Robert Reich, Inequality’s Intellectual Fraudster

You’ve likely run across the media blitz on Robert Reich’s documentary, Inequality for All, with not just the usual left-leaning suspects like Bill Moyers, the Nation, and Democracy Now touting the picture, but even more staid venues like US News & World Report and ABC News (via George Stephanopoulos’ blog) taking note.

Now it may seem churlish to take on a prominent former government official making a star turn to publicize one of the most pressing social and political problems in America, namely, our ever widening levels of inequality. After all, the more light on this problem the better, right?

While Reich does a good job of making the normally dry statistics of inequality accessible and relating them to the experiences of ordinary Americans, it’s not sufficient for someone of Reich’s experience to talk up a problem. Raising the visibility of social and economic issues, particularly for someone like Reich, is presumably a means for building consensus around new initiatives and programs.

And this is why it’s critical to understand where Reich comes from and what he is actually proposing. He’s positioning himself as the economic’s profession’s answer to Marcus Welby, a seemingly benign, well meaning policy doctor who tells you what’s wrong with you and what you need to fix you up. But even though Reich might be good at describing symptoms, he’s not only selling the equivalent of patent medicine as the remedy but he’s even getting commissions from some of the snake-oil manufacturers.

In terms of policy proposals for addressing inequality, Reich serves up overlapping but a broadly consistent menu. Let’s look at two recent examples. One is from a June post on his blog. This is a rough summary of his main ideas:

Enable America to become more competitive in a global labor market:

Develop a national economic strategy

Increase jobs and wages by raising worker productivity

Improve public education, start schooling earlier, subsidize higher education (make them accountable for results but not by using standardized tests)

Unionize low wage service workers

Require companies to give workers stock and a say in corporate decisions, invest in their lowest wage workers, and spend Federal R&D funding in the US

End tax deductions for executive comp in excess of 100x the pay of the lowest-paid worker or contractor

Stop casino banking

For Labor Day, this is his list:

A living wage (which he implies is $10.40 an hour)

An Earned Income Tax Credit for low wage workers

Free child care

Good schools

Universal health insurance

Let labor organize

Now we have to point out that there is a wee problem with Reich’s list, which is that the tacit assumption is rising income disparity is primarily the result of American workers being insufficiently productive by world standards. This chart shows what has really happened:

Screen shot 2013-05-08 at 4.11.45 PM

The big culprit is that companies no longer share the benefits of productivity gains with workers. Why has that come to pass? One big factor is indeed the decline of unions. Reagan breaking the air traffic controllers union was a signal that the Federal government supported union-busting, a reversal of the last three decades of policy. But while supporting unions for low-wage service workers and boosting the minimum wage is a long overdue step in the right direction, it serves more to place a floor under the worst-paid jobs than to restore the fallen standard of workers. The fact is that the Carter-Reagan policies also ushered in an era of using fear of inflation to tolerate higher ongoing levels of unemployment. Too many people chasing too few jobs gives companies the upper hand.

Now you can say that Reich does acknowledge that problem; for instance, he speaks of how companies don’t see their fate as linked to that of worker, and he derides their rampant short-termism. But his policy remedies tell you what problems he’s trying to fix, as opposed to give lip service to. His proposals are simply way too milquetoast to address the huge power imbalance between workers and corporations. If you are going to talk pie in the sky ideas like child care for all and free or close to free college education, something like Randy Wray’s job guarantee is much more on target.

But more important, did you notice what is missing from Reich’s list? Trade policy. Reich is explicit that he believes that Americans can’t fight the march of more globalization. From his June post:

Economic determinists — fatalists, really — assume that globalization and technological change must now condemn a large portion of the American workforce to under-unemployment and stagnant wages, while rewarding those with the best eductions and connections with ever higher wages and wealth. And therefore that the only way to get good jobs back and avoid widening inequality is to withdraw from the global economy and become neo-Luddites, destroying the new labor-saving technologies.

That’s dead wrong. Economic isolationism and neo-Ludditism would reduce everyone’s living standards.

Notice the false dichotomy. You are either for closed markets or for “free trade”. But as William Greider has pointed out, we don’t live in a system of free trade. We live in a system of managed trade. And contra Reich’s cheery assertion that we simply have to accept these inevitable forces, the fact is that our trade partners have negotiated deals with an eye to preserving trade surpluses and helping protect their workers. The US has come to assume the role of consumer for the rest of the world. Our trade partners are perfectly happy with the result, since our trade deficits are tantamount to exporting US demand to support jobs overseas.

Reich has maintained the opposite. He didn’t just support Nafta in 1993. He specifically claimed it would produce more jobs. And even though the level of long-term unemployment was then at record highs, Reich opposed extending unemployment insurance but instead called for training, which is another face of the Clinton Administration posture of treating social safety nets as handouts that needed to be curtailed. In fact, the record shows that government training programs don’t help the recipients get jobs. Employers, particularly in a weak labor market, seek workers who have performed pretty much the same role in similar businesses in the recent past.

And while it is true that education in America is slipping by international standards (and it was never that hot to begin with, when I was a teenager, everyone knew European secondary school education was on a par with most US college education), the pet fad of the policy classes, that we have a STEM (science, technology, engineering, and math) crisis is simply not supported by a look at where jobs are and what STEM graduates wind up doing (see this IEEE article for a one-stop debunking).

Now even though Reich in some of his interviews has tried to suggest that he wasn’t 100% on board with Nafta, in fact, he’s not only continued to support more globalization, he’s also tried to shield the outsourcing industry from opprobrium. Consider the start of this 2012 post, The Problem Isn’t Outsourcing. It’s that the Prosperity of Big Business Has Become Disconnected from the Well-Being of Most Americans:

President Obama is slamming Mitt Romney for heading companies that were “pioneers in outsourcing U.S. jobs,” while Romney is accusing Obama of being “the real outsourcer-in-chief.”

These are the dog days of summer and the silly season of presidential campaigns. But can we get real, please?

The American economy has moved way beyond outsourcing abroad or even “in-sourcing.” Most big companies headquartered in America don’t send jobs overseas and don’t bring jobs here from abroad.

Huh? My brother is in the outsourcing business and I can tell you this is hogwash. Entire industries have been not just outsourced, but entirely offshored. And executives in some of them have told me the economics weren’t compelling but they went ahead because they knew Wall Street would give their stocks a pop. The furniture industry is one. Mid range shoe manufacture is another (that was a casualty of a failed restructuring at Interco, which owned a number of moderately priced brands). And to pretend this is a trend of the past is illusory. More and more white-collar work is going abroad. A few years ago, the big new wave was sending low level big firm legal work overseas. That threatens to do to much of the law profession what has already happened in the computer industry: make it hard to find entry level jobs where you can learn your trade. Alan Blinder in 2007 estimated that a full 29% of US jobs were offshorable. This sadly is a trend that still has a way to run.

So why did Reich take that position? Was it simply election year Democratic party tribalism? It’s likely more is at work.

Reich has been a speaker at major offshoring industry events. In 2008, Reich was a keynote speaker at the International Association of Outsourcing Professionals World Summit:

Outsourcing Insights-January 2008

Reich was a keynote speaker at a different outsourcing organization’s, the World BPO/ITO’s 2012 conference. Now sometimes individuals can participate in dubious-looking conferences and maintain their integrity because they have been invited to serve as an official irritant. But that doesn’t appear to be the role Reich was serving at either confab. And while I’m not up on what former Cabinet secretaries get paid to deliver keynote addresses, I doubt that it’s shabby.

And there’s an even bigger reason Reich’s position is an intellectual sham. Nafta put in place a framework that weakens national regulation and makes it harder for governments to support target industries. Those subsidies can be challenged as violations of trade rules. Reich of all people should know full well that the sort of “national strategy” he advocated last year as part of his wish list for labor can’t be implemented in the muscular manner he suggests with WTO rules in place.

And forget about reining in casino finance. We’ve discussed Nafta in passing when talking about the pending Trans-Pacific Partnership and US-EU trade pacts. It’s critical to understand that they build on and extend principles promulgated in Nafta. We quoted trade watchdog Public Citizen in a May post:

The draft text of the Trans-Pacific Partnership (TPP), a NAFTA-style FTA under negotiation between the United States and 10 Pacific Rim countries, contains the same limits on financial regulation as the WTO, and more. In addition, these rules would be privately enforceable by foreign financial firms that could “sue” the U.S. government in foreign tribunals, which would be empowered to order payment of unlimted sums of U.S. taxpayer money if they saw our laws as undermining such firms’ “expected profits.” Also, even as the International Monetary Fund has officially shifted from opposition to qualified endorsement of capital controls, which are used to avoid destabilizing floods of speculative money into and out of countries, the TPP would ban the use of these important regulatory tools. Despite years of pressure from former House Financial Services Committee Chair Rep. Barney Frank to permit capital controls, the Obama administration is the strongest promoter of this ban in the TPP.

See another section of a Public Citizen discussion:

So-called “trade” agreements – both existing and proposed – limit the domestic-policy options lawmakers can pursue in areas that are not trade related. The WTO enforces 17 different agreements, only a handful of which relate to tariffs and quotas – the traditional terrain of “trade policy.” Others limit subsidies governments can provide to green industries, forbid domestic economic stimulus funds from being directed to domestic workers and firms, set parameters for how our health-care system is managed, and even constrain how our federal and state governments can expend our tax dollars in government procurement. (The North American Free Trade Agreement and similar pacts contain analogous provisions, and also empower foreign investors to sue governments directly for violating certain rules.)

In other words, Reich is performing a monstrous sleight of hand. He tells rapt audiences that he’s all for just about everything on labor’s wish list. But then he shakes an adult finger and says, “Yes, but you must work hard and have good skills to compete with those diligent Germans and Chinese.” He then proposes subsidies and training and a grand national strategy to build up target industries, while failing to tell his following that the very trade rules he’s touting as inevitable and even helpful make the pro-labor program he pretends to back impossible.

I hope journalists will ask Reich if he supports the TPP and the US-Europe trade deal. Reich could redeem his record and show he is fully on board for reversing the fallen position of the American middle class by taking a principled stand against these pacts. And if not, we’ll know he’s just a better, more sympathetic salesman of neoliberalism by dangling a bright, shiny toy in front of downtrodden workers to divert their attention from the multinational-enriching, regulation-gutting legislation that Obama is keen to implement.

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    1. Jack Lohman

      Look, Reich is better than no Reich, but he is terribly mute about the one issue that affects every other little fire out there… political corruption. Crooks at the highest levels of government, pocketing campaign bribes to keep hands-off the bankers and other Fat Cats that prefer depressed wages. *ONLY* public funding of campaigns will fix it.

    2. Ishmael

      Robert Reich makes my stomach turn. Among his other faults he is a confirmed plagiarist. There are things things suppressing wages in the US.

      1. Outsourcing trade to slave labor camps. Besides paying nothing to manufacture the products we get crappy products.

      2. Allowing illegal aliens to pour over the border and taking a large number of jobs from people in the US. Many of these were good paying jobs in construction and repair. Now all of these jobs are filled by illegal labor who do not pay any taxes and on top of everything else do crappy work.

