Joe Donahue: Welcome to The Book Show, a celebration of reading and writers. I'm Joe Donahue. Robert Reich is Chancellor's Professor of Public Policy at Goldman School of Public Policy at the University of California, Berkeley. He has served in three national administrations, including Secretary of Labor from 1993 to 1997. He's also the bestselling author of "Saving Capitalism" and "The Common Good". His latest book is "The System: Who Rigged It, How To Fix It". It's an analysis of how the rigged systems of American politics and power operate. How this status quo came to be and how average citizens can enact change.
It is a great pleasure to welcome Robert Reich to this week's Book Show. Thank you very much for being with us, a great pleasure to have you on the program.
Robert Reich: Well, thank you, Joe. Thank you for asking me.
Joe Donahue: It seems in reading this book, as you mentioned, very early on, that this book ultimately came out of a phone call with Jamie Dimon.
Robert Reich: Yes, Jamie Dimon, the CEO of the largest bank in the United States, JPMorgan Chase, called me. He was upset about something I'd written which was critical of him and he kept me on the phone for quite some time, quite defensive and upset. And at the end of what was really a kind of a 20 minute diatribe, I defended myself for the comments I've made about him. I told him not to be so personally defensive. He was just doing his job as the CEO of one of the biggest banks in the United States, but he had to understand a few things about what he was actually doing in America. And what- how he was using his power and how the bank was actually using its power. That he was one of the most powerful people behind the scenes in the United States. He didn't listen very intently, obviously. But I did feel that it was important to get a lot of the ideas and frameworks and facts that I suggested to him, only in a surface way in that phone call, into a book. In fact, it really was the kernel, the seed kernel that launched me on the path of this book, "The System", because you see, Jamie Dimon is one of the most important players in the American system, our political economic system, that is not any longer. It was, in the early years after the Second World War, the first three decades, designed for average people but it's now designed for people like Jamie Dimon.
Joe Donahue: So let us talk about just that concept of a "system"? So we of course have a political system, we have an economic system, we have a health care system, we have a foster care system and the list goes on, and on... How do those, how do those really complement one another? And and really go off on their own? Because at some point, they overlap, don't they?
Robert Reich: They do all overlap and what we have discovered in the Coronavirus crisis is we don't have much of a public health system. In fact, compared to many other countries, we don't have one at all. And in fact, even our private healthcare system is full of holes. Many people have discovered that they can't get what they need. And many people are dying because our hospitals can't get what they need. We don't have much of an economic system at least much of an economic system that is designed to lift the wages of most people. In fact, for the last 30 years, the median wage, the typical workers wage, has been stagnant, adjusted for inflation, no increase at all. And in terms of a political system, it's mostly a system now run by big corporations and Wall Street. Average people have very little say in what's going on, which may be one reason why, for example, the biggest corporations in America were exempt from paying sick leave to their workers in the second Coronavirus bill. You know, a bill that was designed, at least extensively to help average Americans, but American workers have been shafted.
Joe Donahue: So your, your premise in this book, of course, is that the system is "rigged" and that there is a way to fix it. Before we get to "the fix". Let's talk about the rigging. Did we ever have it right?
Robert Reich: Well, we've never had it completely right, Joe. But I think that in the first three or four decades after the Second World War, the American middle class was growing. There was more and more power in terms of labor unions, countervailing power, all sorts of ways in which political power economic power of average people balanced and counter-veiled the power of the top banks and the top billionaires at that time- we didn't have many billionaires, millionaires, hundred millionaires. You know, for the first three decades after the Second World War, we actually had a system: political, economic social system that was beginning to respond to the needs of most of our people. Now, we still had a long way to go. Black people were second class citizens, women did not have the opportunities they subsequently had. But we were on the road to fixing some of these things. And then starting in the 1980s, everything changed.
And that change became apparent to a lot of people after the, the "Great Explosion", the debt bubble that exploded in 2008, the financial crisis brought on by Wall Street. It's at that point that many Americans discovered that the game was rigged against them, that it was rigged in favor of people at the top. And you saw the political reaction on the right, being the Tea Party movement, and on the left, the Occupy movement. Both movements, in a sense, responding to a sudden awareness by many Americans that most people were powerless, and that big corporations and Wall Street and billionaires had taken things over. Of course the direct lineal descendants of the Tea Party movement and the Occupy movement were in 2016, Donald Trump and Bernie Sanders.
