Robert Reich in Saving Capitalism, by Robert Reich
On Budget & Economy:
Threat to capitalism is steady undermining of trust
For three decades after WWII, the economy generated hope. 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 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.
Source: Saving Capitalism, by Robert Reich, p. xi-xii
May 3, 2016
On Budget & Economy:
Threat to capitalism is steady undermining of trust
For three decades after World War II, the economy generated hope. Hard work paid off, education was the means toward upward mobility, our children would enjoy better lives than we had.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.
Source: Saving Capitalism, by Robert Reich, p. xi-xii
May 3, 2016
On Corporations:
Monsanto lobbies Congress to ensure agribusiness monopoly
Monsanto, [through its patents, has a near-monopoly on] corn and soybean seeds. At every stage, Monsanto's growing economic power has enhanced its political power to shift the rules to its advantage, thereby adding to its economical power.
To enforce and ensure dominance, the company has employed a phalanx of lawyers. They've sued other companies for patent infringement and sued farmers who want to save seed for replanting.
You might think Monsanto's overwhelming market power would make it a target for antitrust enforcement. Think again. In 2012, it succeeded in putting an end to a two-year investigation by the antitrust division of the
Justice Department into Monsanto's dominance of the seed industry.
Monsanto has the distinction of spending more on lobbying--nearly $7 million in 2013 alone--than any other big agribusiness.
Source: Saving Capitalism, by Robert Reich, p. 35
May 3, 2016
On Corporations:
Left Atlantic City before Trump Plaza folded
On the day Trump Plaza opened in Atlantic City in 1984, Donald Trump stood in a dark topcoat on the casino floor celebrating his new investment as the finest building in the city and possibly the nation. Thirty years later, the Trump
Plaza folded, leaving some one thousand employees without jobs. Trump, meanwhile, was on Twitter claiming he had "nothing to do with Atlantic City" and praising himself for his "great timing" in getting out of the investment.
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.
Source: Saving Capitalism, by Robert Reich, p. 59
May 3, 2016
On Corporations:
Executive pay skyrocketed from 5% in 1993 to 15% in 2013
The share of corporate income devoted to compensating the five highest-paid executives of large public firms went from an average of 5 percent in 1993 to more than 15 percent in 2013.
So why, exactly did CEO pay skyrocket? One theory is that CEOs play large roles in appointing their corporations' directors for whom a reliable tendency toward agreeing with the CEO has become a prerequisite.
Corporate law in the United States gives shareholders at most an advisory role on CEO pay. "Say on pay" votes are required under the
2010 Dodd-Frank financial legislation, but the votes are not binding on a corporation. Such cronyism in American boardrooms has been common for decades.
Source: Saving Capitalism, by Robert Reich, p. 98-100
May 3, 2016
On Corporations:
Make corporate pay depend on pay of median worker
Almost all [corporate tax] incentives have resulted in lower pay for average workers and higher pay for CEOs and other top executives. The question is how those incentives can be reversed. One possibility would be to make corporate tax rates depend
on the ratio of CEO pay to the pay of the median worker in the firm. Corporations with low ratios would pay a lower tax rate and vice versa. For example, in a 2014 CA bill, if the CEO makes 25 times the pay of the typical worker, the tax rate drops to
7%. If the CEO earns 200 times that of the typical employee, the tax rate rises to 9.5%.
The Chamber of Commerce has dubbed the bill a "job killer." But CEOs do not create jobs. Their customers create jobs by buying more of what their companies sell,
giving the companies cause to expand and hire. So pushing companies to put less money into the hands of their CEOs and more into the hands of their average employee creates more purchasing power among people who will buy, and therefore more jobs.
Source: Saving Capitalism, by Robert Reich, p.196-7
May 3, 2016
On Drugs:
End sentencing disparity of powder cocaine vs. crack
Buried within the rules are assumptions reflecting the status and power of different groups in society. Powder cocaine, for example, is the drug of choice for many in the elite, while crack cocaine is used by the poor.
They are two forms of the same prohibited drug, but before 2010, those who sold or purchased crack cocaine faced sentences one hundred times longer than those caught using the powdered form.
This was part of the reason African Americans served as much time in prison for nonviolent drug offenses as whites did for violent offenses.
In 2010, Congress enacted the Fair Sentencing Act, reducing the sentencing disparity between crack and powder cocaine to eighteen to one.
