critical. As long as the yearly deficit continues
to drop as a percent of the national economy, as it’s been doing for several
years now, we can more easily pay what we owe.

SECOND: America needs to run larger deficits when lots of people
are unemployed or underemployed – as they still are today, when millions remain too discouraged to look for jobs and millions more are in part-time jobs and need full-time work.

As we’ve known for years – in every economic downturn and in
every struggling recovery – more government spending helps create jobs – teachers, fire
fighters, police officers, social workers, people to rebuild roads and bridges
and parks. And the people in these jobs create far more jobs when they spend their paychecks. 

This kind of spending thereby grows the economy – thereby
increasing tax revenues and allowing the deficit to shrink in proportion.

Doing the opposite – cutting back spending when a lot of people
are still out of work – as Congress has done with the sequester, as much of
Europe has done – causes economies to slow or even shrink, which makes the
deficit larger in proportion. 

This is why austerity economics is a recipe for disaster, as
it’s been in Greece. Creditors and institutions worried about Greece’s debt
forced it to cut spending, the spending cuts led to a huge economic recession,
which reduced tax revenues, and made the debt crisis there worse. 

THIRD AND FINALLY: Deficit spending on investments like
education and infrastructure is different than other forms of spending, because
this spending builds productivity and future economic growth.

It’s like a family borrowing money to send a kid to college or
start a business. If the likely return on the investment exceeds the borrowing
costs, it should be done.

Keep these three principles in mind and you won’t be fooled by
scare tactics of the deficit hawks.

And you’ll understand why we have to raise the debt ceiling, end the sequester, put more
people to work, and increase rather than decrease spending on vital public
investments like education and infrastructure. 

Hillary, Bernie, and the Banks

Giant
Wall Street banks continue to threaten the wellbeing of millions of Americans,
but what to...

Why the Washington Post’s Attack on Bernie Sanders is Bunk

The Washington Post just ran an attack on Bernie Sanders that distorts not only what he’s
saying and...

Donald Trump Proves What’s Wrong with Bankruptcy Laws in America

On the opening day of Trump Plaza in Atlantic City
in 1984, Donald Trump stood in a dark topcoat on...

WHY WE MUST END UPWARD PRE-DISTRIBUTIONS TO THE RICH You often...

WHY WE MUST END UPWARD PRE-DISTRIBUTIONS TO THE RICH

 You often hear inequality has widened
because globalization and technological change have made most people less competitive,
while making the best educated more competitive.

There’s some truth to this. The tasks
most people used to do can now be done more cheaply by lower-paid workers
abroad or by computer-driven machines.

But this common explanation overlooks
a critically important phenomenon: the increasing concentration of political
power in a corporate and financial elite that has been able to influence the
rules by which the economy runs.

As I argue in my new book, “Saving
Capitalism: For the Many, Not the Few” (out this week), this transformation has
amounted to a pre-distribution
upward.

Intellectual property rights—patents,
trademarks, and copyrights—have been enlarged and extended, for example,
creating windfalls for pharmaceutical companies.

Americans now pay the highest
pharmaceutical costs of any advanced nation.

At the same time, antitrust laws have
been relaxed for corporations with significant market power, such as big food
companies, cable companies facing little or no broadband competition, big
airlines, and the largest Wall Street banks.

As a result, Americans pay more for
broadband Internet, food, airline tickets, and banking services than the
citizens of any other advanced nation.

Bankruptcy laws have been loosened
for large corporations—airlines, automobile manufacturers, even casino magnates
like Donald Trump—allowing them to leave workers and communities stranded.

But bankruptcy has not been extended
to homeowners burdened by mortgage debt or to graduates laden with student
debt. Their debts won’t be forgiven.

The largest banks and auto
manufacturers were bailed out in 2008, shifting the risks of economic failure
onto the backs of average working people and taxpayers.

Contract laws have been altered to
require mandatory arbitration before private judges selected by big
corporations. Securities laws have been relaxed to allow insider trading of
confidential information.

CEOs now use stock buybacks to boost
share prices when they cash in their own stock options.

Tax laws have special loopholes for
the partners of hedge funds and private-equity funds, special favors for the
oil and gas industry, lower marginal income-tax rates on the highest incomes,
and reduced estate taxes on great wealth.

Meanwhile, so-called “free trade”
agreements, such as the pending Trans Pacific Partnership, give stronger
protection to intellectual property and financial assets but less protection to
the labor of average working Americans.

Today, nearly one out of every three working
Americans is in a part-time job. Many are consultants, freelancers, and
independent contractors. Two-thirds are living paycheck to paycheck.

And employment benefits have
shriveled. The portion of workers with any pension connected to their job has
fallen from just over half in 1979 to under 35 percent today.

Labor unions have been eviscerated.
Fifty years ago, when General Motors was the largest employer in America, the
typical GM worker, backed by a strong union, earned $35 an hour in today’s
dollars.

Now America’s largest employer is Walmart,
and the typical entry-level Walmart worker, without a union, earns about $9 an
hour. 

More states have adopted so-called
“right-to-work” laws, designed to bust unions. The National Labor Relations
Board, understaffed and overburdened, has barely enforced collective
bargaining.

All of these changes have resulted in
higher corporate profits, higher returns for shareholders, and higher pay for
top corporate executives and Wall Street bankers – and lower pay and higher
prices for most other Americans.

They amount to a giant pre-distribution upward to the rich. But we’re not aware of them
because they’re hidden inside the market.

The underlying problem, then, is not
just globalization and technological changes that have made most American
workers less competitive. Nor is it that they lack enough education to be
sufficiently productive.

The more basic problem is that the
market itself has become tilted ever more in the direction of moneyed interests
that have exerted disproportionate influence over it, while average workers
have steadily lost bargaining power—both economic and political—to receive as
large a portion of the economy’s gains as they commanded in the first three
decades after World War II.

Reversing the scourge of widening
inequality requires reversing the upward pre-distributions within the rules of
the market, and giving average people the bargaining power they need to get a
larger share of the gains from growth.

The answer to this problem is not
found in economics. It is found in politics. Ultimately, the trend toward
widening inequality in America, as elsewhere, can be reversed only if the vast
majority join together to
demand fundamental change.

The most important political
competition over the next decades will not be between the right and left, or
between Republicans and Democrats. It will be between a majority of Americans
who have been losing ground, and an economic elite that refuses to recognize or
respond to its growing distress.