Reich states something that I have thought for some time now: our economists have become too adept at manipulating the economy and they fixed the 2008 meltdown too easily--which precluded the real reforms we needed from happening.
This time around, policymakers had knowledge their counterparts didn’t have in 1929; they knew they could avoid immediate financial calamity by flooding the economy with money. But, paradoxically, averting another Great Depression-like calamity removed political pressure for more fundamental reform. We’re left instead with a long and seemingly endless Great Jobs Recession.
THE Great Depression and its aftermath demonstrate that there is only one way back to full recovery: through more widely shared prosperity. In the 1930s, the American economy was completely restructured. New Deal measures — Social Security, a 40-hour work week with time-and-a-half overtime, unemployment insurance, the right to form unions and bargain collectively, the minimum wage — leveled the playing field.
In the decades after World War II, legislation like the G.I. Bill, a vast expansion of public higher education and civil rights and voting rights laws further reduced economic inequality. Much of this was paid for with a 70 percent to 90 percent marginal income tax on the highest incomes. And as America’s middle class shared more of the economy’s gains, it was able to buy more of the goods and services the economy could provide. The result: rapid growth and more jobs.
By contrast, little has been done since 2008 to widen the circle of prosperity.
Reich provides some ideas to achieve this widened prosperity, like a carbon tax replacing income tax for a large chunk of the middle class and free public universities. He hints at raising the income tax on the wealthy back to the levels it was in the 50's: 70-90%.
This is really what is meant by socialism: we all do better when we are all doing well. When only a tiny few are doing well the majority suffer.
This weekend I also saw an article about the Democrats trying to becoming more like Ronald Reagan and advocating austerity in a desperate attempt to win this fall I think in the Washington Post). Barack Obama will perhaps be remembered for being the person who proved that the Democratic Party is not liberal, and that if liberals want our ideas to be represented in our government we are going to have to start a movement analogous to the Tea Party and create a new, liberal, political party.