Pressures on the System Threaten the Wealthy's Income Stream


ROBERT REICH WEARS many hats. He is a professor of Public Policy at UC Berkeley. He brought his economic expertise to Republican Gerald Ford and Democrat Jimmy Carter's administrations. As Secretary of Labor during Bill Clinton's first stint in the White House, Reich oversaw an increase in the minimum wage and was an outspoken advocate of everyday Americans.

Reich is the focal point of the 2013 documentary 'Inequality For All.' His central assertion in the film is that while inequality drives the free market, severe wealth inequality makes the market stagnant. When the gap between the haves and have-nots is such that the bottom 47% of Americans have no wealth (and likely have significant debt), and 400 billionaires at the top have capital comparable to 80 million families, everyone loses out.

While I felt aligned with Reich's agenda from the beginning of the film, I did wonder how he would substantiate the claim that massive wealth inequality is bad for the very rich. I hoped that his rationale would go beyond some sort of moral-ethical dilemma of the one-percenters. As the film progressed, I got the quantitative documentation I was looking for.

During 'Inequality,' we follow a number of people, some billionaires, some struggling to keep enough food on the table for a family of four. The most telling interview came from the successful, thoughtful billionaire named Nick Hanauer. When asked about his yearly salary, he responds "anywhere from 10 million to 30 million." He acknowledges this is an absurd amount of money for one person to collect.

Hanauer describes how the gulf between ordinary Americans and a small circle of billionaires is actually bad for his business, and for the free market in general. As it turns out, billionaires only need a few pairs of blue jeans a year; they only purchase one or two pillows when necessary.

According to Hanauer, if his money was more evenly allocated throughout working class Americans, more consumers would be able to afford a new pair of jeans, and he would move more pillows. Sales would increase. Despite incredible capital and his position on the top of the economic ladder, Hanauer's bank account is hurt by inequality. The wealth disparity limits the free market system and each agent, rich or poor.

The documentary is not short on ways to address the widening wealth gap in the United States. Each facet of Reich's plan is rooted in years of economic research, not in dogma or partisan ideology. Some suggestions are a no-brainer. Decades ago, Japan showed the world that investing in education can be profitable for everyone. As Japan developed, officials prioritized training the workforce and made trade schooling widely available. Now, Japan is one of the wealthiest countries in the world.

Other calls for action are a thorough reform of Wall Street, more equitable tax policies, and greater oversight in the power of amassed wealth in the political system. Whether campaign contributions come from a multi-millionaire or a multi-national corporation, a small number of oligarchs are assuming the arms of democracy and monopolizing the ears of politicians, as per the Supreme Court decision in Citizens United.

While the challenge is great, Reich wants his viewers to feel empowered. Empowered to demand change, to refashion 'equality' from a buzzword to a basic requisite of the American way, to make sure that every person's voice is heard in their political system, regardless of the number of zeros and commas in his or her paycheck.

Follow Michael on Twitter Twitter: @nahmias_report Contributing Editor: @MAndrewRansom

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The Cow of 'Ism'

Author UnknownLast Modified: 13:52 p.m. DST, 26 August 2014


You have 2 cows.

The state takes one and gives it to your neighbor. The neighbor loses the cow and wants another one.


You have 2 cows.

The State takes both and gives you some milk for your work, instead of a paycheck.


You have 2 cows.

The State takes both and makes you buy the milk.


You have 2 cows.

The State takes both and puts you in prison work camp until you like the idea of buying the milk.


You have 2 cows.

The State takes both, shoots one, milks the other, and stores the milk. The milk goes bad, and they throw the milk away...


You have two cows.

You sell one and buy a bull. Your herd multiplies, and the economy grows. You sell them and retire on the income.


You have two cows.

You sell one, to retire the debt, and force the other to produce the milk of four cows. You grant yourself more stock options, and later you hire a consultant to analyze why the cow has dropped dead.


You have two cows.

You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows.

The milk rights of the six cows are transferred via an intermediary to a Cayman Island Company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company.

The annual report says the company owns eight cows, with an option on one more.

You sell one cow to buy a new President of the United States, leaving you with nine cows.

No accounting is provided with the release of the annual report. You then sell your bull to the public through an IPO of one of your new shell corporations.


You have two cows.

You go on strike, organize a riot, and use your farm tractors to block the roads, because you want three cows, and you know the government will cave...


You have two cows.

You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk.

You then create a clever cow cartoon image called 'Cowkimon' and market it worldwide.

You announce a recall on the cows for a battery firmware issue.

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First Published: 6 February 2012 (Page 2 of 2)


You have two cows.

You re-engineer them so they live for 100 years, eat once a month, and milk themselves.

You go on a camping trip with the family.


You have two cows, but you don't know where they are.

But then you remember that it doesn’t really matter and decide to have lunch with friends.


You have two cows.

You count them and learn you have five cows. You count them again and learn you have 42 cows. You count them again and learn you have 2 cows. You stop counting cows and go get more vodka on credit.


You have 5000 cows. None of them belong to you.

You charge the owners for storing them, while you milk the cows for big money. The poorest people you know drive a Mercedes.


You have two cows.

You have 300 people milking them. You claim full employment, high bovine productivity, and arrest the newsman who reported the facts.


You have two cows.

You worship them and go hungry.


You have two cows.

Both are mad. You institute a news blackout, as a public service, until everyone forgets.


You have two cows.

Business seems pretty good. You close the office, call up your mates, and go to the pub for a few beers to celebrate.


You have two cows.

You borrow against the cows from the Germans. You kill the cows, make Souvlaki, and invite everyone over for a big party. You no longer have an income stream.

You can’t pay the interest so the Germans lend you more money. You can’t pay the interest so the Germans lend you more money. You can’t pay the interest so the Germans lend you more money. You can’t pay the interest so the Germans lend you more money.....

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