For those of you without access to public television, Bill Moyers celebrated the fifth anniversary of “the fiscal meltdown that almost tanked the world economy” a few days ago by speaking with my hero, former Secretary of Labor Robert Reich about wealth inequality in the United States, and his soon-to-be-released documentary film Inequality for All. Here’s video of their discussion, followed by an excerpt of the transcript.
BILL MOYERS: The figures are so startling, I had to shake my head in disbelief when I first saw them, showing that in the first three years of the recovery from the recession brought on by the financial collapse in 2008, the top one percent of Americans took home 95 percent of the income gains. Ninety-five percent?
ROBERT REICH: That’s right. As the economy grows it used to be, you know, within the memory of many of us, myself included, between 1946 and 1978, as the economy grew, everybody benefited. It was very wide– the benefits were very widely dispersed.
BILL MOYERS: Shared prosperity we called it.
ROBERT REICH: Well, we called it shared prosperity. It wasn’t socialism. I mean, Eisenhower was president through most of that. And we didn’t consider it abnormal. We considered it normal. As the economy grows, we should all get something. And during those years, the economy doubled in size and everybody’s income doubled. Even if you were in the bottom fifth of the income earners you did actually better.
And then, and this is really the subject of the film. Something happened in the late 1970s, early 1980s, to change the historic relationship between economic growth and the growth in productivity on the one hand and wages. Beginning in the late ’70s and really to a greater and greater degree over the last three decades, all the wealth, or most of the wealth, most of the new wealth in society went right to the top.
Income gains went right to the top and people in the middle, the median worker, the median wage, stagnated. In fact since the year 2000, if you adjust for inflation, you have to adjust for inflation, the actual median wage has been dropping. It’s now five percent below what it was then.
BILL MOYERS: So help us understand in practical terms what it means when the layman or woman reads that the top one percent of Americans took home 95 percent of the income gains. How can that be?
ROBERT REICH: I think that most people, if they really understand it, will say: “This is not the America that I should be part of. This is not an economy that is working as it should be working. Something is fundamentally wrong.” And the game feels rigged somehow.
And I think that’s the conclusion that many people are coming to regardless of whether you are, consider yourself, on the left or the right. Many Tea Partiers are angry at the system because there seems to be so much collusion between government and big business and Wall Street. That’s where the Tea Party movement came from.
BILL MOYERS: Yeah. That was– that intrigued me back when Occupy happened, that it and the Tea Party were both about the one percent.
ROBERT REICH: Both about what looked like a fundamentally unfair subsidy going from everybody, taxpayers, to mostly the top one percent, that is the people on Wall Street who had blown it. Who had basically treated the economy as a casino for much of their own benefit. And leaving many of the rest of us underwater in terms of being able to pay our mortgages, with our savings depleted because the stock market had basically reversed itself, and jobless.
BILL MOYERS: And here we are, five years after Lehman Brothers collapsed and Wall Street went south and you say that the banks, the big banks are still at it, still gambling?
ROBERT REICH: Unfortunately, they are. We don’t even have a Volcker Rule. Remember when we had the Dodd-Frank Act that was supposed to clean up all of this? And a piece of it was kind of a watered-down Glass-Steagall. Glass-Steagall was the old 1930s rule that said you had to split your commercial banking operations from your, basically your casino, betting operations. And–
BILL MOYERS: You couldn’t bet with my deposit.
ROBERT REICH: You can’t bet with commercially-insured deposits. But we couldn’t even get the watered-down version of Glass-Steagall in the form of the Volcker Rule. It’s still not there. Why isn’t that there?
Because you’ve got a huge, powerful, Wall Street lobbying machine, a lot of money coming from Wall Street that influenced politicians, even Democrat politicians. This is not a matter of partisan politics. Everybody is guilty. And the money is still determining what the rules of the game are going to be.
BILL MOYERS: And these are the people who are taking in most of the income produced by the recovery.
ROBERT REICH: Not only they– they’re taking in most of the income produced by the recovery, they’re enjoying almost all of the economic gains and they are using their privileged position with regard to political power to entrench themselves in terms of their economic gains of the future and their political influence in the future.
So you know, it’s not unusual that many average people who are working harder than ever, worried about their jobs, worried about paying their next, you know, bills, living from paycheck to paycheck, are going to stay, you know, beginning to say to themselves, “There is something fundamentally wrong here.”
…The core principle is that we want an economy that works for everyone, not just for a small elite. We want equal opportunity, not equality of outcome. We want to make sure that there’s upward mobility again, in our society and in our economy. Now how do we achieve that?
There is not a magic bullet. But we’ve got to understand that the economy is a system of rules. And we can change the rules if we are organized and mobilized in order to change the rules in ways that make the economy work for us. Why shouldn’t we have a minimum wage that is at least as high as, adjusted for inflation, the minimum wage was in 1968? I mean, that would be $10.40 today. But the society is so much more productive. If we figured productivity into that, it would be at least $15 an hour.
We ought to have Glass– you know, the Glass-Steagall Act ought to be resurrected, so that there is that wall between commercial and investment banking, so we don’t have too big to fail banks that wreak havoc on the economy and on the middle class and the poor.
We ought to cap the size of the banks. And we ought to make sure that the banks are not as large and as powerful as they are right now. We’ve got to make sure that the earned income tax credit is larger. That’s a wage subsidy. It was a conservative idea. But it’s very important to people.
We’ve got to have a tax code that is equitable. And I’m not just talking about income tax. I’m talking about Social Security taxes. Exempt the first $15,000 of income from Social Security taxes. Everybody’s. And take off the ceiling on the portion of income subjected to Social Security taxes. And so it makes that system much more equitable. I mean, we can go piece by piece through it, Bill. The point is that we can do it if we understand the nature of the problem. That’s what this film is all about.
If you watched the Moyers segment above, you’ve already seen the trailer for Injustice for All, but, in case you didn’t, here it is. My hope is that it does for the subject of wealth inequality what An Inconvenient Truth did for global climate change.