Robert Reich on America's inequality crisis: Trump's "greedy enablers" will "reap the whirlwind"

Superstar economist sees hope in the darkness: Trump's true legacy will be a "revival of progressive politics"

By Chauncey DeVega

Senior Writer

Published April 15, 2019 12:30PM (EDT)

Robert Reich; Donald Trump (Getty/AP/Salon)
Robert Reich; Donald Trump (Getty/AP/Salon)

Some plain facts and hard truths: The top one percent of Americans own 40 percent of the country's wealth and 90 percent of its income.

When adjusted for inflation, the average income in the United States has remained approximately the same for the last 40 years. By comparison, over the last two decades the richest Americans have seen their income increase by three times, relative to those of the poorest Americans.

If adjusted for economic productivity, the federal minimum wage in America would actually be at least $20 an hour, instead of the $7.25 it is at present.

An increasingly large number of Americans are unable to retire and will have to work until they die. Roughly six in 10 Americans don't even have $1,000 they could use for an emergency.

Twenty-six individuals have as much wealth as the bottom half of the world's population. This is a global plutocracy.

Globalization and neoliberalism, the economic revolutions of the 1990s, have largely increased human misery rather than ameliorating it. This has fueled the rise of the racist and nationalist "New Right" and its reactionary brand of pseudo-populism in the United States, Europe and other parts of the world.

In the United States this global right-wing movement manifested itself as an upsurge of racism, nativism and economic angst that put Donald Trump in the White House in 2016. Trump has done nothing to improve those social ills. Instead he is doing everything in his power to make America a more economically unjust and unfair and divided society -- to his own personal benefit. It is entirely possible that this feedback loop of human misery will propel Trump to another victory in the 2020 presidential election.

Is wealth inequality a direct threat to American democracy? Is Donald Trump's regime the culmination of decades of increasing inequality as well as a broader crisis in American cultural norms and values? What would a post-Trump project of American renewal entail? Is it possible for liberals and progressives to fight back and defeat the highly disciplined and extremely well-resourced conservative movement? Do the policy proposals of Sen. Bernie Sanders, Rep. Alexandria Ocasio-Cortez and other liberals and progressives reflect what the majority of Americans actually want from their government?

In an effort to answer these questions I recently spoke with Robert B. Reich, the former secretary of labor under Bill Clinton and now the Chancellor's Professor of Public Policy at the University of California, Berkeley. Reich was also an economic adviser to Barack Obama and has written 15 books, including the bestsellers "Aftershock," "The Work of Nations," "Beyond Outrage" and his most recent, "The Common Good." He is also the co-creator of the award-winning documentary "Inequality for All" as well as the Netflix documentary "Saving Capitalism."

This conversation has been edited for clarity and length. You can hear our full conversation on my podcast, "The Chauncey DeVega Show."

Was the election of Donald Trump a surprise to you? And what do you make of his enduring popularity?

I did not predict Donald Trump per se. But for the last 25 years I have worried with increasing vehemence about the widening divide in this country between a majority that is losing economic security and social standing and a small minority gaining most of the benefits of economic growth. When I was secretary of labor in the 1990s I began to talk about the rise of a series of demagogues who would use fear and anxiety and then channel it towards their targeted scapegoats such as immigrants, African Americans and other minorities. These demagogues would divide the country in order to enhance their power. There was a great fear which seems to have been realized with Donald Trump about the appeal  of authoritarianism for many Americans as an alternative to democratic populism.

How do we do a better job of explaining to the American people how this type of gangster-capitalist kleptocracy is a threat to them personally and also the country's democracy?

I think it's very important to emphasize that we are at an inflection point, and a very dangerous one, with great wealth at the top in a relatively few hands, This is incompatible with democracy. This is not the first time this has happened. Louis Brandeis, the great jurist, said in the 1920s, as the United States was coming out of the Gilded Age, "We can have democracy in this country or we can have wealth concentrated in the hands of a few, but we cannot have both." America made a decision at the end of the Gilded Age to revive democracy and that we called, in hindsight, the Progressive Era and then The New Deal.

But I think that my generation, the baby boomers, took our democratic system pretty much for granted. Our first real experience with politics was the civil rights movement and that was an affirmative experience. But the next experience was the Vietnam War and Lyndon Johnson's lies, and that turned many of us quite cynical. The last 40 years has been a time of testing. Can we keep our democracy when the median wage has barely risen and a large portion of the gains from economic growth have gone to the top? I do not think America can keep its democracy if that trajectory continues over the next few decades.

