And it continues to get sillier and sillier:
The richest 1 percent of Americans save about half their incomes, while most of the rest of us save between 6 and 10 percent. Being rich means you already have most of what you want and need. Each additional acquisition yields a sharply declining level of satisfaction: That second yacht isn’t nearly as exciting as the first.
So when the top 1 percent rakes in more than 20 percent of total income – twice the share it had 30 years ago – there’s insufficient demand for all the goods and services the economy is capable of producing at or near full employment. Without enough demand, the economy can’t grow or generate nearly enough jobs.
So what can we take from that?
Here’s my interpretation - the top 1% is taking in 20% of the income and burying half in coffee cans in the back yard. Or said another way, none of it is invested and pushed back out in the economy to entrepreneurs, businesses or other pro-economic growth activities. They just keep it, stuff mattresses with it or burn it to light their big fat cigars, or something. Well, at least in Reich’s version of the economy.
And they have this declining level of satisfaction because they have everything they want. Other than an excuse to take their money, what is relevant about that (even if true)? Not much. But back to that excuse business. We can save them from the disappointment they’re bound to have when they buy that second yacht (which, btw, will provide good jobs and pay for those who build it) and screw the yacht workers.
Finally, when the rich take that 20%, there’s less for everyone else to spend, so there’s insufficient demand. Really? That’s why? Or could it have to do with the awful economy, over regulating state, massive unemployment and business uncertainty driven by those three things? Could that possibly be responsible for “insufficient demand”?
Anyway, the apparent Reich argument is that if we just made them (the 1%) give up most of that 20% (I assume, given his usual preferences, he’d like to see that via taxes so the government can do the great job it has done up till now spending it – couldn’t trust the proles to spend it properly you know), why there’d be more money to go around and thus somehow magically more demand and everyone would live happily ever after. And we’d be able to put those yacht workers on extended unemployment and food stamps. Yahoo!
The end of sanity perhaps.
The richest 1% are taking 20% of what size income pool? Oh, context! Reich never says. Nor does he mention the standard of living and comparable income levels of 30 years ago. Or the fact that much of what cost a lot of money 30 years ago is relatively cheap now in comparison. Because, you know, that doesn’t help his argument.
And why 30 years ago? Check out the chart 80, 90 or 100 years ago.
Additionally, the Reich economy is also apparently a zero sum game. If the rich take it the “poor” don’t get it since there is presumably a defined pot of money available. Oh, there’s not. So that again brings us to the question, “20% of what”?
This is just another attempt by a committed collectivist to reignite the class warfare meme. It’s desperation time in the old political sphere and Reich is counting on economic ignorance and envy to do it’s thing. Screw the truth (and history) – it’s never been this bad and it is the root of all our ills.
What guys like Reich, Obama, Axlerod and the Occupy crowd don’t seem to understand is this basic truth:
Successful populists such as Republican Teddy Roosevelt and Democrat Franklin Roosevelt did not allow their championing of “the little guy” to devolve into class warfare.
They realized that Americans tend to view the United States as a land of opportunity and do not begrudge anyone for becoming wealthy.
Oliver Wendell Holmes, Jr said it best:
I have no respect for the passion for equality, which seems to me merely idealizing envy.
And that’s exactly what that bunch is trying to do. Idealize envy.
I don’t think, unless the America character has changed dramatically over the past 3 years, it’s going to succeed.