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by Robert B. Reich

  We further pledge that no more than 20 percent of our total labor costs will be outsourced abroad. If we have to lay off American workers at a time when we’re profitable, we will give those workers severance payments equal to their weekly wage times the number of months they’ve worked for us.

  We pledge to keep a lid on executive pay so no executive is paid more than fifty times the median pay of American workers. We define “pay” to include salary, bonuses, health benefits, pension benefits, deferred salary, stock options, and every other form of compensation.

  We pledge to pay at least 30 percent of money earned in the United States in taxes to the United States. We won’t shift our money to offshore tax havens, and we won’t use accounting gimmicks to fake how much we earn.

  We pledge not to use our money to influence elections.

  This isn’t too much to ask, is it? Again, it wouldn’t be a legal requirement; corporations would be free to pledge or not to pledge. And consumers would be free to boycott those corporations that don’t make the pledge or that disregard it. But at least we’ll know which corporations that enjoy the benefits of American citizenship act like American citizens. That’s important this election year and beyond.

  PRACTICING ACTIVE CITIZENSHIP

  Not long ago I had a discussion with Jon Stewart, the wily impresario of Comedy Central’s Daily Show. It was before a young audience who whooped and hollered at Stewart’s antics and my hapless responses to them, but the topic we were debating was dead serious. I argued that the real reason Washington was letting so many of us down was so few of us were actively pushing our public officials to do the right thing. He said we elected them so we wouldn’t have to be actively engaged in politics; that was their job. I said he was wrong: Citizenship entails more than voting on election days. Real citizenship requires ongoing engagement: knowing what needs to be done, getting the facts, and understanding the arguments, and then making enough of a ruckus—and organizing and mobilizing others to join you—so that what needs to be done gets done.

  Most of us don’t practice active citizenship, because we tell ourselves we’re too busy for it. Yet we find time to do other things—swimming or crossword puzzles or playing cards or cooking. Maybe we make religion our focus, or golf. Or we devote ourselves to trying to make money in the stock market. The truth is we have the time. The real reason most of us don’t practice citizenship is we don’t know how. And we don’t think it will do any good anyway.

  I hope I’ve convinced you that you must at least try. You don’t need to practice it full-time. It need not and should not become an obsession. But few things we possess and will hand on to our children and grandchildren are more precious than our democracy. And few things we believe in will affect the lives of our children and grandchildren more fundamentally than our commitment to equal opportunity and to a fair and just society. That precious possession and that fundamental ideal are both gravely endangered. They can be protected only by engaged citizens who know the truth and are willing to fight to reclaim our democracy and our economy.

  How to begin? Here and now. You’ve already just about finished this book, which should help you connect the dots and understand what’s happening, why the regressives are dangerously wrong, and what must be done. Share the book with your friends. Invite them over to talk about it. Ask if they’d be willing to join you in developing an “action agenda” for achieving progressive change in your community, or even at the state or national level. Bring others into the circle who might feel similarly and be helpful. Assign someone the task of finding other groups or organizations in your area aiming to do something similar, and reach out to them as well.

  This is how progressive change occurs. This is how it has always occurred.

  A FINAL NOTE ON THE BASIC CHOICE: REGRESSION OR PROGRESSION, SOCIAL DARWINISM OR THE PUBLIC GOOD

  America is not the only place struggling with a collision between regressive forces lurching backward toward more authoritarian, intolerant, and unequal societies and progressive forces striving for more democracy, tolerance, and equal opportunity. The details differ, but the larger forces are similar. You see it in Europe, where many people are being squeezed by bankers insisting on austerity. You see it in Chile and Israel, where young people are revolting against limited opportunity and widening inequality. It’s on view in the Middle East, where the “Arab spring” has turned into ongoing struggles to create functioning democracies. You see it even in China, where young and hourly workers are demanding more and where the surge toward inequality in recent years has been as breathtaking as the surge toward modern capitalism.

  But it is likely to be in America—still the world’s largest economy and its most influential practitioner of democracy—where the collision is most consequential. And I believe we will once again show the world that when our ideals are tested, we do not bend. We do not move backward. We do not tolerate rigged games.

  The great arc of American history reveals an unmistakable pattern. Whenever privilege and power conspire to pull us backward, we eventually rally and move forward. Sometimes it takes an economic shock like the bursting of a giant speculative bubble; sometimes we just reach a tipping point where the frustrations of average Americans turn into action. Look at the progressive reforms between 1900 and 1916; the New Deal of the 1930s; the civil rights struggle of the 1950s and 1960s; the widening opportunities for women, minorities, people with disabilities, and gays, starting in the 1960s and continuing, in fits and starts, to the present day; and the environmental reforms of the 1970s. In each of these eras, regressive forces reignited the progressive ideals on which America is built. The result was fundamental reform.

  It will happen again, but it will not happen automatically. The nation’s forward movement has always depended on the active engagement and commitment of vast numbers of Americans who were morally outraged by how far our economy and our democracy have strayed from our ideals and who committed to move beyond outrage to real reform.

