Reich’s The System
A conversation between Robert Reich and Michael Sandel.
Robert Reich, an economist and professor of economics at Princeton who served under Ford, Carter, and Clinton administrations, had a great discussion with Michael Sandel, political philosophy professor at Harvard, about Reich’s new book: The System: Who Rigged It and How to Fix It. I can only find the 60 minute video on facebook, but here’s my summary of the ideas below. It also all fits together perfectly with Robert Fisk’s new film, This is Not a Movie, which documents the history of journalists backing away from the truth in order to make a much easier living selling government-supported falsehoods.
This was all outlined and clarified by Klein’s Shock Doctrine, ten years ago, but it’s important it’s revisited again and again. Here’s what they said:
The important distinction in politics now is NOT between right and left, but between democracy and oligarchy (power held by a few — specifically those with money). Three developments have contributed to the shift to an oligarchy: the move from stakeholders to shareholders, the decline of labour unions, and the deregulation and expansion of finance.
It started in the 1970s. We had well-developed regulations, but people saw opportunities for exploitation, and loosened the regulations. But by the 1980s, it became a self-propelling mechanism. Creating money through politics attracts people talented at getting money, and fosters even more exploitation.
It was both the Democrats and Republicans who rigged the system by deregulating banks and industry (but Republicans are generally better at it). For instance, the Glass-Steagall Act was dismantled in 1999 by Clinton. Both Bush and Obama made the 2008 crisis worse and paved the way for Trump by solidifying angry, right-wing populists. The bank bailout was viewed as caving in to Wall Street, so when homeowners didn’t get any bailout, they were outraged and formed the Tea Party on the right and Occupy Wall Street on the left. They were looking for someone to unrig the system, like Trump or Sanders. So people didn’t vote for Trump because of his racism, although that’s part of it. Racism grew because people are angry and want to have a place to channel their anger, so they looked for scapegoats, and Trump just clarified which specific groups to throw under the bus.
The reason Trump won over Sanders in 2016, is that the Democrats had already invested so much more in Clinton, that they didn’t want Sanders to run. In 2020, Sanders lost again because Sanders and Warren split the progressive vote. In polls, they were ranking higher together than anyone else, but not individually. And Warren made the Democrats nervous with her wealth tax. Biden was a safe harbour for the Democrat’s wealth.
This oligarchical system has lasted for four decades even though the majority of people are not in the 1% and are not benefiting from this system in any way, yet they still vote for it! It’s because a populous revolution started.
Trump rewarded Republicans with tax breaks, and he keeps people angry with each other (through racism and misogyny) so they’re distracted from their own economic interests. It’s vicious divisiveness. They perpetrate the lie that people have to choose between the free markets or government regulation, and that the markets will save everyone. But the market is a creation of power. In the U.S., more than other places, people really think that the wealthy deserve their wealth. In other places, most people think anyone outrageously rich is probably a crook!
This is the second gilded age, a term that comes from Mark Twain’s description of the late 19th century, and refers to something glittering on the surface but corrupt underneath. There was prosperity, but those in power took a lot more for themselves. The degree of power is larger now than before. We need to have public conversations about whether or not the market rewards merit, but it’s hard to get across a complex paragraph. It’s not to say that specific wealthy people are the problem, but that the current system is the problem.
In the 2020 election, we need Biden to tell the people that he’ll get wealth away from the top; Obama’s “fat cats of Wall Street” speech is what won him the election.
Populism used to be a positive term to mean following the desires of the people, but it was corrupted by Jennings Bryan who spun the term to mean telling the people what they want to hear. Now the fight is between populists and progressives. We need anti-trust laws and regulations so that the wealthy with power can’t abuse their power. Even though Trump is wealthy, his style is still anti-establishment, and he sounds tough and politically incorrect, so he seems like he’s telling big truths. He wouldn’t be anywhere, though, without the help of Fox News.
The Democrats lost the working class in the past 40 year. They could change things, but they’re still dominated by Wall Street and the big corporations. They’re funded the same way as the Republicans. It’s not unique to the U.S., though. Labour in the U.K., the SPD in Germany, and the socialists in France are increasingly parties of the professional class who have seen the flight of working class voters. U.S. is an outlier in terms of inequality and lack of health care; only 6.4% of industry is unionized. There’s no sense of a countervailing power here.
BUT, we can’t despair or succumb to cynicism. If we think that change isn’t possible, then they’ll win. We have to keep fighting.