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US ECONOMY VIEW OF ROBERT REICH Robert Reich: The 10 Biggest Myths About Our Economy PLAY YOUTUBE VIDEO Original article: https://www.youtube.com/watch?v=HZ3j4hHMO5E Peter Burgess COMMENTARY I became a 'follower' of Robert Reich during the Carter Administration. I liked the idea that four 'Yalies' ... Clinton (bill) / Clinton (Hillary) / Robert Reich / and Justice Thomas were all part of the same Yale class and were going to have important impacts of the governance of the USA. Fast forward, and in many ways it is Robert Reich who is having the biggest impact ... the others having done their thing and now more 'past' than 'future'. So ... thank you Robert Reich for continuing to inspire me and make me think about what is important for the future of the USA and planet earth! Peter Burgess
The 10 Biggest Myths About Our Economy Robert Reich Dec 23, 2024 977K subscribers ... 501,818 views ... 20K likes We cannot separate what has happened to working people over the last five decades from the dangerous lure of Trumpism. To build a path forward, we must debunk these 10 destructive myths about our rigged economy. Transcript 0:00 Donald Trump is not the cause of the crisis we find ourselves in. He’s a consequence. The last five decades have been marked by an explosion in wealth inequality and a growing distrust of America’s institutions. They go hand in hand. Many Americans believe that system as a whole is rigged against them. So how did this happen? And how can we fix it? To answer these questions, we’ve made this series of videos, which debunk the most common and destructive myths about our economy. These myths make it almost impossible for us to have a real discussion about how this system got rigged, who’s being hurt by it, and how power has shifted. Have you heard this lie? Economics is an objective science that has nothing to do with politics or morality. Bunk! If you really want to understand the economy, you have to understand politics, and also morality. 1:04 They're treated as separate fields, separate disciplines. Each has its own experts and specialists, but the three are completely intertwined. In fact, through most of the 1800s, the field of study that we call economics was called political economy. People who studied it saw that the two fields were the same. Adam Smith, the Scotsman who wrote The Wealth of Nations in 1776, is considered the father of economics, especially by conservatives. But he never called himself an economist. He called himself a moral philosopher. Why? Because he was really interested in the meaning of a good society. That’s what it's all about or should be all about. What sort of society do we want? These are basically moral questions. 2:00 A society has the ability to make its own rules and determine how much inequality is acceptable. How much poverty? Is slavery acceptable? Is it okay for young children to have to work? Should there be a minimum wage? Is it okay for an adult who works 40 hours a week or more to earn so little that her family is impoverished? Is it okay for children of the super wealthy to inherit so much wealth they never have to work a day in their lives? When we talk about morality, we can't avoid the issue of power. How much power should the wealthy have? Is it okay for a corporation to monopolize a market? Is it okay for workers to join together to form a labor union? In the late 19th century, economists began to de-emphasize politics and morals. They started treating economics as more of a science and less of a philosophical study that took into account morality. 3:03 Alfred Marshall's monumental work “Principles of Economics” established economics as its own science in 1890. But economics, politics, and morality cannot be separated. We need to see the moral underpinnings of economics. That's bunk. Politicians of all stripes talk as if the rules that govern the economy are determined either by the free market or by government. But that's wrong. There can't be a choice between the free market and government because a market cannot exist without a government to organize and enforce it. A market is an arena where goods and services are exchanged. 4:01 How that market functions depends upon rules determined by government. The rules govern property (what can be owned), monopoly (what degree of market power is permissible), contracts (what can be exchanged and under what circumstances), bankruptcy (what happens when borrowers can’t pay up), And how is all of this enforced? These rules are decided on one way or another by human beings. But who exactly? And whose interests are they representing? Over the past few decades, large corporations, Wall Street, and wealthy individuals have gained increasing influence over politics. Corporate PAC spending has reached hundreds of millions of dollars a year. Business lobbyists spend 68 times as much on lobbying as labor unions. And big corporations march into courtrooms 5:01 with platoons of lawyers. Simultaneously, centers of countervailing power that between the 1930s and 1980s enabled America's middle and lower middle class to exert their own influence have withered. For example, labor union membership has fallen from a third of private sector workers in the 1950s to just 6% in 2023. Small businesses have