      3. Allow all sorts of so called professionals to immigrate into the US and take jobs away. The number one professional coming in on H-1-b’s are accountants. Do you really think accountants are a strategic asset. Besides anything else most of these so called professionals also are substandard. I encounter this time and time again.

      Did Reich mention any of these. NFW!

      All of these measures cheapen labor and hollow out the US.

    3. curlydan

      Right after Reich joined the Clinton administration, he gave a speech at the university I attended. In this speech, he was still wagging his finger, but not exhorting the U.S. to be like China or Germany, but oddly, to be more like Japan–I guess Japan’s downfall was just starting to materialize.

      I guess he got his wish (we’re at ZIRP forever with a corrupt corporate class), but now he’s moved the goalposts across the Sea of Japan.

  1. PaulArt

    My practical experience of ‘Free Trade’: I moved back to India with a lot of others in 2004 when NAFTA and Bill Clinton ushered in ‘Globalization’. When I interviewed there with one leading MNC (Intel or Motorola, I am not going to specify) I asked them the question of whether they were simply moving jobs from US to India and China and Malyasia and the phrase I heard the mid-level Executive use in reply was ‘no, no, it’s not a zero sum game’. In 2008 I was interviewing again in India and I was talking to another big MNC (GE or Honeywell I won’t say again). This time I again asked the question of what kind of work they were brining here from the US and again I heard the phrase, ‘Paul, it’s not a zero sum game’. It then hit home like a thunderbolt that all these mid-level executives had been spoon fed this phrase. They were tutored to say this. What it meant was, it was a blatant lie. It was too much to be a coincidence for two mid-level executives from two completely different companies, both of whom were Indian expatriates relocated from the US to India with very fat pay checks and expat benefits to be using the same phrase. Globalization has been good for India and China but it is definitely a zero sum game. It’s jobs lost in America to jobs gained in India and China period. Don’t let anyone else tell you anything different. The biggest rubes in this exercise have been the Christian Evangelicals and Blue Collar White male GOPers. They go out and still vote for the party that is massively reducing job opportunities for their own children.

    1. Klassy!

      The biggest rubes in this exercise have been the Christian Evangelicals and Blue Collar White male GOPers. They go out and still vote for the party that is massively reducing job opportunities for their own children.
      Please share with us just how blue collar voters can go about voting in their interest. To whom do they turn?

      1. Carla

        Your point extends to pink collar voters, scoop-neck voters, V-neck voters, hoodie voters… everyone one but a tiny elite and those who directly benefit from their largesse, altogether, maybe the top 3%.

        There is nowhere to turn, voting-wise. Reminds me of “That’s how it crumbles, cookie-wise.”

        GREAT post by Yves.

        1. Klassy!

          Yes, Carla. That is actually what I meant to get at. It is not like blue collar workers are the only ones suffering from a false consciousness. White collar workers seem to be even more guilty of this– they forget the worker part of white collar worker.

    2. Thorstein

      The rubes are illiterate, but they’re not exactly stupid.

      The last time I looked, there were about a dozen genes implicated in dyslexia, and they were all autosomal dominant. Thus, straight Mendelian genetics implies that 75% of the population is dyslexic. With many genes implicated, there are of course many forms of dyslexia. I believe the most common form is cerebellar in origin.

      The ability of the eye to execute repetitive saccades across the printed page is far more exacting a fine motor skill than crocheting or building a ship in a bottle. For most of human evolution it was a useless mutation. But with the invention of literacy, it became a superlative predatory trait.

      The rubes know they’re being ripped off by the eggheads and their big words in fine print. They’ve got that figured out right. They’re not slow-witted, and they’re usually kinder and gentler than the predatory eggheads. But without the eidetic auditory memory of a Homer, all they know is what they were just told. And there’s nothing they can do about it except stage re-enactments of the tea party.

      In the final act of this farce, the Social Darwinists strut like Fortinbras, unaware that they, too, carry the dominant genes of dyslexia.

      If all of this is true, there is an alternate ending. The cerebellum is not plastic like cerebral cortex. It is a slow learner. It only learns by practice and it pretty much only learns once. So insofar as dyslexia is like the inability to play the violin, the solution is to begin young, be patient, and pray for time.

      1. charles sereno

        “The ability of the eye to execute repetitive saccades across the printed page is far more exacting a fine motor skill than crocheting or building a ship in a bottle. For most of human evolution it was a useless mutation. But with the invention of literacy, it became a superlative predatory trait.” (Thorstein)

        The ability to make repetitive saccades in reading whether to an upcoming word or line or a previous location was not the result of a “useless mutation” anymore than making saccades to points of interest was in ordinary visual scene perception. BTW, writing, not literacy, was invented.

        1. anon y'mouse

          perhaps he means that the brains ability to make sense of the written word is troubled by mutations that are highly prevalent?

          you can’t deny that more text-larnin’ causes myopia. it seems every culture that has turned to it in a major way has had an onslaught of eyeglass wearers in its wake. reminds me of the Belgian lacemakers who went blind in their 20s.

          it has been claimed by kooks that myopia can be cured with opposite-valued glasses (meaning, we should be treating myopia for distance by forcing people to wear reading glasses, as the eye was developed to see normal and further distance and not close work, thus its adjustment to this abnormal seeing distance causes the expansion that creates nearsightedness). not sure about this “cure” but it sure seems that upping one’s prescription does nothing but make you more and more dependent.

  2. PaulArt

    By the way, I have ALWAYS trashed Reich every time he posted ANYTHING in HuffPo. Krugman was also a fellow traveler on the ‘Free Trade’ bandwagon but of late he has seen the light. Yves is on the money about outsourcing and America being the consumer of the World. The other funny and hilarious thing about India in particular when it comes to outsourcing is, they recently complained to the WTO because the Obama regime made the H1-B visa rules more expensive and onerous. This is among the few good things Obama has done. India’s complaint was that under WTO rules this was ‘discrimination’. Get the hypocrisy of that! Have you ever tried to get a visa to go work in India? Well, best of luck to you if you are going to try. The other MAJOR issue that Yves does not touch in this article is ‘Indian Insourcing, job loss is not just due to outsourcing but it’s also due to bringing boat loads of Engineers (particularly from India) on H1-B visas, L-1 visas (take your visa acronym soup pick) into the USA to fill jobs which are ‘unfillable’ due to a scarcity of Engineers. The smart people today are those who encourage their children to take up medicine or pharmacology or even IT Administration because these jobs CANNOT be outsourced. A newly established trend in ‘Indian Insourcing’ is bringing in boat loads of Physical Therapists from India. The American Medical Association has for long fought hard against bringing in Doctors from abroad but for some reason they have turned a blind eye to Physical Therapists and also Nurses being imported from abroad. The moral story here is American politicians and the Business community has made complete SAPs of Americans. That was an intended pun by the way, boat loads of SAP ‘experts’ have also coming in from India since the 1990s.

    1. Jack Bray

      You are dead on about the “professional jobs” outsourcing. US business types view anyone they can control as a “cost of doing business”. As a degreed engineer (with a degreed physical therapist wife), I would support the formation of professional guilds to protect jobs the way the AMA does.

      Here’s more food for thought – where do you think the anti-America terrorists get their expertise to develop/operate weapons of mass destruction? Go visit the graduate school departments of your nearest engineering university. You will be shocked.

    2. ifthethunderdontgetya™³²®©

      Krugman was also a fellow traveler on the ‘Free Trade’ bandwagon but of late he has seen the light.

      When Krugman prints the facts: Obama is a cynical, 3rd Way corporatist who has filled his Administration with the same…I’ll have a lot more respect for him.

      Until then, I see him as an enabler.

    3. sellem

      Re importation of Indian engineers: Wal-Mart, for all its “made in America” sloganeering, imports Indian IT professionals to staff its headquarters in Bentonville, AR. So much so to the point that in Bentonville, Indian oriented grocery stores have sprung up to serve them. Not what you expect to find in small Midwestern towns.

    4. diptherio

      I once saw a job-opening announcement for a “Philippino Nurse.” And no, the employer was not a Philippino Nursing Home, just a regular old nursing home in bum-f#@k MT. The home where I was working at the time employed about 20% foreign nurses, mostly from the Philippines (one Tibetan).

      If I could emigrate to Nepal and get a work permit I would in a heartbeat but, as you point out, the PTB have ensured that immigration is a one-way street. Globalization means the free movement of money and goods, but we lowly humans still have to stay where we’re told. Paul Sameulson assures me that it doesn’t really matter (factor-price equalization) but somehow I am not convinced…

    5. Jeremy Grimm

      I’m curious to learn more about how the new immigration bill would impact Indian placement firms, I guess — firms like TATA — that supply Indian workers on H1-B visas to U.S. employers. [I’ll continue calling these firms placement firms.] I scanned parts of the version of the bill that left the Senate. From what I recall it contained new rules that required the placement firm to employ at least 50% U.S. workers or something to that effect along with some other rules that I didn’t fully understand. My impression of these new rules is that they not only complicate and add expenses for Indian placement firms but also appear to more firmly tie Indian workers and their H1-B Visas to their U.S. employers. I think this would give the U.S. employers considerable leverage over them. [If say TATA holds the H1-B, then when job ends for one of their placements they can place that person into another job that they locate for them, often in another part of the U.S. A worker would have a difficult time doing this on his or her own.] I also recall some number of the H1-B Visas would be set aside for new foreign national STEM graduates at the Masters and Phd. level, graduating from U.S. Colleges. That along with the other rules would tend to increase the number of foreign workers directly hired by the U.S. employer. I would think that placement firms and the foreign workers will be harmed. [– to say nothing of the harm done to U.S. workers!]

      Please correct me where I’m wrong and explain a little more about how placement firms currently operate and how their operationss will be impacted. Are U.S. placement firms — job shops — making a move, through these rules, to take over the placement of foreign H1-B workers? [Or — maybe the U.S. placement firms are preparing to sell themselves to the foreign firms?]

  3. Danb

    Reich supports raising the wage for fast food service workers; but the fast food industry is ecologically unsustainable. So we have the irony of layered exploitation of the workers and the biosphere. While many ponder how and when the workers will exercise their power to claim social and economic justice, few even consider that the biosphere and its resources are not passively waiting for humans to wise up.

  4. Joe

    It sure is odd that Reich is so concerned about the plight of working people now that he is not in a position to do anything about it. When his opinions could have actually translated in to action, not so much. I guess populist bloviation pays his bills.

    1. Klassy!

      Yes, you only need to read Christopher Lasch’s Revolt of the Elites to see how ridiculous it was that this man was labor secretary.
      I’m glad Yves has highlighted his chicanery.

  5. Dan Kervick

    Now we have to point out that there is a wee problem with Reich’s list, which is that the tacit assumption is rising income disparity is primarily the result of American workers being insufficiently productive by world standards.

    Maybe Reich believes that, Yves, but I don’t see how you can infer it from the list. Only the initial items on the list point at inadequate education standards. The rest of the list seems to point to such things de-unionization, the lack of an incomes policy, an inadequate welfare state, hierarchical corporate governance, and capital flight.

