The Hardest Lesson

[Crewleader]

Robert B. Reich


As the banking system collapses, politicians and journalists are ignoring one of the main causes of the crisis: massive inequality.

With the collapse of the banking system, politicians and journalists are looking back at all the warning signs they missed: the sudden popularity of sub-prime loans, the rise of securitized debt instruments, the abject failure of credit-rating agencies. But perhaps instead of proximate causes, we should have paid attention to a much more basic red flag: inequality.

The specific financial machinations that lead to collapse are always different, but inequality at the levels America reached in 2006 (the last year for which we have data) is a reliable sign of danger. The richest 1 percent of Americans last year took home 23 percent of total national income. Back in 1980, the richest 1 percent took home 8 percent of total income. The last time the top 1 percent took home more than 20 percent of total income was in 1928, just before the Great Crash.

I'm not predicting another Depression, but the parallels between what's happening now and what happened 80 years ago are striking. In the 1920s, wealth and income began concentrating at the top for a number of reasons: a huge consolidation of industry that richly rewarded certain investors and executives; the emergence of Wall Street as a driving force in the economy as the nation shifted toward debt financing, generating large gains for financiers; and increasing globalization, putting large sums of money into the hands of those commanding the heights of international commerce.

http://www.thepeoplesvoice.org/TPV3/Voices.php/2008/12/18/the-hardest-lesson?

[ayeshahaqqiqa]

1. We are all in this together

and obtaining more and more while depriving more and more only ends in disaster for all.

[DJ13]

2. I've noticed the powers that be seems to be trying to deal with the crisis

using every means they can think of, EXCEPT trying to address the declining wages that are the primary cause of the economic crisis.

There is no solving the crisis without understanding that we need a healthy, LARGE middle class that can afford to be good consumers.

[tblue37]

6. That's true, but it's also true that there is something pathological

about an economy based, as I have read it is, 70% on consumer spending. We are devouring the earth and its resources.

[NMDemDist2]

3. K&N, excellent article as are several others on that site

thanks for the link! :hi:

[Crewleader]

4. you're welcome my friend

:hi:

[Hawkowl]

5. Extremely disappointing

As in I'm extremely disappointed that Reich isn't leading, let alone part of Obama's "economic team". Instead we have a bunch of free market re-treads. We are in for a world of hurt. I just hope Obama is a quick study and figures out how to redistribute the wealth fast.