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Aug 9, 2022Liked by Robert Reich

"In the first three decades after World War II, America produced the largest middle class the world had ever seen. But for the last three decades, the middle class has been shrinking."

And why is that? Simple answer: a markedly reduced tax base.

In the 1950s taxes were the highest in history. And these taxes were used to build highways, bridges and schools - which further stimulated the economy, and made possible the strongest middle class in history. This is precisely what was envisaged by the early economists. But it needs strong government, to collect those taxes and redistribute wealth in order to keep the economy strong, and to prevent government takeover by the wealthy.

This, by the way, is not socialism, but vibrant capitalism.

Then along came Milton Friedman and Ronald Reagan, and turned this teaching on its head. Remember Friedman "Government is always the problem, never the solution"? And Reagan "The scariest nine words in the English language are: I'm from the government and I'm here to help."

These brilliant folks made a mockery of government and led to a quorum of Republican politicians who still believe that any increase in taxation will prove disastrous. THAT is why Mitt Romney (Mr. 14%) gets so exercised about even a whiff of increased taxation.

Can anyone blame the bottom 40%, in their inchoate rage, voting for the orange clown?

The time is ripe for a Democratic sweep of the Senate, followed by large tax increases on the corporations and the wealthiest Americans.

Turn the clock back - to Adam Smith - and pretend Reagan didn't happen.

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according to my recollections, the unemployment rate does not include anyone who has been looking for work longer than 6 months and nor does it include those who have simply given up ever finding a job again. there actually is a very large (hidden) group of unemployed people who, as soon as wages and benefits increase to liveable levels, will jump back in to the job market.

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Aug 9, 2022Liked by Robert Reich

Why is Powell still chair of the Fed? Why is he there with Biden’s blessing? I wish you would explain this to us. It makes no sense to me at all.

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Numbers lie -- exactly what kind of "jobs" have been added and do they pay a living wage??? NO!! So when the Feds say employment is full and unemployment is at an all-time low - it's not actually helping people who work for a living!

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It's becoming increasingly difficult to distinguish between legitimate economics and magical thinking!

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I agree with your assessment, Professor Reich, but I have questions. Both Presidents Biden and Obama kept failed Federal economists from the previous administrations, despite the economic distress Bush and the trumpster left behind, WHY? Biden generally, throuhout his career, has favored the working class, at least verbally. Biden must be able to see the widening wealth gap the same as we do, so, why isn't he stepping in to stop these interest rate increases?

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Aug 9, 2022·edited Aug 9, 2022

Dr Reich, I think you should lobby Biden for a post at the Fed! We need someone there who promotes economic fairness by prioritizing the needs of lower income workers above all else. The income gap keeps widening. It’s a recipe for social disaster. If folks on the bottom rungs keep getting screwed, their grievances will be easy prey for the next Trump.

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Aug 9, 2022Liked by Robert Reich

Our society is quite complex. There are many motivations and movements that interact and change all the time. Some of those things are social: writ broadly, our regard for one another. Another of those things is capitalism, getting the most from the system for ones self. But getting the most for ones self, when carried to the extreme, is greed. And, as the Catholics say, greed is a deadly sin.

A mixed society like ours is healthy when these conflicting things are roughly in balance. Since 1980 we have lost that balance. We elevated greed, the defining characteristic of capitalism, to the defining characteristic of our nation. Mainstream religions, once a repository of those other values, declined apace. Public education is in tatters. Life expectancy is declining.

Capitalism is inherently entropic. Piketty demonstrated that, when r>g, wealth will pass up and concentrate at the top until the whole thing becomes unstable, topples over, and collapses. When we lowered taxes on the very wealthy in the 1980s, we closed a shunt that recycled some accumulating wealth to more social uses and thus prolonged the life of both capitalism and society. That choice will prove ultimately to be bad for both capitalism and society. We now have the most unequal distribution of wealth since at least the 1920's, and we know what happened in 1929. Stay tuned, our next act will be exciting.

