Robert Reich: The wealthy have broken society by siphoning all its money to themselves

They already "undertook the upward redistribution by altering the rules of the game"

Published April 30, 2015 8:01PM (EDT)

Robert Reich, the Secretary of Labor under Bill Clinton, published an essay in the most recent American Prospect in which he argues that the wealth inequality isn't a problem because of current economic policy, but because the financial elite starting rigging the game against the middle- and lower-class half a century ago.

Debates between those on the left and the right about the merits of government intervention versus the free market distract people from the real problem, Reich said, which is how different the market is than it was 50 years ago.

"Its current organization is failing to deliver the widely shared prosperity it delivered then," he explains, because it's no longer designed to reward hard work. Everything from intellectual property rights to basic contract laws has been altered at the behest of corporate interests, creating a system in which -- if functioning properly -- money is siphoned from the bottom up.

The entry-level wages of female college graduates have dropped by more than 8 percent, and male graduates by more than 6.5 percent. While a college education has become a prerequisite for joining the middle class, it is no longer a sure means for gaining ground once admitted to it. That’s largely because the middle class’s share of the total economic pie continues to shrink, while the share going to the top continues to grow.

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. These changes stem from a dramatic increase in the political power of large corporations and Wall Street to change the rules of the market in ways that have enhanced their profitability, while reducing the share of economic gains going to the majority of Americans.

This transformation has amounted to a redistribution upward, but not as “redistribution” is normally defined. The government did not tax the middle class and poor and transfer a portion of their incomes to the rich. The government undertook the upward redistribution by altering the rules of the game.

Read the rest at the American Prospect...

By Scott Eric Kaufman

MORE FROM Scott Eric Kaufman

Related Topics ------------------------------------------

College Graduates Income Inequality Robert Reich U.s. Economy