    I agree about the need for a full employment system, based on a job guarantee. Until we end the permanent buyers’ market for labor that is caused by structural mass unemployment, workers will lack the bargaining power to demand their full share of national output. We should also aim higher than a “living wage”. We should set the minimum wage at something closer to $15.

    Also, Americans need to realize that a 100-to-1 executive salary cap is still ghastly by the standards of some of the most successful societies in the world. The last time I looked at this issue, the CEO-to-lowest-paid-worker ratio in Japan and Sweden were something like 11-to-1 and 12-to-1. Still I give credit to Reich for making an opening bid of 100-to-1, since these kinds of income policies are heresy among neoliberals.

    1. Foppe

      Perhaps one way of getting there is by noting that the point isn’t that the US needs ‘better’ jobs, but better-paying jobs.. Reich’s focus is largely on the legislative side: raising the min wage, raising the eitc, while he says next to nothing (here, and I cba to watch his other videos) about what happened on the corporate side, and about what could justifiably be done there. (Legislatively, things such as raising corporate tax rates, allowing for fewer exemptions, are well within reach, at least theoretically.) Now, this may be because he wants to keep it ‘simple’, but it seems to me that the fact that corporations are contributing ever less to the public’s or general welfare should be worked in there somehow.

      1. Dan Kervick

        He does mention tying R&D subsidies to investments in the US, and the executive income cap proposal which will help to raise the wage share.

        1. susan the other

          Today’s news (CNBC) sounds as if even R&D subsidies in the US are just to expensive. JPM and Billy Gates and some of their wealthy investors are off to Africa. Ta ta to those onerous regulations. In Africa, it sounded like, they can do their last drug trials and at the same time provide low cost drugs for combatting some of the worlds most debilitating diseases. And of course they are madly trying to come up with an alzheimers drug, etc. Naturally they are investing the money for returns and they expect at least 8%. What would a free trade pact do with this behavior?

        2. Yves Smith Post author

          The executive income cap is not an income cap. It’s a complete gimmick.

          First, it effectively excludes the richest dudes, the guys at private equity firms and hedge funds. There the lowest paid person would be a secretary. I guarantee the secretaries are paid at least $80,000 (my secretary at Sumitomo made well over $40,000 in the 1980s with overtime and she was underpaid. Good secretaries are paid handsomely and these guys get the best). And they likely paid even more to assure loyalty, as in silence. Recall John Thain’s driver made $230,000.

          But more important……drumroll….most of the pay of these guys gets capital gains treatment. So that wouldn’t be subject to this proposal. And back to the secretary, none of these dudes makes more than $10 million, which is what 100x with a $100,000 secretary would let you have, in regular comp. They move as much as they can to the capital gains (tax advantaged) category.

          And give me a break. You think the companies wouldn’t pay the taxes on the excess? They’d do that and act like wounded victims.

          As for R&D, you are only talking about federally subsidized R&D that goes directly to companies. The overwhelming majority of Federal R&D support is indirect, such as the NIH funding basic research and stuff like the Feds heavily subsidizing higher education in physics and math, which is intended to help the military-industrial complex. I would also bet that for security reasons. any R&D funding in the military-industrial complex is required to stay in the US for security reasons. So tell me how much is left to be subject to Reich’s proposal? Again, this is optics.

          1. Dan Kervick

            These Clinton-era retreads obviously aren’t going to lead the way toward a more equal society. But it’s a start. Even if the program is weak tea, I don’t think you can look at the things on the list and conclude Reich thinks the entire problem is uncompetitive labor. That’s only the first section of the list.

  6. sd

    Why unionize only ‘low wage’ jobs? Anyone who is an employee – which is labor and not ‘management’ – should be union.

    I’d like to understand what drives the hate that us directed towards labor. Why do so many people hate workers?

    1. Pokey

      Driving through Alabama near the Mercedes plant last week, I saw a huge billboard saying something like vote no on UAW because Alabama is for winners, not losers. The idea of course is to associate union opposition to the nearby college football team.

      People don’t hate workers, they want workers to work more for less money, so they encourage workers to support measures that favor capital. This may not be the reason why money for education is shrinking, but it is certainly convenient to encourage ignorance. The most effective way to do this is with appeals to prejudice through Fox propaganda. The last thing capital wants is a realization that class is the issue.

    2. Joe

      The press and media have demonized unions since their inception. Edward S. Herman and Noam Chosky’s Manufacturing Consent is a good book to read to get some perspective on how the media operates. The book is a bit dated (written pre internet) but gives a good overview.

      Also What’s The Matter With Kansas by Thomas Frank, gives a good perspective on why working people constantly vote against their own interests.

      Some of the most vitriolic anti union rhetoric I’ve heard, was from my fellow unionized Bellsouth employees. Some of them spend every working hour of the day listening to right wing talk radio. They are brainwashed beyond comprehension.

      1. Banger

        That has been my experience. People most in need of unionization are very opposed to unions but not because of talk-show propaganda–it makes a difference but not “the” difference.

        For much of the working class community–some call it the “yeoman class” there is much pride in going through tough times and toughing it out I suggest to you that the suffering the oppression from the bosses is a source of pride not a source of feeling wronged. Why? Because American culture, not just talk radio, is permeated with the tough-guy ideal and the worshipful admiration of the strong and successful. If you aren’t successful the myth goes then you need to work twice as hard as you did before and for half-the-pay. The idea that “losers” (one’s fellow workers) should get together and take some control of their lives is anathema to this mentality. Talk radio just amplifies this idea and also uses cultural, patriotic, regional, racial identity politics to leverage things a bit. For many if not most working class people they’d rather spend 40k a year putting black people in jail than spending half that per person jailed on making life better for these people so they’d have an alternative. Health-care is a case and point–it’s more important to many people in the lower-middle class that black and hispanics don’t have adequate health-care than that they themselves have adequate health-care.

        The TP had such an easy time recruiting these people to support their agenda because people were primed for this.

        American workers have, by and large, accepted alienation, exploitation as a give–if you can get slapped around by those things and come up smiling that is a victory for you.

        Comrades, there is no way to change this culture at this time. No amount of preaching, “education” will change that. To many people the Bible is inerrant and literally true and the poor will always be among us and we should just make their lives more miserable since the fact they are poor is a sign they are immoral (never mind what the Bible actually says). There is no such thing as climate change–it is a con created by evil communist scientists who are just in it for the money and so on. People should not get assistance from the state because it makes them lazy–if they’d be willing to work there would be work for everyone. I see no way, and I’ve had online and in-person discussions about these things and my interlocutors are 100% certain about their beliefs no matter how inconsistent they are–they do not recognize reason or science as something that applies to them.

        1. EmilianoZ

          Strange “tough guy” mentality you’re describing. It’s hard to imagine how it came into being.

          I think I once heard Joe Bageant talk about it in some internet radio show. That was a long time ago so I could be inaccurate quoting him. He said this worldview was typical Scots-Irish ethos. The interviewer was himself of Scots-Irish descent and gave examples of how tough his family behaved even among themselves. Now that I think of it, it might be the interviewer who suggested the Scots-Irish connection rather than Joe Bageant.

          Do you think the “tough guy” mentality has anything to do with the Scots-Irish culture?

          1. Synopticist

            Yes, that might be it.

            I was reading Bangars comment, trying to figure out where that attitude came from, because it’s not an English or Scottish thing, and it’s not really a common attitude in any other part of Europe I can think of. (on second thoughts, after writing most of this comment, I’ve realised you got the same outlook amongst eastern European Germans, for much the same reasons).

            But for Protestant Northern Irelanders it fits quite well, that toughness in adversity being a virtue, even to the point of welcoming it. They’ve also historically seen everything in zero-sum terms, so any alleviation in the hardship of Irish Roman Catholics meant a reduction in their own wellbeing.

            1. Jamie

              I disagree. I was raised by my Scottish father with a large dose of “stiff upper lip” tough guy training. It seems a very Scottish thing to me. Of course he was also the product of a boarding school—a fine English institution for the production of unfeeling colonial managers—which may have had more influence than his mere nationality.

              1. Synopticist

                OK, but this type of attitude…”suggest to you that the suffering the oppression from the bosses is a source of pride not a source of feeling wronged…”

                Is what I was originally referring to. Putting up with that sort of business is not in the Scottish character at all. That’s more of a Scots Irish, and Irish Catholic thing.

                On a broader note, if there is such a thing as a “get up and go” gene, or set of genes, it will be much more prevelant in the US than in Europe. I can’t help suspecting that America is genetically more right wing than over here.

        2. neo-realist

          “For many if not most working class people they’d rather spend 40k a year putting black people in jail than spending half that per person jailed on making life better for these people so they’d have an alternative. Health-care is a case and point–it’s more important to many people in the lower-middle class that black and hispanics don’t have adequate health-care than that they themselves have adequate health-care.”

          More specifically, White Working Class Racism. The idea that dark skinned people have equal opportunity to them is anathema. And thanks to Fox news, Limbaugh, Savage, Southern Strategy, hell just plain ole right wing money owned media infrastructure, the temperature is raised to the boiling point.

          1. anon y'mouse

            might I suggest that this animosity is because these groups would be the prime competitors (and are. I’ve seen studies that showed clearly that immigration, illegal or otherwise, lowered the wage rate of the lower strata of workers, although usually of the black workers first and worst) for jobs.

            this is the source of anger over the immigration stuff. the racism is just a convenient vehicle and way to trump up the tribalism in-out group thing for political groups to use. it is really about livelihoods that are all too scarce to come by down here in white trash land.

        3. Funonymous

          Spot on. So many have so internalized the attitudes of the people using them that they pride them selves on how well they can be used: their suffering and privation transmuted into heirarchical street cred so those unwilling to be exploited get kicked lower down the monkey pile. Not the type of people to read Bukowski or throw away their medals to be sure. Add to that the ‘Jim Crow’ dynamic, where the middle underclass is placated due to having a low underclass inferior to them to despise and well, here we are. Anyone who expects or demands decent treatment and dignity are accused of demanding special treatment and the dreaded ‘entitlements’, a word whose social meaning has surely changed in my lifetime. So much time, money and effort wasted worrying about who is deserving and who is undeserving, as I recall being covered a bit in the ‘relentless creation of second class citizens’ pieces. Pay twice as much to get next to nothing, and get pilloried as a lazy mooching taker who wants more than their share for having the nerve to mention it. Sorry if this was a bit disjunct, I end up i a stream of consiousness mood whenever I end up thining about these interlocking dynamics.

        4. psychohistorian

          Nice comment, thanks.

          Is it the Protestant work ethic with a little agro and boot-strap theory thrown in that you are referring to?

          Please keep commenting and educating us.

        5. Carla

          Does anyone reading and commenting here consider that one factor in anti-union sentiment could be the co-option, corruption and corporatization of union “leadership”?

          Referring back to Klassy’s comment above about blue-collar workers, and when it comes to voting, where are they to turn?

          Does everyone posting here believe that union leaders actually represent their membership? Like, ever? They’re cutting the backroom deals to their own advantage every day of the week, and the members (the DUES-paying members) be damned.

          It’s sad, but true.

          I think we desperately need effective representation for all working people. It has too often been lacking in the union movement in the US.

