Robert Reich breaks down how oligarchs are 'cashing in' on the pandemic
Robert Reich is probably the most outspoken former secretary of labor. I mean, have any others become a household name, with an outsize presence on progressive news and social media sites to match? (Okay, maybe Frances Perkins.) This is all to say that the career trajectory of Mr. Reich, who was Clinton's labor secretary from 1993 to 1997, is more unusual than the average elder statesman. Rather than settle into a comfortable retirement, Reich has spent the past 23 years as an engaged activist, writing and speaking publicly about income inequality in the United States. That issue, Reich argues forcefully, is the singular thread that devolves all other aspects of our democracy; nearly every ill, from police violence to the rise of the far-right to the ascension of Trump, stem from the starkly unequal economic situation we find ourselves trapped in.
Yet for someone who covers bleak subject matter, Robert Reich is hopeful in interview. I asked him if history was doomed to repeat the cycle of income inequality leading to greater equality before inevitably decaying again. "A democracy is subject to virtuous and vicious cycles," he demurred. "There's no status quo. There's no stable state. Either the middle class is growing, the franchise is expanding, there is more generosity in the system because people feel more secure about their position — or the opposite occurs." Echoing what his peers like Paul Krugman believe, Reich added that the way to move forward rather than regress was to recognize the fiction of free market fundamentalism — "knowing that many of these social mythologies, like meritocracy, [are] a convenient kind of cloak to disguise the continuous power grabs that are going on."
In Robert Reich's new book, "The System: Who Rigged it, How We Fix It", the former Secretary of Labor gives an accessible and eminently readable walkthrough of thirty years of neoliberal fiscal policy, corporate malfeasance, and lobbying wickedness. The reader is left with a crystal-clear understanding of how democracy decays and the specific forces that have bled the middle-class dry, leaving us with an oligarchy in which the average citizen has virtually no power. The book takes an epistolary form — several chapters are written in the form of a letter to Jamie Dimon, the CEO of JPMorgan Chase, who takes the role of antagonist.
I spoke to Mr. Reich on the phone to talk about his new book and how the pandemic is affecting the bigger economic situation. As always, this interview has been condensed and edited for print.
Obviously the political circumstances have changed a lot in the past few weeks given the pandemic. A lot of your book is about oligarchs behaving badly. What do you think the nations' oligarchs are doing in reaction to the economic crisis precipitated by the pandemic?
Well, they're cashing in on it. The big $2.2 trillion Coronavirus bill [the CARES Act] that passed Congress was signed a law by President Trump gave a lot of that away to the biggest corporations, banks and the wealthy — both through a gigantic bailout fund, and also numerous tax credits and deductions. Also the biggest companies got themselves exempted from the requirement in the second Coronavirus bill, the smaller bill, from the requirement to provide workers with paid sick leave.
And undoubtedly some big companies are making a lot of money off of the bidding war among the states and FEMA for equipment and supplies. Meanwhile, as I show in the book, average Americans come out with the short end of the stick. $1,200 per adult won't take anybody very far given that the typical American spends about $1,000 a week on food, rent, mortgage, et cetera. It's become very clear that the super-rich have managed to escape to The Hamptons or yachts or wherever and still get concierge healthcare, including, apparently, tests for the virus when they wish. Everybody else is either in limbo or in danger.
To that end do you see a potential for some type of larger political or structural change emerge from the pandemic? I'm seeing a lot of labor action happening, which is part of why I'm curious what you think.
Well first of all, the pandemic reveals the class structure in America more vividly than anything we've seen since… probably including the Great Recession, the explosion of Wall Street in 2008. Back then, with the Wall Street bailouts, [consider] the fact that homeowners didn't get bailed out and the enormous cost imposed on average people in terms of jobs lost, savings lost and for many homes lost.
But this is much larger and it's much more vivid. It's clear that the most people who are so-called essential workers are not college educated. They are being put into harm's way, often without adequate equipment or protection. Twice as many Blacks and Latinos are dying in New York than whites. And that may be the pattern in the rest of the country. We don't know yet. Native Americans are and other vulnerable populations are being especially hard hit.
And so with all this becoming so transparent and so obvious in terms of the gaping gap in privilege and wealth and power, we might see more awakening among particularly the working class, which has in recent years left the Democratic Party and embraced Trumpism. Maybe now some of them will come back, if the Democrats offer them a real alternative. That's a big if.
What are your thoughts are on the current state of the 2020 election, the Democrats lining up around Biden?
Well, the first goal quite obviously, for the good of the country and the world is to ensure that the pathological narcissist is no longer in the Oval Office.
But having said that, I think clearly Biden needs progressives and young people. He's not going to be able to win just by attracting some suburban women who have been Trump supporters and who are wavering in their support right now.
