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"Saving Capitalism: For the Many, Not the Few"

How wealth is divided has been an important issue for most of us, an issue decided between employees and employers, decided when people buy things, and decided by politicians and their tax plans. Opinions about the division of wealth impact elections.

Robert Reich is Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies. He was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century.

Reich complains that wages, adjusted for inflation, have been stagnant for middle Americans for about thirty years. He describes inequality as widening. "A lot of Americans", he says, "are working harder than ever, they're not going anywhere and we have a lot of people called the working poor, who are working full time and are still poor." Reich says that if we do not get serious about changing the rules of the game ... "we're going to find ourselves with a capitalism that really is fundamentally not working for our people." The full title of his book is Saving Capitalism: For the Many, Not the Few.

At Amazon.com, of the 59 who rate the book, someone who gives the book its lowest rating – two stars – describes it as "Intelligently simple and clear with totally vapid and disproven suggestions." Someone who gives the book three stars describes Reich as not a "red communist but an optimist." A five-star comment describes Reich as worth reading even if you don't agree with him.

Expressing the book's ideas in a November 1 article in the Washington Post, Reich writes:

Much of the national debate about widening inequality focuses on whether and how much to tax the rich and redistribute their income downward. But this debate ignores the upward redistributions going on every day, from the rest of us to the rich. These redistributions are hidden inside the market.

He describes some of us paying too much for the products manufactured by Pfizer, Merck, and other big proprietary drug companies – money that goes to their executives and major shareholders. He complains,

We also pay more for Internet service than do the inhabitants of any other developed nation. The average cable bill in the United States rose 5 percent in 2012 (the latest year available), nearly triple the rate of inflation. Why? Because 80 percent of us have no choice of Internet service provider, which allows them to charge us more. Internet service here costs 3 and-a-half times more than it does in France, for example, where the typical customer can choose between 7 providers. And U.S. cable companies are intent on keeping their monopoly. It's another hidden upward distribution – from us to Comcast, Verizon, or another giant cable company, its executives and major shareholders.

Likewise, the interest we pay on home mortgages or college loans is higher than it would be if the big banks that now dominate the financial industry had to work harder to get our business. As recently as 2000, America's five largest banks held 25 percent of all U.S. banking assets. Now they hold 44 percent – which gives them a lock on many such loans.

Regarding food prices, Reich says, "Four food companies control 82 percent of beef packing, 85 percent of soybean processing, 63 percent of pork packing, and 53 percent of chicken processing. Result: A redistribution from average consumers to Big Agriculture."

Reich complains of big corporations, Wall Street banks, their top executives and wealthy shareholders having the political power to redistribute "much of the nation's income upward to themselves." This, he says is why "the rest of us must gain political power to stop the collusion, bust up the monopolies, and put an end to the rigging of the American market."

A comment to the Post in response to the Reich article warns of Reich and Elizabeth Warren advocating policies that would destroy the benefits of capitalism. We have been hearing such complaints for decades and years.

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Copyright © 2015 by Frank E. Smitha. All rights reserved.