been replaced by giant big box and online retailers. Small investors, by giant institutional investors. Political parties, once anchored at state and local levels, have become giant Washington-based fundraising machines. As a result, the rules of the American economy are now largely organized by big corporations and those with great wealth. Ever-larger upward distributions inside the market 6:00 from the poor and working class to the top have become normalized as functions of a market that is assumed to be neutral. But remember, markets are not neutral. They reflect who wields power. Get ready for this lie: The richest people have worked the hardest and therefore deserve their wealth. BUNK! Income and wealth increasingly depend on who has the power to set the rules of the game. CEOs of large corporations and Wall Street's top traders effectively set their own pay, and their pay has gone into the stratosphere. They've linked their pay to the stock market through stock options, used corporate stock buybacks to increase stock prices, and timed the sale of their options to those increases. 7:04 Some get inside information about corporate profits and losses before the rest of the public and trade on that information. Others create or work for companies that have monopolized their markets. That means they can charge consumers higher prices than if they had to compete for those consumers. And they can keep wages low because workers have fewer options of whom to work for. Others use their political influence to get changes in laws, regulations, and taxes that benefit themselves and their corporations, while harming those who don't have this kind of influence. Others were just lucky enough to be born into or marry into wealth. These days, the most important predictor of someone's future income and wealth in the United States is the income and wealth of their parents. 60% of all wealth is inherited. And we're on the cusp of the biggest intergenerational transfer of wealth in history, 8:03 from rich boomers to their children. Meanwhile, the pay of average workers has stagnated because they have lost economic power and the political influence that goes with it. Corporations have lowered wages by outsourcing work abroad, replacing workers with software, and preventing workers from unionizing. Wealth doesn't measure how hard someone has worked or what they deserve, but how well our economic system has worked for them. Here’s a bare-faced lie. Corporate political donations are free speech. Rubbish. That's not free speech, that's bribery. In 1971, Lewis Powell urged the leaders of American corporations 9:03 to devote a portion of their profits to politics. Since then, America has witnessed the largest and most entrenched system of legalized bribery in its history. Big corporations and the super wealthy have rigged the free market for their own benefit. Throughout the 1980s, corporate PACs spending on congressional races increased nearly five fold. Labor union PAC spending rose only about half as fast. By the 2016 campaign cycle, corporations and Wall Street contributed $34 for every $1 contributed by labor unions and all public interest organizations combined. In 1980, the richest 100th-of-1% of Americans provided 10% of all donations to federal elections. By 2012, they provided 40%. Both political parties have become giant fundraising machines 10:00 fueled by money from the top. What's the result of all this bribery? Politicians use the money to get elected and reelected. And then, lawmakers do what corporations and wealthy individuals want! It's legalized bribery. The market doesn’t play favorites! Bunk! Many of the most vocal proponents of the so-called “free market” have for years been actively re-organizing the market for their own benefit. They don't want us to notice what's happened over the last half century, as big money has corrupted our politics. Laws that limit campaign donations have been weakened or repealed, allowing wealthy individuals and corporations to essentially bribe politicians. 11:02 Antitrust laws have been virtually abandoned, with the result that big corporations have got much bigger. And mergers and acquisitions far more common. So-called “right to work” laws have made it harder to organize labor unions. So the unionized portion of the private sector workforce has dropped to just 6%. High-paid bankers have pocketed huge sums while exposing America to extraordinary economic risk. After the 2008 Wall Street crisis and the taxpayer funded bailout of the big banks, only one top banker went to jail. Corporations have been able to use bankruptcy to get out of labor contracts, but homeowners cannot use bankruptcy to protect their homes from being taken back by lenders. And former students can't use bankruptcy to protect their earnings from being garnished to pay their student loans. 12:01 Hedge fund and private equity managers get a low tax rate on their incomes, courtesy of a special loophole that neither Democratic nor Republican presidents have closed. Lower trade barriers have enabled corporations to outsource work to nations that pay lower wages and then sell the goods back to the United States. Americans get the benefit of cheaper goods, but lose unionized manufacturing jobs. It's been a vicious cycle. Each change in laws has ratcheted wealth and power upward, making it easier for the wealthy and powerful to gain further legal changes that ratchet even more wealth and power upward. Have you heard this lie? Global trade is good for everyone. 