Saving Capitalism, by Robert Reich: on Budget & Economy

Donald Trump: People with lots of money avoid consequences of bankruptcy

In America, people with lots of money can easily avoid the consequences of bad bets and big losses by cashing out at the first sign of trouble. The laws protect them through limited liability and bankruptcy. But workers who move to a place like Atlantic City for a job, invest in a home there, and build their skills have no such protection. Jobs vanish, home values plummet, and skills are suddenly irrelevant. They're stuck with the mess. Bankruptcy was designed so people could start over. But these days, the only ones starting over with ease are big corporations, wealthy moguls, and Wall Street, who have had enough political clout to shape bankruptcy law to their needs.

Richard Durbin: 2008: Allow homeowners in foreclosure to use bankruptcy

The bill passed the House, but when in late April 2009 Durbin offered his amendment in the Senate, the financial industry flexed its muscles to prevent its passage, arguing that it would greatly increase the cost of home loans. (No convincing evidence showed this to be the case.) The bill garnered only 45 Senate votes, even though Democrats were in the majority. Partly as a result, distressed homeowners had no bargaining power. More than five million of them lost their homes, and by 2014 another two million were near foreclosure. So much, for shared sacrifice.

Robert Reich: Threat to capitalism is steady undermining of trust

The threat to capitalism is no longer communism or fascism but a steady undermining of the trust modern societies need for growth and stability. When most people stop believing they and their children have a fair chance to make it, the tacit social contract societies rely on for voluntary cooperation begins to unravel. In its place comes subversion, small and large--petty theft cheating, fraud, kickbacks, corruption. Economic resources gradually shift from production to protection.

We have the power to change all this, re-creating an economy that works for the many rather than the few.

Robert Reich: Threat to capitalism is steady undermining of trust

But today all these assumptions ring hollow. Confidence in the economic system has declined sharply. The apparent arbitrariness and unfairness of the economy have undermined the public's faith in its basic tenets. Cynicism abounds. To many, the economic and political systems seem rigged, the deck stacked in favor of those at the top.

The threat to capitalism is no longer communism or fascism but a steady undermining of the trust modern societies need for growth and stability. When most people stop believing they have a fair chance, the tacit social contract begins to unravel. In its place comes subversion. Economic resources gradually shift from production to protection.

We have the power to change all this, re-creating an economy that works for the many rather than the few.