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