Robert Reich, who served as labor secretary under President Clinton, discusses the economic plans of Democratic front-runners Bernie Sanders and Hillary Clinton, as well as his new book, Saving Capitalism: For the Many, Not the Few. The book looks at why the United States is now experiencing the greatest income inequality and wealth disparity in 80 years.
This is a rush transcript. Copy may not be in its final form.
AMY GOODMAN: So, let’s turn to the Democrats, because it hasn’t only been the Republicans who have been in power, and that sucking sound from the bottom to the top has been quite as loud. In July, Hillary Clinton outlined her economic vision in a speech at The New School here in New York City.
HILLARY CLINTON: First, hard-working families need and deserve tax relief and simplification. Second, those at the top have to pay their fair share. That’s why I support the Buffett rule, which makes sure that millionaires don’t pay lower rates than their secretaries. I’ve also called for closing the carried interest loophole, which lets wealthy financiers pay an artificially low rate. And let’s agree that hugely successful companies, that benefit from everything America has to offer, should not be able to game the system and avoid paying their fair share, especially while companies who can’t afford high-priced lawyers and lobbyists end up paying more.
AMY GOODMAN: Your response to what Hillary Clinton has said, someone you know well?
ROBERT REICH: Well, it’s a step in the right direction, Amy, but it’s not far enough. I mean, we do have to substantially increase taxes at the top, if we’re going to have enough money to do everything that needs to be done with regard to investing in education, infrastructure, do a lot of things that, despite President Obama’s efforts, have still not been done. But I think we even have to go beyond that and really change the way the market is organized. I mean, if you look at antitrust law, for example, you’ve got huge combinations now in health insurance, in airlines, in banking, in food. That means Americans are spending much more than otherwise for all of these basic necessities – airlines may not be a necessity, but certainly the others are necessities – and that’s a redistribution upward.
JUAN GONZÁLEZ: And you recently, in an op-ed piece in The New York Times, talked about the digital monopolies and the need to break up some of these companies now that have such enormous influence over our lives – the Googles and the Amazons and the Facebooks. Could you talk about that?
ROBERT REICH: Well, up until quite recently, we had antitrust scrutiny, very careful antitrust scrutiny of some of these big high-tech firms. They are creating larger and larger entry barriers. It’s harder for other companies to get into the business, because they have platforms that are basically network monopolies over whether it’s search or shopping or whatever you want. And those huge – that huge market power, those network monopolies end up giving them the power to keep competitors out – ultimately charge higher prices, but also deter innovation. We need to apply antitrust law. I don’t mean we necessarily have to bust them up, but we’ve got to make sure that we don’t stifle innovation, and we’ve got to make absolutely sure that consumers down the line are not ending up paying too much.
JUAN GONZÁLEZ: And you mention in your book – I thought it was a fascinating nugget – that Google and Apple are spending more money acquiring the patents of others than they are – and fighting over these patents in court cases, than they are in actually new research and development.
ROBERT REICH: And also on litigation and on lobbying. I mean, Google is now the number one lobbyist in Washington. It’s simply kind of a consequence of having more and more market power. And it’s not – I’m not saying Google is a bad company. I’m not saying Apple is bad. I’m not saying that anybody – people – companies are not bad – people are not companies, companies are not people, despite what the Supreme Court says. But what you’ve got to be careful of in an economy is the aggregation of market power that turns into political power, inevitably. And we’ve seen that again and again. And that’s what antitrust laws were created for in 1890, the Sherman Act. And yet antitrust scrutiny has waned over time.
AMY GOODMAN: I want to go to Bernie Sanders. Your book is called Saving Capitalism: For the Many, [Not] the Few. He is a socialist. He is a Democratic presidential candidate. In July, he was interviewed at an event hosted by the U.S. Hispanic Chamber of Commerce at the Newseum in Washington, DC, and was asked about his position on financial institutions and his support for reinstating the Glass-Steagall Act, which separated commercial from investment banking and was repealed in 1999. This is a part of what he said.