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The unemployment rate is misleading because it does not include all those unemployed who for whatever reason are no longer looking for work. A better metric would be the unemployed rate of those of working age

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Covid hit this household pretty hard. Boomers with a degree and lots of experience in the labor class. Now we are retired, still, own the house and 2 cars, and trying to figure out how (with fixed income/S S & Medicare) how to find the next wolf... True, we are still paying some taxes and get the occasional pittance of cost of living stipends, but this year the wolf barely got beaten off and next year, with rents unaffordable, our IRS account amazingly emaciated, and with costs going up, how long until one of us gets an old age condition that will tear our American dream to shreds? Not to mention credit cards that are maxed.

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So, how else to control inflation? Taxing the rich instead of raising interest rates? Right now a lot of overpaid accountants are working overtime to get around the new corporate income tax. I hope they find no loopholes.

I know too many Trumpians. Mostly they fit the mold: uneducated, “poor”, and hating all liberal agendas. They are mostly hard workers. But, they aren’t above taking free heat pumps given by local charities due to their (reported) low incomes. They work for wages that give them plenty of time to travel in their RVs. They prefer a somewhat vagabond life rather than the daily office routine of the middle class. They want government out of their lives. No seat belt laws and few environmental protections.

Taxing the rich will not be popular with them. They admire the independence of the rich.

But don’t be deceived by my observations. The inequality within our society has pushed them into their lifestyles. If there were good jobs for the non college educated their attitudes would be very different. Non coastal Maine is a pétri dish of the problem. Few jobs with families holding each other together. Bring back the CCC and watch how many of their youth join. Pay for it by taking the rich. I can’t wait to see the talent that erupts from such a program.

I hope i haven’t offended anyone. I volunteer to provide homes for low- income families. For those who accept that “the poor will always be with us”, I say the rich will never be satisfied with their wealth.

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Do you know why the fed does this when they must know they are lowering the standards of living and kinds of jobs and even having a job available to vast numbers of Americans? is it really so engrained in the minds of average American officials (who usually come from haves when they are high up) that if in doubt make huge numbers of Americans economically vulnerable or desperate or unhoused or overworked? This is why so many have-nots vote for lying and hateful GOP people.

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I don't think the Fed naively believes the given reason for their continued interest rate hikes. By having most of us gainfully employed and working productively but with diminishing purchasing power it will drive more of the have less population into debt to cover monthly expenses at increasing interest rates on debt owed, The Federal Reserve is international banking interest with a historical pattern of getting borrowers in debt and offering high rate loans to enslave them in a have less situation until war results from the conditions so they can trap nations into high rate loans in classic British Imperialist fashion. To stay sovereign we need to hold more real physical assets in the Constitutionally controlled Treasury and limit the portion of investment in Federal Reserve financial instruments.

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It is sad to me that President Biden decided to keep Powell on the Fed. He has no vision and can only think in interest rates. That is a pretty narrow view as Dr. Reich points out. The Fed needs to just step back and see how things go for a little while. Then, Congress needs to consider some windfall taxes for at least 2 years. I think that would do most to bring down prices since corporations are so averse to paying taxes. It is time we the people rein in the super wealthy. We will all pay for it (literally and figuratively) if we don't.

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Now you are getting to the crux of the matter. There was a huge imbalance of power and production following WWII. We were what China became, the production arm of the world. The rest of the world was in shambles. Capital found its best return here. As the years passed, capital found better returns elsewhere. No, we are not exceptional. We are just people in a system called capitalism that no longer favors us. Colonialism, capitalism, autocracy, they are all about wealth. Read Aristotle, Adam Smith, John Maynard Keynes, they all warned about the accumulation of wealth. We judge individuals, ethnic groups, and countries by their accumulation of wealth. It is how we measure worth that is our problem. As long as money and wealth are our guideposts, we will continue on our road to destruction. Economist rejected the moral sentiments of Adam Smith long ago:

“The great source of both the misery and disorders of human life, seems to arise from over-rating the difference between one permanent situation and another. Avarice over-rates the difference between poverty and riches: ambition, that between a private and a public station: vain-glory, that between obscurity and extensive reputation. The person under the influence of any of those extravagant passions, is not only miserable in his actual situation, but is often disposed to disturb the peace of society, in order to arrive at that which he so foolishly admires.

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We've been saying this since 1985, and nobody listens yet.

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