Robert B. Reich, a co-founder of The American Prospect, is a Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. His website can be found here and his blog can be found here.
Broadcast April 12, 2001 The biggest drag on this economy -- easily two-thirds of the current slowdown -- comes from the huge drop in business investment. I mean, we re talking about Niagara Falls here. The first quarter last year, business spending was rocketing at an annual rate of more than 20 percent over the year before. By the end of last year, almost nothing. Okay, so why is American business so bearish? American companies invested like mad in the 1990s, expecting that American consumers would follow right along and buy everything that was being produced. But last year American consumers reached their limit. They re deep in debt and can t go deeper. The dirty little secret of the Roaring Nineties is that median family income -- the take-home pay of the middle of the middle class -- didn t rise very much. It went from around $55,000 in 1990 to around $60,000 last year, adjusted for inflation. Most of the Nineties Boom went to families at or near the top. But wealthy families don...
The New York Times CAMBRIDGE, Mass. -- The old industrial struggle was between companies and workers. The new struggle is between . . . companies and workers. But the battle isn't what it used to be. Now, it's over who's going to spend enough to keep the economy moving forward. The crunch will come if companies lay off so many employees that consumers go on a spending strike. Since last year, American companies have cut way back on their purchases. The economy isn't in recession only because consumers haven't cut back their spending as well. If they do, the American economy tanks. A slowdown usually starts the other way around. Consumers reduce their spending because they've used up too much of their savings and can't afford or don't want to borrow more. Then companies cut back their own spending because sales are down. This time, companies started it. They overspent in the late 90's, mostly on capital equipment and software, and then began cutting back last year at the first sign of...
The Washington Post A growing chorus is telling Americans that one of the best ways to demonstrate that the nation won't be cowed by terrorism is to continue to buy shares of stock and retail goods. Vice President Cheney said he hoped Americans would "stick their thumb in the eye of the terrorists and . . . not let what's happened here in any way throw off their normal level of economic activity." House Minority Leader Dick Gephardt proclaimed that Americans were "not giving up on America, they're not giving up on our markets." Treasury Secretary Paul O'Neill said, "We're going to show we have backbone." On Thursday night, President Bush asked Americans for their "continued participation and confidence in the American economy." Call it market patriotism. The theory is that we demonstrate our resolve to the rest of the world by investing and consuming at least as much as we did before, preferably more. The terrorists tried to strike at the heart of American capitalism. We show that...
Broadcast September 28, 2001 Consumer confidence is dropping like a stone. Mass layoffs are sending chills through an America already shaken by the horror of September 11th. Last week alone, companies announced more than 100,000 layoffs, and there are signs of hundreds of thousands more to come. Worries about terrorism, coupled with growing worries about job security, aren't exactly inspiring consumers to flood into the malls and buy a lot of stuff despite patriotic calls to spend money. And if consumers don't buy, there are likely to be more layoffs. You see how it becomes a vicious cycle. Layoffs that undermine consumer confidence create more layoffs, further undermining confidence. When the pace of layoffs is more gradual, you don't get this downward spiral. But too many layoffs occurring too quickly can send the whole economy into a tailspin. Wall Street faces something of the same problem when too many stocks are unloaded too quickly, and the market drops too far, too fast. Panic...
New York Times
I do not believe that it is politically feasible to insulate such huge funds from a
governmental direction," Alan Greenspan told the House Ways and Means
Committee last week, one day after President Clinton proposed investing a
portion of Social Security funds in the stock market.
Mr. Greenspan was equally forthright in criticizing the President's proposal to
raise the minimum wage to $6.15 an hour from $5.15. "My own preference
would be to lower it and, in fact, eliminate [the minimum wage] because I
think that it does more damage than good," he told the committee.
Pundits are now declaring Mr. Clinton's stock plan to be in deep trouble, in
large part because Mr. Greenspan opposes it. And a new cloud also hangs
over the possibility of raising the minimum wage.
Rarely has the chairman of the Federal Reserve Board been so outspokenly
critical of the White House. Rarely, in fact,...