You could not have said it any better. So much work to do to turn this ship around. First step is to protect voting rights and ensure the integrity of the voting process.
If I was currently a PhD candidate in economics, I would want to look at switching costs. As you show it is much easier to switch a capital investment to a new higher performing investment than it is to create a new high performing investment. In this way the investment bankers "allocate capital efficiently" but they also skim off a big part of the entrepreneurs' reward for their creative efforts. Switching costs include taxes, and tax policy should much more evenly tax financial rewards versus the rewards from hard work and creativity. It is a downright shame that there are so many loopholes, preferential tax rates, "investment" credits, carried interest rules and other advantages for the purely financial players while the people who create value face many disadvantages and carry the highest tax burdens.
For 40 yrs I watched this happen with a seat on the front row. I was a Manufacturers Rep and wholesale re-distributor. You're right, trillions of dollars moved to the financial sector. It is/was called Free Market Capitalism, capital seeking the best return, capitalism without a tether. You've explained this change in the clearest and simplest language possible. It should be on the editorial page of every newspaper in the country and on Fox News and MSNBC! You have spent your life being a TEACHER! Your challenge has been taking complex subjects and making them understandable. This might be the most important column you have ever written. Everything you wrote about I've read books about. I'm not your target. The "Reich Nerds" that pay to read you already know this stuff. We're about "confirmation bias." Every member of Congress needs to read this AND understand it. MASS MEDIA needs to repeat this message again and again until it is second nature (buried in the unconscious). This is the culture that CREATED A TRUMP! We can fix it. We created it!
Robert Reich, you are a treasure. Both very informed and able to teach. I am grateful to have you as a resource for information, I cannot say enough how much I value your insights.
I do remember my disappointment when Obama left in place all of the Bush people, the last ones who should be influencing anything after the hard fought campaign to elect him for change. The republicans always do the same thing…they don’t stand for anything outside of stopping a Democrat from exposing their sheer greed and corporate love over people. I find Biden much better in terms of expressing the truth about republicans and calling them out. He has some very beneficial accomplishments already but still has major accomplishments to go.
Pandemic is still on but Biden must get out and talk about the Voting Rights Act and characterize the republicans for what they are. We must see indictments on Trump and all of those traitors connected, Michael Flynn, Flynn’s brother, Roger Stone etc. The American people need to witness justice! Especially after seeing murderer Rittenhouse presented as a hero.
The quagmire is that the traitors have everything in place to keep Dems from achieving goals..Supreme Court, federal judges, to slim of a margin in the Senate to pass anything.
Thank you for this sobering lesson. Private equity is destroying this country. These megafunds don't only buy up and plunder stores, they have also bought up and plundered ambulance services, apartment complexes, etc., vital entities whose mismanagement endangers people's lives.
Trump was a disaster, clearly unqualified for the presidency, and in way over his head. Because he had no clue how to govern, he served as a compliant puppet of the money worshippers you describe. But Hillary Clinton would almost certainly have continued the policies of her husband, maybe even worse. Between her stint as secretary of state and her candidacy for president, she received hundreds of thousands of dollars in speaking fees from large financial institutions and other corporations. These were not campaign contributions, which are bad enough, but money going straight into her own pocket. I wondered whether, in return, she would use her position as president if elected to enact policies favoring these benefactors, at the expense of ordinary Americans. The news media really didn't seem to care.
We voters need to look more closely not only at candidates' campaign donors, but also their personal finances.
Meanwhile, Republicans win elections by blaming Black people, immigrants, and AOC for our problems, and Democrats let them get away with it.
I don't complain of the financial sector bailout-- and the general public doesn't seem to know what financial collapse would be like.
But the no-strings is just the US version of corruption, in which fealty-payments to large firms, especially finance firms, are required and endemic.
Joseph Stiglitz was right: support of the finance sector should have been accompanied by some combination of public ownership and regulation in the public interest.
