Tag archives: Robert Reich

Reich Redux

by Rob Schwarzwalder

September 10, 2010

Readers of my occasional contributions to this site realize I have written several times about the going economic commentary of former Clinton Labor Secretary Robert Reich.

I do this out of no personal animus: By all accounts, Mr. Reich is a lively, warm, and indisputably intelligent man. However, he is a man whose economic misunderstandings border on the fabulous fabulous in the literal sense, the sense in which Gullivers Travels was fabulous. Absurd, gigantic, the stuff of satire. And just plain wrong.

Last evening, during his weekly Marketplace Radio commentary, Mr. Reich commented on the Presidents plan to provide tax reduction for businesses. Mr. Reich was intellectually apoplectic, reduced to explaining his understanding of the rudiments of the American economy:

The reason businesses aren’t investing in new plants and equipment has nothing to do with the cost of capital. It’s because they don’t need the additional capacity.

Well, Ill grant him this: capacity is related to productivity. However, capacity exists because capital is inaccessible (see below). And then, Mr. Reich persists:

Obama’s proposed corporate tax cuts won’t generate more jobs, because they won’t put any more money in worker’s pockets … Obama’s whopping proposed corporate tax cuts help legitimize the supply-side dogma that the economy’s biggest obstacle to growth is the cost of capital, rather than the plight of ordinary working people.

Two broad observations:

(1) Mr. Reich argues that we should put more money in workers pockets so they will spend more and thereby foster greater demand and thus stimulate corporate output, which means new hires and more jobs.

As usual, Mr. Reich is wrong. Most of the workers to whom he refers already pay, at best, modest taxes. Although I strongly support tax reductions for virtually everyone who pays them, the fractional amount of money a tax cut for the working lower-income (not quite the same ring as tax cuts for the rich, but more accurate) would put in their pockets would do little to induce economic growth.

Or perhaps Mr. Reich is thinking of some kind of direct federal payment to workers, of having the Treasury Department fabricate yet more money and dispense an arbitrary but politically potent amount of it to a favored group. Naturally, this would create more federal debt and serve as an at-best temporary infusion of capital into the economy. Sort of like a fiscal heroin injection.

Heres a better idea: If we lower taxes on corporations and provide incentives (e.g., making the R&D tax credit permanent, as Republicans have long advocated and which the President now suggests) to enhance innovation and improve Americas global competitiveness, companies will begin to hire more employees (i.e., workers, in Mr. Reichs parlance). These people will then start paying taxes, buying things of all types (from new cars to groceries) and thereby stimulate the market through wonder of wonders the private sector itself!

(2) Mr. Reich asserts that President Obama wants corporate tax reductions to lower the cost of capital.

This is part right, but misses the larger point. Corporate tax reduction encourages investment, productivity improvements, and frees up capital itself. A business that is not growing cannot access capital. A business that is growing and private sector growth happens, in large part, when the tax burden is not excessive creates jobs, eases the plight of those in the lower income brackets, and builds a stronger America.

Robert Reich has a marvelously mellifluous voice which is a delight to the ear. His obvious passion for people on the down-side of advantage is compelling. But he is wrong, in fact, philosophy, and policy. Thats what makes him, and his compeers in the American Left, so dangerous.

Robert Reich: Lost in Political Space

by Rob Schwarzwalder

February 2, 2010

In the late 1990s, former Clinton Labor Secretary Robert Reich wrote a book called Lost in the Cabinet about his admitted misadventures as head of a major federal agency.

Now comes his latest missive, an article in the left-leaning American Prospect Magazine called “What Happened to Democracy.” In it, he decries industry lobbyists and back-room negotiations - pretty standard fare for a liberal who is as yet un-mugged by reality.

No one wants “closed door” deals or unfair benefits for any company or group. But then Mr. Reich takes us into the intellectual thin air with this statement: He calls for “adequate public financing for congressional and presidential candidates who refuse private funding, more constraints on lobbyists, tighter rules for who must register as a lobbyist, fuller disclosure, and tougher rules on the revolving door between public service and private gain.”

Let me see if I understand: The federal government will pick and choose what candidates are viable for public office (that’s the basis of public financing) but people representing private corporations and business associations (that would be lobbyists) merit “more constraints.”

Then Mr. Reich leaps beyond the ether into stratospheric terra incognita and gets thoroughly lost in political space: “Yet nobody seems to be talking about these sorts of reforms. They don’t appear on Obama’s agenda. True, they don’t generate lots of public excitement, and they’re murderously difficult to enact. But without them our democracy doesn’t stand a chance.”

Conservatives have, for decades, been calling for full and immediate disclosure of campaign contributions. No argument there. But does Mr. Reich honestly believe that without federal financing of elections and tighter rules about lobbying - it’s already illegal for lobbyists even to buy a Congressman a cheeseburger; how much more “constrained” can the rules get? - “democracy doesn’t stand a chance?”

We live in a republic, not a democracy, a political sphere in which people govern themselves through elected representatives at the local, state and national levels. Our Founders were terrified of democracies, considering direct self-rule an invitation to mobocracy and social dissolution. They believed that representative self-government is the only sure way for honorable, or as they put it, “virtuous,” citizens to maintain ordered liberty.

