Reichonomics

Former+Secretary+of+Labor+Robert+Reich+speaks+about+the+need+for+increased+government+spending+and+mitigation+of+growing+wealth+inequality+on+Sept.+7+as+part+of+the+University+of+Iowa+Lecture+Series.

Former Secretary of Labor Robert Reich speaks about the need for increased government spending and mitigation of growing wealth inequality on Sept. 7 as part of the University of Iowa Lecture Series.

Eleanor

Former Secretary of Labor Robert Reich speaks about the need for increased government spending and mitigation of growing wealth inequality on Sept. 7 as part of the University of Iowa Lecture Series.
Robert Reich accepts a medal honoring him as the 2010-2011 Distinguished Lecturer in the University of Iowa Lecture Series

Robert Reich is just another Washington bureaucrat talking about the economy and jobs. Except that he is one of the best bureaucrats and most acclaimed political economists out there. (“There” being the uncertain world of poor economic times). In fact, Reich is so good at economic and political analysis that Time Magazine named him one of the Top Ten Best Cabinet Members of the century, serving most recently as Secretary of Labor under President Clinton and The Wall Street Journal ranked him sixth on its list of Most Influential Business Thinkers.

 And just days after his Sept. 4 op-ed in the New York Times entitled “The Limping Middle Class” and mere hours before President Obama’s speech on job creation Sept. 8, Reich spoke to a packed crowd at the Iowa Memorial Union on Sept. 7 at 7:30 p.m. as part of the University of Iowa Lecture Series. Adding to his lengthy resume, Reich was declared the Distinguished Lecturer of 2011 by University of Iowa President Sally Mason.

 Despite accomplishments as intimidating as they are numerous, Reich isn’t arrogant, and remains personally true to a long professional life spent championing the rights of the common man. In fact, his very first comment was a reference to his own small stature.

 “This economy has really worn me down,” he said, to laughter. Continuing, “Obama was going to give his speech tonight until he heard I was giving mine.”

 In fact, Reich spent much of his own speech discussing the message he hopes to hear from Obama when he speaks about job creation before Congress Sept. 8. An unabashed liberal economist, Reich challenged Obama to advocate a bold plan, saying simply promising to extend unemployment insurance and social security tax cuts is not doing enough to spur job creation and economic growth. Reich went even further, saying that the stimulus bill passed in 2009 was too small, a bold move of his own amidst cries of excessive government spending and high national debt in the political arena.

 “I can’t even say stimulus in public,” he said. But he explained that the Great Recession was unlike normal recession caused by a hike in interest rates by the federal reserve reacting to high inflation. “The Great Recession is like the Great Depression in that it began with the bursting of an asset bubble. I don’t know where you were, but I heard it. And it was loud. … The bottom line is the that stimulus was way too small. This is not popular. Did I just hear applause?”

 He did. The audience was vocal in its support for policies that are typically construed as universally undesirable.

 Reich referred to government spending like the stimulus as “priming the pump” for a booming economy, arguing that in times of recession it is more important to worry about job creation than the deficit, another message he hopes to hear in Obama’s speech tomorrow – along with the promise of more stimulus money.

 According to Reich, the national debate about debt is a warped. He argues that according to Keynesian economics government spending in a poor economy can actually be a complement to long term deficit reduction by stimulating employment that creates a strong economy that will improve GDP in the long term. He even added a personal story about his own childhood, growing up with a Republican father who told him that future generations would be “paying off FDR’s debt.”

 “I didn’t know what a debt was, but I was scared – I would imagine debt gobbling me up and my children’s children up. … I have a granddaughter who’s almost three, and I expected her to talk about FDR’s debt,” he said.

 Reich acknowledged that the government spending should be paid for in the long term, and advocated higher taxes on the highest income brackets – also addressing his second main point and the focus of his recent aforementioned editorial and book Aftershock: the growing inequality in the distribution of wealth in the United States. According to Reich, the top 1% of Americans own close to 24% of the total wealth, a percentage that hasn’t been near that level since 1928, an ominous parallel to the start of the Great Depression.

 And here’s the kicker: Reich argues that wealth concentrated in the hands of the wealthy is bad not only for the middle and working classes, but ultimately for the wealthy because the middle class doesn’t have enough purchasing power to keep the economy stable and strong – resulting in crashes that hurt everyone (sound familiar?).

 Continuing on the vein of analyzing and predicting Obama’s interactions with Congress, Reich emphasized that respect for those with opposing viewpoints and engagement in public discourse are key – condemning the media’s and public’s fascination with petty fighting. Reich recalls a recent televised debate with a conservative economist.

 “I was having one of the best conversations of my life [on air] and I get on break and the producer comes in my ear and says ‘Be angrier.’ … and at that point I lost my temper,” he said.

But all is not lost, and Reich ended with a call to action for Iowans.

“Iowans have to ask the right questions,” he said, explaining that the nation is counting on us to be a model for civil discourse.