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Robert Reich

Comcast and Time Warner Cable executives, along with other executives and experts, are are sworn in on Capitol Hill in Washington, Wednesday, April 9, 2014, prior to testifying before the Senate Judiciary Committee hearing on "Examining the Comcast-Time Warner Cable Merger and the Impact on Consumers," earlier this month. Reich argues that the merger would violate the spirit of the nation's antitrust laws put in place a century ago. (Susan Walsh/AP/File)

Comcast-Time Warner deal is bad for our democracy. Let's end it.

By Guest blogger / 04.17.14

We’re in a new gilded age of wealth and power similar to the first gilded age when the nation’s antitrust laws were enacted. Those laws should prevent or bust up concentrations of economic power that not only harm consumers but also undermine our democracy — such as the pending Comcast acquisition of Time-Warner. 

In 1890, when Republican Senator John Sherman of Ohio urged his congressional colleagues to act against the centralized industrial powers that threatened America, he did not distinguish between economic and political power because they were one and the same. The field of economics was then called “political economy,” and inordinate power could undermine both. “If we will not endure a king as a political power,” Sherman thundered, “we should not endure a king over the production, transportation, and sale of any of the necessaries of life.”

Shortly thereafter, the Sherman Antitrust Act was passed by the Senate 52 to 1, and moved quickly through the House without dissent. President Harrison signed it into law July 2, 1890. ( Continue… )

Organizer Bryan Watson, left, gestures during a march to raise the minimum wage to $15 per hour in Seattle. The push to raise minimum wage is gaining steam, but Reich and others think it needs to go beyond legislation that would raise it to $10.10 an hour nationally. (AP Photo/seattlepi.com, Joshua Trujillo, File) (Joshua Trujillo/seattlepi.com/AP/File)

Minimum wage should be $15 an hour. Seven reasons why.

By Guest blogger / 04.09.14

Momentum is building to raise the minimum wage. Several states have already taken action  — Connecticut has boosted it to $10.10 by 2017, the Maryland legislature just approved a similar measure, Minnesota lawmakers just reached a deal to hike it to $9.50. A few cities have been more ambitious — Washington, D.C. and its surrounding counties raised it to $11.50, Seattle is considering $15.00

Senate Democrats will soon introduce legislation raising it nationally to $10.10, from the current $7.25 an hour.

All this is fine as far as it goes. But we need to be more ambitious. We should be raising the federal minimum to $15 an hour.

Here are seven reasons why:

1. Had the minimum wage of 1968 simply stayed even with inflation, it would be more than $10 an hour today. But the typical worker is also about twice as productive as then. Some of those productivity gains should go to workers at the bottom.

2. $10.10 isn’t enough to lift all workers and their families out of poverty. Most low-wage workers aren’t young teenagers; they’re major breadwinners for their families, and many are women. And they and their families need a higher minimum. ( Continue… )

Sen. Charles Schumer, D-N.Y., right, accompanied by Sen. Sheldon Whitehouse, D-R.I., speak to reporters on Capitol Hill in Washington, Wednesday, April 2, 2014, about the Supreme Court decision in the McCutcheon vs. FEC case, in which the Court struck down limits in federal law on the aggregate campaign contributions individual donors may make to candidates, political parties, and political action committees. (Manuel Balce Ceneta/AP)

What the 'McCutcheon' decision has to do with today's jobs report

By Guest blogger / 04.04.14

What does the Supreme Court’s “McCutcheon” decision this week have to do with today’s jobs report, showing 192,000 new jobs for March?

Connect the dots. More than five years after Wall Street’s near meltdown the number of full-time workers is still less than it was in December 2007, yet the working-age population of the U.S. has increased by 13 million since then.

This explains why so many people are still getting nowhere. Unemployment among those 18 to 29 is 11.4 percent, nearly double the national rate.

Most companies continue to shed workers, cut wages, and horde their cash because they don’t have enough customers to warrant expansion. Why? The vast middle class and poor don’t have enough purchasing power, as 95 percent of the economy’s gains go to the top 1 percent.

That’s why we need to (1) cut taxes on average people (say, exempting the first $15,000 of income from Social Security taxes and making up the shortfall by taking the cap off income subject to it), (2) raise the minimum wage, (3) create jobs by repairing roads, bridges, ports, and much of the rest of our crumbling infrastructure, (4) add teachers and teacher’s aides to now over-crowded classrooms, and (5) create “green” jobs and a new WPA for the long-term unemployed. ( Continue… )

Republican activist Shaun McCutcheon (center) leaves the Supreme Court after the court's hearing on campaign finance in McCutcheon v. Federal Election Commission on Oct 8. (Susan Walsh/AP)

The 'McCutcheon' decision will create a vicious cycle

By Guest blogger / 04.03.14

If wealth and income weren’t already so concentrated in the hands of a few, the shameful “McCutcheon” decision by the five Republican appointees to the Supreme Court wouldn’t be as dangerous. But by taking “Citizen’s United” one step further and effectively eviscerating campaign finance laws, the Court has issued an invitation to oligarchy.