13:02 That's bunk. Many economists believe in the doctrine of comparative advantage, which posits that trade is good for all nations when each nation specializes in what it does best. But what about costs to workers and the environment? What if a country's comparative advantage comes from people working under dangerous or exploitative conditions? Or from preventing them from forming labor unions? Or allowing employers to hire young children? Or from polluting the atmosphere or the ocean, or destroying rainforests and polluting groundwater? My old boss, Bill Clinton, called globalization “the economic equivalent of a force of nature, like wind or water.” But globalization is not a force of nature. 14:00 Global trade is structured by rules negotiated between nations about which assets will be protected and which will not. These rules determine who benefits and who is harmed by trade. Over recent decades, trade deals such as the North American Free Trade Act and agreements under the World Trade Organization have protected the assets of U.S. corporations, including intellectual property. For example, if another nation adopts strict environmental regulations that reduce the value of U.S. oil assets in that country, U.S. oil companies can seek compensation for their reduced profits. Trade deals have also benefited the pharmaceutical industry with extended drug patents. They’ve benefited stock traders by ensuring they can move capital into and out of countries, regardless of local banking laws. And trade deals have protected big agriculture. 15:02 Now, it's true that American consumers benefit from lower priced goods from China, Mexico, and other countries where wages are lower than in the United States. But trade deals have caused millions of Americans to lose their jobs. Between 2000 and 2017, a total of 5.5 million manufacturing jobs vanished, partly due to increasing imports, mostly from China. Global trade on its own is neither good nor bad, but the way trade is now conducted protects the wealth of those who already have it and burdens those who don't. Here's a lie you'll hear on conservative talk radio: “Taxing the rich is socialism.” Bunk. 16:04 Far from being a socialist country, the United States provides corporate welfare for the rich, while subjecting everyone else to the harshest form of capitalism in the world. Most Americans who lose their jobs are not eligible for unemployment benefits. Less than 30% of working Americans have access to paid family leave. Only 36% of Americans have government-subsidized health insurance. And while people in most other countries get 3-5 weeks of paid vacation, Americans on average only get 11 days. Executives who run their companies into the ground are getting gold-plated exit packages while their workers get pink slips. After a security breach at Equifax that exposed the personal information of 145 million customers to hackers, Richard Smith retired with an $18 million pension. The Wells Fargo CEO in charge of the unit that opened more than 2 million unauthorized consumer accounts 17:02 departed with $125 million exit package. Meanwhile, thousands of big American corporations are raking in billions each year in government subsidies, bailouts, and tax loopholes, all funded on the taxpayer’s dime. When their workers have to rely on programs like food stamps and Medicaid, corporations that don't pay their workers a living wage, in effect get fat government subsidies. This government largesse raises stock prices for the richest 1%, who own half of the stock market, as well as CEOs and other top executives who are paid largely in shares of stock. The money is there – money that could instead be used for more generous social safety nets. But we’re using it to pad the pockets of the wealthy. Corporations and CEOs are job creators who need tax cuts and fat profits 18:02 to generate jobs. Most American jobs are created by poor, working, and middle class people, whose spending on goods and services causes businesses to create jobs. If most Americans don't have enough purchasing power, businesses won't hire. In 1914, Ford Motor Company boosted its workers wages. Their employees could afford to buy Model T Fords, enlarging the demand for Model Ts, thus creating more jobs at Ford. The Great Crash of 1929 ushered in the Great Depression of the 1930s because people didn't have enough money to buy the goods and services the economy could produce, which caused a vicious cycle of fewer jobs and even less money in the pockets of average people. The cycle only ended when the government stepped in through vast public spending on World War II. 19:03 So when you hear that corporations need tax cuts So when you hear that corporations need tax cuts So when you hear that corporations need tax cuts in order to create more jobs, or that tax increases on corporations and the wealthy are job killers, know that this is baloney. The best way to create more jobs is to put more money into the pockets of more workers. Which is why we need a higher minimum wage, an expanded Earned Income Tax Credit, and stronger unions that can bargain