My good friend and former colleague Bill Wichterman will be addressing this theme at the Family Research Council in a speech titled, “Did the Founding Fathers Establish a Democracy?” this coming Thursday, February 4 at 11 a.m. ET. The speech will be Webcast and can be viewed at frc.org.

I hope Mr. Reich will join us. Perhaps together we can learn a thing or two about representative republican democracy.

It Has Been Worse

by Robert Morrison

October 19, 2009

I’ve been on travel the past week, visiting with college administrators, staff, and students. I’m often asked by concerned young people: “Has it ever been this bad before?”

Oh, my yes. When I was your age, I tell them, 300 American cities went up in flames after Dr. King was assassinated, riots in the streets turned huge areas of America’s cities into no-go zones. Bob Kennedy was assassinated en route to a likely presidential nomination. Three hundred young Americans were dying in Vietnam every week, with no strategy for victory and no end in sight. Inflation was rampant and few Americans could see our country healing after such terrible divisions.

But heal she did. Last week, I witnessed American troops coming home from Iraq in two of our major airports. Welcoming committees cheered them wildly. What a great improvement on the sullen indifference that greeted too many of our returning Vietnam vets. One of my pool pals—guys I swim with every morning—was one of those Vietnam vets who came home to no welcome. Today, he joins the welcomers in applauding our magnificent troops. God bless you, Bob Hogan!

Even worse than that “annus horribilis” of 1968 was Washington in 1861. A book by Ernest Furgurson, Freedom Rising, describes the scene in the Capital. “Panic seized the people and the previous emigration [from Washington] was child’s play to the present hegira,” wrote a young man of that time of civil war. He was obviously educated before we had a federal education department. Furgurson’s narrative goes on: “Property is valueless, business is dead,” wrote a 19th century observer. “To feed incoming troops, the federal government confiscated all the flour in the mills of Georgetown and aboard schooners about to sail. Residents of Georgetown were awakened by what they feared was cannon fire; it was [instead] 3,000 barrels of flour being rolled out of one of the town’s thirty-three canalside warehouses, to supply ovens being built for the army in the basement of the Capitol. Within fifteen minutes of the confiscation order, the public price of a single barrel of flour more than doubled.”

Check out your local super market: the price of bread has not doubled. Yes, it has been worse, much, much worse.

After Pearl Harbor, there was a real, sinking feeling that the West Coast of the U.S. was defenseless. With the Pacific fleet crippled, what was there to stop the Japanese from seizing Seattle and San Francisco? These fears, we now know, were exaggerated. And they led to the unjustifiable internment of thousands of Japanese-Americans. Nonetheless, they did not seem irrational or unrealistic then.

But because things have been much, much worse than now does not mean that we should relax our strenuous efforts one bit. What is being proposed —- and seriously planned in Washington today —- is a grave threat to our future. The health care takeover is menacing. Robert Reich, Bill Clinton’s former labor secretary, and a real bellwether for liberalism, wrote boldly to seniors: “We will let you die.” Sarah Palin was publicly pilloried for saying they would do that. Reich, from Harvard, says it and gets away with it.

Rush Limbaugh was blackballed by the NFL over racist comments he never made. Yet Justice Ruth Bader Ginsburg boasts about her lovely office at the Supreme Court. It faces an interior courtyard, where she won’t have to see or hear those raucous protesters out in front. She can don her $3.000 Paris-made judicial robes and never have to answer for her genocidal comments about public funding for abortions. She told the New York Times she thought the Supreme Court missed the whole point of Roe when it upheld the Hyde Amendment that bans federal funding of abortion back in 1980. She always thought, she confessed, that public funding of abortion was necessary to get rid of “populations we don’t want too many of.” No more heinous statement has been made by a Supreme Court justice since Roger B. Taney said “the black man has no rights which the white man is bound to respect.”

Another huge threat is the debt being piled upon our children’s generation and our grandchildren’s. The government announced on Friday that this year’s deficit had climbed to $1,400,000,000,000. President Obama has managed, in just nine months, to exceed the debt run up by all 43 of his predecessors. The media likes to print it as “$1.4 trillion.” Sounds small. There’s a decimal, after all. But it really should be reported as $1.4 TRILLION! George W. Bush is no innocent in this regard. But if he ran up a mountain of debt, Barack Obama has answered with a Mountain Range of debt. It’s Pike Peak versus the Rockies.

Can we survive? Can we come back? Yes. During that horrible year of 1968, many of us college students were pretty down. Our wonderful diplomatic history prof at University of Virginia—Norman A. Graebner—had not given up on this country. He concluded his final lecture of the year by urging us to understand the incredible unused resources of these United States. The U.S. was like the boxer, Joe Louis, he said. The Brown Bomber always had “power to spare.”

The man we called “Graebner the Great” was right. America does have power to spare. That power stems ultimately from the American people’s reliance on God. In God we Trust. As long as that is so, I say power to the people.