Robert B. Reich, Bill Clinton's first secretary of labor, admits in his new book, Aftershock, that he didn't do enough to help avoid the oncoming economic mess. "We in the Clinton administration tinkered," he writes. "We raised the minimum wage and guaranteed workers time off from their jobs for family or medical emergencies. We tried for universal health care." He continues, "All these steps were helpful but frustratingly small in light of the larger backward lunge."
Of course, he doesn't take all the blame, either. Reich identifies America's Great Prosperity as the time from 1947 to 1975, when the country experienced unparalleled growth, and he credits that growth almost solely to the middle class. He attributes the regular series of busts since that time—the recessions in the early '80s, '90s, and '00s, including the recession the Obama White House inherited from Bush—to tax cuts for the wealthy that penalized the middle class, capping growth and inflating credit.
For those of us who find economics to be a mysterious, even frustrating, set of ideas, Reich proves to be an excellent teacher. He understands that one of the most daunting parts of economics is its verbosity: Aftershock is a breezy 146 pages, not including the index. He opens the book with a brief history of the modern American middle class, from its origins with Henry Ford's decision to pay his assembly-line workers enough that they could afford the product they were building. Reich pauses to admire some of the mind-boggling ways conservative thinkers have misattributed market forces, as when business leaders during the Depression believed "a depression was the scientific operation of economic laws that were God-given and not man-made. They could not be interfered with."
Modern-day Tea Partyers, Reich argues, are as sensible as those God-minded economists from the Depression if they believe that tax cuts for the wealthy and unregulated business is the way back to economic health. "This argument is bunk," he writes. "It equates the stock market with the economy, and... does not acknowledge the consequences for an economy when the middle class lacks the means to buy what it produces."
Simply put, the middle class is key to everything, he says. The top 5 percent of all American wealth can't buy our way out of this recession, because it's not humanly possible for Bill Gates, say, to spend the incomprehensible stores of wealth he has accrued. Without a healthy, spend-happy middle class, America will stagnate in this recession (and subsequent jobless recovery) for years to come.
Reich, an early Obama supporter whose snub of Hillary Clinton's presidential campaign was one of the first signs of disaster for the Clinton machine, has some kind words for the current administration's bailout plans. "The government," he writes, "averted what in all likelihood would have become another Great Depression." But "ironically, President Obama's success in forestalling economic collapse reduced the urgency of dealing with the larger challenge." Reich, a member of president-elect Obama's transition team, says the enormity of the financial crisis preempted any discussions about how to do any more than maintain the status quo.
What Reich proposes in Aftershock is a bold reimagining of populist presidential candidate Huey Long's "Every Man a King" proposal from the 1930s, a kind of socialized capitalism. The government would pay wage supplements to full-time workers. Those earning $20,000 or less a year would get $15,000 annually. Workers who make $30,000 would get supplements of $10,000; $40,000-a-year workers would get $5,000; and the scale would even out at $50,000. Taxes would only become a factor after the $50,000 mark, starting at 10 percent and climbing higher from there. With the extra money, middle-class Americans would be able to buy more products and services for their homes and families. This cash influx would benefit small businesses and local economies, driving the economy upward. Reich would pay for this plan with higher taxes on the wealthy and a steadily increasing carbon tax on business.
It practically goes without saying that this plan has its flaws. It continues to rely on consumerism as the most important—sole?—engine of America's economy. A consumer economy relies on consistent growth to stay healthy, which, as anyone who has studied basic physics knows, is impossible. This system also wouldn't play very nicely with state taxes. And, further, Reich's plan sounds like political suicide in our gaffe-thirsty media climate. It's hard to imagine a presidential candidate putting this plan forth at a debate and not being Kuciniched over into the corner of the stage next to the wilted fern.
But part of the pleasure of books like this, and of thinkers like Reich who are willing to expend their political capital on daring proposals that wouldn't fly on CNN, is that once the idea is spoken, it starts to sound less strange. As it circulates, it begins to gather an increasing air of normalcy until it becomes safe to say in public political settings without being laughed out of the room. Taking the first step is often the hardest part. That part is over.