I think the easiest way for Biden to do that is to announce that his former position against Medicare For All was wrong. And he sees it because of the millions of people who've lost their employer-provided health care in this crisis.
It's a clear exit ramp for him from his previous position. And most Americans agree.
I don't know that he will take it. I also would hope that he would select Elizabeth Warren for his vice president and that would be another very clear signal.
To go back to your book, I wanted to ask about one of the things I thought you did an excellent job discussing, specifically the stuff about power as distinct from wealth or income. As I was reading those parts, I thought, "it seems like power is something that we don't talk about as much and as explicitly" — it's harder to measure discretely or quantitatively, like you might wealth or income. I think when I'm talking to friends who are more centrist or conservative, it's something that's very hard to articulate to them. Is there a good way to talk about power, or conceive of the idea of power as it pertains to social and economic justice?
The best way is to show people what's happened over the past 40 years as I've tried to do. There's no better way of describing this centrality of power and revealing how close it is to wealth.
And most people who call themselves conservatives, even Republicans, are appalled at the amount of big money in American politics. In fact, the Tea Partiers decried what they call crony capitalism, and they are strongly opposed to corporate welfare. There's a great deal of overlap between their position and the position of progressives who care deeply about democracy. I think that power is and the abuse of power is at the center of our predicament, our national dilemma.
I'm old enough to remember when politics was very different. Most Americans thought that the government acted in the public's best interest, most of the time. That was what polls showed in the 1960s and early 1970s, and there's been a steady decline in that degree of trust since then. And public policies have increasingly sided with the wealthy in terms of tax cuts, all sorts of regulatory rollbacks and special benefits, decline of anti-trust enforcement. An assault on unionization. Globalization that reduces the bargaining power of average people, average workers, and so on.
When I was Secretary of Labor I saw this happening. It's happened under Democratic as well as Republican administrations. Political scientists don't talk much about power because it's hard, as you said, to measure. Economists don't talk about it at all because it doesn't fit into any microeconomic or macroeconomic models.
It's like the big black hole in the universe. You can see it by seeing how all the stars and planets are moving toward its gravitational pull. It is the single most important explanation and factor in our system as it's presently constituted. There is no counter-veiling power. Unions have shriveled from 35% of the private sector workforce to 6.4%.
There are no political parties that are rooted in grassroots mobilization. Both parties have become giant funding machines. The mythologies that go with this huge simplification of economic and political power at the top are broadly accepted, but I think after the pandemic they may be questioned. One obvious one is the mythology of meritocracy.
The notion that everybody is where they are because they deserve to be in the pecking order. Well that's obviously not true. The free market is a product of political decisions as to how it's going to be organized, and those decisions are very much dependent upon who has most influence in politics. Another mythology is corporate social responsibility. The notion that companies will be charitable and responsible.
The most obvious example is the Business Roundtable's statement in August, last August, saying that they are responsible for all their constituents and all their stakeholders. Well the pandemic has revealed that to be a complete joke. They continue to pay dividends and support exorbitant execute pay even as they're laying off millions of workers.
Another mythology might be called market fundamentalism, the [idea] that the market can do no wrong. That every attempt to provide safety nets or to reduce the harshness of market outcomes for average people is a quote-unquote "intrusion" into the market, that is presumably, or there's a rebuttable presumption that it is a bad thing. There's no workforce in the world among the advanced countries, the so-called advanced countries, that is as badly treated as the workforce in the United States. Almost no sick leave or no sick leave. No paid family medical leave. No paid sick leave. Very stagnant wages. Very few benefits. No health benefits to speak of. No healthcare.
I mean, we could go through a long list. It's staggering, the extent to which the — I call it the oligarchy — has managed to use a variety of mythologies to blind people to what's going on. The final technique is divide and conquer. Using racism and ethnocentrism and xenophobia and a variety of other methods to get most people to suspect or dislike or in some cases hate other people.
That kind of divisiveness of course serves the interests of the oligarchy because it means that nobody is looking upward at where all the wealth and power have gone. Everybody is fighting each other over the crumbs.
You have this line in the book, you say that the way to overcome oligarchy is to build a coalition of working class, poor and middle-class Americans to fight against this kind of concentrated power and privilege. I'm paraphrasing, but I guess my point is the type of thing you described reminds me a lot of what Bernie Sanders was doing — and sort of still is doing, even though he's out of the race. I guess I'm wondering, do you see his exit from the primary as a blow to building what you describe?
Well it's not clear. I think Bernie did an extraordinary service in 2016 and also in this election cycle of legitimizing some ideas that were on the fringe until he made them far more acceptable. Medicare for All being one. Obviously free public higher education. Then, along with Elizabeth Warner, a wealth tax. And a number of other initiatives. He never adequately connected with African Americans, and he only touched the surface of the working class in America.