Source: Saving Capitalism, by Robert Reich, p. 50
May 3, 2016
On Drugs:
Prohibition failed in 1920s; marijuana ban fails now
Prohibition of alcohol was a notorious failure in the 1920s, just as bans on the purchase and sale of marijuana are today. Black markets are inherently risky and dangerous since illegal contracts can only be enforced through violence,
or the threat of violence (which is an argument for regulating sales of things that attract eager buyers but pose minimal harm to the public, rather than trying to prevent them altogether).
Source: Saving Capitalism, by Robert Reich, p. 51
May 3, 2016
On Education:
Achievement gap from richer districts spending twice as much
The achievement gap between poor kids and wealthy kids isn't mainly about race. It's a reflection of the nation's widening gulf between poor and wealthy families, of how schools in poor and rich communities are financed, and of the nation's increasing
residential segregation by income.This matters, because a large portion of the money to support public schools comes from local property taxes. Most states do try to give more money to poor districts, but most also cut way back on their
spending during the recession and haven't nearly made up for the cutbacks.
As we segregate by income into different communities, schools in lower-income areas have fewer resources than ever.
The result is widening disparities in funding per pupil, to the direct disadvantage of poor kids.
The wealthiest, highest-spending districts are now providing about twice as much funding per student as the lowest spending districts.
Source: Saving Capitalism, by Robert Reich, p.140
May 3, 2016
On Energy & Oil:
Treat right to emit carbon dioxide as a form of property
Ideally, the right to emit carbon dioxide into the atmosphere would be treated as a form of property whose price continued to rise over time. Polluters could buy and trade it, so it would be used where most needed.
This would also give them a strong incentive to minimize their emissions immediately and devise innovative ways of reducing them further.
Such property rights require that government determines how they are to be traded.
If necessities such as clean air and water simply go to the highest bidders, income and wealth disparities can result in wildly unfair outcomes. Government must also monitor and enforce any such system.
Source: Saving Capitalism, by Robert Reich, p. 19
May 3, 2016
On Energy & Oil:
Treat right to emit carbon dioxide as a form of property
Ideally, the right to emit carbon dioxide into the atmosphere would be treated as a form of property whose price continued to rise over time.
Polluters could buy and trade it, so it would be used where most needed. This would also give them a strong incentive to minimize their emissions immediately and devise innovative ways of reducing them further.
Such property rights require that government determines how they are to be traded. If necessities such as clean air and water simply go to the highest bidders, income and wealth disparities can result in wildly unfair outcomes.
Government must also monitor and enforce any such system.
Source: Saving Capitalism, by Robert Reich, p. 19
May 3, 2016
On Environment:
Lawsuit-enforced monopoly on seeds led to tripling prices
Monsanto, the giant biotech corporation, owns the key genetic traits in more than 90 percent of the soybeans planted by farmers in the United States and 80 percent of the corn. Its monopoly grew out of a carefully crafted strategy. It patented its own
genetically modified seeds, along with an herbicide that would kill weeds but not soy and corn grown from its seeds. The herbicide and herbicide-resistant seeds initially saved farmers time and money.
But the purchase came with a catch that would haunt them in the future: The soy and corn that grow from those seeds don't produce seeds of their own. So every planting season, farmers have to buy new seeds.
Since 2000, Monsanto has more than doubled the price of corn and soybean seeds. The average cost of planting one acre of soybeans increased 325 percent between 1994 and 2011, and the price of corn rose 259 percent.
Source: Saving Capitalism, by Robert Reich, p. 34-5
May 3, 2016
On Free Trade:
Free trade isn't opposite of protectionism; it's political
The conventional view equating "free trade" with the "free market," in contrast to government "protectionism," is misguided. "Free trade" agreements entail complex negotiations about how different market systems are to be integrated. The most
important aspects of such negotiations concern items such as intellectual property, finance, and labor. Within these negotiations, the interests of large corporations--to fully protect the value of their intellectual property and financial assets--time
and time again trump the interests of average working Americans to protect the value of their labor. (A personal confession: When I was secretary of labor in the Clinton administration, I argued against NAFTA within the confines of the administration
but did not air my concerns publicly, believing I could do more good remaining inside than resigning in protest over this and bringing China into the World Trade Organization. In subsequent years I have often wondered whether I made the right choice.)
Source: Saving Capitalism, by Robert Reich, p.124
May 3, 2016
On Government Reform:
There can be no "free market" without government
Conservatives want a smaller government and less intervention; liberals want a larger and more activist government. This has become the interminable debate, the bone of contention that splits left from right. One's response to it typically depends on
which you trust most (or the least): the government or the "free market." But the prevailing view, as well as the debate it had spawned, is utterly false. There can be no "free market" without government. The "free market" does not exist in the wilds
beyond the reach of civilization. Competition in the wild is a contest for survival in which the largest and strongest typically win. Civilization, by contrast, is defined by rules; rules create markets, and governments generate the rules.