  Your outrage and your commitment are needed once again.

  Appendix

  PRESIDENT BARACK OBAMA’S SPEECH IN OSAWATOMIE, KANSAS, DECEMBER 6, 2011 (ANNOTATED)

  I believe President Obama’s speech in Osawatomie—where Teddy Roosevelt gave his “New Nationalism” speech in 1910—will be remembered as the most important economic speech of his or any modern presidency in terms of connecting the dots, laying out the reasons behind our economic and political crises, and asserting a willingness to take on the powerful and the privileged who have gamed the system to their advantage. It’s so important that I’ve included most of it here (along with, if you’ll pardon me, my annotations):

  For most Americans, the basic bargain that made this country great has eroded. Long before the recession hit, hard work stopped paying off for too many people. Fewer and fewer of the folks who contributed to the success of our economy actually benefited from that success. Those at the very top grew wealthier from their incomes and investments than ever before. But everyone else struggled with costs that were growing and paychecks that weren’t—and too many families found themselves racking up more and more debt just to keep up.

  He’s absolutely right, and it’s the first time he or any other president clearly stated the long-term structural problem that’s been widening the gap between the very top and everyone else for thirty years—the breaking of the basic bargain linking pay to productivity gains.

  For many years, credit cards and home equity loans papered over the harsh realities of this new economy. But in 2008, the house of cards collapsed.

  Exactly. But the first papering over was when large numbers of women went into paid work, starting in the late 1970s and the 1980s, in order to prop up family incomes that were stagnating or dropping because male wages were under siege—from globalization, technological change, and the decline of unions. Only when this coping mechanism was exhausted, and when housing prices started to climb, did Americans shift to credit cards and home equity loa
ns as a means of papering over the new harsh reality of an economy that was working for a minority at the top but not for most of the middle class.

  We all know the story by now: Mortgages sold to people who couldn’t afford them, or sometimes even understand them. Banks and investors allowed to keep packaging the risk and selling it off. Huge bets—and huge bonuses—made with other people’s money on the line. Regulators who were supposed to warn us about the dangers of all this, but looked the other way or didn’t have the authority to look at all.

  It was wrong. It combined the breathtaking greed of a few with irresponsibility across the system. And it plunged our economy and the world into a crisis from which we are still fighting to recover. It claimed the jobs, homes, and the basic security of millions—innocent, hardworking Americans who had met their responsibilities but were still left holding the bag.

  Precisely—and it was about time he used the term “wrong” to describe Wall Street’s antics and the abject failure of regulators (led by Alan Greenspan and the Fed) to stop what was going on. These were among the remarks that earned Obama the enmity of much of Wall Street—and encouraged them to empty their wallets for the Republicans in 2012. Nonetheless, these “wrongs” were only the proximate cause of the economic crisis that befell the nation in 2008 and lingered for years after. The underlying cause was, as the president said before, the breaking of the basic bargain linking pay to productivity.

  Ever since, there has been a raging debate over the best way to restore growth and prosperity, balance and fairness. Throughout the country, it has sparked protests and political movements—from the Tea Party to the people who have been occupying the streets of New York and other cities. It’s left Washington in a near-constant state of gridlock. And it’s been the topic of heated and sometimes colorful discussion among the men and women who are running for president.

  But this isn’t just another political debate. This is the defining issue of our time. This is a make-or-break moment for the middle class and all those who are fighting to get into the middle class. At stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home, and secure their retirement.

  Right again. It is the defining issue of our time. But I wish he didn’t lump the Tea Party in with the Occupiers. The former hates government; the latter focuses blame on Wall Street and corporate greed, just where the president did a moment ago.

  Now, in the midst of this debate, there are some who seem to be suffering from a kind of collective amnesia. After all that’s happened, after the worst economic crisis since the Great Depression, they want to return to the same practices that got us into this mess. In fact, they want to go back to the same policies that have stacked the deck against middle-class Americans for too many years. Their philosophy is simple: we are better off when everyone is left to fend for themselves and play by their own rules.

  He might have been a bit stronger here. The “they” who are suffering collective amnesia include many of the privileged and the powerful who have gained enormous wealth by using their political muscle to entrench their privilege and power. In other words, it’s not simply or even mainly amnesia. It’s a clear and concerted strategy, and it continues to pay off for them while imposing significant risk on the rest of the economy.

  Well, I’m here to say they are wrong. I’m here to reaffirm my deep conviction that we are greater together than we are on our own. I believe that this country succeeds when everyone gets a fair shot, when everyone does their fair share, and when everyone plays by the same rules. Those aren’t Democratic or Republican values; 1 percent values or 99 percent values. They’re American values, and we have to reclaim them.

  Amen.

  …In 1910, Teddy Roosevelt came here, to Osawatomie, and laid out his vision for what he called a New Nationalism. “Our country,” he said, “… means nothing unless it means the triumph of a real democracy … of an economic system under which each man shall be guaranteed the opportunity to show the best that there is in him.”