Many things are converging in terms of system shocks right now. There is elite overproduction. On the other end of the spectrum there are many poor and working-class people around the world who feel alienated by globalization. The neoliberal order has failed to provide prosperity for most people on the planet. What do these factors do to America going forward?

There are two forms of populism. One is authoritarian. We have seen this before in history when large numbers of people are afraid, and then demagogues emerge who pretend that they are the champions of the masses. These demagogues will target minorities as the source of these anxieties. Trump has chosen immigrants and forces outside the United States. But he has also gone after black athletes, and indirectly supported white supremacists. In total Donald Trump has fueled the ugliest kinds of divisiveness in the United States.

The other kind of populism is we might call democratic populism. In 2016 Bernie Sanders represented that alternative, and at this stage he is the only practical alternative to authoritarian populism.

To combat right-wing authoritarian populism there needs to be fundamental reform of our political and economic system. The two are intimately related. You cannot reform our political system until you reform the economy. And one of the deepest problems with the economy is that there are so many hidden upward pre-distributions from the poor and middle class to the wealthy that people do not see because they are buried in the new rules of the game. These structural inequalities are the laws and regulations that have been installed by wealthy interests such as big corporations and the very rich.

Corporations and the plutocrats have gamed the American political system and economy through a "too big to fail" strategy and narrative. They have an entire news media apparatus to circulate their propaganda. The right wing claims to love capitalism but the system they have created is actually antithetical to free markets and an efficient economy. Neoliberalism is socialism for rich people and free markets for everybody else. Republicans love to complain about "socialism," but they certainly love it for themselves.

Republicans and conservatives have been talking that way for 85 years. They opposed Franklin D. Roosevelt's plan for Social Security by calling it "socialism." They opposed John F. Kennedy and his ideas for economic development as "socialist". They opposed Lyndon Johnson's Medicare as "socialism." The right wing has called socialism anything that helps average working people. But it is much deeper than that. The actual rules and regulations and laws that the wealthy are increasingly able to create have tipped the balance in the United States largely in favor of socialism for the rich and a brutal form of capitalism for almost everybody else.

I recently wrote an essay about Jamie Dimon, who runs the largest and most successful bank on Wall Street, JPMorgan Chase, who recently, in his yearly letter to the shareholders, talked about the so-called scourge of "socialism." The irony here being that Jamie Dimon was the head of JPMorgan Chase when the bank got a huge bailout from the federal government, while homeowners who were underwater, owing more on their homes than their homes were worth, got little or nothing. Millions of Americans lost their jobs and savings because of the mismanagement and outright fraud committed by big banks like JPMorgan Chase.

Jamie Dimon was also instrumental in getting the big tax cuts from Donald Trump's administration. The business community predicted these tax cuts would generate more investment and higher wages. Instead, as many of us predicted, these tax cuts went directly into stock buybacks and higher executive wages -- which is another form of socialism for the rich. On top of all this, you've got a wave of CEOs who have lost their jobs over the last several years because they have not satisfied Wall Street's demands. But these same CEOs are walking away from their jobs with giant paychecks that reflect no success on their part at all. In fact, these payouts reflect a cartoon version of socialism where irresponsible people get ahead.

The great irony today is we have a business class that has failed at the job of leadership of America in a spectacular and ultimately devastating way. The business leaders of the 1940s, 1950s and 1960s were not angels by any stretch of the imagination, but at least many of them tried to be corporate statesmen in the sense that they really did support policies that would help lift all boats. This new group of CEOs, of business leaders, are all greedy enablers of Donald Trump and the Republican Party. They will reap the whirlwind. They are sowing the seeds of terrible social dissent, discontent and ultimately their own undoing.

Donald Trump is a living, breathing moral hazard. His policies are designed to make himself and his allies rich through such things as changing the tax code and deregulating entire industries. Never mind all of his alleged and in some cases publicly documented illegal behavior. How come there are not enough prominent people speaking truth to power by saying, "Look at Trump's policies and how they're making him and people like him rich."

I wish the Democrats, and also more progressives, would take on the selfishness and greed of Trump and other people who occupy positions of great wealth in this country. They should do this not as a matter of demonizing all wealthy people, because many of them are philanthropists and have their hearts in the right place. But this selfishness and greed should be highlighted to show real abuses of power, such as when CEOs contribute massive amounts of money to politicians for the obvious purpose of getting changes in laws, rules and regulations that benefit them and thus undermine democracy and American society.