A market--
any market--requires that government make & enforce the rules of the game. In most modern democracies, such rules emanate from legislatures, administrative agencies, and courts. Government doesn't "intrude" on the "free market." It creates the market.
Source: Saving Capitalism, by Robert Reich, p. 4-5
May 3, 2016
On Government Reform:
There can be no "free market" without government
Conservatives want a smaller government and less intervention; liberals want a larger and more activist government. This has become the bone of contention that splits left from right in America. One's response to it typically depends on which you trust
most (or least): the government or the "free market." But the prevailing view, as well as the debate it spawned, is utterly false. There can be no "free market" without government. The "free market" does not exist in the wilds beyond the reach of
civilization. Competition in the wild is a contest for survival in which the largest and strongest typically win. Civilization, by contrast, is defined by rules: rules create markets, and governments generate the rules.
A market--any market--requires
that government make and enforce the rules of the game. In most modern democracies, such rules emanate from legislatures, administrative agencies, and courts. Government doesn't "intrude" on the "free market." It creates the market.
Source: Saving Capitalism, by Robert Reich, p. 4-5
May 3, 2016
On Government Reform:
Citizens United means deepest pockets get the loudest voices
In 2010, a majority of the Supreme Court of the United States decided in "Citizens United v. Federal Election Commission" that corporations are people under the First Amendment, entitled to freedom of speech.
Yet as a practical matter, freedom of speech is the freedom to be heard, and most citizens' freedom to be heard is reduced when those who have the deepest pockets get the loudest voice.
Nowhere did the five members acknowledge the imbalance of power between big corporations increasingly willing to finance vast political advertising campaigns and ordinary citizens.
In practice, therefore, the freedom of speech granted by the court to corporations would drown out the speech of regular people without those resources.
Source: Saving Capitalism, by Robert Reich, p. 11-2
May 3, 2016
On Government Reform:
Citizens United means deepest pockets get the loudest voices
In 2010, a majority of the Supreme Court of the United States decided in Citizens United v. Federal Election Commission that corporations are people under the First Amendment, entitled to freedom of speech.
Yet as a practical matter, freedom of speech is the freedom to be heard, and most citizens' freedom to be heard is reduced when those who have the deepest pockets get the loudest voice.
Nowhere did the five members acknowledge the imbalance of power between big corporations increasingly willing to finance vast political advertising campaigns and ordinary citizens.
In practice. Therefore, the freedom of speech granted by the cort to corporations would drown out the speech of regular people without those resources.
Source: Saving Capitalism, by Robert Reich, p. 11-2
May 3, 2016
On Government Reform:
End revolving door between regulators and companies
The national commission appointed to investigate the giant oil spill in the Gulf of Mexico in 2010 found that BP failed to adequately supervise Halliburton Company's installation of the deep-water oil well--even though BP knew Halliburton lacked
experience in testing cement to prevent blowouts and hadn't performed adequately before on a similar job.Meanwhile, the Department of the Interior had not adequately overseen the oil and oil-service companies under its watch because it had developed
cozy relationships with them. The revolving door between the regulator and the companies it was responsible for overseeing was well oiled.
In 2013, Halliburton pleaded guilty to a criminal charge in which it had admitted destroying evidence in the
Deepwater Horizon oil spill disaster. But the fine it paid was a mere $200,000, the maximum allowed under the law for such a misdemeanor. Halliburton's revenues in 2013 totaled $29 billion. And no Halliburton official went to jail.
Source: Saving Capitalism, by Robert Reich, p. 69-76
May 3, 2016
On Health Care:
High drug prices result from patents' temporary monopolies
America spends more on medications per person than does any other developed country. Of the $3.1 trillion America spent on health in 2014, drugs accounted for 10 percent of the total.Drug prices are high in America partly because, while other
governments set wholesale drug prices in their countries, the law bars the US government from using its considerable bargaining power to negotiate lower costs. But the bigger reason drug prices are so high in America is that drugs are patented--and
those temporary monopolies often last beyond when the patents are supposed to run out (now 20 years); the Patent Office often renews patents on the basis of small changes to the original drugs that technically make them new and therefore patentable.
