November 29, 2007

This review of Robert Reich's new book is worth a look whatever your view may be of Reich, who is a bit of a simp, and whatever your view is of reviewer Tony Judt, who is generally a bit of a fool.

Some of Reich's examples (as presented in the review) are pretty striking and difficult to refute (especially you there, with your tongue on the boss' boot). The review is especially skillful in showing how very deeply Reich has drunk the kool aid of globalization and neo-liberalism.

The Wrecking Ball of Innovation - The New York Review of Books: "Reich has a nice eye for the instructive example. The wealth gap in the US is now at its widest since 1929: in 2005, 21.2 percent of US national income accrued to just 1 percent of earners. In 1968 the CEO of General Motors took home, in pay and benefits, about sixty-six times the amount paid to a typical GM worker; in 2005 the CEO of Wal-Mart earned nine hundred times the pay of his average employee. Indeed, the wealth of the Wal-Mart founders' family that year was estimated at about the same ($90 billion) as that of the bottom 40 percent of the US population: 120 million people. If the overall economy has grown 'exuberantly' but 'median household income has gone nowhere over the last three decades,...where has all the wealth gone? Mostly to the very top.' As for the intrepid boldness of the latest generation of 'wealth creators': Reich lists the tax breaks, pension guarantees, safety nets, 'superfunds,' and bail-outs provided in recent years to savings and loans, hedge funds, banks, and other 'risk-takers' before dryly concluding that arrangements 'that confer all upside benefit on private investors and all downside risk on the public are bound to stimulate great feats of entrepreneurial daring.'"

Like their political forebears, contemporary economic writers often tend to the reductive: "In the long run," three respected economists write, "only one economic statistic really mat-ters: the growth of productivity."[4] And today's dogma—like other dogmas of the recent past—is indifferent to those aspects of human existence not readily subsumed into its own terms of reference: just as the emphasis of the old thinking was on behavior and opinions that could be categorized as a product of "social class," so contemporary debate foregrounds interests and preferences that can be rendered in economic terms. We are predisposed to look back upon the twentieth century as an age of extremes and delusions from which we have now, thankfully, emerged. But are we not also deluded?

In our newfound worship of productivity and the market have we not simply inverted the faith of an earlier generation? Nothing is more ideological, after all, than the proposition that all affairs and policies, private and public, must turn upon the globalizing economy, its unavoidable laws and its insatiable demands. Together with the promise of revolution and its dream of social transformation, this worship of economic necessity was also the core premise of Marxism. In transiting from the twentieth century to the twenty-first, have we not just abandoned one nineteenth-century belief system and substituted another in its place?....


The market requires norms, habits, and "sentiments" external to itself to hold it together, to ensure the very political stability that capitalism needs in order to thrive. But it also tends to corrode those same practices and sentiments. This much has long been clear.[10] The benign "invisible hand"— the unregulated free market—may have been a favorable inaugural condition for commercial societies. But it cannot reproduce the noncommercial institutions and relations—of cohesion, trust, custom, restraint, obligation, morality, authority—that it inherited and which the pursuit of individual economic self-interest tends to undermine rather than reinforce.[11] For similar reasons, the relationship between capitalism and democracy (or capitalism and political freedom) should not be taken for granted: see China, Russia, and perhaps even Singapore today. Efficiency, growth, and profit may not always be a precondition or even a consequence of democracy so much as a substitute for it."

I think that Reich is initially presenting a very similar perspective to Jim Webb, and a similar clear eyed view for how the American people have been bent over a barrel, but with a different set of policy prescriptions and less righteous anger.

That is to say: Webb, far more conservative and actually in touch with Americans outside of the Berkeley-NY Review of Books axis, is far more appealing and far more likely to overturn the apple cart. Webb can actually produce some change. He is a man who has been (and can again) be elected.

On the other hand, Reich sounds critical but is really a tool. He is Clintonian lite.

Here is Webb, back when he had just won the Senate race in Virginia and fired a shot across the elites' bow in the Wall Street Journal, of all places:


most important--and unfortunately the least debated--issue in politics today is our society's steady drift toward a class-based system, the likes of which we have not seen since the 19th century. America's top tier has grown infinitely richer and more removed over the past 25 years. It is not unfair to say that they are literally living in a different country. Few among them send their children to public schools; fewer still send their loved ones to fight our wars. They own most of our stocks, making the stock market an unreliable indicator of the economic health of working people. The top 1% now takes in an astounding 16% of national income, up from 8% in 1980. The tax codes protect them, just as they protect corporate America, through a vast system of loopholes.

Incestuous corporate boards regularly approve compensation packages for chief executives and others that are out of logic's range. As this newspaper has reported, the average CEO of a sizeable corporation makes more than $10 million a year, while the minimum wage for workers amounts to about $10,000 a year, and has not been raised in nearly a decade. When I graduated from college in the 1960s, the average CEO made 20 times what the average worker made. Today, that CEO makes 400 times as much.

In the age of globalization and outsourcing, and with a vast underground labor pool from illegal immigration, the average American worker is seeing a different life and a troubling future. Trickle-down economics didn't happen. Despite the vaunted all-time highs of the stock market, wages and salaries are at all-time lows as a percentage of the national wealth. At the same time, medical costs have risen 73% in the last six years alone. Half of that increase comes from wage-earners' pockets rather than from insurance, and 47 million Americans have no medical insurance at all.

Manufacturing jobs are disappearing. Many earned pension programs have collapsed in the wake of corporate "reorganization." And workers' ability to negotiate their futures has been eviscerated by the twin threats of modern corporate America: If they complain too loudly, their jobs might either be outsourced overseas or given to illegal immigrants.

This ever-widening divide is too often ignored or downplayed by its beneficiaries. A sense of entitlement has set in among elites, bordering on hubris. When I raised this issue with corporate leaders during the recent political campaign, I was met repeatedly with denials, and, from some, an overt lack of concern for those who are falling behind. A troubling arrogance is in the air among the nation's most fortunate. Some shrug off large-scale economic and social dislocations as the inevitable byproducts of the "rough road of capitalism." Others claim that it's the fault of the worker or the public education system, that the average American is simply not up to the international challenge, that our education system fails us, or that our workers have become spoiled by old notions of corporate paternalism.

In general, as readers of Undismayed no doubt have gathered over the years, I agree and have long criticized the handing of national prosperity to the corporate and financial striped-pant elites who have grown obscenely wealthy while selling out their fellow countrymen to the Red Chinese for a short terms gains and higher stock prices.

The real loss has not simply been the country's manufacturing capability, it is the loss of opportunity itself for people to move up through the system. Educated elites are set, of course. But all the regular people who make up the vast bulk of the country are increasingly left without options. Not everybody can wrest the value from sitting in a cubicle nibbling on their food pellet like a rat.

Undismayed says: time to start ending the thralldom to Mammon.

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