Aftershock: The Next Economy and America’s Future by Robert B. Reich

Robert Reich’s Aftershock: The Next Economy and America’s Future is very much like his earlier book Beyond Outrage: What is wrong with our economy and our democracy, and how to fix it.  He sees the problem with our economy as too much of the wealth in the hands of a few.  In 2007 the richest 1% earned 23.5% of all income, the highest since 1928 just prior to the Great Depression and nearly three times the 9% share in 1975.  Middle class real incomes have stagnated since 1975 and to cope, the middle class has worked longer hours, wives have entered the workforce and families have gone further into debt.  Reich contends that these options have been fully exhausted and once the effects of the most recent economic stimulus wear thin our economy is in trouble.  

The problem is that the wealthy don’t spend and consume enough to create demand for goods and services and without that demand, unemployment soars.  Whereas, when money is placed into the hands of the middle class, they spend most of it and create demand and a healthy economy.  Further, he argues with a political system that elects the candidate that can raise the most money, the wealthy end up controlling our political system and everyone in it.

The fix Reich offers involves several redistribution of wealth measures headed primarily by a complete overhaul of our income tax code which taxes the wealthy at a dramatically higher rate.  He also adds government programs for education and job training as well as safety nets for the unemployed (and underemployed) and government run health care for all.  He also proposes a carbon tax to eliminate our dependence on fossil fuel. (He lost me on how this flattens the wealth curve.)

Reich contends that without some type of wealth redistribution, the middle class standard of living will decline and a backlash will ensue.  He hypothesizes the 2020 presidential election being won by the Independence Party.  The platform of the Independence Party is zero tolerance of illegal immigrants; a tightening of global trade policies and a ban on foreign investment; investment banking will be prohibited; and all personal incomes will be capped at $500,000 annually.  Any earnings over that will be taxed at 100%.

Interestingly, Reich wrote this book in 2012 before anyone announced plans to run for the 2016 presidency.  Now in late 2015 the leading Republican candidate, Donald Trump and the second leading Democratic candidate, Bernie Sanders are running on “I’m mad as Hell and I’m not going to take it anymore” rhetoric. Even if neither of these candidates are nominated or elected, the opinions of the people are getting out there and will effect change.  As for Reich, I find his solutions idealistic, simplistic and not original but I thank him for the provocation of thought.