What's Wrong With Robert Reich

Anytime I see a video show up on Facebook three times, there’s a pretty good chance I better write an article about it because more often than not they contain a lot of misinformation or oversimplification. In the case of the Robert Reich video, “What’s Wrong With The Economy”, it contains both. This should not come as a surprise. He makes a big deal about explaining how simple it all is and doing it in two and quarter minutes.

Folks, the economy cannot be explained in two and a quarter minutes.

However, the good people at the George-Soros funded MoveOn.Org, which commissioned the video, sure would like you to believe it can. They specialize in spoon-feeding pabulum to Liberals who don’t know what they don’t know, all the better to keep them ignorant. If you think George Soros and MoveOn don’t have an agenda, then you’ve been living under a rock.

This is not to say that Mr. Reich is 100% wrong. He may have a few things right. The problem is he oversimplifies things and deliberately misleads his audience. (How do I know it’s deliberate? It’s for MoveOn.org). The key is to examine each statement made — but not only the text. You must look at the subtext, context, and omissions to get a complete understanding.

That’s really the purpose of this article — an exercise in critical thinking. It’s just like those movies they showed of advertisements in seventh grade, and you learned how not to be taken in by phrases like, “virtually odor-free”.

Dot 1: Economy has doubled, but wages have been flat.

(Sound of furious scribbling). Nope. Dept. of Labor shows just the opposite.

Mr. Reich has lied to you. That’s right, I call it a lie. Because when someone says one thing and the government chart that collects the data — which I found in 30 seconds — tell another, I don’t know what else it could be.

Subtext: Regular people’s wages aren’t growing. This is not fair. Remember, “fair” = Socialism. We don’t live in a Socialist country.

Those familiar with debate know that, having proven the initial premise to be a lie, all statements that follow from it are also false. However, as my old math teacher used to say, “That was for the A students. I’ll repeat it for the B students”.

Dot 2: All gains from the economy go to the super rich.

Context and Omissions: What does he mean specifically by “gains from the economy”? Think about it. Can you answer that question? If you can’t answer it yourself, then you are forced to make an assumption. If your sympathies lie with the Left, you interpret this to mean that the rich are raping the middle and lower class. If you keep your Spock-like mind focused on reason, you recognize the statement is vague.

But we’ll take him at his word. He is, again, lying.

(Sound of furious scribbling). Nope. If the economy grows, that means businesses are growing. If businesses are growing, it means they are manufacturing more goods and services. Who provides those goods and services? Workers. That means more workers get hired. More workers getting hired means they receive salaries and benefits.

If you did not have a job and then you have one, you have gained from economic growth.

If you had a job, and kept it as real wages grew faster than inflation, you have gained from economic growth.

Furthermore, since your wages have increased, and thanks to productivity and technology gains, goods and services also cost less. I call that a gain from economic growth.

By the way, he also says the “super rich” now take home 20% of income, instead of 10%, and own 40% of the nations wealth.

Subtext and Omissions: Who are the “super rich”? Is that defined as net worth or annual net income? Gross income or after-tax income? Income from wages or capital gains? The subtext, again, is “the super rich are exploiting the poor defenseless workers”. As for the alleged wealth disparity, you should be aware of two things. The first is this is a classic tactic of the far-Left: promote class warfare. Even though we’re starting to see that fomenting this warfare is based on a series of lies. The second item is that it takes money to make money, and that’s just a fact of life (more on that in a second).

Dot 3: With money comes political power.

(Sound of furious head scratching). The text is correct. At last! If you have money, you can indeed influence politicians and government, to do things like lower taxes. Except….

Subtext and Omissions: Super-rich = Republicans. Alas, some of the Super-rich are also Democrats. At least, I think they are. Since super-rich hasn’t been defined, we don’t know, do we? But here’s what we do know. Opensecrets.org is a great website where you can see who contributed money to politicians. You’ll find that corporations donated just as heavily to Democrats as Republicans, and that unions were only outspent 53% – 47%.

So, yes, I’m sure plenty of people lobbied for lower taxes. But plenty of people were also lobbying for increased salary and benefits for unions, especially public employee unions, real wages that also benefited from lower taxes (The Bush Tax Cuts benefited all Americans in every tax bracket).

As for lower capital gain tax rates, Mr. Reich omits two important concepts while subtextually implying that the rich “aren’t paying their fair share”. Here’s the deal. It takes money to make money. If you have money, even a few dollars, you can invest it. The more you have, the more opportunities become available to you. The way investment works is that the more risk one takes, the more return one needs to justify the risk of losing one’s investment. Every investment carries risk. The concept of lower capital gains is to encourage investment — to allow one to keep more of their return in exchange for taking the risk. And the key is that these investment risks are good for the economy. Whether you invest in a bond or a stock or especially private-equity funds (which invest in start-ups and middle market companies experiencing rapid growth), you are encouraging companies to grow, or in other words, to hire more people.

Dot 4: Lower taxes leads to huge budget deficits

(Sound of furious belching). False. This video is a bit clumsy, but it explains why Reich is wrong.

Subtext and Omissions: The subtext is, “see, the economy is bad because the rich aren’t paying enough!”. The omission, and it’s a glaring one, is that Mr. Reich doesn’t mention spending. See, the MoveOn folks want you to believe that the only part of a budget is the revenue side — taxes. But you aren’t that stupid. You know the other part is spending. Mr. Reich makes no mention whatsoever about the out-of-control spending that was bad under Bush, and has gotten worse under Obama (increased more in 2 years under Obama than 8 years under Bush).

Mr. Reich furthers his lies by talking about how public services are being sacrificed and cut at “all levels of government”. It’s scare-mongering, of course. Roads, bridges, levees, health care, safety nets! The sky is falling. It isn’t. Spending is increasing. Maybe he didn’t hear about the Stimulus bill that failed to stimulate because it was never intended to.

Dot 5: Middle class divided

(Sound of furious passing of gas). This is the most egregious and revolting statement. Mr. Reich continues to foment class warfare. He claims “union vs non-union” are competing for the “scraps left behind”. The truth is that non-union people aren’t screaming at union workers at all, other than forcing them to join a union against their will if they don’t work in a right-to-work state. Meanwhile, the truth is that it is union workers who are behaving like thugs, even going so far as to disrupting the Special Olympics. “Native born vs. immigrants”. Do I need mention the subtext? Americans do not have a problem with immigrants. They have a problem with illegal immigrants, who have taken away millions of American jobs by committing a crime — entering this country illegally.

Dot 6: Anemic Recovery

(Sound of furious snoring). At this point, Mr. Reich isn’t even making sense. Having “proven” that the middle class isn’t earning any money, they have to borrow money to create purchasing power to help the economic recovery. But we’ve already proven that the middle class has seen real wage increases. Further, it was the overleveraging of America that contributed to the financial crisis — people borrowing money to buy houses they could not afford. This doesn’t even speak to the credit-restricting policies of state and federal governments. The CARD Act restricted credit. The attack on RALs restricted credit. The constant attack on payday loans restricted credit. More lies and omissions from Mr. Reich, but at this point, we shouldn’t be surprised.

Conclusion: “So you see? The only way we can have a strong economy is with a strong middle class.”

Only way? No. A strong economy depends on numerous factors including, but not limited to: massive spending cuts, lower taxes, repayment of the national debt, a balanced budget, smaller government, and a little bit of truth-telling here and there. Another idea: out-of-the-box thinking that might encourage government spending in a way that actually would create jobs, instead of wasting taxpayer money.


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