for higher wages. Remember, it's working people who create jobs when they have enough money in their pockets to buy. You hear this rubbish all the time – inflation is caused by too much government spending, along with wage increases. Bunk! 20:00 Higher wages and government spending don't push up consumer prices. In many cases, mega-corporations raise prices to increase their profits. They can do this because they face such little competition. Worried about sky-high airfares and lousy service? That's largely because airlines have merged from 12 carriers in 1980 to only four today. Concerned about drug prices? Between 1995 and 2015, 60 leading pharmaceutical companies merged to only ten. Upset about food costs? Four large companies now control 85% of beef processing, 70% of the pork market, and 54% of poultry. Worried about grocery prices? Just three giants Albertsons, Kroger, and Walmart control 70% of the grocery sales in 167 cities. Monopolies can raise prices and keep them high 21:01 because there's not enough competition to charge lower prices and grab their consumers away. Right now, responsibility for fighting inflation lies with the Federal Reserve, which raises interest rates to slow the economy when prices rise. But this causes more unemployment, keeps wages low, and harms many working people. An important way to avoid inflation would be to fight it at the source. Break up monopolies using antitrust laws so that a handful of private companies can't artificially raise prices. Many people fall for this lie. Unconstrained economic growth is always good. That's bunk. 22:04 Unconstrained economic growth is causing such grave harm to the climate that its costs are likely to be greater than the gains. Mainstream economists don't measure the costs of growth. They talk about climate change as a so-called “externality,” as if it were just incidental to growth. Wrong. If you consider the deaths and injuries caused by chemical pollution, wildfires, more intense hurricanes and storms, the costs of growth are huge. It's possible to shift from an economy organized around growth to one organized around sustainability. How? Dramatically reduce the use of fossil fuels, limit what can be mined and extracted, treat the Earth the same way we treat any limited natural resource. We prevent overfishing by limiting the amount of fish that can be taken out of the sea over a given period of time. 23:02 We should also limit the amount of gunk that can be put into the air, limit how much plastic can be produced, how much of our coastlines can be developed, and how much land can be owned and developed. In other words, if we accept that the Earth is a finite resource, let's also agree that infinite growth will destroy the Earth. It's already on its way. Many people dismiss Trump supporters as ignorant. Bunk! If we want to reduce the lure of authoritarianism, we need to address its root causes. The truth is, many of the key political and economic institutions of our society have abandoned American workers. 24:01 The free market has been rigged and power has shifted upward to corporate executives and investors who engage in organized bribery, bankrolling lawmakers who change laws and regulations to their benefit. This allows the powerful to monopolize, bash unions, pay lower taxes, make big financial bets on Wall Street and get bailed out when they go sour, outsource jobs abroad, and pretend they're job creators who deserve all this power. By 2016, the richest one tenth of 1% owned nearly as much wealth as the bottom 90% put together. For many people, the American dream has become a nightmare. Most Americans without college degrees are working longer hours than they worked decades ago and taking fewer sick days or vacations. Meanwhile, life expectancy has been falling 25:01 since 2010 for Americans without college degrees. That's because income and wealth have direct impacts on health and longevity. They determine access to life supporting services like high quality preventive health care, nutritious foods, and housing. And income and wealth have a lot to do with whether someone is endangered by handguns, opioids, and economic stress. As a result of all of this, Americans have become angrier and more frustrated — more vulnerable to demagogues peddling the politics of hate. Gross inequality is the enemy of democracy. But this doesn't have to be our fate. We have the power to make a system that works for the many, not the few. Congratulations! You’ve made it to the end! 26:01 You’re now armed with the facts you need to counter these pervasive economic myths. Which have been used to justify a system whose gains increasingly go to the top, while most Americans have been working harder but getting nowhere. We cannot separate what has happened to the typical American from the dangerous lure of Trumpism. Trump has exploited the anger and anxiety of many Americans for his own ends, but the anger and anxiety are real. Unless addressed, they will continue to be exploited by other authoritarians long after Trump is gone. The first step to fixing the economy is understanding the real problem: big money corrupting our politics and rigging the system against working people. So please, share this video to help spread the truth.

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