SEN. BERNIE SANDERS: We have six of the largest financial institutions in this country who have assets equivalent – assets of about $10 trillion, which is equivalent to about 60 percent of the GDP of the United States. So, point number one, you have a handful of huge financial institutions that have enormous economic clout. They issue a significant amount of the mortgages in this country and the credit cards in this country. So the first issue is, for a vibrant economy, do we think it is a good idea for a handful of financial institutions to have that much economic clout? …
What Wall Street has done is create a business model which says, “We really don’t care about small and medium-sized businesses. What we care is about being an island unto ourselves,” coming up with the most esoteric financial tools imaginable, that nobody in the world knows, but enables Wall Street to make huge, huge amounts of money in highly dangerous and speculative activities. That led us to the Wall Street crash of 2008, which created the worst economic downturn since the Great Recession. I personally believe that the business model of Wall Street is fraud. …
When I was in the House, I was a member of the House Financial Services Committee, that dealt with deregulation. And we had the Clinton people, and we had the Republicans coming before us. And remember what they said? They said, “It’s a great idea if we merge investor banks – investment banks with commercial banks, with large insurance companies. It will be great for us internationally.” I never believed it for one second, fought against it. So, to my mind, what we have to do is, A, re-establish Glass-Steagall, maintain those separate entities, but second of all, more importantly, we have got to break them up.
AMY GOODMAN: That’s Bernie Sanders. Actually, Glass-Steagall was repealed under the Clinton administration in 1999, Robert Reich.
ROBERT REICH: Bernie Sanders is right: We’ve got to re-establish Glass-Steagall. Repealing it –
AMY GOODMAN: And explain why it’s so important.
ROBERT REICH: Well, because after the crash of 1929, the United States set out to prevent that kind of crazy risk taking by the banking sector that led to the crash of 1929 – we’re not talking about 2008, we’re talking about 1929. One thing we did was separate commercial banking from investment banking, so that people’s deposits, the ordinary savings of ordinary people, would not be used for gambling operations by the investment banks. We ought to maintain that. I mean, that’s one of the reasons that we got into trouble again.
We also need to bust up the biggest banks. Bernie Sanders actually understated the reality. I mean, the five biggest banks, they used to have 10 percent of total banking assets back in 1990, now have 44 percent of total banking assets in this country. I mean, they are far too big to fail. I mean, they are so large that they are – just because of their political clout and their scale, they are gaining more and more market share of the entire banking industry. That’s dangerous. It’s dangerous for the economy. It’s dangerous for our political culture, because those banks have a great deal of political power.
AMY GOODMAN: You’ve also talked about welfare reform. You were the labor secretary when President Clinton signed off on this. And your experience that day, as he was signing off in the White House, you were his guy, but you weren’t standing next to him.
ROBERT REICH: No, I was very disappointed that he signed that bill that came over from the Republicans to basically get rid of welfare and substitute a five-year maximum lifetime public help for people, because five years in somebody’s lifetime is – it may not be enough. In fact, we discovered in the Great Recession it was not enough. But look, if you’re in a president’s Cabinet, you’re not going to agree with the president on everything, and there are certain things that you have to ask yourself, “Is it worth resigning over, or can I do more good inside?” There’s no easy answer to that, Amy.
AMY GOODMAN: And Hillary’s stance at the time?
ROBERT REICH: I don’t know what her stance at the time was. I do not think that she ought to be blamed or credited for what her husband did as president. I don’t think that’s fair to her. I think she has to stand as a candidate separately. But she needs to be, as every candidate needs to be, including Bernie Sanders, pushed to be bolder on issues that are really critically important to America at this time.
AMY GOODMAN: We’re going to talk about that in a minute. We’re talking to Robert Reich, former labor secretary in the first term of President Clinton, now a professor at the University of California, Berkeley. His latest book is called Saving Capitalism: For the Many, Not the Few. He’s also chair of Common Cause. Stay with us.
AMY GOODMAN: This is Democracy Now!, democracynow.org, The War and Peace Report. I’m Amy Goodman, with Juan González. Our guest is Robert Reich, former labor secretary under President Clinton, now professor at the University of California, Berkeley. His newest book, Saving Capitalism: For the Many, Not the Few. Juan?
JUAN GONZÁLEZ: Robert Reich, the title of your book, Saving Capitalism: For the Many, Not the Few, I’m sure there are a lot of people out here in our audience who would say, “Why save capitalism?”
ROBERT REICH: You know, it’s interesting, Juan.
JUAN GONZÁLEZ: Why not contain capitalism or control capitalism for the many, not the few, or upend capitalism?
ROBERT REICH: I’ve been out on a book tour now just a couple of days, and there are two groups of people: one who says, “Why are you criticizing capitalism? Saving Capitalism sounds like there’s something to be saved, and it’s perfectly fine as it is,” and then the other group says, “Why do you want to save it? Let’s get rid of it.” So, the title is actually doing what I had hoped, and that is, riling everybody up.
But the most important point is to recognize that even Denmark and Sweden and so-called social democracies are still capitalist fundamentally. That is, they’re based on private property and voluntary exchange. Even China is becoming a capitalist nation.
