Robert Reich’s powerful new film, “Inequality for All,” breaks down the disparity of wealth that is so pronounced in this country. It solves the riddle of why San Jose is really two cities, and it explains the great political divide we face locally and as a nation.
The facts are indisputable: The top 400 people in America have more wealth than the bottom 150 million people. The top 2 percent of Americans are beyond rich; the top 20 percent are doing very well. But after that, America is struggling. You are poor if you are in the bottom 50 percent.
These are facts. As the late Daniel Moynihan noted, “You are entitled to your opinion, but you are not entitled to your own facts.”
Reich, a professor at UC Berkeley and former U.S. Secretary of Labor, systematically shows what caused the disparity in wealth: an unfair tax system that taxes the wealthy too little; a failure to invest in education; technology and globalization that opened up the labor market; reduced manufacturing jobs; the decline of labor unions, which helped build the middle class; a failure to increase wages—even the minimum wage—over the last 30 years; and government policies written by and for the rich and powerful. This last point has provided benefits and subsidies to the wealthy and influential while poking holes in an ever-expanding safety net that is stretched beyond its capacity.
Reich notes that Americans are working longer hours, producing more than ever and yet they still struggle to make ends meet. The American Dream has become a nightmare for many. Working people are the victims of this calamity.
Reich also focuses on how the disparity in wealth has caused unrest and a great political divide in this country. The Tea Party and the Occupy movement were two sides of the same coin. People are angry, but differ on who or what to blame. The current federal government shutdown is a significant example of the polarization that Reich claims is inherent when the disparity of wealth is grossly unequal.
He has the data to back it up.
Locally, the political divide between the Chamber of Commerce and South Bay Labor Council mimics the national political divide. These are times when the interests should be the same, as the solutions are very apparent and beneficial to both sides.
But in the final analysis, it is not class warfare that causes inequity. The rich are fine as long as there is no cataclysmic event. But without labor, their wealth cannot be sustained. They need a working middle class to survive as much as those in the middle class need upwardly mobile jobs. The failure to reinvest in people is the biggest problem. While the wealth is concentrated at the top, it’s not trickling down—it’s being hoarded.
Apple, for instance, is sitting on $147 billion in cash. Some large investors want the company to buy back their stock at a profit. But that makes no sense, because every $1 billion invested in new products, ideas and businesses is 50,000 jobs. That is real economic growth. Every $1 billion that goes to Carl Ichan increases his net worth on paper, but does not change his lifestyle and does very little for the greater economy.
There is no begrudging Ichan a return on his investment, but the money he wants can be used more effectively by expanding opportunities in the labor market, which will ultimately result in more wealth for Mr. Ichan and other Apple investors over the long term.
For years, Steve Jobs refused to pay dividends to investors, believing that if Apple lost its “growth” mentality it would begin to decline.
Apple is not the only Silicon Valley company with vast cash reserves. And the 400 wealthiest people in America have vast sums that could be invested in America. In short, we need to open the spigot of wealth to produce more and better jobs and grow the economy. We need to innovate instead of speculate.San Jose and Silicon Valley lead the country in economic opportunity, and we could make it happen elsewhere.
In the final analysis, nobody cares how much money the top 2 percent has if the rest of society can afford to buy a home, put food on the table, provide opportunities for its children and have some semblance of financial and personal security.
Robert Reich is right. It is not only in the best interest for everyone to have a strong middle class, it is also the morally right thing to do.
Rich Robinson is a political consultant in Silicon Valley.