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E-mail a friendRobert Reich
airdate October 23, 2007
Robert Reich has served in three administrations, including as Labor Secretary under President Clinton. He's also a best-selling author, prize-winning professor, media commentator and playwright. Now a public policy professor at UC Berkeley, he's been on the faculty at Harvard's John F. Kennedy School of Government and Brandeis University. The Rhodes scholar and Yale Law School grad is the author of 11 books, including Supercapitalism, in which he argues that capitalism should be separated from democracy.
Robert Reich
Tavis: Robert Reich is a professor of public policy at Cal Berkeley who served as secretary of labor under President Bill Clinton. He is also a noted public speaker and author whose many notable books include "The Work of Nations." His latest is called "Supercapitalism: The Transformation of Business, Democracy, and Everyday Life." He joins us from Berkeley. Mr. Secretary, nice to have you on the program, sir.
Robert Reich: Well, nice to see you, Tavis.
Tavis: Let's start with the definition of supercapitalism.
Reich: Super-competitive capitalism. It's a different kind of capitalism than we had, say, 40 years ago when most of our industries were fairly comfortable, they didn't have to worry about too much competition. Now not only is competition global, but every business has to worry about every other business in the United States. Everybody's getting into everybody else's business. This is good for consumers.
Supercapitalism is good for consumers. It means consumers have more choices, it means we have better products and a greater range of possibilities. It's also good for investors, in terms of many more places to put our money, to the extent that we have money to be invested. But it is not necessarily good for democracy.
Tavis: Far be it from me, before I get to that latter point about why it's not necessarily good for democracy - I'll come back to that, I promise - but before I get to that, tell me why you argue that supercapitalism - or how you argue that it's good for consumers. I'm not sure I buy that just yet.
Reich: Well, it's good for consumers, Tavis, in the sense that we have so much choice that any company that wants us to buy from it has got to attract us, got to keep us. So contrast 35, 40 years ago, we had only big three automakers, three automakers to choose from. Now we've got about 12 automakers, 14 automakers to choose from.
Everybody, every automaker has got to provide the best deal possible. If you take telecommunications, about 40 years ago, well, we had Ma Bell. That was it. Now we have cable companies and telephone companies and all sorts of companies, voice over the Internet, competing to get us, give us better and better deals. You go through industry after industry and you see that as consumers, we are actually doing better and better.
Tavis: If I went, though, to your point, Mr. Secretary, industry by industry, could not I also make the point, though, that we are seeing a trend now where the big ones are trying to gobble up all the other ones? And so I'm not so sure that I buy the fact that - I don't know why, as a consumer, with all due respect to your point of view, that I don't feel like I have more choices. I feel like I'm being monopolized with greater effect every day.
Reich: Well, you may feel that way, Tavis, but the fact of the matter is that a lot of the big companies that look like monopolies actually are in intense competition. Take Wal-Mart, for example. A lot of people criticize Wal-Mart as being too big and too powerful. Actually, Wal-Mart, if it tried to raise its prices, would find that its competitors like Target would come in there and grab its customers as fast as possible.
Wal-Mart is providing great deals, and in the process of providing great deals to consumers, it also is pushing wages down, not only for its own employees but for every contractor, every supplier who deals with Wal-Mart.
Tavis: If supercapitalism then, to your point of view, is good for consumers but bad for democracy, explain the latter.
Reich: Well, the competition, the intensifying competition that started around 1975 with increasing intensity right up till today has sloshed over into the political process. One reason we've got so much corporate money in Washington - and by the way, I was in Washington starting in the 1970s. I came back there in the 1990s. The big difference is Washington became a very rich city. It's kind of an Emerald City, hotels and restaurants and bistros and the seven counties immediately surrounding Washington, D.C. are among the 20 wealthiest counties in the United States now.
That was not the case 35 years ago. That money is coming mostly from corporations, and they are there in Washington primarily to battle other companies in their own industries or in other industries, mainly to protect themselves so that public policies are not tilted in one direction or another. Google comes to Washington in 2004; it hires a fleet, a platoon, of lobbyists and lawyers, and also the public relations professionals.
Why? Because Google's major competitors, Yahoo and Microsoft, have their own fleets of lobbyists and lawyers and public relations professionals. And if Google were not there with its own fleet, Google would be outmaneuvered with regard to a lot of issues that face this industry and improve the competitive position of one side or the other - anti-trust and trade and intellectual property and so on.
