Editorial: Unequal wealth
CHARLESTON, W.Va. -- Former Labor Secretary Robert Reich, now a California university professor, crusades against a worsening American dilemma: the ever-growing concentration of wealth in the hands of the top 1 percent of families, while the middle class flounders.
U.S. government policies favor the rich, he says. Other modern democracies are fairer, and have more equality.
After writing several books and essays, Reich produced a video, "Inequality for All," which is being shown this week at universities, churches, labor halls and other reform sites in a coordinated nationwide effort. It's to be viewed at 7 p.m. Friday at Charleston's Unitarian Universalist Congregation on Kanawha Boulevard West.
"We're in the biggest economic slump since the Great Depression, and we can't seem to get out of it. Why? Because, exactly as in the 1920s, so much of the nation's income and wealth are going to the top, that the vast middle class doesn't have the purchasing power to keep the economy going," Reich wrote about the video.
Just before the historic 1929 stock market crash triggered the Depression, America's elite similarly acquired a lion's share of income. After World War II, the middle class soared during decades of prosperity. But even before the conservative Reagan administration of the 1980s, the rich began ascending.
"Starting in the late 1970s, the middle class began to weaken," Reich wrote in The New York Times. "Although productivity continued to grow and the economy continued to expand, wages began flattening in the 1970s because new technologies -- container ships, satellite communications, eventually computers and the Internet -- started to undermine any American job that could be automated or done more cheaply abroad. The same technologies bestowed ever-larger rewards on people who could use them to innovate and solve problems. Some were product entrepreneurs; a growing number were financial entrepreneurs. The pay of graduates of prestigious colleges and MBA programs -- the 'talent' who reached the pinnacles of power in executive suites and on Wall Street -- soared."
Middle-class families coped because more women got jobs -- and households lived on credit card debt. But these stopgaps can't keep up with the shift of income.
To counter worsening inequality, Reich said America should have "enlarged safety nets" and "made Medicare available to anyone." As corporations sent U.S. jobs overseas and laid off millions of American workers, they should have been forced to give severance pay and retraining to the layoff victims. "We could have raised taxes on the rich and cut them for poorer Americans," he said.
Instead, he wrote, government "shredded safety nets. (Only 27 percent of the unemployed are covered by unemployment insurance.) And it allowed companies to bust unions and threaten employees who tried to organize." Washington "stood by as big American companies became global companies with no more loyalty to the United States than a GPS satellite." Taxes on the wealthy were slashed below half.
Reich wants to mobilize public support for reforms to restore part of the lost equality. We don't know if any reversal is possible -- but concerned people should become informed about this economic quandary.