Robert Reich – Saving capitalism: For the many not the few.
[My one-paragraph summary] Our nation is not engaged in a fight between democracy and socialism, it is engaged in a fight between democracy and oligarchy. There are important differences in the positions of the political parties, but both bear some responsibility for allowing the rules to be manipulated by those with the greatest wealth. Little will change until politicians shape the rules of the economy to benefit all and not the ultra-wealthy.
I have read several critiques and the negative take on Reich is that he keeps promoting the same old arguments and lacks concrete recommendations for remedies. Not how I read his books at all. Yes, his complaints are consistent across the several books I have read. However, he is quite concrete in explaining what has to change. He explains that it is the rules of the game that are established by politicians to shape the economy and the control of politicians through pressure from the wealthy that is allowed by some of these rules. For example, rules which control political contributions and who are allowed as lobbyists. His suggestions for laws focused on the leadership of publicly held companies, worker unionization, wealth inheritance, the finance of political campaigns, monopolistic practices and related oversight, and several other areas under the control of the rule-makers are quite specific.
Solutions
- Limit inheritance
- Prevent ex-office holders from lobbying
- Get rid of large corporations as source of funding for elections (Citizens United)
- Modify board makeup of board of directors for publicly held companies so that employees of that company are included. Boards reward company execs to limit the focus to profit margin to engorge stock values limiting returns to those who do the work.
- Limit salaries of company executives so they are not rewarded for focusing on stock buy-packs as a mechanism for raising stock values
Since, I have already generated a post based on an earlier book, I thought I would focus this effort on some enlightening statistics. For those wanting to check my source for any given claim, I would suggest you purchase the Reich book as all claims are carefully referenced. These statistics focus on the concentration of wealth and the role of great wealth in political influence.
The total wealth of the richest .1% of American households (160,000 people) rose from less than <10% to more than 20% of the total wealth of the country since 1980. The bottom half owns 1.3% of the wealth.
Since 1980, the wealth of the richest 1% has doubled while the earnings of the bottom 90% remained roughly stagnant. CEO pay increased by 940% while worker pay increased 12%.
So much has been made of setting the minimum wage to $15 an hour. Forty percent of American workers made less than this amount.
Sixty % of household wealth is inherited rather than earned.
CEOs are increasingly pressured to maximize stock valuations at the expense of funds spent on employees. Pressure can be brought by hostile takeovers. In the 1970s there were 13 takeovers of companies valued at a billion or more. During the decade of the 1980s entrepreneurs attempted more than 2000 leveraged buyouts. Who benefits from the pressure to maximize stock valuations. The top 10% of citizens by wealth own 80% of the stock.
The richest .01% (about 25,000) of the population made 40% of contributions to campaigns. In 1980, this same percentage of the rich made 15% of contributions.
In 1970, approximately 3% of politicians became lobbyists when leaving office. This figure is now about 40%.
About 6.4% of American workers are unionized. The values for other countries are 25% United Kingdom, 26% Canada, 37% Italy, and 67% Sweden.