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Reich: If the 1% had less, would the 99% be better off?

Robert Reich

Kai Ryssdal: If Wall Street was still occuppied, tomorrow would be the two-month mark. But even though protestors in several cities, including New York, have been cleared out, the basic idea of the movement still resonates. The growing divide in this country between the top 1 percent and everyone else.

So our commentaries this week have been geared around this question. If the 1 percent had less, would the 99 percent be better off?

Here's Robert Reich.


Robert Reich: With all due respect that's exactly the wrong question. It plays into the false idea that the economy is a giant zero-sum game, in which either the top 1 percent wins and everyone else loses, or the reverse. But that's not how it works. If an economy is functioning correctly, everyone wins -- the top 1 percent and the bottom 99 percent.

For three decades after World War II, that's the kind of economy we had. Labor productivity doubled, and the incomes of almost all Americans doubled as well. In fact, the pay of workers in the bottom fifth more than doubled -- rising at a faster pace than the pay of people at the top. The vast majority of Americans did so well they had enough money to buy just about everything they produced -- which, in turn, kept the economy growing at full tilt.

But over the last three decades, the opposite has happened. The economy has doubled in size but the pay of most workers has barely risen, adjusted for inflation. Almost all the gains have gone to the very top. America's middle class maintained its purchasing power for a time because wives and mothers enter the paid work force, and then, during the housing boom, it could borrow trillions against their homes.

But those coping mechanisms are now exhausted. Which means most Americans no longer have the purchasing power to keep the economy going. That's why we're in the mess we're in. So to get the economy moving again we have to restore broad-based prosperity -- not just for the top 1 percent and not just for the bottom 99 percent, but for everyone.

The top 1 percent should be eager to do this. As we learned in the three decades after World War II, the rich do far better with a smaller share of a rapidly-growing economy than they do with a big share of one that's barely growing at all.


Ryssdal: Robert Reich teaches public policy at the University of Berkeley. His most recent book is called "Aftershock: The Next Economy and America's Future." In our future, P.J. O' Rourke continues our commentary series. Send us your thoughts.

About the author

Robert Reich is chancellor's professor of public policy at the University of California, Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton.
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Irrelevant. An America that cannot produce its own goods has lost the means of production and therefore: (a) cannot support itself independent of the agendas of other sovereign powers; (b) cannot weather economic reverses because it has no residual assets to be thrifty with except real estate, which is showing deflationary signs at the same time that staples and all moveables are inflationary or hyperinflationary; (c) depends on the velocity of cash flow for its well-being and its tax rate-ables, but that velocity must slow down given the lack of salary and contract growth.
You can date the end of America's productive single ship with the total disconnect of the market in equity from the welfare and wealth of main street America. From 1982 onward we have become a nation of parasites only, and we just discovered due to the predations of a few moronic banks that it possible for parasites to feed until they kill their "host" and lose their gravy train. Our train left the rails at the end of the Carter administration, and it isn't coming back with or without the Volcker rule except on the shedding of a lot of blood and tears as the parasite community goes on the biggest diet it has seen since the long depression of the 1870's.

Shame on all of us: 100% wrong and unwilling to learn from history or the "angels of our better nature".

I'm just an average guy so will probably give a simplistic view on this concept of 1% vs 99% and it in my opinion being a zero sum game.

I think that what has occurred with job losses and wage stagnation for the middle class over the last decade has largely been a result of a zero sum game. The burden of balancing corporate books has largely been put on the shoulders of the workers. Workers pay has stagnated , benefits have been cut, and conditions have gotten worse, while the CEO's and upper managements compensation and perks have continued to climb. When they found they could not squeeze the work force anymore to increase the profitability they moved to dump domestic workers for cheaper foreign labor, rather than share the burden with their workers and take a cut in their own benefits and compensation.

The simple concept is corporate owners income has continued to rise while workers jobs have been shipped abroad and wages have stagnated.

I think this trend has been profitable for corporations and their shareholders in the short run, but in the long run it is not a sustainable structure for the American market. How can people continue to purchase the products being sold when they have declining income and little job security?

In the end I don't think this is corporations responsibility (if we left the choice of milage standards on corporations, they'd just produce what the market wants at that moment without regard for long term consequence). I think it's the governments responsibility to help manage and maintain the market so that we can better attempt to avoid behavior or practices that will damage or harm the market stability.

At this point I think that some level of domestic market protectionism is necessary, I don't think that this is unusual and in fact think other countries are actively doing these things already.

My recommendation for the American Market is something along these lines : For any product that is to be sold in the American Market 15-25% of this product must be manufactured domestically. It applies universally to all products so doesn't provide an unfair advantage to one industry or another. We have a huge market that corporations want access to, to have access to that market I think corporations have to demonstrate a commitment and an investment to the citizens that make up this market.

