Inequality For All: Robert Reich’s Powerful Message: Not “Trickle Down,” But “Middle Up”

My Article For Voice Of Russia

The documentary Inequality For All, directed by Jacob Kornbluth, features Robert Reich, former Secretary Of Labor under Bill Clinton, author of Aftershock: The Next Economy and America’s Future, in an impassioned exposé on why the chasm between the rich and the poor has much further reaching implications than a mere income gap.

In and of itself, Reich points out, inequality can be viewed as an inherent part of an incentive-driven capitalist system, but Inequality For All asks when inequality becomes a problem. This question takes on particular urgency when we consider that of all the developed nations, the United States has the greatest degree of wealth disparity. Much like The Corporation, Inequality For All is broad in its scope, and clearly shows the interconnectedness of a number of seemingly disparate phenomena. Filmed in the style of other policy lecture documentaries, Inequality For All uses Reich’s Wealth And Poverty class at UC Berkeley as the platform for some rather hair-raising revelations (a lot of them new even to those very familiar with the Occupy movement’s platform), yet the tone of the film remains optimistic about disrupting this status quo.
Just how consolidated is wealth at the top, you might ask? Put simply, 400 people in the top income bracket earn the same amount as 150 million in the lower tiers. Reich homes in on a recent study by Pikkety and Saez that analyzed tax data dating back to 1913, when the income tax was first instituted. The study finds that 1928 and 2007 were the peak years of income concentration at the top, creating a graph that resembles a suspension bridge. Both years were followed by calamitous market crashes — a parallel that Reich thinks is not random at all. As income got more concentrated at the top, the rich turned to the financial sector for investment, creating a speculative bubble. And as middle class income was stagnating, that in turn created a debt bubble, conditions that inevitably precipitated economic crises.
The crux of Reich’s argument is that what makes an economy stable is a strong middle class. And while his assertion that consumer spending makes up 70% of economic activity is contestable, there can be no denying that the middle class plays an integral role in the economy. The rich alone are not spending enough to generate the requisite level of economic activity. Inequality For All features venture capitalist/1%-er Nick Hanauer who debunks the myth of the rich as “job creators” in favor of a feedback loop theory that Reich also espouses (he calls it the virtuous cycle). If there is one sound bite to emerge from the film, it is that Reich supports “middle up” rather than “trickle down” economics. If the middle class is not doing well enough to create healthy consumer spending levels, then the economy as a whole will suffer—in other words, as the film rightly notes, one doesn’t have to be a bleeding heart liberal to understand that this is not merely a social justice issue. Reich argues that even from a cynical and self-serving perspective, the top 1% should have an interest in how well the middle class is doing as they drive spending in a rather significant way.
Was there an idyllic time that was different from the current abysmal state of affairs? Reich points to the years between 1947 and 1977 as the golden age of great prosperity and very low inequality. What were we doing right then? Public higher education spending was much more of a priority and the proportion of people who were able to receive a college degree without being saddled with mountains of debt was much higher than today. With decimated federal funding for higher education nowadays, little is trickling down to the states, he argues, causing unparalleled spikes in tuition costs. Unions were also very strong, ensuring that worker wages remained robust. With the decline of unions, Reich argues, wages and rights have suffered a crushing blow. Not only have wages remained stagnant, but upward mobility is also equally imperiled. 42% of children born in poverty will never leave poverty behind. No other developed nation, Reich argues, even the UK with its vestiges of a monarchic system, has less social mobility than that.
Inequality For All covers a number of other plucked-from-the-headlines issues thoroughly as well, such as the shockingly low tax rate most of the rich actually pay, and how the tax code has increasingly evolved to the benefit of the haves. It also talks about the impact globalization has had on worker wages and the fact that which countries’ workers add the most value determines what country reaps the benefits. A prime example is that even though iPods are assembled in China, it only earns 3.6% of the value of an iPod, with Germany and Japan taking much more significant portions because the parts come from there.
The ultimate upshot of inequality is that its deleterious effects ripple outward, profoundly disrupting a healthy economic cycle. Reich calls equal opportunity the “the moral foundation stone on which this country and our democracy are built,” and that is not mere exaggeration or partisan-minded alarmism. When money starts to infect politics, as it has done now with lobbyists and PACs, it undermines democracy and paves the way to plutocracy. Inequality For All offers plenty to get outraged over, but Reich remains measured in his rhetoric. Instead of portraying inequality as an “us versus them” zero-sum game, he explains that is in our interest and in our power in to disrupt the status quo by demanding change.

What’s In A Number: Can We Meet UN Poverty Reduction Goals?

