Robert Reich: Notes From a Class Worrier

http://www.huffingtonpost.com/robert-reich/notes-from-a-class-worrie_b_676140.html

Robert Reich
Former Secretary of Labor, Professor at Berkeley
Posted: August 9, 2010 04:43 PM

Notes From a Class Worrier


The decline of America's middle class can be charted directly. In the three decades after World War II, the median wage (smack in the middle) grew rapidly, right along with productivity gains. Even as late as 1980, the richest 1 percent of Americans received only about 9 percent of the nation's total income.

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Meanwhile, the rich have been getting a larger and larger portion of total income. From 9 percent in 1980, the top 1 percent's take has increased to 23.5 percent in 2007. CEOs who in the 1970s took home 40 percent of the compensation of average workers now rake in 350 times. Financiers who forty years ago made only modest fortunes today, even after the Great Recession they helped bring on, routinely earn seven and eight-figures. In 2009, when most of the nation's middle class was deep in recession, the 25 best-paid hedge-fund managers took in an average of $1 billion each. (Their marginal income tax, by the way, was barely over 17 percent, while the typical family paid a marginal tax far higher.)

What happened? It wasn't just greed. It was also the systematic and ever cleverer manipulation of laws and rules by those able to pay lobbyists, legislators, lawyers, accountants to do their bidding. As income and wealth have risen to the top, so has the power to manipulate the system in order to acquire even more money and more influence.

To be sure, globalization and technological change have bestowed gains disproportionately on those with the education and connections to benefit most from them, while burdening Americans without the education and connections most needed. But instead of enlarging the circle of prosperity so that the vast middle class could come out winners as well -- instead of strengthening trade unions, improving public education, deepening public investments, enlarging safety nets, and making the tax system more progressive -- the nation took direction from those at the top, and did the opposite.

It is not surprising America's middle class is increasingly frustrated and are venting their anger -- at politicians, the leaders of big business and Wall Street, as well as global traders, immigrants, and others who are easy targets of resentment. A politics of audacious hope has turned into a politics of fear -- meaner spirited than at any time in recent memory.

I am not a class warrior. Call me a class worrier. Our choice in the years ahead is either demagoguery that turns Americans further against one another and the rest of the world, or genuine reform that enlarges shared prosperity. It is the responsibility of all of us to fight the former and work toward the latter.

"It was also the systematic and ever cleverer manipulation of laws and rules by those able to pay lobbyists, legislators, lawyers, accountants to do their bidding."

It's not just the manipulation of law as seen in the torture memos. It's the outright ignoring of some laws and not others.

Where are all those anti-trust laws that use to prevent monopolies? They are still on the books. What happened to jail time and penalties for illegally hiring people? They have not been repealed. What happened to the treaties we had that outlawed war crimes and torture? Why did Obama ignore all the illegal practices of the bushes?

Yet if you are poor in this country, no laws are ignored for your benefit. No supremes court justice is going to violate the Constitution on your behalf as they did for the bushes.

We are a nation controlled by the whims of the wealthy.

The current financial crisis is due in a large part to the men put into place by the last administration whose job it was to protect the scammers by not doing their jobs. Markopolos spent years trying to get action from the SEC on Madoff and was stonewalled, even with the whole scheme dumped right into the SEC's lap. BP was allowed to violate safety rules at its plants with impunity, leading to the disaster in the Gulf. The side bets on the financial system are ongoing and the ratings agencies, while facing inquiries, are still not bothering to do their jobs rating this balance sheet junk.

People at the bottom caught with a joint or a rock of crack would go to prison for long sentences as examples--after all, peasants don't work hard enough if they're on drugs. Men at the top were coddled and protected and still are. Madoff went to prison but his whole organization, together with his crooked family, skated and kept all the loot. This is not by accident, it's by design.

Madoff only went to prison because he fleeced the upper middle class and lower tier of wealthy clients. Had he simply stolen from retirement funds for working people, he'd still be in business today. No one at any enforcement agency was ever concerned with where the money went, as long as the front man went to prison, everything was supposed to be fine in the world.

Our laws are still largely in place, but the possibility of ever having them enforced depends entirely on the class of criminal. Rob a gas station, and you're sent up for a decade. Rob millions of people, financial institutions, and even whole countries of their futures, and you get a smirk and a free pass to multiple retirement palaces around the world. Make paper profits for the unimaginably rich, and you are insured that the whole system will rise to your defense, your name will be kept out of the papers, and your rewards will be handsome and permanent.

It is going to take decades to unravel what happened during the 8 years the plutocrats rigged an incurious idiot into office so that they could scam the rest of us and be assured that the laws would not be enforced. It will take decades more to recover from it.

The first step would seem to be to enforce the laws we still have, vigorously and across the board. I'm still waiting for signs that will happen.

and it still goes on today.