Robert Reich: 2013 Was 'the Year of the Great Redistribution'
Last year was "the year of the Great Redistribution," declares liberal pundit and Berkley professor Robert Reich.
"It was redistribution upward, from average working people to the owners of America," writes Reich, former Secretary of Labor under President Clinton, in a blog post.
"America has been redistributing upward for some time — after all, "trickle-down" economics turned out to be trickle up — but we outdid ourselves in 2013."
The record-setting stock market of 2013 handed stock investors the largest annual gain in nearly 20 years. But most Americans can't save enough to invest in stocks, he states, saying over two-thirds live paycheck to paycheck.
Even when including IRAs, the extremely rich own most stocks, he asserts.
The richest 1 percent owns 35 percent of the value of American-owned shares, and the richest 10 percent own more than 80 percent.
As Reich explains it, stock prices increased because corporate profits increased. Corporate profits increased because corporations cut costs — especially their biggest cost: employee wages.
Corporations cut wages because they could, he argues. Ongoing high unemployment left workers with little bargaining power. Outsourcing work overseas, automation replacing routine jobs, a trend from full-time to part-time and contract work and the long-term demise of unions have all contributed to the decline of employee bargaining power.
"Corporate earnings now represent the largest share of the gross domestic product — and wages the smallest share of GDP — than at any time since records have been kept," he maintains. "Hence, the Great Redistribution."
State and federal government policies, such as state right-to-work laws that gut union power, have been instrumental in driving the redistribution, according to Reich.
Most importantly, the tax system's favorable treatment of capital gains, dividends and debt lets billionaires and multimillionaires pay income tax rates of about 12 percent, less than half the rate of most workers.
"The data say something else," Jonah Goldberg, a fellow at the American Enterprise Institute, argues in an editorial for USA Today. "Family structure and the values that go into successful child rearing have a stronger correlation with economic mobility than income inequality."
While conservatives may see inequality as a symptom of larger problems, liberals view income as a public good that's distributed, "like crayons in a kindergarten class," he says. "If so-and-so didn't get his or her fair share of income, it's because someone or something — government, the system — didn't distribute income properly."
