Wednesday, June 17, 2009

Robert Reich on Bill Moyers Journal

[Video and Text]

BILL MOYERS: And the banks, as we speak, are fighting regulation. And they're winning. The banks are actually winning on this issue. Do you see it that way?

ROBERT REICH: Well, they're winning right now because, as these banks come out from under TARP — basically the bailout mechanism — the government has less and less leverage over them with regard to regulations that are going to prevent a repeat of the future. There's still no regulations out there. And there are lobbies. I want to come back to this theme, Bill, because it's important for the public to understand. The lobbies, whether we're talking about healthcare, insurance, pharmaceuticals, or we're talking about the banking system, the lobbies in Washington are enormously powerful.

The only way we're going to have any kind of regulatory regime for the banks that make sense is if people understand what's going on, if they pressure their individual members of Congress if Obama stands up to the banking industry and forces real regulation on them.

BILL MOYERS: You were on the transition team, Obama's transition team. You were a supporter of his. And the coalition, the Democratic Coalition seems to be holding behind him now, progressive Democrats, like yourself, are staying with him despite his compromises on detention, despite his escalation of the war in Afghanistan, despite other compromises he's made, including possibly a compromise on the bailouts and healthcare. When will he show you what you want to be shown? What will you be looking for?

ROBERT REICH: Healthcare and the public option is the first big one. I think that's a big test. And then the real hard, tough regulation of Wall Street to prevent a repeat of what we've had before. Those are the two big upcoming fights. And, but, you know, Obama can't do it alone.

Even though the presidency has all this power attached to it, only has a limited amount of power if the public is not pushing the president to take certain action and pushing Congress as well. There is no substitute, Bill, for an informed active citizenry.

BILL MOYERS: Is there any other way to see what's happening on Wall Street? As anything but a massive transfer of wealth from the middle class to the financial class?

ROBERT REICH: Well, that's what happens between 2000 and 2007. You had for the first time a lot of people in the middle class buying shares of stock, getting involved, thinking, "Oh, this is great, greatest thing since sliced bread." They were lured into a speculative bubble. And that speculative bubble burst obviously leaving behind a lot of middle-class people who have lost their homes and their savings and their 401(k) plans, 40 percent of them.

The only people left standing — and I hate to say this because I sound like a class warrior and I don't want to sound like a class warrior — is a lot of people at the top. Look, I'm not one to cast blame at anybody. There's enough blame to go around. But the fact of the matter is that as late as 1980, the top one percent by income in this United States had about nine percent of total national income.

But since then, you've had increasing concentration of income and wealth to the point that by 2007, Bill, the top one percent was taking home 21 percent of total national income. Now, when they're taking home that much, the middle class doesn't have enough purchasing power to keep the economy going. You know, that was hidden by the fact that they were borrowing so much on their homes. You know, they kept on consuming because of their borrowing. But once that housing bubble exploded, it exposed the fact that the middle class in this country has really not participated in the growth of the economy. And over the long term, we're not going to have a recovery until the middle class has purchasing power it needs to buy again.

BILL MOYERS: What has happened to capitalism that has led it to the abyss?

ROBERT REICH: Essentially, capitalism has swamped democracy. You see, there's no such thing really as pure capitalism without rules and regulations that set limits on profit making, because otherwise it's everybody out for themselves. Otherwise, nobody can trust anybody. Otherwise, it's the law of the jungle.

I mean, we rely upon government to set the boundaries. This can't happen because it's fraud. That can't happen because you're stealing something. This can't happen because you're imposing a huge burden on other people. But unless you have a democratic system that allows the rules to be created not by the companies but by the people and the people's representatives reflecting what the public needs, not what the corporations need, you're going to have a system that is not a democracy and it's not democratic capitalism. It's super capitalism without the democracy.

Go back to years and ask yourself why did we get into the banking crisis we did get into. And what you see again and again is that Wall Street lobbyists prevented the right kind of regulations. Again and again. The Wall Street said, don't do it. Don't limit us. Let us speculate. Let us do whatever we want to do. The market can take care of itself. Well, again and again we learn the lesson and then we forget it...


BILL MOYERS: But for you, as I hear you, the Armageddon that now is before us is the healthcare debate. You'll be watching how he handles this to see if he's tough enough to push back against the Business Roundtable, the Chamber of Commerce, Murdoch's media empire, big pharma, big industry. How he stands up to them you think will, in effect, determine how he's going to handle these other battles?

ROBERT REICH: It will be a clear indication of his toughness with regard to the willingness to twist arms and demand that the public interest be foremost.


I love me some Bill Moyers Journal. Like the man says: "And over the long term, we're not going to have a recovery until the middle class has purchasing power it needs to buy again."

We need unskilled laborers gainfully employed by someone other than Walmart - someone willing to pay to train people up into $20-30 an hour jobs. That's how you create a growing economy that is robust enough to stand up to downturns. We need real industry in the United States - real labor being done, not just pencil-pushers counting beans over labor being done in Mexico, Malaysia, China, India and Africa.

People must work here or you can say goodbye to the U.S. as it once was.