Robert Reich talking:
we do have to substantially increase taxes at the top, if we’re going to have enough money to do everything that needs to be done with regard to investing in education, infrastructure, do a lot of things that, despite President Obama’s efforts, have still not been done. But I think we even have to go beyond that and really change the way the market is organized. I mean, if you look at antitrust law, for example, you’ve got huge combinations now in health insurance, in airlines, in banking, in food. That means Americans are spending much more than otherwise for all of these basic necessities—airlines may not be a necessity, but certainly the others are necessities—and that’s a redistribution upward.
digital monopolies and the need to break up some of these companies now that have such enormous influence over our lives—the Googles and the Amazons and the Facebooks.
up until quite recently, we had antitrust scrutiny, very careful antitrust scrutiny of some of these big high-tech firms. They are creating larger and larger entry barriers. It’s harder for other companies to get into the business, because they have platforms that are basically network monopolies over whether it’s search or shopping or whatever you want. And those huge—that huge market power, those network monopolies end up giving them the power to keep competitors out—ultimately charge higher prices, but also deter innovation. We need to apply antitrust law. I don’t mean we necessarily have to bust them up, but we’ve got to make sure that we don’t stifle innovation, and we’ve got to make absolutely sure that consumers down the line are not ending up paying too much.
Google and Apple are spending more money acquiring the patents of others than they are—and fighting over these patents in court cases, than they are in actually new research and development.
And also on litigation and on lobbying. I mean, Google is now the number one lobbyist in Washington. It’s simply kind of a consequence of having more and more market power. And it’s not—I’m not saying Google is a bad company. I’m not saying Apple is bad. I’m not saying that anybody—people—companies are not bad—people are not companies, companies are not people, despite what the Supreme Court says. But what you’ve got to be careful of in an economy is the aggregation of market power that turns into political power, inevitably. And we’ve seen that again and again. And that’s what antitrust laws were created for in 1890, the Sherman Act. And yet antitrust scrutiny has waned over time.
We’ve got to re-establish Glass-Steagall. because after the crash of 1929, the United States set out to prevent that kind of crazy risk taking by the banking sector that led to the crash of 1929—we’re not talking about 2008, we’re talking about 1929. One thing we did was separate commercial banking from investment banking, so that people’s deposits, the ordinary savings of ordinary people, would not be used for gambling operations by the investment banks. We ought to maintain that. I mean, that’s one of the reasons that we got into trouble again.
We also need to bust up the biggest banks. Bernie Sanders actually understated the reality. I mean, the five biggest banks, they used to have 10 percent of total banking assets back in 1990, now have 44 percent of total banking assets in this country. I mean, they are far too big to fail. I mean, they are so large that they are—just because of their political clout and their scale, they are gaining more and more market share of the entire banking industry. That’s dangerous. It’s dangerous for the economy. It’s dangerous for our political culture, because those banks have a great deal of political power.
I was very disappointed that President Clinton signed that bill that came over from the Republicans to basically get rid of welfare and substitute a five-year maximum lifetime public help for people, because five years in somebody’s lifetime is—it may not be enough. In fact, we discovered in the Great Recession it was not enough. But look, if you’re in a president’s Cabinet, you’re not going to agree with the president on everything, and there are certain things that you have to ask yourself, “Is it worth resigning over, or can I do more good inside?” There’s no easy answer to that.
I don’t know what Hillary’s stance at the time was. I do not think that she ought to be blamed or credited for what her husband did as president. I don’t think that’s fair to her. I think she has to stand as a candidate separately. But she needs to be, as every candidate needs to be, including Bernie Sanders, pushed to be bolder on issues that are really critically important to America at this time.
I’ve been out on a book tour now just a couple of days, and there are two groups of people: one who says, “Why are you criticizing capitalism? Saving Capitalism sounds like there’s something to be saved, and it’s perfectly fine as it is,” and then the other group says, “Why do you want to save it? Let’s get rid of it.” So, the title is actually doing what I had hoped, and that is, riling everybody up.
But the most important point is to recognize that even Denmark and Sweden and so-called social democracies are still capitalist fundamentally. That is, they’re based on private property and voluntary exchange. Even China is becoming a capitalist nation.
Forgetting the ism, the real issue is: Is the system working for most people, or is it working for a very small group, becoming smaller and smaller, at the top, who are gaining more and more economic power that is being transformed into political power? And the answer is, in the United States, particularly, yes, unfortunately. The system is not working for most people, and the beneficiaries are really getting smaller and smaller and richer and richer and richer. That’s not sustainable. I mean, you know, we talk about inequality. We talk about insecure work. We talk about the engulfing of our democracy in money. These are all connected. And the reason, I believe, that so many Americans are so angry, whether their anger is transferred into a Donald Trump-like scapegoating or whether it has become a kind of Bernie Sanders’ fundamental reform, it is still populist anger of a kind that, hopefully, will fuel reform. That’s what we had in 1900.
There is no free market. And I want to state that again: There is no free market. And the kind of battle that we’ve had between liberals and conservatives for the past 40 years or 50 years, between do you trust the market or do you trust government, is a fatuous and silly battle, because you can’t have a market without government creating the rules of that market. And it’s in those rules, this is what the point of the book is—it’s inside those rules that you find the most important issues that ought to be debated. I mean, for example, look at Wall Street. One of the reasons that you have so many people on Wall Street making so much money off of everybody else is that we have in this country the weakest laws against insider trading of any advanced country. We also have high pharmaceutical prices. Why? Partly because we’re the only country that allows pharmaceutical companies to pay off generic companies, of generic pharmaceuticals, to delay the introduction of generic pharmaceuticals. And go on down the line. I mean, there are hundreds and hundreds and hundreds of examples of ways in which the deck has been stacked, the dice have been loaded, the game has been rigged, in favor of very wealthy, very powerful people and companies and banks.
There is and should be a moral core to any economy. And whether it’s called capitalism or any other system, if it doesn’t have that moral core, in which we agree on basics, kind of minimum standards of decency—we agree that we’re all in it together, we understand that trust is critical if an economic system is going to be maintained and sustained—then you’re in trouble. I think one of the problems in the United States, and one of the problems with contemporary capitalism as practiced by the American model, is that it celebrates greed as the central principle. But that can’t possibly be the central principle, because if it’s all about greed, then you end up spending more and more of your resources protecting yourself from everybody else’s unvarnished greed. I mean, what’s happening, if you look at the GDP, we are spending more on protection—that is, on lawyers and on accountants and auditors and on security guards and on everybody else, that are protecting us from each other’s greed—than we are on actually producing goods and services and food and everything else we need.
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Robert Reich, former labor secretary under President Clinton and professor at the University of California, Berkeley. His newest book is Saving Capitalism: For the Many, Not the Few.
— source democracynow.org