Must-Read: Robert Reich: The Political Roots of Widening Inequality

Robert Reich: The Political Roots of Widening Inequality: “Globalization and technological change have made most of us less competitive…

…The tasks we used to do can now be done more cheaply by lower-paid workers abroad or by computer-driven machines. My solution—and I’m hardly alone in suggesting this—has been an activist government that raises taxes on the wealthy, invests the proceeds in excellent schools and other means people need to become more productive, and redistributes to the needy. These recommendations have been vigorously opposed by those who believe the economy will function better for everyone if government is smaller and if taxes and redistributions are curtailed. While the explanation I offered a quarter-century ago… has become… standard, widely accepted…. I’ve come to believe it overlooks a critically important phenomenon: the increasing concentration of political power in a corporate and financial elite that has been able to influence the rules….

[The] market view… fails to account for much… doesn’t clarify why the transformation occurred so suddenly… [cannot] account for why other advanced economies facing similar forces of globalization and technological change did not succumb to them as readily… why the compensation packages of the top executives of big companies soared… the [recent] decline in wages of recent college graduates…. A deeper understanding of what has happened to American incomes over the last 25 years requires an examination of changes in the organization of the market… stem[ming] from a dramatic increase in the political power of large corporations and Wall Street…. Rising job insecurity can also be traced to high levels of unemployment. Here, too, government policies have played a significant role…. Reversing the scourge of widening inequality requires reversing the upward distributions within the rules of the market, and giving workers the bargaining leverage they need to get a larger share of the gains from growth. Yet neither will be possible as long as large corporations and Wall Street have the power to prevent such a restructuring…

April 28, 2015

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