  Some background: In 1909, Herbert Croly, a young political philosopher and journalist, argued in his best-selling book The Promise of American Life that the large American corporation should be regulated by the nation and directed toward national goals. “The constructive idea behind a policy of the recognition of semi-monopolistic corporations is, of course, the idea that they can be converted into economic agents … for the national economic interest,” Croly wrote. Teddy Roosevelt’s New Nationalism embraced Croly’s idea.

  For this, Roosevelt was called a radical, a socialist, even a communist. But today, we are a richer nation and a stronger democracy because of what he fought for in his last campaign: an eight-hour workday and a minimum wage for women; insurance for the unemployed, the elderly, and those with disabilities; political reform and a progressive income tax.

  Today, over one hundred years later, our economy has gone through another transformation. Over the last few decades, huge advances in technology have allowed businesses to do more with less, and made it easier for them to set up shop and hire workers anywhere in the world. And many of you know firsthand the painful disruptions this has caused for a lot of Americans.

  Factories where people thought they would retire suddenly picked up and went overseas, where the workers were cheaper. Steel mills that needed a thousand employees are now able to do the same work with a hundred, so that layoffs were too often permanent, not just a temporary part of the business cycle. These changes didn’t just affect blue-collar workers. If you were a bank teller or a phone operator or a travel agent, you saw many in your profession replaced by ATMs or the Internet. Today, even higher-skilled jobs like accountants and middle management can be outsourced to countries like China and India. And if you’re someone whose job can be done cheaper by a computer or someone in another country, you don’t have a lot of leverage with your employer when it comes to asking for better wages and benefits—especially since fewer Americans today are part of a union.

  Now, just as there was in Teddy Roosevelt’s time, there’s been a certain crowd in Washington for the last few decades who respond to this economic challenge with the same old tune. “The market will take care of everything,” they tell us. If only we cut more regulations and cut more taxes—especially for the wealthy—our economy will grow stronger. Sure, there will be winners and losers. But if the winners do really well, jobs and prosperity will eventually trickle down to everyone else. And even if prosperity doesn’t trickle down, they argue, that’s the price of liberty.

  It’s a simple theory—one that speaks to our rugged individualism and healthy skepticism of too much government. It fits well on a bumper sticker. Here’s the problem: It doesn’t work. It’s never worked. It didn’t work when it was tried in the decade before the Great Depression. It’s not what led to the incredible postwar boom of the ’50s and ’60s. And it didn’t work when we tried it during the last decade.

  The president is advocating Croly’s proposal that large corporations be regulated for the nation’s good. But he’s updating Croly. The next paragraphs are important:

  Remember that in those years, in 2001 and 2003, Congress passed two of the most expensive tax cuts for the wealthy in history, and what did they get us? The slowest job growth in half a century. Massive deficits that have made it much harder to pay for the investments that built this country and provided the basic security that helped millions of Americans reach and stay in the middle class—things like education and infrastructure; science and technology; Medicare and Social Security.

  Remember that in those years, thanks to some of the folks who are running Congress now, we had weak regulation and little oversight, and what did that get us? Insurance companies that jacked up people’s premiums with impunity, and denied care to the patients who were sick. Mortgage lenders that tricked families into buying homes they couldn’t afford. A financial sector where irresponsibility and lack of basic oversight ne
arly destroyed our entire economy.

  We simply cannot return to this brand of you’re on your own economics if we’re serious about rebuilding the middle class in this country. We know that it doesn’t result in a strong economy. It results in an economy that invests too little in its people and its future. It doesn’t result in a prosperity that trickles down. It results in a prosperity that’s enjoyed by fewer and fewer of our citizens.

  Look at the statistics. In the last few decades, the average income of the top 1 percent has gone up by more than 250 percent, to $1.2 million per year. For the top one hundredth of 1 percent, the average income is now $27 million per year. The typical CEO who used to earn about 30 times more than his or her workers now earns 110 times more. And yet, over the last decade, the incomes of most Americans have actually fallen by about 6 percent.

  This is the first time the president—any president—has publicly and unequivocally emphasized this grotesque trend. Now see how he connects this with the deterioration of our economy and our democracy:

  This kind of inequality—a level we haven’t seen since the Great Depression—hurts us all. When middle-class families can no longer afford to buy the goods and services that businesses are selling, it drags down the entire economy, from top to bottom. America was built on the idea of broad-based prosperity—that’s why a CEO like Henry Ford made it his mission to pay his workers enough so that they could buy the cars they made. It’s also why a recent study showed that countries with less inequality tend to have stronger and steadier economic growth over the long run.

  Inequality also distorts our democracy. It gives an outsized voice to the few who can afford high-priced lobbyists and unlimited campaign contributions, and runs the risk of selling out our democracy to the highest bidder. And it leaves everyone else rightly suspicious that the system in Washington is rigged against them—that our elected representatives aren’t looking out for the interests of most Americans.