So it's like an arms race. Every industry, every particular company has got to be there in Washington, or it is - maybe it suffers in terms of public policies that advantages competitors.
Tavis: Two distinct questions, but I think they're connected at the hip, if I can put it that way. Question number one, if the democracy is made up of consumers - if there are no consumers there is no democracy - democracy, we are told and taught, at least, is we the people. Help me understand how the same thing can be, at the same time, bad for democracy but good for those consumers that make up the democracy, number one, and then connected to that, I'm trying to - if I take your point now for why and how Washington and the surrounding communities have become so rich because of this infusion of cash from these lobbyists and special interests, how do we slow that trend down?
Reich: Well first of all, we are not just consumers, we are also citizens. It's almost as if we have two sides of our brain, Tavis. The consumer side is getting good deals. The citizen side is worried about the price of those good deals, in terms of unstable jobs, widening inequality, main streets that are being denuded as a lot of consumers go to big-box retailers, global warming, you name it.
The citizen side of our brains is concerned about what we collectively, what happens to us as a community, as a nation. The consumer side of our brains wants to get the best deals possible, doesn't care about the social consequences. And there is a little bit of a war going on in each of our brains, between the citizen side and the consumer side.
The problem is that in Washington, the only side of our brain is represented as consumers and investors. Corporations are not concerned, unless the rules are changed, corporations should not be - that's not their job, they are not concerned about the citizen values that we hold collectively. The market is the market. Democracy is the democracy. They're different spheres.
Tavis: Before I let you go here, not connected to the text but given your expertise and background, obviously, what say you about this housing crisis?
Reich: Well, the housing crisis seems to be getting worse and worse, Tavis. It's not just the millions of Americans who are likely to lose their homes, but it's that the bad loans are mixed up with good loans. It's like sausage meat. We can't separate the two, and that means that all sorts of credit lending agencies, mortgage bankers, the entire credit industry doesn't know how much risk it's facing.
And that is gradually causing loans, whether you are interested in a car loan or a bank loan or a mortgage loan or you're a company trying to get money for a new investment. All of this money is grinding to a halt. The whole credit market is freezing because it doesn't know how risky things are.
Tavis: Are you reading these numbers, these trends, like so many others, and prepared to suggest that it looks like we've got some tough times ahead, economically?
Reich: Well, I think we do have some tough times ahead, because consumers, remember - talking about consumers just a moment ago - consumers represent about 70 percent of the entire U.S. economy in terms of their purchases. Now if consumers are not seeing any increase in their wages - now it's true consumers are getting great deals in the marketplace, but their wages are not going up, their jobs are not stable, their home values - that's the biggest asset most people have - are actually going down in most parts of the country.
Fuel costs are going up, healthcare costs are going up. So consumers feel a little bit beleaguered right now, and that means they're not going to buy as much as they were buying, let's say, six months ago. That's bad for the economy. It slows the economy down, and that - I'm not going to use the R word, Tavis, but you know what I mean.
Tavis: Yeah.
Reich: Could be a recession.
Tavis: Yeah. I've got a minute to go here. Let me come back to the text, "Supercapitalism," as a closing question here. What is the indictment, from your perspective, on Washington that they only pay attention to the consumer side of our brain in Washington, of all places, and not the citizen side?
Reich: Well, Washington really is not geared up to deal with these social values. The only way we can get our social values - that is, make jobs more stable, reduce inequality, reduce global warming, whatever have you, is by getting money out of politics. Now it sounds fairly easy; it's not easy. The system is not going to reform itself from the inside.
We need a citizen's movement that is basically going to grab our democracy back from corporations, from big money, from all of the side of our brains that concerns itself only with good deals and not with what we want together in our society.
Tavis: But you're not holding your breath on that one, are you?
Reich: Well, here's the good news. The good news is that if you followed my logic, all of these corporations are there in Washington because of an arms race. They're there because other corporations are there. Well, arms races can mutually de-escalate. It's possible that everybody would win if everybody just got out of Washington and reduced the amount of money that's being expended.
Tavis: The new book from the former secretary of labor under the Clinton administration, Robert Reich, "Supercapitalism: the Transformation of Business, Democracy, and Everyday Life." Mr. Secretary, nice to have you on the program, thanks for the text.
Reich: Well, thanks very much, Tavis. Bye-bye.
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