Almost limitless political donations coupled with America’s dramatically widening inequality create a vicious cycle in which the wealthy buy votes that lower their taxes, give them bailouts and subsidies, and deregulate their businesses – thereby making them even wealthier and capable of buying even more votes. Corruption breeds more corruption.

That the richest four hundred Americans now have more wealth than the poorest 150 million Americans put together, the wealthiest 1 percent own over 35 percent of the nation’s private assets, and 95 percent of all the economic gains since the start of the recovery in 2009 have gone to the top 1 percent — all of this is cause for worry, and not just because it means the middle class lacks the purchasing power necessary to get the economy out of first gear. 

It is also worrisome because such great concentrations of wealth so readily compound themselves through politics, rigging the game in their favor and against everyone else. “McCutcheon” merely accelerates this vicious cycle.   

As Thomas Piketty shows in his monumental “Capital in the Twenty-First Century,” this was the pattern in advanced economies through much of the 17th, 18th, and 19th centuries. And it is coming to be the pattern once again. ( Continue… )

A picture illustration shows a $100 bill laying on $1 bills. In recent years the biggest gains from trade have gone to investors and executives while the burdens have fallen disproportionately on those in the middle and below who have lost good-paying jobs, says Robert Reich. (Kacsper Pempel/Reuters/File)

When the 'inequality game' plays out in real life

By Guest blogger / 03.31.14

Every year I ask my class on “Wealth and Poverty” to play a simple game. I have them split up into pairs, and imagine I’m giving one of them $1,000. They can keep some of the money only on condition they reach a deal with their partner on how it’s to be divided up between them. I explain they’re strangers who will never see one other again, can only make one offer and respond with one acceptance (or decline), and can only communicate by the initial recipient writing on a piece of paper how much he’ll share with the other, who must then either accept (writing “deal” on the paper) or decline (“no deal”). 

You might think many initial recipients of the imaginary $1,000 would offer $1 or even less, which their partner would gladly accept. After all, even one dollar is better than ending up with nothing at all. 

But that’s not what happens. Most of the $1,000 recipients are far more generous, offering their partners at least $250. And most of partners decline any offer under $250, even though “no deal” means neither of them will get to keep anything. 

This game, or variations of it, have been played by social scientists thousands of times with different groups and pairings, with surprisingly similar results. 

A far bigger version of the game is now being played on the national stage. But it’s for real — as a relative handful of Americans receive ever bigger slices of the total national income while most average Americans, working harder than ever, receive smaller ones. And just as in the simulations, the losers are starting to say “no deal.” 

According to polls, they’ve said no deal to the pending Trans Pacific Trade Agreement, for example, and Congress is on the way to killing it.  ( Continue… )

Americans for Prosperity Foundation Chairman David Koch speaks in Orlando, Fla. in August. Reich argues that in using their vast wealth to change those rules and laws in order to fit their political views, the Koch brothers are undermining the democratic process. (Phelan M. Ebenhack/AP/File)

How the Koch brothers are undermining American democracy

By Guest blogger / 03.26.14

Charles and David Koch should not be blamed for having more wealth than the bottom 40 percent of Americans put together. Nor should they be condemned for their petrochemical empire. As far as I know, they’ve played by the rules and obeyed the laws.

They’re also entitled to their own right-wing political views. It’s a free country.  

But in using their vast wealth to change those rules and laws in order to fit their political views, the Koch brothers are undermining our democracy. That’s a betrayal of the most precious thing Americans share.

The Kochs exemplify a new reality that strikes at the heart of America. The vast wealth that has accumulated at the top of the American economy is not itself the problem. The problem is that political power tends to rise to where the money is. And this combination of great wealth with political power leads to greater and greater accumulations and concentrations of both — tilting the playing field in favor of the Kochs and their ilk, and against the rest of us.

America is not yet an oligarchy, but that’s where the Koch’s and a few other billionaires are taking us.   