His support was largely college-educated and that's fine, but the real coalition to get the change we need has got to embrace people of color and the working class. [Editor's note: Polls showed that in Nevada, New Hampshire and Iowa primaries, Bernie Sanders actually did better with non-college educated voters than college educated voters.]
Now much of the working class is comprised of people of color obviously, but you have a white working class as well. It's there that the work needs to be done. The Democratic party did not just abandon the white working class over the last 30 or 40 years. It abandoned the working class. It became, under Clinton and Obama, a party of the upper-middle class suburbs. That is a terrible shame given where we now find ourselves.
In your book you talk about lobbying quite a bit — how lobbying is used to manipulate candidates and politicians, and used by businesses to get their way. Do you see the larger political system in America as systematically repressing candidates like Sanders — more progressive candidates, or those with a plan to redistribute wealth — from getting as far as he did, say? Do people like Alexandra Ocasio-Cortez and Bernie Sanders face an uphill battle as they have to fight against the ways that oligarchy tries to keep them from getting as far as they do?
Well, undoubtedly, the mainstream media did a job on Bernie. First, everybody piled on Elizabeth Warren in October because there was an angry criticism that her numbers didn't add up with regard to her Medicare for All plan. Well, that was just absurd. You don't expect a candidate to have every dot and every T crossed. This is not a piece of legislation. But she fell into the trap and she tried to provide more and more detail — and of course the more detail you provide, the more demands are made from the establishment. I think that she really did cause a lot of anxiety among oligarchs when she provided her wealth tax. [A wealth tax] is necessary. It's important. It must be enacted eventually, but I think she wasn't prepared for the blowback she got from the wealthy in America.
Bernie's situation was slightly different. Everybody knew Bernie already from 2016, but when Elizabeth went downward Bernie became for a while the leading candidate, and that scared the hell out of the establishment. They just pounded. When I talk about the pounding, I'm not talking about just the wealthy and people I call the oligarchs. I mean everybody who uses them as a frame of reference. Many of the pundits and op-ed writers for the New York Times, they came down with extraordinary brutal negative force on Bernie. Even MSNBC. He never got beyond his 30%.
Of course added to that was his own inability to connect with, as I said, with African Americans and also with the working class, but all of this made it terribly difficult for him to survive really beyond South Carolina. It was actually Super Tuesday — Joe Biden emerges as the last person standing, but also everybody's second choice. I don't know of anybody who's terribly enthusiastic about him. Most people say, "Well if he is the way to get rid of Trump, great. Then more power to him."
I worry that Biden's repeated phrasing of, "We'll go back to normalcy," is a dangerous way of summarizing his candidacy. Because 40 years of normalcy brought us Trump. 40 years of normalcy meant stagnant wages for most Americans. The emergence of the oligarchy, of wealth and power at the top. The engulfing of American politics and big money and the corruption that went with that. Widening inequality. Donald Trump was the culmination, the consequence of all of this, but he wasn't the cause by any stretch of the imagination. It was already there.
Right, he was a symptom.
Well he was a symptom and he also exploited it. He exploited the angers and frustrations of working class America. He continues to do so to this day.
If I may step back and ask you one larger question. Historically, when income inequality gets out of whack — or inequality generally — eventually things become untenable and people demand reforms and organize, and we get something like the New Deal or the Civil Rights Act. Then, over the next few decades, these progressive reforms are chipped away at — but it happens slowly like a frog in a boiling pot, so that you don't notice it — and then eventually we just become an oligarchy again, and the process starts anew. I'm curious if you think this is inevitable — are we doomed to repeat this cycle again and again?
Oh no, I don't think there's any way out. You say doomed, I think it's inevitable that the fight continues and will always continue. A democracy is subject to virtuous and vicious cycles. There's no status quo. There's no stable state. Either the middle class is growing, the franchise is expanding, there is more generosity in the system because people feel more secure about their position, or the opposite occurs. The economy begins working for a smaller and smaller number. People in the middle and below become more anxious and desperate about their situation. That fuels distrust and divisiveness and creates the conditions for somebody like Donald Trump, kind of an authoritarian with fascist tendencies.
We go through this. One of the ways of conducting a more successful fight for a longer and more durable virtuous circle is by knowing the truth, and separating the truth from mythology. Knowing how important power is. Knowing that the free market is a fiction. Knowing that many of these social mythologies like meritocracy [are] a convenient kind of cloak to disguise the continuous power grabs that are going on. I'm a great believer that, as the old saying goes, "the truth will make us free."
Robert Reich's new book, "The System: Who Rigged It, How We Fix It," is currently on sale from Knopf Publishing Group.