The American history of capitalism, viewed through the benefits of economic change has been swinging like a pendulum over the past 100 years between concentration of wealth in the hands of few, and the sharing of prosperity among many. In 1929, the year that marked the beginning of the Great Depression, income inequality in America was at its worst. The current income inequality is similar to the years immediately preceding the great depression. A widely used measure of income distribution called the Gini Coefficient ranked the U.S. 93rd out of 134 countries in 2010 (the higher the rank, the greater the income inequality). Iran was ranked 90th, and Russia 82nd (source, CIA - 2010).
Wealth concentration rose from 1870 to 1929 (the year the Great Depression began), followed by a more broadly shared era of prosperity (1947 - 1975), and then the "Great Divergence" according to Nobel laureate economist Paul Krugman, which is rapidly rising income inequality since the late 1970s.
Mr. Reich believes unless the tide of rising income inequality is turned, we are sure to experience anemic job growth, persistently high unemployment and low wages, which affect everyone including the wealthy. With a weak purchasing power, the middle class that fuels all economic recoveries will be in no shape to sustain a strong recovery of the Great Recession of 2008. Over time, there will be growing public discontent, and two groups will vie for political dominance: The demagogues and the reformers, and let's hope the latter group dominates the voice of reason.
While Mr. Reich's reliance on the pitfalls of income inequality seems plausible -the impacts of which are debatable among economists - one of his lofty remedies could use more forethought. Mr. Reich proposes hefty government subsidies ("wage supplements") for the poor and middle class to the tune of $633 billion annually, funded partly by a carbon tax that can generate roughly the equivalent. Mr. Reich goes on to tout the benefits of such high carbon taxes as an inducement to develop "cheaper and more efficient" sources of energy, but fails to name a substitute when carbon emission is significantly reduced as a result.
Much of Mr. Reich's arguments pertain to establishing the importance of the inequality factor, followed by a very condensed version of how to fix it. Even if Mr. Reich's uncompromising remedies were ignored - there are many ways to skin a cat - "Aftershock" goes a long way in bringing "income inequality" to the forefront of the debate of U.S. economic woes since 2008.
Wealth concentration rose from 1870 to 1929 (the year the Great Depression began), followed by a more broadly shared era of prosperity (1947 - 1975), and then the "Great Divergence" according to Nobel laureate economist Paul Krugman, which is rapidly rising income inequality since the late 1970s.
Mr. Reich believes unless the tide of rising income inequality is turned, we are sure to experience anemic job growth, persistently high unemployment and low wages, which affect everyone including the wealthy. With a weak purchasing power, the middle class that fuels all economic recoveries will be in no shape to sustain a strong recovery of the Great Recession of 2008. Over time, there will be growing public discontent, and two groups will vie for political dominance: The demagogues and the reformers, and let's hope the latter group dominates the voice of reason.
While Mr. Reich's reliance on the pitfalls of income inequality seems plausible -the impacts of which are debatable among economists - one of his lofty remedies could use more forethought. Mr. Reich proposes hefty government subsidies ("wage supplements") for the poor and middle class to the tune of $633 billion annually, funded partly by a carbon tax that can generate roughly the equivalent. Mr. Reich goes on to tout the benefits of such high carbon taxes as an inducement to develop "cheaper and more efficient" sources of energy, but fails to name a substitute when carbon emission is significantly reduced as a result.
Much of Mr. Reich's arguments pertain to establishing the importance of the inequality factor, followed by a very condensed version of how to fix it. Even if Mr. Reich's uncompromising remedies were ignored - there are many ways to skin a cat - "Aftershock" goes a long way in bringing "income inequality" to the forefront of the debate of U.S. economic woes since 2008.
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