After my mother and husband died, I inherited my parents' life savings (which were considerable as I was the only child, never had a wedding, went to CUNY basically for free), an ironically large amount from his insurance (he died when the amount to be paid was at its highest, before plummeting). So I put this all with Schwabb. Over the past couple of years it has gone up, even a lot. I cannot survive without my widow's annuity, social security and rent from a daughter who lives with me (& has a fed gov't as a librarian -- both my husband and father had fed gov't jobs). I was terrified when Trump stopped social security payments: he was cutting off the central funding of social security, the 1st POTUS to have the nerve, though there have been attempts to privatize it (kill it another way). I know there are now attempts to privatize medicare: I don't understand them but know Biden is doing nothing to stop it. Yes the current economic situation of the US population is the result of directly enacted laws and appointed people
I am so glad you are touching this subject, Mr. Reich. It is at the core of the political demise of this country today.
The financialization of the economy is the great rip-off working people (vs. speculating ones) have been subjected to. I do not know if the real economy will be prioritized again before democracy is terminated due to right-wing populist demagoguery, but I certainly hope so.
In the meantime, Joe Biden is not having bad polls because of Manchin and Sinema's political games. If his presidency is in shambles, it is because he does not fight to deliver. When will Democrat lawmakers accept to acknowledge that the only way to be a genuine political force is to be backed up by the citizenry you serve? Our current president is probably a nice person. Politically, however, he is not Franklin D. Roosevelt but his exact opposite. I personally feel sad and frustrated that so many people who recognize themselves as Democrats seem to be unable to connect the dots on that.
It is not about the labels, people, it is about the policies and the will to enact them!
I have not read or heard a clearer or broader explanation. Thank you!
I don't understand most of the financial instruments you mentioned. They aren't real for me except in the repercussions you describe.
In the 2016 and 2020 Bernie campaigns a significant number of people we talked with said they would vote for either Bernie or Trump over the preferred party candidates. It seems to me that "the establishment" was and is more afraid of Bernie than "the former guy" because Trump actually does their business while Bernie wants to curtail it. They can't say that openly because Trump's crazy presentation is embarrassing to them and they like to present a facade of caring for "the people". I find some evidence for that theory in headlines in "liberal" media slant against Biden because he has dared to propose some of Bernie's much needed people centered policies.
Thoroughly enjoy your writings and drawings. You are a National Treasure.
Biden is correct in worrying about the ascendancy of Authoritarianism in the world. The MEpublican "juggernaut" is moving us in that direction with money and power and the "supreme court" behind them. Many of our corporations and the very wealthy are with them also.
We appear to have no cohesive solution to counter them. We desperately need a unifying force to represent what polling says are the wishes of the majority of our population which I think is more positive than the minority which is currently winning the day.
Mepublicans fight like a well disciplined team; we fight like a herd of well meaning cats.
"We are not prisoners of bad decisions made in the past." Why has the Democratic party avoided the solutions you have given, for decades? Why is the Democratic party so beholden to the rise of the financiers that they are willing to lose elections, to the point of sacrificing our entire democracy?
Looks like we here in America are a 'paper tiger', or at the very least, riding a paper tiger. We need to get off and live in a real world where people here can make things, grow things and live in a reality that is actually real. As far as the 'nuts and bolts' of what you described in that article 40 years ago, it might as well be Greek, but I get the gist of it. I was one of the home buyers who were stung by the 'housing collapse' or 'sub prime' housing market where 'instruments' of fraud were used widely. Can't wrap my head around it still, but it was a rip off I do know.
If responsible citizens seek "A More Perfect Union" (a great book by Adam Russell Taylor), we must build from the bottom up. Since the 1980's we have primarily focused on a top-down approach, which has not worked, but only exacerbated wealth & income inequality. Don't trust me, read "The Triumph of Injustice" by Emmanuel Saez. It is time to "Make Capitalism Work for the Many, Not the Few" (another insightful book by the "tunnel rat"). It is time to support the poorpeoplescampaign.org & March on Washington on 6/18/22.
I wholeheartedly agree with your assessment. You've been "right on" for lo these many years. Now, how can us aging lowly workers (and retired and barely surviving former lowly workers) get the oligarchs in Washington to implement ANY of the needed changes?
All so true, but where’s the outrage? At least two generations of Americans have grown up not knowing anything different. Their world view is that they better be happy with the dregs lest they lose even those. We are a beaten down and defeated society, and that’s why we have Donald Trump and all of the vile things that come with him.