          1. Funonymous

            Yep, this comes up often talking with my Teamster uncle, who was a dyed in the wool union man his whole life, who now can’t stand them after one too many deals got cut that benefit everyone but the union members. Perhaps if the union higher ups had to take the same salary cuts the dues paying members get when negoations get tough, there would be some of that ‘solidarity forever’. As with so many of the structures of civilization, call it what you want and then show me how it works. As the complex systems theory people say ‘The Purpose of A System is What it Does’ and if your union functions to enrich union leadership by selling out the rank and file, picket them too. When I think about it, it was almost a perfect long term strategy from the perspective of the union busters: fight the more radical unions mercilessly, and when a less radical one ends up the organizing body, buy up and co opt the union leaders with tip money. “The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which.”

          2. JTFaraday

            “Does anyone reading and commenting here consider that one factor in anti-union sentiment could be the co-option, corruption and corporatization of union “leadership”?”

            I do. And I speak partly from experience. The union reps and elected officials made better plantation overseers than management.

            I think liberals have a tendency to defend the ideas of things (unions, regulation) without examining what function they served historically and/or how they are currently working in practice.

            Maybe we need much less ideological defensiveness and many more case studies. Just because you think something is a good a idea doesn’t mean it’s working the way you think it is.

    3. Joe

      The press and the popular media have demonized unions since their inception. Edward S. Herman and Noam Chomsky’s Manufacturing Consent, although a bit dated (written pre internet), gives a good overview of how the media operates. Also What’s The Matter With Kansas by Thomas Frank, gives another perspective on why working people vote against their own interests.

      Some of the most vitriolic anti union rhetoric I’ve heard, came from fellow union members at Bellsouth. Some of them consumed right wing talk radio every working hour of the day. Their level of brainwashing is beyond comprehension.

      1. Joe

        Many apologies for the double post. My browser is on a crashing binge today. I thought the ordinal post got eaten.

    4. tongorad

      “Why do so many people hate workers?”

      Class solidarity against workers – capitalists and their management-class cronies are united against workers. That seems pretty easy to understand, yes?

    5. armchair

      Some of this disccusion made me recall Boxer from ‘Animal Farm’, “I will work harder!” An Armenian I know, who grew up in the USSR and read the book on mimeographed sheets, explained that Boxer was a fascinating character to him and his friends as he read the book, because it rang true.

  7. middle seaman

    Reich after all was unable to read through the fog that surrounded Obama in 2008 and became a big booster of him. That, by and large, tells you who Reich is. For me, he is shallow, not particularly smart politico.

    As for the legends Americans believe in. Globalization wasn’t invented; it happened and there is no way to avoid it. Agreement between countries, e,g, NAFTA, help both sides if your own workers are important to you.

    We have abandoned labor unions and laborers and now we bemoan the fact that all of us are treated like crap. The solutions Reich fails to identify are actually quite simple but the body politics will never try them.

    1. Walter Map

      Reich, like Krugman, do get a lot of things right, but they both have the same blind spot when it comes to globalization and the predatory nature of transnational labor arbitrage and capital flows.

      Both need to be chastised until they get on board with this, but don’t hope for too much. Both appear to be tolerated by TPTB because of their support of unfree, unfair trade that feeds the rich and screws everybody else. Turning against unfree trade is pretty certain to get them marginalized by TPTB.

      1. James Levy

        Both men suffer from the narrow interpretation of efficiency that is at the heart of neoclassical economics (which is what they were both brought up on and which taints their judgment because to stray too far from that definition is to cut oneself off from one’s peers). The notion that their are values that can trump efficiency is just too far out there for almost anyone trained in the American academe. Decency, fairness, justice–ask anyone trained in economics to discuss these concepts. They either go blank, complain they are “unscientific” and therefore not part of their discipline, or if they are Hayek types they will scream at you and denounce you for even bringing up such weak, pitiable notions.

        1. McMike

          Indeed. Any sort of trade protectionism, anything that has a whiff of restricting trade, is the third rail of economics – it’s their founding premise, thier creation myth.

          It’s like the law of grvaity to a physicist, can’t imagine starting thier day without rubbing the nose of its statue.

          These guys remind me of the American left in he 50’s and 60’s with respect to communism; too in love with the idea to acknoweldge the tragedy of its implementation.

  8. F. Beard

    Pulling out Occam’s Razor I’ll say “It’s the banks ye dupes of Satan!”

    Satan is the Father of Lies and banking was founded on this lie: “Your deposit is available on demand even though we lent almost all of it out.”

    Now it’s generally acknowledged that a house built on a bad foundation is not very sturdy and lo and behold neither is our economy.

    Here’s a question: Why doesn’t automation and outsourcing benefit all of us instead of just a few stockholders? Ans: Because workers are typically paid with their own stolen purchasing power rather than with shares in the companies whose wealth they have a very large part in creating.

    1. Walter Map

      Not good enough.

      If you pay workers “with shares in the companies whose wealth they have a very large part in creating” workers will simply get marginalized with all the other non-majority stockholders. Try looking at the German model, where workers have representation on corporate boards. But don’t believe that’s really going to solve it either.

      Try not to latch onto any one thing. There is no single magic pill that going to fix these problems. TPTB have always made it more complicated than you think, because that’s what they do and they have the resources to do it.

      1. F. Beard

        Not good enough. Walter Map

        My comment implies that the government-backed counterfeiting cartel, the banking system, should be abolished. That surely is the source of very much worker marginalization since otherwise how did capital and labor ever become distinct to begin with?

        No, I’ll continue to insist that our hypocritical, thieving, usury-based money system IS the root of very many serious problems.

        It’s too bad that such a poor messenger as myself delivers that message but some of the most famous people in history, whose shoulders I stand (or maybe just sit!), on have said pretty much the same thing.

        1. Walter Map

          “Unable to accept constructive criticism in the spirit intended. Tendency to mistake symptoms for root causes. Tendency to rant. Sophomoric and dismissive.”

          Why not try to reduce your deficiencies instead of adding to them?

          You’ll be glad you did.

          1. F. Beard

            If the abolition of the banking cartel, including a universal and equal bailout* of the entire population were not enough, I also advocate land reform ala Leviticus 25. And if that’s not enough then let’s redistribute the common stock of all large US corporations too. Except for hanging bankers (which I disavow), I’d say I’m more radical than any one here.

            And why? Because if one takes justice seriously and sees the banks for what they are, that’s where the logic leads one to.

            *At least until all deposits are 100% backed by reserves, excluding reserves borrowed from the Fed.

            1. Lambert Strether

              Yes, it’s interesting to see how people can reason from different premises to a (more or less) common desired policy outcome. Figuring out how to understand and use this process is critical to strange bedfellows strategies. It’s when people get wrapped around the axle on mutually unacceptable premises that the desired policy outcomes are ruled out.

              1. Walter Map

                You don’t want to make the Perfect the enemy of the Good, I always say. Well, sometimes.

                The problem with the Strange Bedfellows approach is that one has to be careful about the Wolf in Sheep’s Clothing syndrome. It’s easy for Proponents of Ordinary Working People to like Reich and Krugman – until you get to their “Free Trade” advocacy, which very much supports the corporatist side of the class war.

                That’s a problem. Makes me want to sleep on the sofa. After all, one doesn’t become Secretary of Labor or a Nobel prizewinner in economics without serving the Bankster World Order in some important context.

                Does one?

                I smell a rat, and it’s definitely not dinner overcooking in the oven.

            2. Ed S.

              all deposits are 100% backed by reserves

              So if all deposits are 100% backed by reserves (by which I presume you mean that if you have “$100” in your “account” then there is “$100” physically in the bank), how exactly do you run even the simplest banking system?

              If all you wanted the banking system to do was enable differentiating time preferences (I want money now, not in the future), how would you do that with 100% reserves?

              I think that all your plan will lead to (I’m not getting into your “equity backed” plan) is:

              a) No banking system (you’d just have millions of “boxes” of money
              b) Locking in current holders of wealth (assets) as they stand today.

              Can you clarify?

              1. F. Beard

                So if all deposits are 100% backed by reserves (by which I presume you mean that if you have “$100″ in your “account” then there is “$100″ physically in the bank), Ed S.

                Don’t be silly. There would be a central depository for all US dollar reserves – a US Postal Savings Service – but unlike the Fed, ALL US citizens would have accounts there. So would the banks (after the Fed is abolished) and anyone else who wished to deal in US dollars aside from using physical currency.

                how exactly do you run even the simplest banking system?
                Ed S.

                Until all deposits were 100% backed by reserves, the banks could still lend EXISTING money; they just could not create additional credit else we could never reach the state where all deposits were 100% backed by reserves. But all deposits would need to be 100% backed by reserves when government deposit insurance is abolished because that will cause a MASSIVE bank run and transfer of reserves into the risk-free Postal Savings Service.

                And after everyone has had a chance to move their deposits out of the banks then government deposit insurance and the Fed would be abolished and the now entirely private banks could leverage as much as they dared and they and their now entirely voluntary depositors would bear all the risks.

  9. Walter Map

    Alas, all too true:

    “…we don’t live in a system of free trade. We live in a system of managed trade. And contra Reich’s cheery assertion that we simply have to accept these inevitable forces, the fact is that our trade partners have negotiated deals with an eye to preserving trade surpluses and helping protect their workers. The US has come to assume the role of consumer for the rest of the world. Our trade partners are perfectly happy with the result, since our trade deficits are tantamount to exporting US demand to support jobs overseas.”

    Beware economists promoting “free trade”, because there is no such thing, just as there is no such thing as “free markets”: either markets are regulated or they are dominated by the biggest players. Either way, markets are not “free”, and neither is trade “free”.

    Krugman has made the same blunder as Reich:

    Paul Krugman was himself a “supposed authority” who gravely misled the American public on how to think about free-trade globalization … Krugman made it his personal duty to act as the watchdog warning the public against non-economists peddling false ideas. In practice, this usually meant skewering progressive writers who criticized globalization from a liberal-labor perspective—offshoring of jobs, stagnating wages, sweatshops and all that.

    Why Was Paul Krugman So Wrong? Everyone’s favorite Nobel-winning Keynesian is no longer gravely deluded on the global economy.

    Unfortunately, in the same article Greider makes his own mistakes:

    The failure belongs to macroeconomics, an intellectual discipline now in shambles. The financial crisis and deteriorating US prosperity made clear the theory failed to predict the future nor does it explain the past.

    To the contrary, the Ricardian theory of Comparative Advantage does predict U.S. workers would lose out to overseas sweat shops, and that’s without even considering other malign effects of unfree trade. It’s remarkable that all three – Reich, Krugman, and Greider – would each find their own ways to get it wrong.

    Greider again:

    Of course it is unfair to blame Paul Krugman personally. He was perhaps the most influential economist with his flair for condescending put-downs of dissenters, but Krugman was merely representative of the standard beliefs widely shared by his profession and embedded in government policies.

    Fine, don’t blame Krugman personally. Blame him professionally.

    The multinationals did fine, but the nation is now mired in large and permanent trade deficits that translate into huge indebtedness to foreign trading partners in Asia and Europe and that exerts continuing downward pressure on US employment and wages. Yet the Obama government is seeking still more free-trade agreements as the answer. The current fiscal debates in Congress do not even recognize that free trade globalization is a core source of America’s diminished prosperity.

