It's not that we aren't working as hard as our parents did, or saving as much. And it's not any of the usual pseudo-economics-and-statistics or the usual snarky explanations. It's not the "market view" which claims that wages have simply stagnated because middle-income workers are "worth less than they were before." For one thing, Reich writes, this pseudo-explanation "doesn’t clarify why the transformation occurred so suddenly." He adds:
While the explanation I offered a quarter-century ago for what has happened is still relevant—indeed, it has become the standard, widely accepted explanation—I’ve come to believe it overlooks a critically important phenomenon: the increasing concentration of political power in a corporate and financial elite that has been able to influence the rules by which the economy runs. And the governmental solutions I have propounded, while I believe them still useful, are in some ways beside the point because they take insufficient account of the government’s more basic role in setting the rules of the economic game.
Worse yet, the ensuing debate over the merits of the “free market” versus an activist government has diverted attention from how the market has come to be organized differently from the way it was a half-century ago, why its current organization is failing to deliver the widely shared prosperity it delivered then, and what the basic rules of the market should be. It has allowed America to cling to the meritocratic tautology that individuals are paid what they’re “worth” in the market, without examining the legal and political institutions that define the market. The tautology is easily confused for a moral claim that people deserve what they are paid. Yet this claim has meaning only if the legal and political institutions defining the market are morally justifiable.
He continues, "Most fundamentally, the standard explanation for what has happened ignores power..." And goes on to explain that changes in the organization of the market are behind the increasing economic power of the wealthy and decreasing economic health of the rest of us:
These changes stem from a dramatic increase in the political power of large corporations and Wall Street to change the rules of the market in ways that have enhanced their profitability, while reducing the share of economic gains going to the majority of Americans.In other words, they've changed the rules on us! They've upwardly redistributed the wealth (!) by making it easier for big companies to monopolize their businesses, raise prices (including prices for medicines, foods, and tech items) on the rest of us, and sit back in luxury while their taxes are lowered and ours are increased. Maddening, if true, and his arguments are convincing.
He goes on, and on, and on. What makes this better than most of the blathering academic-style economics treatises I've ever read is that he writes well and understandably! Amazing!
His solution (which is, unfortunately and inevitably, impossible of implementation):
"... an activist government that raises taxes on the wealthy, invests the proceeds in excellent schools and other means people need to become more productive, and redistributes to the needy. These recommendations have been vigorously opposed by those who believe the economy will function better for everyone if government is smaller and if taxes and redistributions are curtailed."
But can you think of any better solutions? What will it take for us to turn this trend around and return power to the people of our nation? Look at an African-American resident of Baltimore (or Ferguson, or Anywhere) and ask that, while you're at it. At that level, answers seem to start with more questions: Dying in police vans? Being arrested in the street while you're protesting police violence? Because all that started at the economic level, too: Substandard education, lack of jobs, homelessness, denial of voting rights, and inequality on all fronts, and added to all that, police violence.
Come on, let's think of some REAL answers that don't require bloodshed. Maybe the electoral process? Hard to believe, lately, there's any hope there.
[You can get a free download of the entire April 2015 issue of the magazine here. Of course, you have to give them your name and email address, and you'll probably start receiving a never-ending avalanche of emails asking for money. So you may not think it's worth that. (As for myself, I think not.)]