You could not have said it any better. So much work to do to turn this ship around. First step is to protect voting rights and ensure the integrity of the voting process.
If I was currently a PhD candidate in economics, I would want to look at switching costs. As you show it is much easier to switch a capital investment to a new higher performing investment than it is to create a new high performing investment. In this way the investment bankers "allocate capital efficiently" but they also skim off a big part of the entrepreneurs' reward for their creative efforts. Switching costs include taxes, and tax policy should much more evenly tax financial rewards versus the rewards from hard work and creativity. It is a downright shame that there are so many loopholes, preferential tax rates, "investment" credits, carried interest rules and other advantages for the purely financial players while the people who create value face many disadvantages and carry the highest tax burdens.
For 40 yrs I watched this happen with a seat on the front row. I was a Manufacturers Rep and wholesale re-distributor. You're right, trillions of dollars moved to the financial sector. It is/was called Free Market Capitalism, capital seeking the best return, capitalism without a tether. You've explained this change in the clearest and simplest language possible. It should be on the editorial page of every newspaper in the country and on Fox News and MSNBC! You have spent your life being a TEACHER! Your challenge has been taking complex subjects and making them understandable. This might be the most important column you have ever written. Everything you wrote about I've read books about. I'm not your target. The "Reich Nerds" that pay to read you already know this stuff. We're about "confirmation bias." Every member of Congress needs to read this AND understand it. MASS MEDIA needs to repeat this message again and again until it is second nature (buried in the unconscious). This is the culture that CREATED A TRUMP! We can fix it. We created it!
Robert Reich, you are a treasure. Both very informed and able to teach. I am grateful to have you as a resource for information, I cannot say enough how much I value your insights.
I do remember my disappointment when Obama left in place all of the Bush people, the last ones who should be influencing anything after the hard fought campaign to elect him for change. The republicans always do the same thing…they don’t stand for anything outside of stopping a Democrat from exposing their sheer greed and corporate love over people. I find Biden much better in terms of expressing the truth about republicans and calling them out. He has some very beneficial accomplishments already but still has major accomplishments to go.
Pandemic is still on but Biden must get out and talk about the Voting Rights Act and characterize the republicans for what they are. We must see indictments on Trump and all of those traitors connected, Michael Flynn, Flynn’s brother, Roger Stone etc. The American people need to witness justice! Especially after seeing murderer Rittenhouse presented as a hero.
The quagmire is that the traitors have everything in place to keep Dems from achieving goals..Supreme Court, federal judges, to slim of a margin in the Senate to pass anything.
How do these things get addressed now?
Thank you for this sobering lesson. Private equity is destroying this country. These megafunds don't only buy up and plunder stores, they have also bought up and plundered ambulance services, apartment complexes, etc., vital entities whose mismanagement endangers people's lives.
Trump was a disaster, clearly unqualified for the presidency, and in way over his head. Because he had no clue how to govern, he served as a compliant puppet of the money worshippers you describe. But Hillary Clinton would almost certainly have continued the policies of her husband, maybe even worse. Between her stint as secretary of state and her candidacy for president, she received hundreds of thousands of dollars in speaking fees from large financial institutions and other corporations. These were not campaign contributions, which are bad enough, but money going straight into her own pocket. I wondered whether, in return, she would use her position as president if elected to enact policies favoring these benefactors, at the expense of ordinary Americans. The news media really didn't seem to care.
We voters need to look more closely not only at candidates' campaign donors, but also their personal finances.
Meanwhile, Republicans win elections by blaming Black people, immigrants, and AOC for our problems, and Democrats let them get away with it.
Yup.
I don't complain of the financial sector bailout-- and the general public doesn't seem to know what financial collapse would be like.
But the no-strings is just the US version of corruption, in which fealty-payments to large firms, especially finance firms, are required and endemic.
Joseph Stiglitz was right: support of the finance sector should have been accompanied by some combination of public ownership and regulation in the public interest.