    Greider needs to stop using the expression “free trade” as if there really is such a thing, and recognize that globalization pursues unfree trade – trade controlled in such a way as to enrich the wealthy to the detriment of everybody else.

    I can see we’re really going to need to have more discussions about the predatory nature of labor arbitrage and transnational capital flows. The central problem remains, which is that workers in most countries are prevented from benefitting from their own labor because TPTB have gamed the system. International trade is one of the games, screwing workers in the U.S. and Europe by screwing workers in Third World countries.

    1. sellem

      Well, neoclassical economists believe in “free trade” more than just about anything else. I even seem to remember University of Illinois Professor Dierdre McCloskey (formally University of Chicago Professor Donald McCloskey), who is heterodox in so many ways, saying something like “free trade is cool.”

      As I know from personal experience, support of free trade is burned into almost every economist’s DNA from the beginning of his/ her education in the subject. It starts from the assumption that no individual buys or sells anything unless that transaction makes him better off — ergo, everyone must be free to contract and transact. What Adam Smith said about free trade between individuals, David Ricardo expanded to free trade between countries. To an economist, free trade is freedom and freedom is good.

      In the real world there are plenty of problems with this formulation. Unfortunately, the economics profession, which ought to be exploring solutions for society’s economic problems, is in many ways constitutionally unable to do so.

      1. Walter Map

        I don’t believe in “free trade” any more than I do “free markets”, and I am persuaded that my objections to both are quite valid, insofar as there has never been any rebuttal, least of all from Reich or Krugman.

        “Freedom”, in finance and economics, has an uncanny tendency to mean “freedom to corrupt and abuse for exploitative purposes.” The terminology is deceptive, and intentionally so. I’ve found that things that are “free” often come with very high indirect costs.

        1. Banger

          I go even further. Not only is there no such thing as free trade or free markets but there is no such thing as “economics” as separate from politics. Our economic relations are power-relations not some weird system of natural law.

          Economics and “the economy” have become a form of theology. Since we believe, collectively, that the final arbiter of all moral values is money and wealth then the economy and its “actions” are holy. This is absurd.

          Americans of all political persuasions all have one thing in common–they have a radically limited view of politics and history and thus need “economics” to bridge the gap. People are poor because their utility is low thus they get what they deserve–if they were more worthy then they’d have more wealth. That’s as far as you need to go with morality in this culture and it is one reason the left never has any traction in this culture.

          1. James Levy

            Agreed. C. Wright Mills pointed out almost 60 years ago that America had neither monks and nuns on one side, or aristocrats on the other, to provide alternate models of ethics and behavior–we had only the counting house. And since our inception as a nation we have known no credible set of values other than commercial values. This was great when all you needed for material advancement was a willingness and ability to run off the Indians and exploit the manna from heaven. But we’ve hit the limits of that kind of growth and now that we need other values the cupboard is bear.

  10. Bob

    China protects its industries with trade barriers and government subsidies. If the US was to use these tactics, that’s not the same thing as withdrawal from world markets. Restrictions on the flow of capital and reduction of labor arbitrage are the only ways to address the reduction of median income, loss of jobs, and wealth inequality. Although I do agree any policies that might put a dent in The Powers That Be’s income would be met with deadly force and would no doubt lead to temporary turmoil.

  11. taunger

    You should have kept the focus on Reich’s doublespeak on globalism from the start. I see no contradiction with an individual believing that continued globalism is inevitable, and beneficial (at least with strong, liberal work and environment regulations internationally). His position fits perfectly with the mid-20th century liberalism: build stong international trade, with stong international regulatory institutions; provide government subsidized services to the working class that the market won’t (child care, education), and allow workers to unionize to have a voice in the market.

    I think Reich is truly well-meaning in that he believes that this ideology is an appropriate means to raise the standard of living for millions in the U.S. and billions around the globe. I can see its atraction – but the ends of that ideology are unattainble by its means, and more viable means can lead to better ends. We at NC know that – but to trash on Reich like you might Geithner, Rubin, or Summers, I can’t join that pary.

    1. Eureka Springs

      When you and Mr. Reich complete a month of living on 10.40 an hour, 32 to 40 hours a week, max, for a month… get back to us.

      And remember, after taxes the first 350.00 of your net goes straight to Obamney, not care… as long as you don’t get sick.

    2. susan the other

      Robert Reich knows full well he is talking nonsense. He knows he is not talking free trade at all. He knows he is talking corporate trade. He knows trade will have to be heavily regulated (in secret of course) to make it function. They will probably look at the best return on capital for investors who set up corporations or offshore them and that return on capital will be given the double-speak twist so that it looks like each country is exporting its unique expertise and ability and its access to the cheapest resources, etc. All for profit of course. Because unless it is set up like serendipity-trade, to which all capital flows like diarrhea, then no country can compete. France24 does good debates; a few nights ago one of the panelists pointed out the big flaw in “free” trade – that all countries would virtually commit suicide for a trade surplus – is that the whole idea is one big contradiction. Unless it is not-free-trade.

    3. Banger

      One thing I have learned is that Americans, particularly, in the educated upper-middle and upper-classes do generally “mean well.” What I mean is that their world view may be unconsciously informed by self-interest but consciously they believe that their ideas are, in fact, good for the world and the country. I include in this neoconservatives and neoliberals and the full spectrum of the though of members of this class. I also believe they are wrong but the problem is one of intellectual training as much as anything else. The American intellectual elite do not recongnize the unconscious or the idea of complexity as applied to human affairs. In short, American intellectuals almost to a person is unable to think deeply beyond the surface of any subject. They avoid complex or difficult question and hate the idea of paradox which is often at the center of real philosophy–in fact, one might also say that they are philosophically naive and under-educated.

      My point is that we should not blame Reich for being mean-spirited but for his intellectual inadequacy which is normal for the people he associates with. I believe his sincerity and I notice here that so many are questioning that part of him. The danger we face is not that these sorts of intellectuals are cynical servants of the oligarchs but that they honestly believe what they say which is a greater tragedy and an example of American intellectual bankruptcy.

    4. charles sereno

      “The perfect is the enemy of the good.”
      “The road to hell is paved with good intentions.”

      Both of these sayings contain some truth in spite of their dissonance. There’s a fine line between directed and misdirected vigorous criticism when it comes to icons like Reich, Bair, Krugman, etc. As long as an honorable critic like Yves eschews personal venom (which she carefully does), she performs one of the most difficult tasks that need to be done — critiquing and separating “friends (or pseudo-friends)” from a just cause when their solutions seem attractive but, in reality, are counterproductive.

  12. Schofield

    Of course it never occurs to many individuals that “managed trade” or rather “balanced trade” negotiated bi-laterally or multi-laterally between countries that run persistent trade deficits would enable more government created money to be spent on public goods and services or indeed tax reduction rather than finding it’s way to the trade surplus countries. Indeed such government money creation can also be used to “foam the runway,” as Tim Geithner would say, to encourage other countries’ successful exporting business to set up shop in the trade deficit countries and over time make them more sustainable in the production of home grown goods and services production.

    Of course all such speculative thought hinges on a majority understanding how their money system works which they currently don’t. It might also require a groundswell change in the way people regard themselves not as some sort of Libertarian consumption machine on a tread mill to have more toys than anybody else before they die to a recognition that we always have been a eusocial species that has and does benefit enormously from mutualism and indeed can be recognised from our advanced development of speech and the written word.

  13. mad as hell.

    “He didn’t just support Nafta in 1993. He specifically claimed it would produce more jobs. And even though the level of long-term unemployment was then at record highs, Reich opposed extending unemployment insurance but instead called for training, which is another face of the Clinton Administration posture of treating social safety nets as handouts that needed to be curtailed. In fact, the record shows that government training programs don’t help the recipients get jobs. Employers, particularly in a weak labor market, seek workers who have performed pretty much the same role in similar businesses in the recent past.”

    Here is Scott Walker’s plan. Training just like Clinton. Makes you wonder how much financially is in it for them?

    1. Walter Map

      “Training” and “education” for jobs that have been exported are increasingly recognized as phony “solutions”.

      When people see Nobel-prize nominees working as bus drivers and Ph.D. physicists working in consignment shops it should tell them something. It occur to them that “education” and “training” are cons designed to make people believe the problem is with themselves, and not with a system that’s set up to cheat them.

      1. mad as hell.

        See it everywhere. Just talk to a bartender or retail clerk. Once they get done telling you about their education credentials, they will tell you about getting out of their present job into something better.

        I have a niece that graduated from a prestigious Chicago law school in January. Today she’s is working at a greeting card store at one of the local malls. Adding insult to injury she was told she would be out of a job the end of this month because the store is closing due to poor sales. WTF!

        1. allcoppedout

          Have to agree with Walter. There is very little evidence education and training as we do them provide work skills or a pool of labour to be snapped up by thrusting entrepreneurs. A dullard with a degree remains a dullard. I have long believed we have to create work and let people learn to get good at it by doing it. The focus in schools and universities on the “academic” (actually dire, watered down versions) is all to do with a schooling industry that has failed to modernise and university staff who gave in entirely to managerialism.

          1. anon y'mouse

            I would have to agree with you, and i’m -graduating- this year.

            if companies need people to ‘do’ accounting, they should allow them to learn on the job. the problem when you ask businesses to do this is: we have no idea how long we’ll need that post/department/branch and therefore, don’t want to invest. they will claim the surface issue is really at fault (the worker can then take skills we gave them and go elsewhere to benefit some other company) and yet don’t see that the path is to actually treat employees well, and let them cross-train and promote into areas where their skills can be used to best purpose. it is all about the profitability of short-term business interests.

            one day I even asked a shoe-repairman from whom I was picking up some boots whether he hired apprentices. he told me that he couldn’t justify it, because they would “stand around useless for a year while I paid them before they could do anything”. when I asked him about training for his profession, he said “they used to teach these skills in prisons, but don’t anymore. the only school that teaches this stuff is back east somewhere.”

            his store was so swamped with work that he (the owner!) had to run the register and answer the telephone (placing all callers on hold multiple times). he couldn’t see that the “apprentice” would do this necessary but low-skill work, as well as clean and take out the trash, during the time that they were not learning the trade of shoe repair.


  14. Tyler Healey

    Globalization would not be harmful if governments prioritized poverty abolition in their countries.

    For example, if the United States government were truly committed to poverty abolition, globalization would not be able to overcome that because the government would always conduct the spending necessary to keep poverty abolished.

  15. Dino Reno

    The system is working just fine. All it needs is a little fine tuning. So we turn to our little establishment gadflies like Reich and Friedman, who as it turns out are saying pretty much the same thing. The American worker is lazy and stupid and is being paid accordingly. Free trade has exposed this simple truth. Blame yourself. Both of these clowns have helped to tighten the noose by cheerleading establishment politicians and corporations. Now that the American worker is on death’s door, it’s time for a little pep talk. Thanks for caring.

  16. Timothy Gawne

    That inflection point between wages and productivity was just about the time that the post-1965 changes in immigration policy would have started to bite. Nobody beats supply and demand.

