Robert Reich published a must-read editorial in the New York Times that you may have missed because of the long weekend.
Look back over the last hundred years and you’ll see the pattern. During periods when the very rich took home a much smaller proportion of total income — as in the Great Prosperity between 1947 and 1977 — the nation as a whole grew faster and median wages surged. We created a virtuous cycle in which an ever growing middle class had the ability to consume more goods and services, which created more and better jobs, thereby stoking demand. The rising tide did in fact lift all boats.
During periods when the very rich took home a larger proportion — as between 1918 and 1933, and in the Great Regression from 1981 to the present day — growth slowed, median wages stagnated and we suffered giant downturns.
Reich has been saying this for a while, now. Most of this editorial comes from his book Aftershock, which I reviewed last year. It’s one of those rare economic books that keeps getting more relevant as time goes on. I highly recommend it.
Reich did a great AMA Q&A on reddit last week: http://www.reddit.com/r/IAmA/comments/k2…
No question – redistributing the nation’s wealth into the long term investment accounts of the super rich is bad for the economy. That money doesn’t trickle down, it just sits there, disengaged from the economy.
Instead, our tax policies should promote putting money into the hands of those who recirculate it, whether it’s consumers or people creating and growing businesses.
all the evidence is there. the data is there. the trends are there. it is not difficult to understand how these things work. what is difficult & requires hard work and lots of money is concealing the evidence w/ superstition, sound bites & ‘hunches’ (see #2 above). however, there’s no shortage of people arduously working at that concealment (again, see #2 above).
Reich is a national treasure. He had me at Locked in the Cabinet.