Political outsiders, in terms of the establishment parts of the- both political parties who- basically state their political positions and their remarkable political victories. I mean, obviously Bernie Sanders didn't win. But he, he did come out from nowhere and won 22 states in the Democratic primaries of 2016. But they staked their positions on the notion that they would be representing "Average People", of the the Americans who were left behind, rather than be part of the establishment.
Joe Donahue: You mention Bernie Sanders. And of course, you point out- and I think this is interesting that, that especially in light of the $500 billion that corporations are getting from taxpayers- As you note that our system does practice one form of socialism, and it's "socialism for the rich". Everyone else is subject to harsh capitalism, that is so obvious. And yet it is still- even at a time like this when the discrepancies are so apparent. Why aren't people yelling louder about it?
Robert Reich: Well, first of all, a lot of people still don't know about the details. Many people are still fooled into thinking that socialism doesn't exist in the United States. And that even though they're getting a bad deal; they're getting a bad deal, it's because they deserve not to get a better deal. In fact, I was talking to somebody, not too long ago, labor union member who said, "Well, I don't make much, you know, much money and I'm, I'm I don't have much healthcare, but that's because me. That's, you know, if I had gone to college... I would do much better." That kind of notion that it's, on- entirely up on the basis of personal responsibility, how one comes out in this system, itself a mythology. I mean, we know now your position in this system depends mostly on your parents: on where they were in the system, in terms of their income and their wealth and their connections and their ability to help you get forward. Nevertheless, there's a lot of mythology around all of this. I think that people don't understand that we have socialism for the rich. And we have one of the harshest forms of capitalism of all advanced economies in the world. One of the harshest forms of capitalism of all, in terms of a safety net that's barely in existence. The Coronavirus pandemic, I think is exposing much of this to people. They see that there is no safety net there, that our unemployment insurance system is barely there. Our health care system is not there for them when they most need it. But the people at the top are getting bailed out, they're getting all sorts of benefits and tax benefits. The big companies are not giving sick leave. Amazon, Whole Foods, the biggest corporations are exempt from all of those requirements. I don't want to make this sound partisan, Joe, because it really should not be. People who consider themselves conservatives, many of them are as upset about "crony capitalism", as many of them call it or "corporate welfare", as people on the left are concerned. In fact, left and right, are less and less relevant as ways of viewing our underlying political dynamic and contest. The real difference in America, I think, is between democracy and oligarchy. I mean, people who really do believe that we need to have a government and a system that's responsible and responsive to most people on the one hand, and an oligarchy. And I use the term, it's an old Greek term, but I think it fits what we have, a relatively small number of people who own and control most of this country.
Joe Donahue: Robert Reich is our guest on this week's Book Show. The name of the new book is "The System: Who Rigged It, How To Fix It". It is published by Knopf. You, you write that "the connection between the economy and power is critical". How so?
Robert Reich: Right now, we are- have come to a point and I would say, really last few years, where wealth and power are inextricably related. The people at the very top can afford to buy politicians, because so much money is required to run for office these days. That the people at the top of the only ones who have that kind of money and their donations directly and indirectly, are really shaping American politics. They also can afford to buy their children's way into some of the most elite colleges and universities. Maybe not as directly as they thought they could, but indirectly, certainly. In all sorts of ways they make big contributions, to those universities and the universities reciprocate by giving entrance to their children. They also can get concierge health care of the kind that some of us only dream of getting, at a time, in fact, in this country's history, where healthcare is becoming a scarce commodity to most people, even before the Coronavirus. So you have wealth and power inextricably related. And the most insidious aspect of all of this is that people who are the wealthiest in this country can buy changes through their control of politics, in the rules of the marketplace itself. I mean, look at how for example, the rules of bankruptcy have changed over the years. It used to be possible for bankruptcy to be used and utilized by average working people. But as time has gone on, as big banks have had more power, and the wealthy have had more power over the rules of the game, even the laws of bankruptcy have been altered. So that it's no longer possible for homeowners, or for students or former students with big loans and loan burdens, or for most people to utilize bankruptcy. While on the other hand, if you're a big casino magnate, for example, or other- or a big airline, you can use bankruptcy and get out from under all your obligations and shield your personal wealth. That's just one example among, Joe, thousands of the ways in which the so-called free market has been reorganized by those who are very wealthy and powerful, by big corporations and Wall Street, to change the rules of the game to benefit themselves.
