Book Review - Saving Capitalism - NY Times

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Book Review - Saving Capitalism - NY Times

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NY Times – Sunday Book Review – 11/15/2015

Robert Reich’s “Saving Capitalism”
By Alison Griswold – Slate staff writer who covers business and economics

To understand “Saving Capitalissm,” Robert Reich’s sweeping treatise on inequality in America, you must accept a central premise: The free market is fundamentally a human construct and so to debate the appropriateness of government in shaping it is beside the point. Someone is always writing the rules of the market. Reich’s concern is that over the last three decades, the lead authors have been Wall Street, big corporations and the wealthy elite. His fear is that “we are lurching toward a capitalism so top-heavy it cannot be sustained.”

As treatises on inequality go, much of this one is familiar. Reich, who served as secretary of labor under Bill Clinton, criticizes the Citizens United decision, corporate lobbying, tax rates on capital gains and the accrual of “dynastic wealth.” But he also hints at another culprit for modern political and economic distortions, less obvious than the superrich and thereby all the more insidious: a naïve faith in the American dream. Myths and legends, as Hunter S. Thompson observed, die hard in America, but perhaps none so hard as this one. Reich, raised in South Salem, N.Y., remembers when “work hard, get ahead” was still very much achievable. His father sold clothes to the wives of factory workers, the first shop eventually yielding a second. “We weren’t rich,” Reich writes, “but never felt poor.” For 30 years after World War II, the family’s income and purchasing power grew in lock step with the American economy, as did that of the broader middle class.

In the decades since, however, upward mobility has largely vanished. Sometime in the 1970s, wages began to stagnate, though productivity gains and economic growth continued. By 2013, the median American household, after adjusting for inflation, was earning less than it did in 1989. Last year, more than two-thirds of Americans were living from paycheck to paycheck. The winnings at the top, meanwhile, have piled up. In 1978, the chief executives of America’s big companies took home 30 times the pay of their average workers; in 2013, that multiplier was 296. Most people don’t have a shot at even getting close to such wealth. Middle-income children are half as likely to climb to the top quintile as those born there are to stay; for children of the poorest families, the odds of reaching the financial top are just 6 percent.

In spite of this, Horatio Alger’s creed remains strong. As of early 2014, two-thirds of Americans agreed that hard work would get most people ahead, and a full 80 percent felt that “everyone has it in their own power to succeed,” according to a poll by the Pew Research Center. Yet in today’s economy, those adages have become perverse, more inclined to depress than to inspire. “The notion that you’re paid what you’re ‘worth,’ ” Reich writes, “is by now so deeply ingrained in the public consciousness that many who earn very little assume it’s their own fault.”

“Saving Capitalism” is loaded with broad proclamations, while at times frustratingly spare on the particulars. What’s left is an exhaustive, if repetitive, outpouring of Reich’s indignations with politics, with free-market ideals, with the proverbial system. A smorgasbord of reforms he proposes in the final pages includes reversing Citizens United, tying corporate tax rates to C.E.O. pay ratios and creating a basic minimum income. But those ideas are less important than what “Saving Capitalism” is at its core: a rallying call, Reich’s attempt to be a modern Thomas Paine. The irony is that this appeal to the many is far more likely to be read by the few.

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