A brilliant new reading of the economic crisis—and a plan for dealing with the challenge of its aftermath—by one of our most trenchant and informed experts.
When the nation’s economy foundered in 2008, blame was directed almost universally at Wall Street. But Robert B. Reich suggests a different reason for the meltdown, and for a perilous road ahead. He argues that the real problem is structural: it lies in the increasing concentration of income and wealth at the top, and in a middle class that has had to go deeply into debt to maintain a decent standard of living.
Persuasively and straightforwardly, Reich reveals how precarious our situation still is. The last time in American history when wealth was so highly concentrated at the top—indeed, when the top 1 percent of the population was paid 23 percent of the nation’s income—was in 1928, just before the Great Depression. Such a disparity leads to ever greater booms followed by ever deeper busts.
Reich’s thoughtful and detailed account of where we are headed over the next decades reveals the essential truth about our economy that is driving our politics and shaping our future. With keen insight, he shows us how the middle class lacks enough purchasing power to buy what the economy can produce and has adopted coping mechanisms that have a negative impact on their quality of life; how the rich use their increasing wealth to speculate; and how an angrier politics emerges as more Americans conclude that the game is rigged for the benefit of a few. Unless this trend is reversed, the Great Recession will only be repeated.
Reich’s assessment of what must be done to reverse course and ensure that prosperity is widely shared represents the path to a necessary and long-overdue transformation. Aftershock is a practical, humane, and much-needed blueprint for both restoring America’s economy and rebuilding our society.
Robert B. Reich is Chancellor’s Professor of Public Policy at the Richard and Rhoda Goldman School of Public Policy at the University of California, Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written twelve books, including The Work of Nations, which has been translated into twenty-two languages, and the best seller Supercapitalism. His articles have appeared in The New Yorker, The Atlantic, The New York Times, The Washington Post, and The Wall Street Journal. He is also cofounding editor of The American Prospect magazine and provides weekly commentaries on public radio’s Marketplace. He lives in Berkeley and blogs at www.robertreich.org.
From our Q&A with Reich
Q: What’s the “Aftershock” in your title?
A: The absence of a real recovery from the Great Recession. There’s even a likelihood of a return to recession – the so-called “double dip.” Typically after a recession the economy picks up again, and jobs and wages come back. Not this time, because this wasn’t a typical recession. It was the culmination of years of widening inequality in which most of the gains of economic growth went to the top. The middle class didn’t have the purchasing power to buy what was produced – other than by going ever deeper into debt. Eventually that debt bubble burst. And now we’re left with the aftershock.
Q: Does that mean the economy will never recover?
A: We may eventually have a recovery on paper. Share prices may move upward as big corporations make profits by shifting production and sales abroad. And by continuing to trim their payrolls – substituting software and merging with other companies.
But the real economy will remain in the doldrums. Unemployment will stay high for years. And the wages of most people with jobs will continue to stagnate or decline.
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