Joe Donahue: I was really fascinated because you write about that, that as the power shifted to large corporations that the average workers, that most Americans develop these coping strategies. One was for- the earliest one was for women to enter the workforce to bring in another income. And then when that wasn't enough, then all of us, men and women started to work longer hours. And then when that was exhausted, what do you do? Well, you go to your savings, you draw down your savings, and then you borrow as much money as you possibly can. That came to a halt, as you point out in 2008. So what is the last 12 years shown us?
Robert Reich: It's shown us- I think, most Americans that not only have wages stagnated for most people, as the people at the top and the big institutions gained more and more wealth and power- but also that the stock market is less and less of an indicator of what the actual real economy is. The stock market continued to rise exponentially until the beginning of the Coronavirus crisis and presumably it will continue its rise after the crisis is over. But the top 1% now owns half of all of the shares of stock, half of the value of the entire stock market. The top 10%, in terms of wealth, owns 80% of the entire stock market. One of the reasons that the stock market has been going such gangbusters since the 2008 2009 financial crisis is that wages have been repressed for so many people and what otherwise would have gone into wages have gone into stock prices. The other thing that's become very apparent for many people since 2008, since the financial crisis, is that Wall Street managed to get away without any responsibility. No major player on Wall Street, although responsible for the shenanigans that got us into trouble, no major player was actually held accountable. In fact, Wall Street has managed since 2008 2009. To get even the flimsy Dodd Frank Act, which was supposed to be a way of preventing Wall Street from exploding again, has, has watered down even that flimsy Dodd Frank act. Wall Street was- has been that powerful. And what you see even today with the Coronavirus Act, the major piece of legislation, $2.2 trillion among the major beneficiaries, well, not surprisingly, Wall Street, Wall Street banks, some of the biggest corporations in America, directly or indirectly. Directly, in terms of $500 billion worth of bailouts. Indirectly, in terms of all kinds of tax breaks, that were buried, and are buried, in that bill.
Joe Donahue: Robert Reich is our guest. Again, the name of the new book is "The System: Who Rigged It, How To Fix It". So, the question that we have- that you ultimately have to get to, of course, is the second part of that subtitle, how do we "how do we fix it?" What do we do about it? You say that the answer is found in politics and rooted in power, how so?
Robert Reich: Well, we don't talk about power nearly enough in our discussions of, of the economy, or society, or even politics. But power really is the essence of it. If most people are powerless, and I think they are, most people don't feel powerful, but they really are not powerful right now as the system is organized. If that's the case, then there's no possibility of change. Then we are in a vicious cycle in which people who have a great deal of wealth and power can continue to change the rules of the game that give them in ways, more wealth and even more power, until we are no longer a democracy and we're no longer in an economy that's working for many people. The only way you change the allocation of power is by politically organizing and mobilizing a large number of people to take back power. And how do you do that? Well, you do that through making sure that they understand what the stakes are. And they understand that a lot of mythologies that they've been led to believe, are really not true. Mythologies, such as, there being a political left versus a political right, when in fact, the real division is between the vast number of people about the bottom 90% in income and the people- the tiny group at the top that I've called the "oligarchy" that are really controlling everything. Or another mythology that there's something called "corporate social responsibility": that corporations can and will be responsible for a lot of the things that if people had power, government should be doing. Well, corporations are not going to be responsible, they are not responsible. They're organized to maximize shareholder values, not to provide any benefits for the country as a whole. Another obvious mythology that people got to understand if they're going to take back power is the mythology that we live in a meritocracy, that anybody can make it with enough guts and gumption. That might have been the case in the three decades after the Second World- World War. It might have been the case a few other times in American history, not the case any longer.
Joe Donahue: You make the point that history shows that oligarchies cannot hold on to power forever. You also make the point that if this agenda is to, is to work, it is not right, nor is it left. But it does come down to leadership at some point, right? I mean, people have to get behind something, to allow them in into those halls of power.