    According to the US census, the changes in immigration policy from restrictive to increasingly open post-1970 have increased the US population by approximately 80 million (the fraction of foreign born is not not relevant: it is the total increase in population that matters. Look up “demographic momentum”). Even without the current proposed cheap-labor immigration bill, it is set to increase the population to a half-billion by 2040 or thereabouts.

    Of course Reich is a firm supporter of an excessive rate of immigration – gotta have that cheap labor. What would businesses do if there was a ‘shortage’ of 8 dollar an hour labor? Why pay ten dollars an hour, duh. Can’t have that, can we?

  17. Eric Zuesse

    It’s commentaries like this that place “Yves Smith” at the top of the heap of political commentators.

  18. mark j

    Anyone who still believes in the fallacy that productivity drives labor income has been thoroughly brainwashed by economists–I should know as a one-time RA for Stiglitz. The markets for labor power and capital are not two intersecting curves. (Are any?) And, to the extent that earnings do reflect the worth of an individual worker — that worth is only a reflection of the worth to the employer NOT TO SOCIETY! Reich has been consitently in the stupid camp in his analysis on this topic.

  19. Teejay

    Dan Kervick said it better than I could.

    “Maybe Reich believes that, Yves, but I don’t see how you can infer it from the list.”

    1. Klassy!

      Well, you sure can infer it from Reich’s June blogpost.
      And this is right to the point: If you are going to talk pie in the sky ideas like child care for all and free or close to free college education, something like Randy Wray’s job guarantee is much more on target.

      And these jobs don’t have to involve analyzing symbolically!

  20. Erik

    Robert Reich is the Chipotle of the left: a feel-good brand for those people who are “concerned” but not willing to really look the core, underlying problem in the face.

    I generally view the options presented to me by large corporations, the government, and the media as a branding issue. The best example is GM of the mid-20th century. They offered add-ons and options up and down the line to appeal to all buyers, and many different brands to “separately” capture the full spectrum from those seeking luxury to those seeking bare-bones to other values. At the end of the day, though, it’s all GM.

    Chipotle was acquired by McDonald’s to give consumers the option of supporting fast food that is better-sourced and uses higher quality ingredients (and is presumably more healthy). At the end of the day, however, it’s practices are only a few inches away from McDonald’s when compared to what would truly be good food policy. But for those with a vague notion that they want to “eat better” and be “against fast food”, it scratches that itch. To spend a few dollars more somewhere else or a few minutes more cooking themselves would be too much. It’s the Overton WIndow of food choices.

    Here’s the article that I received in my RSS reader just prior to reading this post that made me think of the Chipotle-Reich comparison. Thank goodness for Feedly!

    1. Erik

      I hit submit a moment too soon…

      The “Crow Foods” in the new Chipotle ad campaign is an obvious jab at McDonald’s. Ironic, isn’t it? The same way that Robert Reich is just part of the Neoliberal system of whose problems he laments, where the Ds and the Rs stand in for real choices.

      Let the electorate really believe they are making a different choice! Vote D! Eat Chipotle!

      1. Erik

        And now I stand corrected… McDonald’s divested its stake in Chipotle in 2006. However I still stand by the general theme of the Overton Window / incrementalism / intellectual capture.

        1. James Levy

          “Serious” people, or people who want to be taken seriously in this media environment, cannot stray too far from the accepted narrative without getting shut out. And if intellectuals want one thing above all, it is to be respectfully listened to. I don’t know how mendacious Reich is but given his education and experience among the sharks at Harvard and in Washington, the idea that he might be naïve is simply incredible. He is probably a man who wants two things that don’t go together–to do good and to be heard. First, he thinks, I must be heard. The fact that “joining the discourse” means talking a load of nonsense that doesn’t match reality and discounts the sheer venality of those who own and control this planet is the price he is prepared to pay to be heard and not be made fun of by the cool kids in the media and academe who use sarcasm and derision to police the boundaries of the acceptable. It’s sad, and makes him a bit pathetic, but all too true.

          1. Banger

            I’ve known many people from Harvard both undergraduate and graduate level and I can assure you that their education tends to make them true believers in the sort of naivite that Reich represents. I am certain that Reich believes what he says and that he is not a cynical manipulator. Harvard and other programs inculcate a staggering overconfidence in graduates that they have the ultimate answers and know how to deal with the world. Some of these guys do become cynical hustlers but most are true-believers is the education they were given. And it’s not just Harvard–it is something that is quite common in Americans who have had an elite education. They are, often, unable to seriously question their own assumptions and believe in a very primitive and simplistic philosophy that, as I mentioned in another post, does not represent the fact that the unconscious and unconscious motivation dominate the human situation–not reason and, similarly, they have a hard time with complexity and paradox.

            1. James Levy

              Perhaps, perhaps not. I can’t really imagine someone who clawed their way into and up in the Harvard Economics Department, then spent time in the Clinton White House, as having retain their naivete. Lambs don’t survive long among lions.

              That he may be an overconfident true believer and see himself as a do-gooder I certainly can credit as true. But any man or woman who is wise and not just learned has to see the scams going on. What we may be saying is that Reich knows a lot but isn’t really very smart.

              1. Banger

                I’ve known people in important policy positions and, honestly, my impression is that they maintain that “gee-whiz” attitude and just pretend the ugly side doesn’t exist. I know this seems unreasonable but that’s been my observation at least in the mainstream “left” (such as it is) where Reich likes to live. I knew somebody in the Clinton White House (a brother of a friend), not very well, but well-enough to know he really believed in what he was doing. In contrast, the RP people were more honest and more realistic about politics.

                1. Synopticist

                  I found that same attitude working for the Labour party, back in the day. They really did believe what they were saying. Heck, I did too.

                  Remember, looking at this stuff now, with all we know about the triumph of the oligarchy and all, things appeared different back then, in the nineties with clinton and the early years of new labour. It seemed to be working.

                  It’s the inability to recognise that things went wrong, and that minds need to change when facts do that’s unforgivable.

                2. anon y'mouse

                  sounds like psychological self-defense to me.

                  “no, I won’t look over the side of the boat. there be dragons!”

                  also known as “if I keep my head covered, the bogeyman can’t get me.”

  21. Teejay

    And “fraudster” seems a little bit much. It comes across a little bit over the top. Your arguments are compelling and sound, as always. But…

    1. Lambert Strether

      The carnival barker keeps varying the pitch and luring the rubes into the same old tent. What word do you think would be more fair? “Shill”? “Con”?

      For myself, I prefer “fraud” because Reich isn’t just some poor schlub of a piece-working hasbarist; he’s got a piece of the action, as evidenced by his speaking engagement, post-public service career, and so forth. We might also remember that fraud is the default modus operandi of our elites; it’s so natural to them at this point, they probably don’t even realize they’re doing it, which I suppose is our operational definition of “good faith” these days, sadly.

      1. James Levy

        I’m an academic and I may have some insight here.

        You want to hire someone. Tenure-track lines are hard to come by these days. This may be your only hire for several years. So you go through the process. You’re left with three candidates–one from SUNY Binghampton, one from the University of Iowa, and one from Princeton. They all look good on paper. In fact, the Iowa gal has done the most interesting work.

        You hire the guy from Princeton.

        Why? Nobody can challenge it if it doesn’t work out. You hire the gal from Iowa and something goes wrong in the tenure process and everyone screams, “Why the fuck did you hire someone from Iowa????” Princeton guy is a dud, and you either tenure him anyway or quietly let him go. And no questions are EVER asked! Your ass is completely covered.

        We are now ruled by those appointments in every corner of our national life.

  22. anon y'mouse

    saw some clips of this guy’s shtick, and it had “An Inconvenient Truth” written all over it. blatant emotional “small guy against a big world” manipulation (where Gore had “we’re just simple farmin’ folk who want to do the right thing”). the fix is in when they pull a big, glossy one-man documentary and spend most of the time trying to make you weepy. it’s rather like the blatant overuse of stringed instruments in movies nowadays, which cover up the fact that the actors & script aren’t cutting it & fail to emotionally invest the audience.

  23. washunate

    Personally, I’m very torn on Robert Reich. He and Joseph Stiglitz were basically the only two people in positions of power who tried to advocate a more sane perspective and set of policy tools. For that effort, they have been largely sidelined and ignored, both by right and left. Their omission from the Obama Administration’s ‘Team of Rivals’ was highly illustrative in the transition period.

    I don’t agree with everything they advocate, but I just have a personal affinity toward them I can’t quite shake yet (like Elizabeth Warren and Paul Krugman) that these are basically the last ‘moderate’ voices between the old post-war period system and the new 21st century revolution that is apparently unstoppable at this point.

    I can’t think of another prominent Democrat that has talked more about wages and inequality and so forth than Reich over the past couple decades. Of course, that says more about the low standard of other Democrats than it does the value of the leftist wing of the Clinton Administration…

  24. TomDority

    A Free Market is defined as; a market free from economic rent.
    Wealth does not equal money!!!
    Wealth, all wealth, requires labor in it’s creation.

  25. vlade

    We could do worse than look at history.

    Up to 19th century, UK (or England before) was a fairly mercantilistic country. By all means, it served it pretty well. It become a free-trade in the 19th century, but the really important thing to see there is that it wasn’t free trade. It was UK trade or no trade (in other words, you traded on UK terms, or you pretty much didn’t trade on the world markets), for the first half. Then, slowly, UK started losing ground. At the same time, Germany (post-unification, or Prussia pre-unification) and US were running strongly mercantilist national policies – to intense UK irritation.

    Towards the end of the century, UK was more and more left in the dust (well, not really, but comparably speaking. Even now UK has more industry than people think – even slightly more than France), with mercantilist US and Germany taking over. US was fairly mercantilistic until the end of WW2, when it turned global power (ignoring USSR, as they would never go free trade :) ) and free trade (well, again – US version of free trade one should say). Germany stayed mercantilistic (as did Japan). China is mercantilistic too.

    Draw your own conlusions.

    The assumption of free trade – cheaper goods for everyone – is looking at only one side of equation. Cheaper goods are irrelevant. What’s relevant is lifestyle that can be supported. Lifestyle has two sides, income and expense. (Incidentally, mercantilism Chinese style is looking at one aspect only too, so it’s no silver bullet).

    Advocates of free trade reduce the expense, but pretend that there’s no impact on income, under any circumstances. That could hold in theory, if everyone was entirely free trade, but if large parts of the world are free trade, payoff for being mercantilistic is huge.

    1. James Levy

      You are largely correct here. The irony is that British workers really did enjoy a rising standard of living from around 1881 to 1911 due to deflation in food, fuel, education, and housing costs. For American workers, the price of all those things has gone up, while deflation has been seen in consumer electronics and to a lesser extent household durables. The Brits got meat and fruit and their kids educated for free through till they were 14, while we get laptops, Nintendo, and flat screen TV’s. I’d say they got the better of that deal!

      In the end, however, disinvestment at home and the endless arms race and costs of Empire did the British in. Same thing in store for us? You can all judge for yourselves.

      1. vlade

        You’re right, but the rising life standard of British worker at that time was to a non-trivial extent thanks to the captive markets in the colonies + the need to run large navy to support the colonies. Say, UK was, at the time, able to copy a french battleship design and build it in half the time French could. All in Britain.

