Robert reich why growth is good

It does make me think though that I first came to Berkeley as a sort of a graduate student. I was working for a professor of architecture here in the summer of You remember that summer. Some of you remember that summer. And I have a very, very distinct recollection. I had gone, as Dan said, and thank you Dan for that introduction and thank you for everything you do by the way. And it also, when I went there, it was before the interstate highway system was completely finished, so it was hard to leave.

And it is in Hanover, New Hampshire. So as it was like being in a monastery in Siberia. And I came to Berkeley the summer of and you know that scene in the Wizard of Oz when Dorothy opens the door and it suddenly technicolor.

I remember going up university avenue. I thought I had, I had reached Nirvana. And then I made a terrible mistake and I have to confess this to you, I, I left Berkeley for 35 years and then I came back.

I want to try out three with you that I think that not only accurate but also potentially within our power to do something about. I mean, you remember many of you, class of for particularly you remember the disagreements during the Civil Rights Movement. You remember the disagreements over Vietnam. I mean we fight all the time. Incivility is not about not fighting. Civility is not about agreeing. The issue is how we disagree. And for most of my life, most of my memory and I expect yours, we have had an agreement, although we disagree on the substance.

We have had an agreement on how we disagree. And those need to be distinguished. But we also trust or used to trust our institutions of government.

In , there was a survey done by Gallup and it has been repeated that survey since then, every two or three years. And the question is, do you trust government to do the right thing all or most of the time? In , 72 percent of Americans said yes. Today, fewer than 20 percent say yes.

And that is part of the problem, I believe. We also have much more of what might be called geographic tribalism than ever before in my memory. What do I mean by geographic tribalism? I simply mean that the people around us, our neighbors, our friends, tend to be people who agree with us and the people who disagree with us and agree with themselves tend to live geographically in different places. Now, sociologists understand that the most influences on public opinion under European, on my opinion, on our values are the people we see every day, the people we talked to.

Even you. And so if the people around us we talk with and we see every day are of the same view that we are, we entrench ourselves in those views. The best way, the best way, and this is what I tell my students all the time, the best way of learning anything is to talk to somebody who disagrees with you. The essence of learning is to be provoked. And so we need different views. We need different voices. Fifteen years ago when I came, I was in Cambridge, Massachusetts, I was teaching at a, an institution there that shall go unnamed.

And 15 years ago when I came to Berkeley, I drove no longer a beetle, no longer Volkswagen. I had a Mini Cooper. Now 15 years ago, there were not many Mini Coopers in the middle of America. I drove from Cambridge, Massachusetts 3, miles to Berkeley. I love driving across this country. And I, and I got to Oklahoma and I was in a gas line, I was waiting for gas and, and some truckers came over and they knocked on my window and I lowered the window and I said, Can I help you?

They said, What is this? I said, this is a Mini Cooper. They said, how does anybody fit in there? Now at that point I had a strategic decision to make. And they nodded and walked off. And then I got to Berkeley and I thought Berkeley was 3, miles away from Cambridge and it took me a little bit of time to realize that I had not moved at all.

It was the same town, the same city. Have you ever seen those maps of America where you can actually find out where Starbucks are located. Do you know that there are such maps and my children and I, oh, not that many years ago we took a road trip around in middle America and we stopped in places where there were Starbucks.

Not because we wanted Starbucks, but because Starbucks is a genius company in terms of finding geographically tribal oases in Red America, where you, if you are a blue America kind of person can feel at home, usually college campuses.

Now, how do we get out of our bubbles? How do we actually start talking to people who disagree with us? We start with our own families. I daresay there are people in your families who you disagree with politically. Am I right?

Instead of avoiding conflict and I completely understand conflict avoidance, particularly inside families. Conservative, liberal. Forget them, labels. Just talking and asking your uncle Bob about his work.

What do you know? How is the job? How were the benefits? In other words, have your uncle Bob tell you his story about kitchen table economics. If you want to use that term. And before long you may discover that you have a lot in common and he has a lot in common with you. And then you might talk about solutions. But you see you never are getting up to labels. Conservative versus liberal. The first one is geographic tribalism. The second has to do with what has happened to incomes over the last 40 years.

Now, if I had a chart behind me or a slide behind me, I would show you that from I know the class of Most of you were born in I was born in Bill Clinton was born in George W dot Bush was born in Donald Trump was born in Cher was born in I mean anybody who was anybody was born in Demographers, demographers. They scratch their heads. They want to know. Well, why? Why, why? Why so many people were born in My father was in the Second World War and he came home and there was my mother.

The economy grew and the median wage not the average, the median wage that is half above, half below median wage grew exactly in tandem with economic growth. Everybody, no matter whether they were in the top 10 percent, top five percent, top one percent, bottom 20 percent, bottom 10 percent, everybody grew together.

In fact, interestingly, if you were in the bottom fifth, the bottom 20 percent you, your income grew faster than if you were in the top 10 percent or top 20 percent in those years.

Three decades from up until , , 78, What happens starting in the late seventies is that median wage begins to flatten. Now the economy keeps on growing. Now, granted, there are recessions and recoveries. The gains from the economy are going someplace. That position today is in the minority. A vocal group of progressive thinkers are plumping for the opposite course—and prominent among them is Robert Reich, former Secretary of Labor for Bill Clinton.

In his new book Saving Capitalism: For the Many, Not the Few , he argues for a set of policies that would cripple the American economy. A better title for his book would be Dooming Capitalism, For Everybody. More concretely, Reich starts by insisting that it is a fantasy to assume that there can be a free market without government to create property rights, control monopoly, and enforce contracts.

But he fails to note that this exact list of tasks is what classical liberals like myself assign to government as well. In fact, his list is too short. First, he ignores the role of government in controlling crime and pollution.

Second, he does not discuss the limits that should be imposed on the subsidy of some businesses by others. Third, he leaves to one side the difficult questions about the organization and financing of public infrastructure and the management of public resources. A good government is ironically a lot larger than Reich seems to understand. The real differences between progressives like Reich and classical liberals like myself come then not in the proposition that markets depend in multiple ways on public support.

Rather, the disagreement is over the means chosen to generate social improvements. It is here that Reich repeatedly misfires. Dream on! If the minimum wage shoots up, it will start to make more economic sense for these firms to replace low-skilled labor with machines and technologies that can do the same work.

The employees that do remain will be, by and large, more skilled, shutting out the poor further. For example, Reich never considers the exceedingly high levels of unemployment among minority teenagers, whom regulation has shut out of the labor market.

The unintended consequences of regulations count. The early returns on the minimum wage increases in Seattle are a loss of 1, restaurant jobs in the city compared to an increase of 2, restaurant jobs in the rest of the state. And this is only for the first round of minimum wage increases. It is unlikely that Reich knows more about the restaurant business than the businesses themselves who will likely turn to customer self-order kiosks and other adjustments to offset rising labor costs.

It is just foolish to project that the relatively small declines in employment levels from small increases in minimum wages will carry over when they increase the wedge between the market and the minimum wage. Reich takes an even odder view in his discussion about the control of monopoly power.

He suggests that growth would be stronger if inequality was smaller. Inequality is also a political choice, according to another Nobel Prize-winning economist, Joseph Stiglitz. In a recent New York Times blog he blames the rise of American inequality on underinvestment in infrastructure, education, health care and social safety nets.

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