Donald Trump is a pathological narcissist and a sociopath of the first order, but as you just pointed out, his immorality is so colossal that he embodies the worst aspects of America. He is the obverse, the absolute opposite of the American ideal with regard to almost every aspiration we have for ourselves and our country. Why don't we talk about this more?

Let's consider a counterfactual. What do you think America would look like at present if we had actually enacted Franklin D. Roosevelt's Economic Bill of Rights 75 years ago?

For one thing, the median wage would be substantially higher. By some estimates, instead of it being around $50,000, it would now be closer to $80,000. But a simple discussion of incomes is too simple and superficial an understanding of what Franklin D. Roosevelt was really talking about. If his vision had been followed through on, America would be a more compassionate society and a less stressed society. This is very important. The levels of stress right now in the United States because of harsh capitalism are wreaking great harm. This is manifesting itself not only in terms of ill health but also in the anger and frustrations that many people are feeling. But I want to get back to something that we were talking about a moment ago: Trump is really not the cause of all of this. Donald Trump is the culmination of the consequences of 40 years of a leadership class that failed to do its job and also a public that that has not been told the truth.

If the United States and its leaders, citizens and culture do not change there are going to be Donald Trumps as far as the eye can see in the future. We are going to lose our democracy. I also think the very survival of species is at stake in terms of climate change and nuclear proliferation. One of the reasons that I teach is because I am of an age now where there's very little that I can do directly to change the course of the country. But I want a new generation of young people to understand what's at stake, because the neoliberal framework that became so dominant in their lifetimes is one of the reasons that the American public never understood the full truth about what has really transpired in this country.

In terms of young people, why do Donald Trump, Republicans and the broader right-wing machine hate Rep. Alexandria Ocasio-Cortez so much? They're terrified of her.

They hate her because they're terrified. They're terrified of what she represents and the power she has as a leader of the future. They're terrified of the future. They're terrified of the demographic changes in this country and the possibility that there are millions of people like Alexandria Ocasio-Cortez who will understand the truth. You asked me a few minutes ago why more Democrats or progressives or pundits don't speak truth to power. One of the reasons is that the powerful have so much money they have literally bought either the people themselves or the means by which individuals can get the truth out.

Our media is not monolithic, obviously, but it is not a model of courage. The media is out to make money and they're reluctant to bite the hands that feed them. This is true of foundation heads. This is true even of universities. These centers of truth-telling have become more and more dependent on sources of financing which they do not want to offend. And so we the people are an a kind of catch-22.

That does not even include how the Koch brothers and other right-wing moneyed interests are buying university departments, creating their own news media and the like. They're literally creating their own institutions of "learning" to circulate lies. The left and progressives are so far behind in this fight. The American right is akin to a fundamentalist religious movement, disciplined and loyal.

That has always been the case. There are two reasons for this. One is that to be on the left in America has always been to be anti-authoritarian, which means undisciplined and everyone is doing their own thing. To be on the right in America has always been to be very disciplined, follow the leader. And if the Koch brothers and a few very wealthy people say, "Take that hill," you have many of their followers -- some on the payrolls, but many who are just willing to be followers -- line up and do exactly as they are told.

But there's something else that is an even deeper problem: the power that comes with money. The progressive left in America does not have a great deal of money. Now, there are a lot of individuals who have a great deal of energy and they've shown what that energy can accomplish in the 2018 midterm elections. But ultimately, without resources and with jobs that are less and less secure -- and with people who hold student debts that are extremely burdensome -- you have a population of folks, even on the left, who are less willing to rock the boat.

The so-called "socialist" ideas and policies of Bernie Sanders or Alexandria Ocasio-Cortez are not that outside the mainstream of public opinion in terms of issues such as jobs, health care, the environment and so many other issues. Counter to what the right-wing disinformation machine says, these are policies the American people actually want.

The interesting thing to me is that since the 2016 election, more and more Americans have come over to these types of policies. Seventy percent support Medicare for all, for example. Very large majorities want higher taxes on the super rich. Large majorities are in support of paid child care and also free public university tuition. These are no longer "leftist positions." They really have become dominant positions in America. The corporate media describes them as left and talks about the "center" as being far to the right of where most people are these days. It's almost as if the corporate media and corporate interests want to define the "center" as halfway between where most Americans are and where the corporate elites are. But it's not appropriate to call that the true center of American public opinion and politics.