American democracy used to depend on political parties that more or less represented most of us. Political scientists of the 1950s and 1960s marveled at American “pluralism,” by which they meant the capacities of parties and other membership groups to reflect the preferences of the vast majority of citizens. ( Continue… )

A volunteer health care worker in Florida wears a t-shirt, getting people to sign up for the new health care programs. As the Affordable Care Act deadline approaches, five million people have signed up so far. But 41 percent of Americans who are currently uninsured say they plan to stay that way. (J. Pat Carter/AP/File)

Obamacare is working. It still needs fixing.

By Guest blogger / 03.24.14

Despite the worst roll-out conceivable, the Affordable Care Act seems to be working. With less than two weeks remaining before the March 31 deadline for coverage this year, five million people have already signed up. After decades of rising percentages of Americans’ lacking health insurance, the uninsured rate has dropped to its lowest levels since 2008.

Meanwhile, the rise in health care costs has slowed drastically. No one knows exactly why, but the new law may well be contributing to this slowdown by reducing Medicare overpayments to medical providers and private insurers, and creating incentives for hospitals and doctors to improve quality of care.

But a lot about the Affordable Care Act needs fixing — especially the widespread misinformation that continues to surround it. For example, a majority of business owners with fewer than 50 workers still think they’re required to offer insurance or pay a penalty. In fact, the law applies only to businesses with 50 or more employees who work more than 30 hours a week. And many companies with fewer than 25 workers still don’t realize that if they offer plans they can qualify for subsidies in the form of tax credits. ( Continue… )

Jamie Dimon, JPMorgan Chase's chairman, president and chief executive officer, arrives at the Department of Justice in Washington last year. Morgan Chase almost doubled Dimon's pay for 2013, and the bank said Dimon's compensation of $20 million last year consisted of $18.5 million in stock options and a base salary of $1.5 million. (Manuel Balce Ceneta/AP/File)

As CEO pay grows, hourly workers increasingly left behind

By Guest blogger / 03.14.14

It’s often assumed that people are paid what they’re worth. According to this logic, minimum wage workers aren’t worth more than the $7.25 an hour they now receive. If they were worth more, they’d earn more. Any attempt to force employers to pay them more will only kill jobs. 

According to this same logic, CEOs of big companies are worth their giant compensation packages, now averaging 300 times pay of the typical American worker. They must be worth it or they wouldn’t be paid this much. Any attempt to limit their pay is fruitless because their pay will only take some other form. 

"Paid-what-you’re-worth" is a dangerous myth.  

Fifty years ago, when General Motors was the largest employer in America, the typical GM worker got paid $35 an hour in today’s dollars. Today, America’s largest employer is Walmart, and the typical Walmart workers earns $8.80 an hour.  ( Continue… )

Job seekers line up to sign in before meeting prospective employers at a career fair at a hotel in Dallas in January. Columnist Robert Reich argues that the American economy grew best when more workers were able to share in prosperity and attain a higher standard of living. (LM Otero/AP/File)

Reich: America should reverse 'great u-turn'

By Guest blogger / 03.07.14

Do you recall a time in America when the income of a single school teacher or baker or salesman or mechanic was enough to buy a home, have two cars, and raise a family? 

I remember. My father (who just celebrated his 100th birthday) earned enough for the rest of us to live comfortably. We weren’t rich but never felt poor, and our standard of living rose steadily through the 1950s and 1960s. 

That used to be the norm. ( Continue… )

An illustration photo shows a man holding a smart phone with a Facebook logo as its screen wallpaper in front of a WhatsApp messenger logo. Facebook will buy the mobile-messaging startup WhatsApp - and access to WhatsApp's 450 million users - for $19 billion in cash and stock. Robert Reich argues that despite the rise of small companies with millions of customers, we're not creating more jobs. (Dado Ruvic/Reuters/File)

WhatsApp: How it reflects our deepest economic dysfunctions

By Guest blogger / 02.21.14

If you ever wonder what’s fueling America’s staggering inequality, ponder Facebook’s acquisition of the mobile messaging company WhatsApp.

According to news reports today, Facebook has agreed to buy WhatsApp for $19 billion.

That’s the highest price paid for a startup in history. It’s $3 billion more than Facebook raised when it was first listed, and more than twice what Microsoft paid for Skype.

(To be precise, $12 billion of the $19 billion will be in the form of shares in Facebook, $4 billion will be in cash, and $3 billion in restricted stock to WhatsApp staff, which will vest in four years.)

Given that gargantuan amount, you might think Whatsapp is a big company. You’d be wrong. It has 55 employees, including its two young founders, Jan Koum and Brian Acton.

Whatsapp’s value doesn’t come from making anything. It doesn’t need a large organization to distribute its services or implement its strategy. ( Continue… )

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