The numbers in the recently released UN Millenium Development Goals Report are a case in point. Among its key findings, the report tells us that “the proportion of people living in extreme poverty has been halved at the global level. In developing regions, the proportion of people living on less than $1.25 a day fell from 47 per cent in 1990 to 22 per cent in 2010. About 700 million fewer people lived in conditions of extreme poverty in 2010 than in 1990.” A UN High-Level Panel report touts the progress made in the last 13 years as “the fastest reduction in poverty in human history.” In essence, the prevailing consensus is that Millenium Development Goal 1, the reduction of extreme poverty and hunger by half, is already accomplished. But are the numbers really so clear?
The actual numbers on poverty look significantly grimmer–1.29 billion people in 2008 lived below $1.25 a day; 2.47 billion people in 2008 consumed less than $2 a day. At the current rate of progress, there will still be around 1 billion people living below $1.25 per day in 2015. Most of the 649 million fewer poor by the $1.25 per day standard over 1981-2008 are still poor by the standards of middle-income developing countries.
It turns out that the seemingly simple question of how we measure the number of poor people in the world is surprisingly difficult and extremely important to answer. It affects how we report success, especially considering that the post-2015 talks now dare to speak openly about the goal of complete poverty eradication. In April, at a press conference during the Spring meeting of the international financial institutions in Washington, DC, the president of the World Bank, Jim Yong Kim, pointed to 2030 as the global target year to end poverty. President Obama expressed similar sentiments in February, when he promised that “the United States will join with our allies to eradicate such extreme poverty in the next two decades.”
So, how much has actually been accomplished? Thomas Pogge, the Director of the Global Justice Program and the Leitner Professor of Philosophy and International Affairs at Yale University, makes an important insight—the way that extreme poverty and hunger are measured has shifted over time, and significantly. In other words, some of the madness definitely lies in the method—measurement shifts have taken place, perhaps under the radar of public knowledge and only noticeable by economics geeks. This is inherently confusing. When we claim success, we should know what we have actually accomplished.
In September 2000, the heads of 147 governments pledged that they would halve the proportion of people on Earth living in the direst poverty by 2015, using the poverty rate in 1990 as a baseline. Here Pogge points out something largely glossed over: as with the hunger target, the so-called success over recent years owes much to the back-dating of the base year from 2000 (UNGA Millennium Declaration) to 1990. More specifically, the goal set at the World Food Summit in Rome in 1996 was to halve the number of chronically under-nourished people between 1996 and 2015. That criterion quickly changed at the 2000 meeting to “halve, by the year 2015, the proportion of the world’s people whose income is less than one dollar a day and the proportion of people who suffer from hunger.” Changing the language to refer to a proportion instead of an outright number and backdating the goals to 1990 changed the picture and made the goals easier to reach. Another modification changed the definition to refer only to people in the developing world. Dr. Pogge explains, “…there are two different shifts: (a) shifts in what is to be halved by 2015 (number of poor, proportion of poor in world population, proportion of poor in population of the developing world) and from what baseline (1996, 2000, 1990). (b) Shifts in how persons get identified as poor (average household income below $1/day in 1985 US-dollars, below $1.08/day in 1993 US-dollars, $1.25/day in 2005 US-dollars). These methodological revisions entailed substantial shifts in the number of poor, in their geographical distribution, and, most importantly, in the global poverty trend.” The back-dating of the year allowed for the international institutions to count the significant progress China had made in poverty reduction.

Another major methodological issue is how poverty is measured, using an international poverty line (IPL), and the resulting overreliance on what Dr. Pogge calls a “money-centric” measure set by the World Bank. “In contrast to a human requirements-centered approach, the Bank has set a relatively arbitrary international poverty line (IPL) defined in abstract money units and translated into local currency amounts that it deems to be ‘equivalent.’” The poverty measurement’s excessive sensitivity to the IPL level has a significant impact in how we measure progress, as it provides a very narrow definition of poverty. At $1.25/day, according to PovcalNet, we are 22.4% ahead of meeting the goal. But with $1.50/day, we are only 8.5% ahead, and with $1.815/day we are 5.7% behind. The choice of base year that the progress is measured from is an equally important consideration. Another distortion comes from the use of general consumption PPPs. The general-PPP (purchasing power parity) equivalent to $1.25 (2005) in a typical poor country buys only as much food there as $0.83 bought in the US in 2005. So, the World Bank’s poverty line is too low to cover basic needs. The Bank’s very low line overlooks a lot of very poor people. It counts as poor in 2010 only 1,214.98 million people. The rather narrow IPL measure also disregards intra-household income distribution by looking at the household as a whole, nor does it account for other dimensions of poverty such as the leisure time/labor time ratio, public goods, and climate.
So how can we get around this statistical quagmire and properly measure a very human problem — living in dire poverty. Dr. Pogge suggests that it is crucial that we “define precisely in advance the goals and targets the world is committing itself to as well as the methods by which progress toward these targets is to be measured or assessed,” to prevent midstream revisions and back-dating of targets. He also advocates that the monitoring of progress be left to groups of independent experts, not to international agencies, which are politically exposed. Ultimately, the new agenda should be a lot more participatory, inclusive, and responsive to those directly affected by poverty and social injustice.

