The Tinderbox Societies
Robert B. Reich
What's going on?
Shares are up because corporate profits are up, and profits are up largely because companies have figured out how to do more with less.
One of the most striking legacies of the Great Recession has been the decline of full-time employment -- as companies have substituted software or outsourced jobs abroad (courtesy of the Internet, making outsourcing more efficient than ever), or shifted them to contract workers also linked via Internet and software.
That's why most of the gains from the productivity revolution are going to the owners of capital. Meanwhile, typical workers are either unemployed or underemployed, or else getting wages and benefits whose real value continues to drop. The portion of total income going to capital rather than labor is the highest since the 1920s.
Increasingly, the world belongs to those collecting capital gains. They're the ones who demanded and got massive tax cuts in 2001 and 2003 on the false promise that the gains would "trickle down" to everyone else in the form of more jobs and better wages.
They're now advocating austerity economics on the false premise that cuts in public spending -- including education, infrastructure and safety nets -- will generate more "confidence" and "certainty" among lenders and investors, and also lead to more jobs and better wages.
None of this is sustainable, economically or socially.
It's not sustainable economically because when most of the gains from productivity growth go to people at the top, the vast middle class doesn't have the purchasing power to buy the goods and services an ever-more productive economy can generate. The result is chronically inadequate demand for goods and services. That's meant anemic growth punctuated by recessions.
It's not sustainable socially because high unemployment and widening inequality results in rising frustration over the inability of most people to get ahead.
Austerity economics in
Inequality is also widening in
It's a combustible concoction wherever it occurs: Increasing productivity, widening inequality and rising unemployment create tinderbox societies.
History tells us public anger and frustration can ignite in two very different ways. One is toward reforms that more broadly share the productivity gains. The other is toward demagogues who turn people against one another.
Demagogues use fear and frustration to advance themselves and their own narrow political agendas -- scapegoating immigrants, foreigners, ethnic minorities, labor unions, government workers, the poor, the rich, and "enemies within" such as communists, terrorists or other conspirators.
Be warned: The demagogues already are on the loose. In
The real economy isn't the stock market. It's jobs and wages -- and the standard of living of most people. Unless the gains of the productivity revolution are more broadly shared, the world's tinderbox societies will ignite in divisiveness.
- The Tinderbox Societies
- The Job Stall
- Bank of America's Healthier Roots
- Wall Street's Speed Freaks
- Grassroots Victory Over Big Business
- Austerity Strategy is Fatally Flawed
- Waiting for Copernicus
- Why the 'Pro-Growth Centrists' are Wrong
- Why Europe's Double Dip Could Lead to One in United States
- Why Fairness is Essential for Economic Growth
- Tax Dollars and (Common) Sense
- This Economy Stinks Worse than You Think
- The Decline of Labor and the Future of the Middle Class
- Worker-First Philosophy All Too Rare
- 'Say on Pay' Votes Battle Back Against Income Inequalities
- Citigroup Vote Not the Start of a Trend
- The True Lessons of the Great Recession
- Why Being 'On The Right Track' Isn't Enough
- The Most Lopsided Economic Recovery On Record
- The Far-Reaching Effects of the Generational Wealth Gap
- Maybe the Young Aren't Taking Over the 1 Percent
- Slipping Chinese Growth Could Hurt U.S. Exports
- Mortgage Lending Lags Pick-Up in Consumer Credit
- Where We Dwell Is Changing Fast
- How 'Shadow Inventory' Hurts the Housing Market
- 3 Reasons Not to Panic About the March Jobs Report
- How Long Will the Pain at the Pump Last?
- Is Your Bank To Blame for Pain at the Pump?
- Car Sales Soar Even as Gas Prices Do, Too
- We're Turning America into a Giant Casino
- Labor Market Showdown: The Employed vs the Unemployed
- We Are All West Now
- The Second Oil Revolution
- Invoking Fake Job Creators to Cut Taxes on the Rich
- CEOs Bullish on Economy but Will Wait and See on Jobs
- No Magic Bullet for the Price of Gas
- Bye-bye American Economic Pie
- America's Day of Reckoning is Here
- What's Good for the CEO May Be Bad for Business
- Could the Rosy Jobs Numbers Be a False Spring?
- Three Ways to Revive Our Sluggish Economy
- Consumers Still Buried In Credit Card Debt
- Job-Killing Tax Breaks
- Pumping Gas Prices for All They're Worth
- Extra Dollars You're Paying At Pump Going To Wall Street Speculators
- Why Americans Are Paying More At the Pump
- Lack of 'Rainy Day Funds' Bringing Consumers Down
- 2012 Job Gains: This Time, It's Different
- The Manufacturing Myth
- Deja View: Consumer Confidence Back Where it Was a Year Ago
- Starving Public Universities Shrinks the Middle Class
- A Farewell to Fossil Fuels
- United States Can't Control the World Oil Market
- Tensions in Middle East Fan Fears of Sharp Gas Price Hikes
- Inflation Outpacing Compensation for U.S. Workers
- The Myth of Economic Inequality
- Occupy Wall Street Must Learn That We Are What We Buy
- Six Unusual Economic Indicators
- Housing Market Improves, but Growth Years Away
- Could Strong Chinese Currency Boost U.S. Economy?
- The Downward Mobility of the American Middle Class
- Unemployment: Fudging the Numbers
- Why the Fed is Lukewarm on the Economic Recovery
- Are Student Loans the Next Debt Bomb?
The Tinderbox Societies | Politics
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