After my mother and husband died, I inherited my parents' life savings (which were considerable as I was the only child, never had a wedding, went to CUNY basically for free), an ironically large amount from his insurance (he died when the amount to be paid was at its highest, before plummeting). So I put this all with Schwabb. Over the past couple of years it has gone up, even a lot. I cannot survive without my widow's annuity, social security and rent from a daughter who lives with me (& has a fed gov't as a librarian -- both my husband and father had fed gov't jobs). I was terrified when Trump stopped social security payments: he was cutting off the central funding of social security, the 1st POTUS to have the nerve, though there have been attempts to privatize it (kill it another way). I know there are now attempts to privatize medicare: I don't understand them but know Biden is doing nothing to stop it. Yes the current economic situation of the US population is the result of directly enacted laws and appointed people
I am so glad you are touching this subject, Mr. Reich. It is at the core of the political demise of this country today.
The financialization of the economy is the great rip-off working people (vs. speculating ones) have been subjected to. I do not know if the real economy will be prioritized again before democracy is terminated due to right-wing populist demagoguery, but I certainly hope so.
In the meantime, Joe Biden is not having bad polls because of Manchin and Sinema's political games. If his presidency is in shambles, it is because he does not fight to deliver. When will Democrat lawmakers accept to acknowledge that the only way to be a genuine political force is to be backed up by the citizenry you serve? Our current president is probably a nice person. Politically, however, he is not Franklin D. Roosevelt but his exact opposite. I personally feel sad and frustrated that so many people who recognize themselves as Democrats seem to be unable to connect the dots on that.
It is not about the labels, people, it is about the policies and the will to enact them!
I have not read or heard a clearer or broader explanation. Thank you!
I don't understand most of the financial instruments you mentioned. They aren't real for me except in the repercussions you describe.
In the 2016 and 2020 Bernie campaigns a significant number of people we talked with said they would vote for either Bernie or Trump over the preferred party candidates. It seems to me that "the establishment" was and is more afraid of Bernie than "the former guy" because Trump actually does their business while Bernie wants to curtail it. They can't say that openly because Trump's crazy presentation is embarrassing to them and they like to present a facade of caring for "the people". I find some evidence for that theory in headlines in "liberal" media slant against Biden because he has dared to propose some of Bernie's much needed people centered policies.
Thoroughly enjoy your writings and drawings. You are a National Treasure.
Biden is correct in worrying about the ascendancy of Authoritarianism in the world. The MEpublican "juggernaut" is moving us in that direction with money and power and the "supreme court" behind them. Many of our corporations and the very wealthy are with them also.
We appear to have no cohesive solution to counter them. We desperately need a unifying force to represent what polling says are the wishes of the majority of our population which I think is more positive than the minority which is currently winning the day.
Mepublicans fight like a well disciplined team; we fight like a herd of well meaning cats.
"We are not prisoners of bad decisions made in the past." Why has the Democratic party avoided the solutions you have given, for decades? Why is the Democratic party so beholden to the rise of the financiers that they are willing to lose elections, to the point of sacrificing our entire democracy?
Looks like we here in America are a 'paper tiger', or at the very least, riding a paper tiger. We need to get off and live in a real world where people here can make things, grow things and live in a reality that is actually real. As far as the 'nuts and bolts' of what you described in that article 40 years ago, it might as well be Greek, but I get the gist of it. I was one of the home buyers who were stung by the 'housing collapse' or 'sub prime' housing market where 'instruments' of fraud were used widely. Can't wrap my head around it still, but it was a rip off I do know.
If responsible citizens seek "A More Perfect Union" (a great book by Adam Russell Taylor), we must build from the bottom up. Since the 1980's we have primarily focused on a top-down approach, which has not worked, but only exacerbated wealth & income inequality. Don't trust me, read "The Triumph of Injustice" by Emmanuel Saez. It is time to "Make Capitalism Work for the Many, Not the Few" (another insightful book by the "tunnel rat"). It is time to support the poorpeoplescampaign.org & March on Washington on 6/18/22.
I wholeheartedly agree with your assessment. You've been "right on" for lo these many years. Now, how can us aging lowly workers (and retired and barely surviving former lowly workers) get the oligarchs in Washington to implement ANY of the needed changes?
Thank you thank you thank you for expressing it succinctly and completely!
All so true, but where’s the outrage? At least two generations of Americans have grown up not knowing anything different. Their world view is that they better be happy with the dregs lest they lose even those. We are a beaten down and defeated society, and that’s why we have Donald Trump and all of the vile things that come with him.