Robert Reich: Soak the rich for their own good

Robert Reich is the point man in economics of the “Democratic wing of the Democratic Party,” as Howard Dean used to say. That is, he’s been the burr under the saddle of the Wall Street wing that chased Reich, as Secretary of Labor, out of Bill Clinton’s Cabinet after the first term. Robert Rubin, imported from Goldman Sachs to reshape Clinton’s thinking and de-regulate finance, used to threaten to quit if Secretary Reich kept railing about “corporate welfare.” But it was Reich who left, and Rubin who stayed in the saddle, burr or no — who became Treasury Secretary and sponsored Larry Summers as his successor; the same Rubin who made Summers president of Harvard and then, after the meltdown, put his own and Wall Street’s stamp on the Obama era, too.

Reich’s new tract Aftershock, neatly coincidental with Larry Summer’s retirement from the White House, is a polite populist’s effort to seize a teachable moment in this season of anger. The disease in the economy and the public mood, he’s arguing, is not debt; it’s not even that we’re living beyond our means. It’s the 30-year trend to an obscene concentration of wealth — one percent of the population reaping more than 20 percent of the income — that has so diminished the means, so drained the purchasing power of the average American. Few politicians and policy wonks are as clear as Reich about the remedy to rebalance and build the whole economy: boost all incomes under $50,000 with direct supplements; and restore real taxes on the biggest earners with a marginal rate of, say, 55 percent. Today’s pattern of concentration, speculation, bust and stagnation recapitulates the crisis of the Great Depression, he’s saying. And it calls again for a Great Teacher:

What Obama needs to do is connect the dots. Americans don’t see the big picture. They don’t see the narrative. They don’t hear the story. They don’t understand that we’ve had three decades of flat wages, that almost a quarter of all income is now going to the top one percent. They don’t understand the connections between all of these issues and problems. They don’t see that there is a large tapestry here. A leader needs to weave that tapestry, show how one thing is related to another. We’ve not had a president who did that since Ronald Reagan. The tapestry he wove was the wrong tapestry; it bore no relation to reality. But at least he explained. He showed how “a” relates to “b” relates to “c”. He did connect the dots…

Robert Reich with Chris Lydon in Cambridge, September 24, 2010