Robert Reich: Yes, it does come down to leadership. And I think that the kind of leader that we end up with is either going to be an authoritarian, let's say, for lack of a better word, populist. Like Donald Trump, who subverts democracy, but uses the anger and the powerlessness and the sense of frustration of so many people to channel it into, basically, bigotry against scapegoats. I mean, we've seen this before in history. This is not a new movie, we saw the 1930s, and that's exactly what Donald Trump has done. The alternative is a democratic kind of populism, a small "d", I'm not talking about Democratic Party, I'm talking about a movement for democracy in which people come together, understanding that we really have no choice. If we don't come together to take back our, our economy and our politics, then we really are destined for the kind of authoritarian populism that Donald Trump represents. Now, then the question is, well, how do you do that? Bernie Sanders and Elizabeth Warren both tried, and for a whole variety of reasons that I don't think we quite have the time for, neither of them was able to do it this time around. I would hope that if Joe Biden is the nominee for the Democrats, he selects Elizabeth Warren or even perhaps Bernie Sanders- although I think less likely- but Elizabeth Warren for his Vice President. Uh, and that that provides at least the kind of leadership core that America needs to rally around democracy, as opposed to continuing the direction of empowering and enriching the oligarchy.
Joe Donahue: The- back to that oligarchy, you, you write that they understand that a divide and conquer strategy gives them more room to get what they want ultimately, without any opposition. So they can, they can pit native born Americans against immigrants, the working class against the poor, white people against people of color. The thing that I think, gives many of us pause, is that that worked. That, that, that people said, "Okay", they were okay with that. So how do we turn that around, because that seems even more fundamental that that it is not us versus them. That, that idea that we have to come together, that we are all in this together seems to be a very difficult road to hoe.
Robert Reich: Well, it's very, very hard. And it's only through national emergencies, depressions and wars and pandemics, that people begin to see how connected we are and how dependent we are- on each other. I mean, nobody in their right mind would wish this pandemic on this country. We've had thousands of deaths, there will be thousands more, but maybe, maybe the one silver lining could be that- like we emerged from the Second World War and emerged from the Great Depression with a renewed sense of, of social solidarity and understanding that we need each other, maybe we will emerge from this pandemic the same way. Maybe it will allow a kind of new politics in which people come together and say, "No, we don't really want an authoritarian", "We don't want the kind of oligarchy running America, we don't want wealth and power in the hands of very few people at the top.", "No, we want to go back to fundamentals and restore our democracy and make sure this economy works for everybody." We want a healthcare system that is not going to put us in the kind of crisis we now find ourselves in a public health system that is actually going to be ready for the next pandemic, a system in place for making sure that global warming, climate change, is not going to continually batter this country and make it harder and harder for the planet to provide the kind of life that we need and human beings need. In other words, it could be the out of this morass- this terrible period of time, this nightmare of a pandemic. It could be that this provides the seed crystal for a new politics and a new economics.
Joe Donahue: So with that new politics and new economics, and let's be positive and say it can happen, does that in and of itself become a new system? A different system and replacing the one or do we do away with the system altogether?
Robert Reich: No, I don't think we can do away with our current system. I think we, we have to live up to the system. I mean, the original system, as it was envisioned, was a system called democracy. It was a very bold idea in the 18th century. It was far from reaching fruition. I mean, obviously, those who formed it, our Founding Fathers, had a very limited view of who should be voting, and who should be actually part of that system. But the basic ideas founded in that document, the Constitution, are ideas that still have a very important place today. Democracy could work, we've seen that there are times in our, in the past- And again, I want to go back to the late 30s, the 40s, the 50s, the 60s, the 19, early 1970s, in which we had a strong labor union movement. We had people who were leading the charge, like Martin Luther King and the Civil Rights Movement, toward greater and greater degrees of democracy and equality of opportunity for more and more people. We had, somebody I worked for, Robert F. Kennedy, who embodied the notions that our economy and democracy could work for all. In other words, we could return to a time when we had a common vision for making this system work for others and for ourselves and for everyone. A kind of a vision of not just equal political rights, but genuinely equal opportunity. We can get there. I think that that is ultimately the choice we have in front of us, either that or authoritarianism. And maybe hopefully, and I hope I'm not being too ridiculously optimistic, but I hope that out of this horror that we are now experiencing that possibility can become a more realistic possibility.
Joe Donahue: We enjoy hearing from our listeners about our shows. You can e-mail us at book@WAMC.org, and you can listen again to this or find past book shows via podcast or at wamc.org. Sarah LaDuke produces our program. Bookmark us for next week, and thanks for listening. For The Book Show, I'm Joe Donahue.