As I said at the outset of our conversation, the strongest forces in American politics today are anti-establishment. They're anti-corporate, they're anti-Wall Street, they're anti-big money in politics. Some of those forces, particularly in the Republican Party, have been captured by a fake and very dangerous authoritarian populist. Donald Trump's enablers in the Republican Party will go down in history as people who should never have had power and should be ashamed by what they have enabled with Trump and what he represents. The rest of America is leaning toward democratic, progressive populism. That's where more and more of the so-called center actually lies.

One of Trump's favorite claims is that this is the greatest economy ever. Of course this is not true. When you look at the American economy what warning signs do you see?

The good news is that the official rate of unemployment is low, but the bad news is that we have a record number of people, as a percentage of the American work force, working part-time or in insecure jobs who would rather work full-time and have more job security. There are a large number of people who are working in jobs which they are overqualified for in terms of their education and experience. We've got many people who are too discouraged to even look for work. We still have a wage, for most people, that has barely kept up with inflation. It has moved upward slightly over the last several years. But with this level of unemployment one would expect much higher wages under normal circumstances.

Beyond that, you have people who no longer have pension or health benefits with their jobs. You've got a great number of Americans who have no health insurance at all. Thirty million people are not even reached by extended Medicaid or the Affordable Care Act, and Trump is doing everything he can to take health insurance away from them. Housing costs are soaring. More and more people are renting. Fewer and fewer people are buying homes. This is not a successful economy for most Americans.

Now, in terms of the stock market and more conventional measures of where the economy is going, we are ripe for what Wall Street euphemistically calls a "correction," one that is likely to be a substantial downturn. And the reason for the downturn has to do with the failure of what economists call "aggregate demand." If people are not being paid enough, and most Americans are not, to buy up all of the goods and services that this increasingly productive economy is able to generate, and if export markets are deteriorating because of Trump's policies and also because of a spreading worldwide slowdown, then there really is not enough demand to sop up what we can produce. The stock market has been artificially maintained through stock buybacks. That is about to come to an end. It cannot continue because there is just a limited amount of money for stock buybacks -- and most of it came from the Trump tax cuts. And I haven't even gotten to issues concerning the deficit or cumulative debt.

What would a project of American renewal look like to confront some of these social, cultural and political problems that created the conditions for Donald Trump's presidency?

The benefits of economic growth are intertwined with the health of a democracy. They are two sides of the same coin. Each depends on the other. Where do you begin? I think HR1, the first bill that the Democrats in the House have offered, is a good starting place. But you've got to have massive economic reform at the same time. How do you start that? The easiest and first thing to do is to dramatically increase the earned income tax credit. That becomes a foundation for almost everything else, such as a universal guaranteed minimum income or a guaranteed job that pays at least a living wage. In order to pay for all this, taxes on the very rich will have to be raised.

If at the same time we begin to take our democracy back, then it's possible to begin to revive antitrust laws and to bust up the monopolies. We can also then get rid of the actual and near-monopolies such as pharmaceuticals, in health care, in high tech, on Wall Street and many other places, which are driving up prices and keeping wages down. We can then revive labor unions and new forms of labor associations to give workers more voice. It's possible to do many things. The point is to begin.

What gives you the most hope in this moment?

My hopes really do outweigh my fears. I'm basically optimistic about the future, notwithstanding everything I've said. I'm optimistic first because I am a student of history. I know that there are dark moments in American history. After the first Gilded Age we did repair our system considerably between 1901 and ultimately 1940. We are now in a second Gilded Age, and I think the pendulum will swing back accordingly. I'm also very optimistic about grassroots political movements. Donald Trump's only positive legacy, I think, will be the revival of progressive politics at the grassroots all over this country. Many people are getting involved for the first time. Some people who got involved during the civil rights and anti-Vietnam War movements are now becoming re-involved and reactivated.

The third thing that makes me optimistic is young people. They are idealistic and committed. They are dedicated to the fundamental principles of our economy and democracy in ways that are very powerful. I've been teaching for 40 years. I've never taught a generation of young people as committed to reforming the system as young people today. It's not just Alexandria Ocasio-Cortez. She is the tip of a vast pool of wonderful young people who are going to inherit this mess and reform it.

By Chauncey DeVega

Chauncey DeVega is a senior politics writer for Salon. His essays can also be found at He also hosts a weekly podcast, The Chauncey DeVega Show. Chauncey can be followed on Twitter and Facebook.

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