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.
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.
One of the things we're hearing a lot these days from political leaders is "We need to try to get our lives back to normal." None of us can go back to exactly what we were doing before September 11th, of course, and no one's suggesting we should stop grieving for those who died and for the innocence America lost that day. But our political leaders are asking that we at least try to take up where we left off. And step by step, most of us are doing so. . . .
Except in Washington. That's the one place in the nation where almost no one is going back to doing what they were doing before September 11th.
We hear a lot about a stimulus package coming out of Congress, eventually. Regardless of what combination of tax cuts and spending increases finally emerges, almost everyone agrees that the government has to spur the economy right now. Alan Greenspan and company can't do it alone. Cuts in short-term rates are helpful, but we can't fight this recession with one hand tied behind our back. We also need government to spend more and tax less now.
For years now, many management gurus have been urging companies to give their employees a larger share of the profits. The thinking was that workers who invested in their own company would work harder because there'd be a direct connection between effort and reward.
This idea came just at a time when many companies were ending the old-fashioned kind of pension plan that guaranteed employees a certain fixed amount of money every month after retirement. Companies replaced those plans with 401(k) retirement accounts. Instead of a specific pension, employees, and sometimes employers, now invest a certain amount every month tax-deferred. After retirement, employees live off the cumulative investment.