Many drugs that are available over the counter in other countries can be bought only by prescription in the US. It is illegal for Americans to shop at foreign pharmacies for cheaper versions of the same drugs sold in the US, either branded or generic.
Source: Saving Capitalism, by Robert Reich, p. 22-4
May 3, 2016
On Jobs:
Falling wages created "working poor" even with two jobs
Until quite recently, poverty was largely confined to those who did not work--widows and children, the elderly, the disabled and seriously ill, and those who had lost their jobs. Public safety nets and private charities were created to help them.
It was rare for a full-time worker to be in poverty because, the economy generated a plethora of middle-class jobs that paid reasonably well and were inherently secure. This is no longer the case.
There are several reasons for the growth of America's working poor. First, wages at the bottom have continued to drop, adjusted for inflation. By 2013, the ranks of the working poor had swelled to forty-seven million people in the
United States, one out of every seven Americans. One-fourth of all American workers were in jobs paying below what a full-time, full-year worker needed in order to support a family of four above the federally defined poverty line.
Source: Saving Capitalism, by Robert Reich, p.133-4
May 3, 2016
On Principles & Values:
We can have democracy or concentrated wealth, but not both
In the late 19th century, railroads, steel, oil industries created vast economic combinations (then called "trusts"), concentrated wealth at the top, and fostered urban squalor and political corruption. The lackeys of robber barons literally deposited
sacks of money on the desks of pliant legislators, prompting the great jurist Louis Brandeis to note that the nation had no choice: "We can have a democracy or we can have great wealth in the hands of a few," he said, "but we cannot have both."
America made the choice. Public outrage gave birth to the nation's first progressive income tax. President Theodore Roosevelt, railing at the "malefactors of great wealth," used government power to break up the trusts and impose new regulations barring
impure food and drugs. He proposed "all contributions from corporations to any political committee or for any political purpose should be forbidden by law," leading Congress to ban corporate political donations.
Source: Saving Capitalism, by Robert Reich, p.159
May 3, 2016
On Tax Reform:
CEO pay is tax deductible, unlike corporate investments
The share of corporate income devoted to compensating the five highest-paid executives of large public firms went from an average of 5% in 1993 to more than 15% in 2013. Not incidentally, this was money corporations could have invested in research and
development, additional jobs, or higher wages for average workers. In addition, almost all of it was deducted from corporate income taxes, which means the rest of us paid more taxes proportionally in order to make up the shortfall.
One justification is that CEOs and top executives are worth their soaring pay because the stock market has also soared during these years. But, the stock market surge has had a great deal to do
with changes in the rules that have favored big companies and major banks--platforms and networks (and declining market power for average workers, who no longer have strong unions negotiating on their behalf).
Source: Saving Capitalism, by Robert Reich, p. 98-100
May 3, 2016
On Technology:
Most important form or property now is intellectual property
In order to have a "free market," decisions must be made about:- PROPERTY: what can be owned
- MONOPOLY: what degree of market power is permissible
- CONTRACT: what can be bought and sold, and on what terms
- BANKRUPTCY: what
happens when purchasers can't pay up
- ENFORCEMENT: how to make sure no one cheats on any of these rules
You might think such decisions are obvious. Ownership, for example, is simply a matter of what you've created or bought or invented, what's
YOURS. Think again. What about slaves? The human genome? A nuclear bomb? A recipe? Most contemporary societies have decided you can't own these things. You can own land, a car, mobile devices, a home, and all the things that go into a home.
But the most important form of property is now intellectual property--new designs, ideas, and inventions. What exactly counts as intellectual property, and how long can you own it?
Source: Saving Capitalism, by Robert Reich, p. 8
May 3, 2016
On Technology:
Most important form or property now is intellectual property
In order to have a "free market," decisions must be made about:- PROPERTY: what can be owned
- MONOPOLY: what degree of market power is permissible
- CONTRACT: what can be bought and sold, and on what terms
- BANKRUPTCY: what happens when
purchasers can't pay up
- ENFORCEMENT: how to make sure no one cheats on any of these rules
You might think such decisions are obvious. Ownership, for example, is simply a matter of what you've created or bought or invented, what's YOURS.
Think again. What about slaves? The human genome? A nuclear bomb? A recipe? Most contemporary societies have decided you can't own these things. You can own land, a car, mobile devices, a home, and all the things that go into a home.
But the most important form of property is now intellectual property--new designs, ideas, and inventions. What exactly counts as intellectual property, and how long can you own it?
Source: Saving Capitalism, by Robert Reich, p. 8
May 3, 2016
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