Saturday, November 16, 2013

Robert Reich on Inequality and the Steps to Fix it

A thank you chocolate note from organizers

I've been worn down by the economy” was the entry line of Robert Reich, the renowned economist who served both under Presidents Clinton and Obama. It was a clever remark because not only did he set a succinct tone of humor from the onset, but he dissolved the first impression that was on every person's mind, namely his height, or to put it bluntly, the lack thereof. By openly and humorously acknowledging it, he immediately shelved the issue and now the audience at the Orpheum Theater could fully focus on what he had to say instead of harboring on his physical height.

Apart from being entertaining, there were many points and observations of interest. His main concern was that our world though globalization and technology has re-shifted the labor force and that the current state of economic affairs - mainly in the US but also a growing worldwide trend - mainly benefits those who have-a-lot and who get almost all the gains, while everyone else is struggling hard to survive or get by.

This causes an ever-widening gap of inequality leaving most of us at a disadvantaged position. In the meantime, the government is too busy working out the best deals for the 1%, whereas the 99% have been unfairly designated to carry the burden. Reich explained that the sectors and jobs that are the most valuable and beneficial for society as a whole end up being underpaid. For instance, the American government does not invest sufficiently in education; in comparison to other jobs it pays very little to educators.

It was during his talk that I realized the gravity regarding the shutdown of the government at the time and the impending debt deadline. Reich said that it would have had disastrous effects on the economy, but it is a good thing that clearer heads have prevailed since. However, Reich also pointed out that American politics is often too entrenched in ideology and what's worse name-calling and laying blame. The best thing would be to put those conflicts aside and to try to make veritable progress.

Reich also pointed out that there are a number of practices that used to work in the past but are not followed due to misplaced and shortsighted greed. The United States economy was continuously growing until the 80s when it suddenly swerved and started taking a nosedive.

Yet according to Reich the best economic practice for an owner was to treat the workers well and to pay them good salaries. One of the most pronounced examples in history was Henry Ford. His decision to give his workers more than decent wages forced other companies to try to keep up resulting in an overall much healthier and balanced economy.

That in turn led to more profits for Ford since his workers not only produced more, but, more importantly, they were able to afford Ford's own cars. Although some have disputed that particular claim, this wage increase helped solve the problem of turnovers because workers who get paid well are willing to work harder and produce more, and they do not want to lose their jobs. Hence that extra incentive or effort could only benefit the economy.

This was the best case scenario, a win-win situation. Relying on natural resources and exports is tricky because they are dependent on a host of factors outside of one's control. But if your consumers are your own people, then everyone would benefit, and this would create not only economic but also political stability. There would be no need for radical groups on either the left or the right since most people will be content with what they have.

To get to that point of progress and stability, we need to also compete with other countries. Both the US and Canada need to ensure that they have a particular and very valued resource, namely, skilled trade. This is where education would pay off dividends and a nation can indeed profit from it. 

By turning one's people into valuable and sought-after assets and resources, one would also be able to weather the technological storm that is making certain jobs, such as cashiers and bank-tellers more and more obsolete. There are many things that machines cannot do as well as humans and that is where most focus needs to go on. In other words, this brings us back to the caring professions, such as nursing or teaching.

One of my questions was that if there are people like Reich in influential positions, why are things not changing. My own answer is that things might be more complicated than that and even good people may not be able to make a definitive and lasting change. 

However, as Reich claimed if people start taking more political action, if they are more aware of the issues facing them, then they could make the government more accountable, and that is how real and lasting change might occur after all. So as they say, crisis represents opportunity, and this would be our time to bring about those necessary changes and to diminish the gaps of inequality that our North American societies are riddled with.

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