JUAN GONZÁLEZ: A capitalist –
ROBERT REICH: Forgetting the ism, the real issue is: Is the system working for most people, or is it working for a very small group, becoming smaller and smaller, at the top, who are gaining more and more economic power that is being transformed into political power? And the answer is, in the United States, particularly, yes, unfortunately. The system is not working for most people, and the beneficiaries are really getting smaller and smaller and richer and richer and richer. That’s not sustainable. I mean, you know, we talk about inequality. We talk about insecure work. We talk about the engulfing of our democracy in money. These are all connected. And the reason, I believe, that so many Americans are so angry, whether their anger is transferred into a Donald Trump-like scapegoating or whether it has become a kind of Bernie Sanders’ fundamental reform, it is still populist anger of a kind that, hopefully, will fuel reform. That’s what we had in 1900.
JUAN GONZÁLEZ: Well, one of the refreshing aspects of your book, I found, was that your – your main idea that the free market is a myth, that, in essence, what is occurring constantly is a battle in terms of the different groups in society to get government to better regulate the existing system, and that there are many decisions made, not only the big ones, but small ones, regulatory decisions, that have major impact on what kind of economy we have.
ROBERT REICH: Exactly. There is no free market. And I want to state that again: There is no free market. And the kind of battle that we’ve had between liberals and conservatives for the past 40 years or 50 years, between do you trust the market or do you trust government, is a fatuous and silly battle, because you can’t have a market without government creating the rules of that market. And it’s in those rules, exactly as you said, Juan – and this is what the point of the book is – it’s inside those rules that you find the most important issues that ought to be debated. I mean, for example, look at Wall Street. One of the reasons that you have so many people on Wall Street making so much money off of everybody else is that we have in this country the weakest laws against insider trading of any advanced country. We also have high pharmaceutical prices. Why? Partly because we’re the only country that allows pharmaceutical companies to pay off generic companies, of generic pharmaceuticals, to delay the introduction of generic pharmaceuticals. And go on down the line. I mean, there are hundreds and hundreds and hundreds of examples of ways in which the deck has been stacked, the dice have been loaded, the game has been rigged, in favor of very wealthy, very powerful people and companies and banks.
AMY GOODMAN: Let’s go for a minute – you talked about the different groups critiquing your title. Let’s go outside the system, to Pope Francis. Earlier this year, he spoke at the World Meeting of Popular Movements in Santa Cruz, in Bolivia, where he focused on the damage done to the Earth by capitalism.
POPE FRANCIS: [translated] Time, my brothers and sisters, seems to be running out. We are not yet tearing one another apart, but we are tearing apart our common home. Today, the scientific community realizes what the poor have long told us: Harm, perhaps irreversible harm, is being done to the ecosystem. The Earth, entire peoples and individual persons are being brutally punished. And behind all this pain, death and destruction, there is the stench of what Basil of Caesarea called “the dung of the devil.” An unfettered pursuit of money rules. The service of the common good is left behind. Once capital becomes an idol and guides people’s decisions, once greed for money presides over the entire socioeconomic system, it ruins society. It condemns and enslaves men and women. It destroys human fraternity. It sets people against one another. And as we clearly see, it even puts at risk our common home.
AMY GOODMAN: So, basically, you have Pope Francis talking about capitalism as “the dung of the devil.” Robert Reich?
ROBERT REICH: There is and should be a moral core to any economy. And whether it’s called capitalism or any other system, if it doesn’t have that moral core, in which we agree on basics, kind of minimum standards of decency – we agree that we’re all in it together, we understand that trust is critical if an economic system is going to be maintained and sustained – then you’re in trouble. I think one of the problems in the United States, and one of the problems with contemporary capitalism as practiced by the American model, is that it celebrates greed as the central principle. But that can’t possibly be the central principle, because if it’s all about greed, then you end up spending more and more of your resources protecting yourself from everybody else’s unvarnished greed. I mean, what’s happening, if you look at the GDP, we are spending more on protection – that is, on lawyers and on accountants and auditors and on security guards and on everybody else, that are protecting us from each other’s greed – than we are on actually producing goods and services and food and everything else we need.
JUAN GONZÁLEZ: Well, we only have about 30 seconds, but I’m interested – your critique dovetails very much with a lot of the stuff that Bernie Sanders has been saying on the campaign trail. Your sense of what he’s bringing to the debate that’s going on now in America?
ROBERT REICH: I think he’s telling the truth, and I think people are responding with extraordinary enthusiasm, even many conservatives and Republicans I meet, to a truth teller.
AMY GOODMAN: Well, Robert Reich, I want to thank you very much for being with us, former labor secretary under President Clinton, professor at the University of California, Berkeley. His latest book, Saving Capitalism: For the Many, Not the Few. He’s also chair of Common Cause.