Agreed. Right on "the money" Mr. Reich.

wildhirt - You under estimate the people and drink to much of the propaganda kool aid. What you rattle off is the lie that the Main Stream Media has been feeding America for the last 30 years. The song and dance is getting old.

When people are allowed to take ownership of public property they do an excellent job of stewardship. The USA has one of the worlds greatest national park systems because we the people believe that these spaces are worth preserving. Before the national park system was established private interests were destroying these sacred areas from the east coast to the west coast. Ever since the establishment of the Park system private interests have been trying to regain their control of these spaces for exploitation and greedy gain. Sometimes the people win and sometimes the private interests prevail and our natural resources suffer.

We the people can take very good care of public spaces and we need to regain control of all that belongs to we the people and kick the private bastards out of the public's business. Our infrastructure crumbles now, not because we the people control our public spaces but because Wall Street has Occupied America.

You have not been listening. The OWS answer to your question is that, OWS knows that the American people are not as selfish as you think they are and probably not as selfish as you seem to be. We the American people, the 99% strong, care about America, its public spaces, infrastructures, and natural resources, and real patriotic Americans care about their fellow Americans.

It seems that the larger the free market, which is now the entire world, the wealthier are the wealthiest of individuals, the top of the free market hierarchy, gleans profits from a larger base of cheap labor. However, I don't think this phenomenon, left unaltered, is a good thing. It means that the people at the bottom feel anonymous, unrewarded, poorly supported, trapped, and unimportant. It means that those at the top feel empowered, entitled, and their power can rival the power of citizen elected governments. A wide difference between rich and poor means unmitigated external costs and human suffering. I think the healthiest and happiest societies are those who do have active wealth recycling pumps, like in Scandinavia. It is not "wealth" from a luxurious handouts bestowed on the masses to abuse, it is investment the form of active support: education, health, inexpensive and efficient communication and transportation, and investment in a shared legislative and justice system. Only this kind of redistribution of wealth gives us strong middle class with a happier people. Only this kind of investment makes it possible for every child to have vertical mobility in the hierarchy: an equal opportunity to succeed in business and industry.

I agree with you on this one Prof. Reich.

Yes, 1% vs. 99% is a good campaign slogan for describing one symptom of the problem, but not one that should be interpreted or dealt with as the primary cause. A net redistribution of wealth downward is way too Simple Simon. How about this: WHAT IF THEY GAVE A BOND AUCTION AND NOBODY CAME? Restore our progressive tax base; restore our public industries (and learn to value and appreciate them); restore and maintain our social services; and restore confidence in our financial markets by restoring Glass-Steagall.

Government spending, as a percent of revenues 1950-1980, averaged 16% and didn't exceed 18% any year. And we managed to reduce the federal WWII debt from 120% of GDP to 30% in the same time period. Today we are spending 24% of GDP, debt is soaring, and we still have a sluggish economy. While the economy is not a zero-sum game as Reich characterizes it, it seems to me that overall net prosperity cannot grow unless overall productivity grows by an equal amount -- you need to produce more if everyone is to get more. If increased taxes are used to fund productive things like infrastructure, like in the 50's & 60's, I'm all for it. But if it's just a wealth transfer to boost incomes, inflate entitlements, or fund make-work without any commensurate increase in productivity, it's a lousy idea.

Actually, the OWS movement isn't about taking anything. It's about redesigning the government and bringing democracy into the government and the workplace. The OWS protesters (and I watched a 100 hours on the net) want to take personhood away from corporations and make it illegal for representative to receive a private dime while on the federal, state or local payroll. Money corrupts politicians always and forever. I cannot give my postman a 'tip" because he is a quasi-government employee. I cannot hang a political sign on the courthouse. I cannot make personal calls from a government phone. I cannot pay an immigration official to look the other way while I smuggle an illegal alien into the United States. ABSOLUTELY NO GOVERNMENT WORKER (and reps are on OUR PAYROLL) SHOULD RECEIVE A PRIVATE DIME.
Secondly, the OWS want to END THE FED with its phoney, artificial, non-government money. It must be brought into the Congress and Congress must establish the new U.S. Treasury Bank. All Federal Reserve notes are illegal and should be revoked.
Additionally, the people of the United States have dipped so low into apathy that only about 53% of the people vote. The OWS people want to engage the PEOPLE into the DEMOCRACY. That will require them to claim all ownership of ALL PROPERTY IN THE PUBLIC DOMAIN and control their government and the People's assets: the waterways, the roads, the parks, the national forests, public buildings, our onshore and offshore resources. Going up and down our streets, camping, walking into our government buildings or halls of the government day or night as the PEOPLE see fit. And finally: STOP THE POLICE FROM ATTACKING THE PEOPLE!!!. As Pete Seegers' song says, "This land is your land, this land is my land from California to the New York island; this land was made for you and me!"

What kind of Scrooge doesn't tip the mailman?

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