Robert Reich: How more wealth is being redistributed to the wealthy in America

Robert Reich, an economist by training, published an editorial about the impact of the widening income inequality on American workers, especially poor and middle-class families. The last thirty years has seen the greatest redistribution of wealth from the poor to the rich (reverse Robin Hood). I wonder how will the late John Rawls (one of the major thinkers in liberal political philosophy) react if he saw how this nation has changed from social welfare for the needy to corporate welfare for the wealthy.

For years, the bargaining power of American workers has also been eroding because of the ever more efficient means of outsourcing abroad, new computer software that can replace almost any routine job, and an ongoing shift of full-time to part-time and contract work. And unions have been hit hard. In the 1950s, more than a third of private-sector workers were members of labor unions. Now, fewer than 7% are unionized.
All this helps explain why corporate profits have been increasing throughout this recovery (they grew more than 18% in 2013 alone) while wages have been dropping. Corporate earnings now represent the largest share of the gross domestic product — and wages the smallest share of GDP — since records have been kept.
Hence, the Great Redistribution.

Check out Reich's documentary on income inequality, Inequality for All (2013).

Related links:

• Reich: The four biggest right-wing lies about income inequality (May 21, 2014)
• Reich: Debunking the myth that 'you're paid what you're worth' (March 19, 2014)
• Reich: The great U-turn (March 11, 2014)
• Reich: Minimum wage increase woes are wrong -- again (March 9, 2011)
• Reich: Lousy wages are the real job killers (March 1, 2014)
• Reich: The American right focuses on poverty, not inequality, to avoid blame (February 22, 2014)
• Reich: America, we have a 'we' problem (February 19, 2014)
• Reich: America can't afford to forget post-war economic booms (February 13, 2014)

The Atlantic: RIP, American Dream? Why It's So Hard for the Poor to Get Ahead Today

In honor of the 50th anniversary of the War on Poverty, this is an The Atlantic article by Matthew O'Brien that everyone should read. Although many anti-poverty programs (e.g., Head Start, Medicaid, Upward Bound, VISTA, etc.) still exist today, the United States in the last thirty years has become a nation where the gap between the rich are getting richer and the poor are being left behind. This is truly sad because the middle class is also feeling the crunch. The cost of necessities (food, housing, transportation) continue to increase. Wages and salaries has not kept up with inflation since the 1970s. Even a college degree alone does not guarantee that the poor can obtain upward social mobility. We need a domestic Marshall Plan to revitalize the middle class and our underserved communities.

Inequality is breeding more inequality. It's a story about paychecks, marriage, and homework. Now, it's not entirely clear why the top 1 percent have pulled so far away from everyone else, but there's a long list of suspects. Technology has let winners take, if not all, at least most, in fields like music; deregulation has set Wall Street free to make big bonuses off big bets (and leave taxpayers with the bill when they go bad); globalization and the decline of unions have left labor with far less leverage andshare of income; and falling top-end tax rates have exacerbated it all. But high-earners aren't just earning more today; they're also marrying each other more. It's what economists romantically call "assortative mating" -- and Christine Schwartz, a professor of sociology at the University of Wisconsin, estimates inequality would be 25 to 30 percent lower if not for it.

Marriage is widening inequality today, and keeping it wide tomorrow. Well-off couples get married more, stay together more, read to their children more, and otherwise have more time and money to spend on their children's education. As the New York Times points out, economists Richard Murname and Greg Duncan have found that high-income couples have poured resources into the educational arms race at a prodigious pace the past generation. For one, the amount of time college-educated parents spend with their kids has grown at double the rate of others since 1975; for another, high-income households invested 150 percent more in "enrichment activities" for their kids from 1972 to 2006, compared to a 57 percent increase for low-income households.

UPDATE [January 8, 2014]: Fifty years ago, President Lyndon B. Johnson introduced his plan, the War on Poverty, in his State of the Union address in January 8, 1964. The national poverty rate was 19 percent in 1964. His War on Poverty project created Medicare, Medicaid, a permanent food stamp rpogram, Head Start, Volunteers in Service to America, and the Job Corps. Since 1964, much remain the same -- the national poverty rate hovers around 15 percent. The New York Times' Room for Debate has a discussion on whether the United States needs another War on Poverty. Six experts, ranging from research institutes to non-profit organizations, debate the issue. Watch the six-minute speech below:

NYTimes: Loan Monitor Is Accused of Ruthless Tactics on Student Debt

Happy new Year! As I continue to post articles about the student loan debt crisis in America, this New York Times article by Natalie Kitroeff perfectly highlights why the post-secondary financial aid system needs major reform at the federal level. Such predatory collection tactics should stop since they ignore basic human decency and compassion. Furthermore, student loans, both federal and private, should be eligible for bankruptcy protection just like medical, auto, and credit card debt.

There is $1 trillion in federal student debt today, and the possibility of default on those taxpayer-backed loans poses an acute risk to the economy’s recovery. Congress, faced with troubling default rates in the past, has made it especially hard for borrowers to get bankruptcy relief for student loans, and so only some hundreds try every year. And while there has been attention to aggressive student debt collectors hired by the federal government, the organization pursuing Ms. Jorgensen does something else: it brings legal challenges to those few who are desperate enough to seek bankruptcy relief.

That organization is the Educational Credit Management Corporation, which, since its founding in Minnesota nearly two decades ago, has been the main private entity hired by the Department of Education to fight student debtors who file for bankruptcy on federal loans.