        1. charles sereno

          I’d like to recommend an important and timely book to NC readers by Timothy Mitchell — “Carbon Democracy: Political Power in the age of Oil.” It came out in 2011, got a bit of attention, then seemed to fade from view. It is very topical in light of recent events in the Mideast. Here’s a recommendation more important than mine: ““It’s a book that tackles a really big subject, in a sweeping but readable fashion, and after reading it, it’s hard to imagine thinking about political power the same way again … This book utterly blew me away.”
          – Matt Stoller, Naked Capitalism

  26. May

    Yves, leaves big area out of discussion. This is job killing by technology (automation, AI, robots). It has been ongoing since 1960s and has accelrated. Hi tech industry is a job killing industry. Heck they are even replacing engineers with software now.

    1. Banger

      We ought to be welcoming robotics and automation. We don’t need to be “working” we need to explore, have fun, go to parties, make music or whatever else excites the imagination. One thing I profoundly believe is that this cusp we are on (between ages) is traumatic for most of us but the only way forward is forward. I believe Americans have been collectively resisting the call to move on since the end of the 60s. We have shrunk, not expanded, our imaginations when it comes to what is possible in the future and prefer to go back into a neofeudal future rather than an adventurous future: “to explore strange new worlds, to seek out new life and new civilizations, to boldly go where no man has gone before.”

      1. anon y'mouse

        if you deskill most of us so that only a small percentage of us knows how to make anything for ourselves, then you’ll be run by the robot designers and repairmen.

        let us hope that the designers and repairmen have a more inclusive and enlightened view of who is worthy to keep providing food and care to than the current ones.

        I don’t relish being a peasant in this world, and wouldn’t relish being a court jester in that one. no matter how well my Transponder Tofurky was cooked.

      1. Jeremy Grimm

        While I agree with the Alternet article’s assertion that automation is not a significant factor in the current high rate of unemployment in the U.S. I remain skeptical that automation necessarily creates more jobs than it replaces. That may be true in some cases, but not in all cases. I suspect that overall, automation reduces employment.

        While it has been true that new jobs were created following the displacement of workers by automation I can’t perceive any causal relationship and there is no reason to believe that new jobs or better new jobs will always follow the automation of old jobs.

      2. Walter Map

        I’m sorry to disagree with you Yves, but most new software, if not nearly all, is built with object-oriented languages, and has been since the last millenium.

        1. Yves Smith Post author

          There is a yawning chasm between “using object-oriented languages” and building software primarily using libraries of existing objects which is where big savings in programmer labor would come in.

          1. vlade

            There are massive OO libraries out there. _THE_ difference from what what people thought would happen and what did happen is that the resuability is limited, as in only fairly technical things (which everyone uses in the same way) are reused. Stuff like threading, UI elements etc. etc. There’s minimum of “business” OO libraries that would be truly reusable (especially if you exclude computer games industry).

    2. Sam Kanu

      “…Hi tech industry is a job killing industry. Heck they are even replacing engineers with software now….”

      Not necessarily. Computer technology has made many things possible that didnt even exist before.

  27. Dino Reno

    Just saw Reich on CNBC promoting his film. I will resist the urge to comment on his diminutive stature other than to say his laptop looked like a desktop.
    One talking head asked the money question, “You’ve outlined the problem, now what do we do about it?” Reich mumbled little could be done because there’s–wait for it–GRIDLOCK IN WASHINGTON. Gee, never heard that one before.

    Meanwhile, Bob Benmosche of AIG fame is comparing his harrowing experience of fighting for bonuses using taxpayers’ money with getting lynched in the South.

    Can this whole thing get anymore black and white?

  28. Aint No

    Reich is a funny fellow; beyond his boosting of NAFTA and so called Free Trade, who can forget his endorsement of the “end of American manufacturing” with his assessment that it in the near future we were all going to be “symbolic analysts”.

    What he didn’t tell us—or know—was that it was unpaid work; that in the 21st century we would be trading our jobs for Facebook while Finance took the money.

    Nonetheless, I still wouldn’t call him a charlatan, at least this morning I wouldn’t. Reich is like one of those old pre Windows software programs that had to run IBM supercomputers as well as PC’s. We might have forgotten most of what he’s said over the years, but I get the feeling that he remembers every goddamn word.

    Reich holds onto to his past ideas even as the future has shown many of them to be Neo-liberal pap. But beyond his enormous intellectual ego, Reich is also straining toward—a progressive— intellectual and political coherence. I say, support him where he’s right, slam him when he’s wrong.

  29. Hugh

    From the Moyers interview, Reich arguing that it is not about opportunity or inequality. It is about opportunity and inequality. And oh yes, “nobody should expect or even advocate equality of outcome.”

    ROBERT REICH: Well, first of all, let’s be clear about what we are arguing. Rick Santorum is exactly right in saying that nobody should expect or even advocate equality of outcome. The real problem is that we don’t have equality of opportunity. What do I mean by that? Number one, the schools available to poor and lower middle class and many middle class families and their kids are not nearly as good as the schools available to the wealthy.

    The tax laws are weighted increasingly in favor of the wealthy. Therefore a lot of middle class and poor people actually are paying, particularly through social security taxes, which nobody talks about. They all want to talk about income taxes. They’re paying a much larger share of their income.

    The laws governing almost everything we can imagine are tilted toward shareholders away from those whose major asset is your house. So it’s not equality of opportunity. That’s the problem. If we really had equality of opportunity we wouldn’t even be having this discussion.

    I think again, it’s important to bear in mind that some inequality is necessary if we’re going to have a capitalist system that creates incentives for people to work hard and to invent and to try very hard. 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.

    This is the cant of the Establishment liberal. Criticisms of aspects of the system and concern for its “victims”, but at the heart of it all a basic affirmation of the system: capitalism needs inequality, but then note the substitution, labor not capital is what you need: “to work hard and to invent and to try very hard.” So where exactly does capital fit into Reich’s defense of inequality of outcomes? That’s a trick question because if you look past Reich’s comforting tone, he is presenting a mishmash of ideas, which as Yves notes, are fundamentally contradictory. My question about Establishment liberals is at what point do we reject them for the shills and propagandists they are for the very system which rewards them and grinds us down?

    The purpose of Reich, Stiglitz, Krugman, and other Establishment liberals is to hold our hand as we are being led off to the slaughter pen. What we need to understand is that they are not rebelling against the slaughterhouse, they own shares in it. That’s their real inequality of outcomes. We get to be cattle, and they get to eat beef.

    1. Banger

      Again, the problem here is that we are listening to economic arguments. I believe in this age and the one to come that economics has no meaning. What we are talking about here are power-relations. All markets are managed and usually rigged by political factions. Because of the peculiar fact that Americans believe that our political system is so perfect we have transcended history and politics is, quite simply, about the will of the people who are all rational actors blah blah. No politics is about power and the exercise thereof by individuals, factions and so on.

      Economics is a false God that has not real meaning and I challenge anyone to show me how economics has some existence outside power-relations. If you are looking at economists to give economic solutions to our problems you are just wasting your time. They can give you technical advice and make some good predictions about one or another course of action but that means nothing if you’re in the political desert and the cost of water keeps rising.

      1. James Levy

        Since his comment about equality pissed me off, I’ll get crude. Of course a dwarf with an endowed chair at Berkeley wants inequality–it’s what makes him “bigger” than all those “little” schmucks toiling away at Cal State Chico and Pomona College. No group of Americans are as status-obsessed as academics. I’d lay heavy odds that Reich’s entire sense of worth is tied up in his having been at Harvard, holding a Chair at Berkeley, and having been BFF with Bill Clinton. I doubt his actual written work counts for 1/10th as much of his ego structure as those things do.

    2. tosser

      There it is, the smoking gun. Proof that Reich is fulla shit to the hairline.

      Equality of outcome! Equality of opportunity!
      Equality of outcome! Equality of opportunity!

      This is choreographed partisan collusion to circumscribe public discourse. Reich quotes celebrated mackerel-snapper Rick Santorum for fake choice 1 and says, no, it’s fake choice 2. No 3, no 4, no anything else.

      If self-styled mackerel-snapper Rick Santorum knew shit about the infallible Vatican he pretends to follow, he would be talking not about outcome or opportunity but about the means of life, the Vatican’s term for the world-standard of political economy. Economic rights. The CESCR. The Declaration on the Right to Development. Reich doesn’t rebut that like he rebuts Santorum’s ‘outcome’ crap because he doesn’t dare bring it up. He has to keep it out of your provincial US head. Reich’s teaching you his Harvard Juche. We really do live in East Pyongyang, right down to the little stunted fanatic exhorting us to Advance the heroic spirit of Songun Korea pressing forward to a bright future with the might of its people’s single-minded unity!

    3. anon y'mouse

      why do people need carrot and stick to motivate them to learn and do well?

      most human beings, who have not been totally damaged and demotivated by their upbringing (ok, then-very few of us in this current system if we’re honest), want to be useful and do good work. some of us just don’t want to do that ALL the time and have it define our lives.

      why do we need constant innovation all of the time? haven’t many of the major problems (basic necessities) been solved? the problems we now face are environment and equity. how can we preserve and restore the former, and will it be possible also to do this while ensuring the latter?

      if we don’t take everyone to the bright, startling future, then why are we working so hard to innovate ourselves

  30. diptherio

    Reich is a POLITICIAN, and a high-level one at that. Given this fact, we can be 98% sure that anything he says or claims to advocate is strictly in the interests of furthering his own career. Let’s not be naive for once.

    To become a cabinet secretary or a senator or a president, or to attain any other high-level political office, one must be a consummate bulls#*t artist. One must also be unscrupulous in their actions and willing to say whatever is necessary to please their superiors. Occasionally, a person may attain to high-level office without displaying all of these characteristics, but these cases are so rare as to be practically nonexistent. Therefore, whenever a high-level politician (or really, any politician at all) says anything, we should never assume that they are speaking in earnest or that their agenda is what they claim it to be.

    History has shown that politicians should never be taken at their word. I am baffled that at this late date in our history, anyone actually gives any credence at all to anything said by someone whose goal is to become a ruler of men and women (i.e. a politician). Sadly, people like Moyers and Goodman are still keen to give these social parasites a megaphone whenever the seem to be saying something positive. As otherwise quality journalists, you would think they’d know enough to consider the source…but I suppose the childish need to receive endorsement from an authority figure is pretty deeply embedded in most people. The problem, of course, is that we create authority figures in the first place, but I digress…

  31. Benedict@Large

    We need to get over this liberal icon of Reagan breaking the air traffic controllers, and that being the start of everything. In fact, in 1978 as Chrysler was failing, Jimmy Carter stepped in and broke the UAW. Our current round of union breaking didn’t start with Ronald Reagan, and it didn’t even start with Republicans. I like Carter a lot otherwise, but it was he and his fellow Democrats that started with union busting in the modern era.

    1. Yves Smith Post author

      I’ve said Carter was a big perp elsewhere, so I agree this is a bi-partisan affair.

