Robert Reich joined Bill Moyers on the latest edition of his PBS show, Moyers and Company, to discuss his latest effort — a film called Inequality for All. The movie is an analysis of what is wrong with the economy in the U.S. today, and it all boils down to one simple fact; the inequality of opportunity.
Reich says that he is in partial agreement with Rick Santorum who, during his bid for the Republican nomination last year, said that he doesn’t believe in equality of outcome. Reich agreed that equality of outcome was not what we need, but what we do need is the opportunity to advance our individual positions. He said,
[box type=”shadow”]“The question is not inequality, per se. The question is, at what point do you tip over, do you get to a tipping point where the degree of inequality actually is threatening your economy, your society, your democracy? When do you reach a point where inequality is simply too much? Where most of your people feel like the game is rigged.”[/box]
The answer, of course, is yes and if we have not yet reached that point, we are getting dangerously close to it.
The problem is that as more and more wealth is concentrated at the top the rules are changed to benefit those who have already reached the top at the expense of the rest of the nation. The tax laws are weighted to benefit the richest while further eroding the purchasing power of those at the bottom and even more importantly the middle. It is a strong middle class that fuels growth in any economy, if the middle class cannot purchase goods there is less demand and in order to increase the bottom line, business sees no other way but to cut wages and hours or send the jobs offshore.
Reich says that there is plenty of blame to go around but that the real culprit is a set of economic rules which are not working as they should. As more and more wealth is concentrated at the top fewer and fewer people are, in effect “buying” the rules to rig the game in their favor. For this reason he says we will not make any progress toward reforming the rules that govern the economy until we get the money out of politics.
He draws a comparison between where we were in 1928 and where we are right now and the similarities are striking. At the time of the stock market crash in 1928 nearly all of the wealth had become concentrated at the top and was held by only a few, this is what caused the crash. We have a nearly identical situation today and few seem to be willing to acknowledge that we must do something to rectify it.
We now have the greatest inequality of wealth in all of the developed world, even England, a nation we generally think of as having a deeply ingrained class system, there is more upward mobility than we have in this country today. A child born in poverty in the U.S. today has a 42% chance of still living in poverty as an adult, while in England that same child would only have a 30% chance of remaining in poverty for life.
The poor who so many on the right demonize and blame for all of our problems claiming that they pay no taxes actually pay a greater portion of their income in taxes than the richest do. They pay the most regressive taxes, Social Security and sales taxes. Too often many listen to the mantra that the top 1% pay most of the taxes, speaking of course only of income taxes, while in absolute dollar amounts this is true, taken as a percentage of income it is actually a much lower rate than a working man pays.
In 1960 the pay of a CEO was about 40 times that of the average worker today that CEO is making 450 times as much as the worker and the actual buying power of the worker has decreased through wage stagnation and inflation. This is not a sustainable business model, if we continue down this path the “little depression” which everyone insists on calling the “great recession” will look like a walk in the park as we fall into a depression that makes the depression of the thirties look like an economic boom.
This video is long, nearly an hour, but it is well worth taking the time to watch.