US Economy

Robert Reich Discusses New Documentary on Income Inequality

August 13, 2013  • Catherine Lutz, Guest Blogger

What do we owe one another as members of the same society? That’s the fundamental question behind the multi-faceted and utterly complex issue of income inequality, said economist and professor Robert Reich, a former US secretary of labor and the subject of the documentary “Inequality for All,” which screened at the Aspen Institute’s Paepcke Auditorium on August 5.

In a discussion with the Institute’s Elliot Gerson following the screening, Reich offered little in the way of solutions to the income gap problem, which has been building for over 30 years and underlies many of the issues middle class America faces today.

The fundamental framework or our economy is so “out of whack,” said Reich, that a discussion of solutions could start anywhere — and it needs to be had. Part of the problem is that “we don’t have a body of language to talk about the economy in terms of economic justice.”

Yet, solutions will follow once the issue is fully understood, Reich said. And that’s what the film aims to do: educate and motivate people to act. “Inequality for All,” which opens across the nation on September 27, has already earned prizes from the Sundance Film Festival and Traverse City Film Festival. The documentary is both an in-depth study of widening income inequality and a look at the career and beliefs of the man who can rightfully be called one of the greatest champions of the American middle class.

Reich, who is under five feet tall, peppers the film with jokes about being short, lending humor to an otherwise rather pessimistic subject. Through clips from his UC-Berkeley class on wealth and poverty, media interviews, and his travels in his Mini Cooper to meet with people affected by this phenomenon, Reich argues that the health of the American economy is tied to the stability of the middle class. That’s because while consumer spending comprises some 70 percent of the US economy, it’s middle-class consumers — not the wealthy or large corporations — who are the nation’s job creators.

“The most pro-business thing you can do is help the middle class thrive,” he said in the film.

Reich, who has degrees in economics and philosophy and was a Rhodes Scholar with Bill Clinton, offers a number of graphs and statistics to document the decline of middle-class wages since the late 1970s, which he explains is tied to myriad factors, including globalization, the rise of technology, financial deregulation, and the decline of labor unions.

In one eye-opening graph whose outline looks like that of a suspension bridge, Reich shows how wealth concentration at the top has peaked twice in the last century — in 1928 and 2007. Both peaks, which favored financial markets and the wealthy at the expense of the middle class, were followed by major crashes. But while things were so bad during the Great Depression that there was sufficient political will for major structural changes, things don’t look that way this time around, Reich said during the Q&A following the film. Bailouts and other efforts kept the economy from falling off a cliff, he said, “but the irony is they might have prevented the political will from forming for structural changes in the economy to occur.”

And therein lie some of the biggest obstacles to reversing this trend of wage inequality. While middle-class anger has been channeled into such movements as Occupy Wall Street and the tea party, none of the popular uprisings thus far have effectively targeted the economic rules and framework that underlie the problem. Meanwhile, wealth has an ever-increasing ability to influence politics — and to protect the interests of large corporations and the wealthy people that put their money into politics. All of which contributes to the vicious cycle, as Reich explains in the film, of lower tax rates at the top, less revenue for government and education, political polarization, and fewer and fewer opportunities for the advancement of the middle class. 

It’s a grim message, but both the film and Reich’s Aspen talk ended with a note of encouragement: to get involved, to get political and urge for positive change, as the American people have done successfully time and time again throughout history.

“It’s important to remember that nothing good happens in Washington or in state capitals unless people outside are organized to push elected officials to change something,” he said. “There’s no substitute for an active, engaged citizenry.”

“Inequality for All” opens across the nation on September 27. The film’s website offers ways to stay informed and get involved.