      But you are airbrushing out that Chrysler got a Federal bailout. It was a mere guarantee of its bonds, but it was ginormously controversial. And Chrysler exhibited shared sacrifice. The UAW took a hit and Lee Iacocca took a $1 salary.

      The UAW supported the bailout. The unions did make big concessions, but that’s not at all the same as hiring scabs. Pulheeze.

      And even though there might have been a corporate push to blame the UAW, I was in business school then and reading the business press. Everyone then saw the malaise of Big Auto (and American manufacturing generally) as due to : 1. Germans and Japanese having better (newer) factories and 2. American management being terrible, in particular not adopting new manufacturing techniques like just in time inventories. At B-School, no one (even students, 40% of whom had worked for manufacturing companies) said bad things about unions.

      1. skippy

        lulz… destruction of foreign made products @time by labor in solidarity with Delco @Chrysler.

        skippy… man what a fracas… how do you tell the boyz that over half the stuff is assembled with – foreign parts – to start with.

  32. judabomber

    Guys like Reich and Krugman couldn’t give a simple explanation of the definition between free and fair trade and what it means for the United States to be competitive in global markets.

    All they would have to do is go backwards in time to the Reagan years and realize that his Council on Competitiveness defined it as “the degree to which a nation can, under free and fair market conditions, produce goods and services that meet the test of international markets while simultaneously maintaining and expanding the real incomes of its citizens.” These days, being competitive in the global marketplace means slaving away at a “middle class” warehouse job for Amazon.

    Chalmers Johnson makes a great argument that over the last 40+years we have given trading partners unfettered access to the gargantuan American consumer market, while asking for little or nothing in return, so long as our trading partners supported American military hegemony and the function of “multilateral” global institutions such as the WTO and IMF.

    I just watched Jim Bruce’s interesting documentary Money for Nothing, and while it was interesting and humorous, towards the end of the film I was troubled by the fact that he essentially blames the American consumer for the fact that we have been running perpetual current account deficits over the many recent years. As the issuer of the world’s reserve asset which is demanded by the surplus countries, it is of no fault of the average American. Policies in China and Germany which encourage a high level of savings over investment are just as responsible.

  33. tongorad

    Things look different from the gated community in which Reich undoubtedly resides. WTF does he know about workers or working for a living?

  34. wadih de fayad

    some of reich’s propositions are understable and effective, but in any way, any system has to finance himself or it will be unreliable, and he is approaching it on the borders, the american economic way is archaic, and too deadlined, no replacement in dead sector, and that’s very bad economically when things are countable, and not infinite quantities.

  35. Gaylord

    Correction needed in the 7th paragraph, in case it has not been noticed:

    “The fact is that the Carter-Reagan policies also ushered in an era of using fear of inflation to tolerate higher ongoing levels of employment.”

    I think that should be “unemployment”.

    Wouldn’t that partially be the fault of Fed policy makers?

    1. Yves Smith Post author

      Will fix, thanks for the catch.

      Yes, but aside from Stiglitz (now is different due to post crisis high unemployment), I can’t think of a Big Name Economist that has criticized the Fed (Stiglitz has said the Fed needs more labor representatives involved in interest rate setting!).

  36. baldski

    We are the largest trading nation in the world and we cannot set a balanced trade policy? It boggles the mind! A captain I sailed with in the ’80’s had it right. He advocated one Toyota from Japan would require one steer delivered to Kobe, we could start with that.

  37. Sam Kanu

    Look everyone can agree or disagree on Reich’s effectiveness,but the blog author is wrong on this bit where he says: “…If you are going to talk pie in the sky ideas like child care for all and free or close to free college education, …”

    I mean seriously. Practically all of Scandinavia Europe has free child care. And most has college education that is free or close to it, with generous government loans for the rest.

    These kind of things are not “pie in the sky” – they are necessary investment in the nation’s human capital. Of course in the US we seem to think that human capital is cheap. We neglect it, abuse it and then imprison it, after which we throw out visas and green cards to the smartest and best in India, Taiwan, China, Africa and so on. While quietly accuumulating a growing underclass at home which we repress with an ever more militaried “police force”. Tha’ts a ponzi scheme if I’ve ever seen one.

    And yet you talk about sensible basic policy as “pie in the sky”. Sorry but you are way off base on this one. I wouldnt say you are in any position to throw stones at Reich.

    1. JTFaraday

      I’m still waiting for a plan from what currently passes for “the left” in this country that isn’t just a contemporary form of labor impressment by the federal government. One that allows them to have some kind of autonomous decision making over their own lives.

      Also, you do realize a large mass of people have to be willing to deliver that “free” childcare, right?

    2. Klassy!

      I think the point is is that these are not particularly effective ways to attack the sort of inequality we have here– especially in the short term. Nobody says they’re bad things or undesirable.

      1. Sam Kanu

        Dealing with inequality is a multi-generational undertaking. Its not a 1 year job or even a 10 year job.

        It’s about having kids grow up and the all getting the development they need. Did you know for example language and vocabulary developent up to age 3 already has a major impact on lifetime learning ability?That means quality daycare and kindergarten from an early age.

        Did you know that by the time a boy is age 12, you can more or less predict their outcomes in life based on their education and social acheivements. This means early education is critical.

        It also means intervention to help children whose parents are less educated, have less resources etc is critical.

        This isnt about a “handout” to the parents. Its about society making necessary investments in the future of the children. THAT is what the Scandinavians are doing, instead of neglecting their kids them imprisoning them as teenagers and young men and importing Indian and Chinese young adults to replace the shortfall in adult acheivement.

    3. Yves Smith Post author

      America is not Scandinavia. Both those ideas ARE pie in the sky in America.

      First, do you have the slightest appreciation for how bloated the cost structure of higher education in the US has become thanks to student loans? And I would also bet the Nordic nations have much stronger qualification tests to get free public education than we have at a lot of our schools.

      As for child care, free public education is under assault by charter schools. You think we are going to get free child care when the very notion of universal free public school education is under assault? Plus for middle class parents, the liability issues and neurotic parenting would make it difficult (as in you’d have hyper litigious parents ready to sue the child care types for normal childhood accidents that could have happened anywhere). And America is also not very densely populated, even with the country finally being more urban than rural. This might be a great beenie for the middle class. but for a lower income person who is already hugely time stressed (likely more than one job, probable user of public transportation where outside NYC, Boston, and Washington DC, public transportation sucks), the logistics of getting the children to and from the child care center may make it effectively unusable.

  38. Andrea

    Reich’s labor day list sounds just like France! Presumably he knows this but would never mention it.

    A living wage (which he implies is $10.40 an hour)

    – the SMIC

    An Earned Income Tax Credit for low wage workers

    – France doesn’t have this, but only 53% (no. over many years) people pay tax, and various Gvmt. subsidies are handed out, such as child allowance, stipend to study, etc.

    Free child care

    – check

    Good schools

    – performs OK on PISA etc. Free. Much recent criticism.

    Universal health insurance

    – check, the SECU

    Let labor organize

    – Certainly possible in France.

    And France has many very serious problems: Unemployment, youth unemployment, shocking wage disparities, outsourcing, de-industrialisation, terrible work atmosphere, GDP per capita decline since the 1960s, too big to fail banks, Gvmt and municipal debt, balance of payments, social problems, pollution, etc. etc. Don’t get me wrong, I’m not bashing France, imho it is a better place to live than the US, but pointing out that the major problems can’t be fixed with Reich’s list.

    1. Sam Kanu

      You do realise that France – and all of western Europe has less inequality than the US? Documented by the OECD. The worst in that continent is Britian and even they perform better than the US on that measure. Most people dont know this.

      Also, all of the above countries perform better than the US on measured intergenerational mobility aka the “american dream”. In other words the life outcome of a person in those countries is stasttically more a result of their own skills and effort, than driven by their parents wealth or social status.

      America is very good at promoting outlier stories while ignoring the actually data/facts. I mean just look at the way any american newspaper is written – they dont deal in fact, instead they bore you to death with some drawn out anecdote while barely gving your the hard facts and comparatives necessary to understand the topic.

      In such a culture it is therefore possible to be completely oblivious of the fact that for all its “trouble”, the average person in France is better off than the average American. But the media in America hides that by constantly battering you with glamour stories about the 0.05 percentile people that made it big in silicon valley from poverty. The rest of the people that make of the real story are completely swept under the carpet

      1. Andrea

        Yes I realise inequality is much lower in France than the US and that even GB does better than the US on that rubric. When I said shocking inequalities, I meant to me, and to the French public, they are seriously pissed off, in a raging way, nothing like in the US where star pay or fraudulent captures and slave pennies tend to be ‘accepted’ or not challenged *directly* per se.

        The most ‘equal’ OECD (income, employment) is Switzerland. There is also a myth hanging about that Germany is fairly ‘unequal’. It is not true, not since about 10 years.

        1. Sam Kanu

          Germany does have growing inequality over the past 10 years. Nowhere near as bad as the US, but they should be concerned about changing the direction.

          In some places it is just plain bad though. For example one third of the children in Berlin today are growing up in poverty conditions. This doesnt mean they are starving, but it means they can have trouble in later life in making it up the ladder from where there parents are. That will mean political instability and polarisation. Also fodder for demagoguery…

  39. chris

    Yves, I don’t think you have been paying attention to the message Reich has been giving over the past couple years. Instead you rail against him and trade while riding the coat-tails of the upcoming movie. You talk about Reich being a fraudster, but it’s you that’s a fraud with this article. Using to popularity of the upcoming movie to peddle your disagreement with Reich on his ideas about trade, knowing this was the only way you could get your foot in the door. Attack him on trade, that’s fine, but do it on it’s merit alone. Leave the IfA out of it unless you don’t think your argument would get attention by itself.

    1. Yves Smith Post author

      Do you have this backwards.

      First, I don’t need Reich to be part of a conversation. The people who read this blog pay attention to what I write. Those who don’t read my blog don’t.

      Second, as Lambert said, did you bother reading the post? It appears not, or at least not at all closely. The reason for criticizing Reich is that he’s now making more noise about inequality because it’s hot, which means it’s safe. And yet he was integrally responsible for Nafta (US job losses estimated at over 1 million) and pushing the nonsense that Americans can all become either knowledge workers or servicer workers as if that’s a solution. That distribution of jobs is PART OF THE PROBLEM.

      And as I made explicit right at the top, it’s critical to look at the remedies Reich proposes. Here he seeks to be THE voice in the inequality debate, and many of his solutions are simply not even remotely possible or are neoliberal pap in prettier wrappers.

  40. John M


    Upon your suggestion, I decided to email Robert Reich and ask a few questions about his ideas around TPP and US-Euro trade deals. He replied. Let me know if you would like to see what he had to say.

  41. John M


    I am not an expert in this area by any means, but an
    email from Robert Reich today yielded these answers today:

    1) Do you support the TPP & US-Euro Trade Deals?


    2) How have you made sense of NAFTA after the fact?

    3) Is there an argument to be made that supports such trade deals and addresses poverty/increasing inequality?


    4) Do you think it is difficult to distinguish between the progressive left and the neoliberal left in this country?


    *** my own response — I find it interesting the disconnect between answer #3 (TINA) and not knowing the labels (Neoliberalism). I would be curious to your own response.

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