Why The Three Biggest Economic Lessons Were Forgotten by ROBERT B. REICH, Professor of Public Policy at the University of California at Berkeley

Reich introduces his 11th of February blog by asking the retorical question " Why has America forgotten (as have many others I may add-eg France's UMP leading up to the election of N. Sarkozy) the three most important economic lessons we learned in the thirty years following World War II?  

In Reich's words this goes as follows:

LESSON I.

" First, America’s (& Co) real job creators are consumers, whose rising wages generate jobs and growth. If average people don’t have decent wages there can be no real recovery and no sustained growth.

In those years, business boomed because American workers were getting raises, and had enough purchasing power to buy what expanding businesses had to offer. Strong labor unions ensured American workers got a fair share of the economy’s gains. It was a virtuous cycle.

LESSON II.

Second, the rich do better with a smaller share of a rapidly-growing economy than they do with a large share of an economy that’s barely growing at all.

Between 1946 and 1974, the economy grew faster than it’s grown since, on average, because the nation was creating the largest middle class in history. The overall size of the economy doubled, as did the earnings of almost everyone. CEOs rarely took home more than forty times the average worker’s wage, yet were riding high.

LESSON III.
Third, higher taxes on the wealthy to finance public investments — better roads, bridges, public transportation, basic research, world-class K-12 education, and affordable higher education – improve the future productivity of America. All of us gain from these investments, including the wealthy.

In those years, the top marginal tax rate on America’s highest earners never fell below 70 percent. Under Republican President Dwight Eisenhower the tax rate was 91 percent. Combined with tax revenues from a growing middle class, these were enough to build the Interstate Highway system, dramatically expand public higher education, and make American public education the envy of the world.

We learned, in other words, that broadly-shared prosperity isn’t just compatible with a healthy economy that benefits everyone — it’s essential to it.

But then we forgot these lessons. "For the last three decades the American economy has continued to grow but most peoples’ earnings have gone nowhere. Since the start of the recovery in 2009, 95 percent of the gains have gone to the top 1 percent."

For starters, too many of us bought the snake oil of “supply-side” economics, which said big corporations and the wealthy are the job creators – and if we cut their taxes the benefits will trickle down to everyone else. Of course, nothing trickled down!!!!

Reich explains

"For starters, too many of us bought the snake oil of “supply-side” economics, which said big corporations and the wealthy are the job creators – and if we cut their taxes the benefits will trickle down to everyone else. Of course, nothing trickled down.

MY COMMENT FROM EXPERIENCE:

Let me repeat this remark "for starters" above; for this was the line an local UMP(right wing party in France) tried to sell me. I thought to myself he believes I'm an idiot and thinks everyone else is too. Well Nicolas Sarkozy's UMP won the french presidential election that year.  No offence intended but better safe (warned) than sorry. 

Reich concludes:

"As the gap between America’s wealthy and the middle has widened, those at the top have felt even richer by comparison. Although a rising tide would lift all boats, many of America’s richest prefer a lower tide and bigger yachts."

But please do read in full "Why The Three Biggest Economic Lessons Were Forgotten by ROBERT B. REICH, Professor of Public Policy at the University of California at Berkeley 

ROBERT B. REICH, is Chancellor’s Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century."

POST SCRIPTUM:

My attention was brought to this work  from an article "Lettre de Wall Street" - Letter from Wall Street  by Stephane Lauer in the french journal Le Monde 19 Feb 2014, Eco&Entreprise p7. 

More from S. Lauer:

La rémunération du PDG de JPMorgan a presque doublé en 2013 
President & DG salary almost doubled inspite of justace problems

Malgré les déboires judiciaires de la banque américaine, Jamie Dimon a touché 20 millions de dollars.

Une année 2013 médiocre pour JP Morgan

Bad year for JP Morgan but a great year for the Boss!!!!

Le salaire du PDG de JPMorgan a augmenté de 74 % en 2013 16 Increased salary  of 74% accepted by the board

Le conseil d'administration a accordé à Jamie Dimon lasomme totale de 20 millions de dollars, dont 18,5 millions en actions, malgré les déboires judiciaires de la plus grande banque américaine.

I shall be pleased to respond to questions concerning my treatment, following my humble effort  to eliminate a particularly nocive element from aero-engine special steels-the well named & specified as superalloys. In fact the findings were extended throughout a large range of similar materials!!!! Damnit! cf my published work in Materials Science & Technology Maney Press for IOM3.