Film Review: Salinger

My Review of Salinger

Salinger, the ten-years-in-the-making documentary by Shane Salerno, is a surprisingly moving and thorough look at the life of one of American’s most beloved iconic writers. It is a must-see film for anyone who appreciates the child birthing-like nature of writing and its nearly supernatural ability to give voice to our shared humanity.  Surprisingly because there was a veneer of sensationalism/celebrity-chasing in the marketing of the film as a “never before seen” and uncomfortably probing  wide-angle-lens-ish expose on a man who purposely shunned the spotlight. The Catcher In The Rye captured the hearts and minds of generations; the very relatable angst of Holden Caulfield and his condemnation of all things fake made this seminal work timeless and dearly loved and not just one of those other classics you were forced to read in English class but never really enjoyed. Salerno’s documentary certainly covers a lot of ground—as for the attention-grabbing ploys, we can chalk those up to misguided publicity efforts because the strength of the film is certainly not in unearthing unseen footage but in painting a holistic portrait of the enigmatic Salinger.

Salinger makes a lot of how World War 2 shaped J.D. Salinger, calling it the “ghost in the machine of all his stories” and rightfully so—this is the meat of the film, providing an unparalleled glimpse into something that affected the author’s work profoundly.  Salinger was very patriotic and determined to serve in the war and voluntarily enlisted, not even imagining the horrors that lay ahead. Being a part of D Day (while carrying six chapters of Catcher In The Rye in his pocket) and the ensuing 200 days of battle, he fought in the fields of France aptly called “the meat grinder,” where routinely 200 men would die in the span of a couple of hours. Witnessing the sheer desecration of humanity in camps abandoned by the Nazis left lasting scars on Salinger’s mind and he suffered a nervous breakdown in Normandy. His treatment and the themes of “craziness” and damage to innocence would make an indelible mark on his writing, finding its way into almost all of his stories. Salinger’s coverage of the author’s war years also shines a light on his complexity as a character—despite his later reputation as a recluse, he was affable, close to his fellow soldiers, and very in tune with the perspective of both the victims and the perpetrators, especially when he started working as a war investigator in the aftermath. He also met Hemingway there who was very encouraging of the young author.
The only significant way in which Salinger sputters is when the film starts to psychoanalyze Salinger, ascribing motivations without much ground for the conjecturing and the giving of voice to opposing views makes for a  rather meandering “was he or was he not” narrative. For example, a lot of time is spent on Salinger being the “Howard Hughes of his day” yet aside from choosing to live in the woods, one would be hard pressed to see what other “idiosyncracies” he displayed. As for the recluse moniker–by all appearances, he was far from it. His retreat to Cornish, New Hampshire was a rather pragmatically-driven quest for find peace and silence to continue to work. He certainly seemed to be social enough in the town itself. He protective of just how much the public extracted from him, granting interviews on his own terms and with the reporters he trusted and staying actively plugged in. Salinger also suggests that Salinger IS Holden Caulfield and that all of his writing is essentially autobiographical, which does not seem to be of tremendous relevance nor anything specifically endemic to Salinger as an author. As Salinger once aptly put it, “I am a fiction writer, not a counselor.”
Salinger also delves rather deeply into Salinger’s relationships with women (specifically younger women). To its credit, the movie does not attempt to sensationalize those relationships under a queasiness-inducing rubric, but it does suggest, perhaps groundlessly, that he was platonically attracted to the innocence he saw in them and once he perceived them as “women,” he grew disinterested.  It also uncovers the author’s deep devotion to the Vedanta Hindu religious tradition and his daily meditation. There are some rather ham-handed plot-propelling devices too, like the constant flashing of one and the same picture or of the image of an actor sitting behind a typewriter in a giant movie theatre. The part of the film that delves into all of the killers who claimed that The Catcher In The Rye made them do it (John Hinckley, Mark David Chapman) also seemed entirely out of place with the rest of the narrative and thrown in for pure shock value.
Salinger offers an enthralling look into the creative process of the author. Salinger was really committed to writing a “good book and not just a best seller,” when he set out to write Catcher In The Rye. He was fanatically perfectionistic in his approach and fiercely protective of his work, to the point of being maniacal even about the punctuation. He toiled assiduously, doggedly writing all day, every day, to the detriment of anyone and anything around him. Ultimately, like his fellow creative geniuses, he espoused passion—“there has to be fire between the words.”
Salinger is a paean to lovely mystery that writing really is and a tribute to a man who wanted to be known for his work rather than for himself. The big revelation of Salinger’s end is that a lot of the late author’s works will be released starting 2015, including the completion of the Holden Caulfield and the Glass families stories as well as books on the Vedanta religious tradition.