Sunday, September 29, 2013

On the Robert Reich Film: 'Inequality For All"

Economist Robert Reich is out with a film, Inequality for All. By the end of the film, it will be clear that Reich is quite comfortable with his shortness. In fact, before the end of the film, you will want him to stop with his short jokes.

If you are at all familiar with economics, you will want the entire film to stop, probably by the 15 minute mark. I have heard more sophisticated lefty arguments in San Francisco bars then the ones made in this film.

Reich does nothing but throw up a bunch of charts on the screen without full context, beyond that he promotes through out the film the Keynesian notion that it is consumption that drives the economy and states that higher taxes on the rich will help the economy grow (because the rich save instead of consume).

His favorite chart shows wealth inequality peaking in 1928 and 2007, but he never mentions the connection between those years and peak Federal Reserve money pumping. In fact, in a movie about the economy, he doesn't mention the Fed at all, not once. He does point out that the most recent explosion in CEO salaries started in the 1990s, but fails to mention that this was when government stepped in to protect establishment CEOs against upstarts that were trying to end the establishment gravy train.

Michael Milken was indicted for racketeering and securities fraud in 1989 by US Attorney Rudy Giuliani, who had big time political ambitions and took marching orders from the establishment. Milken was funding takeovers by raiders of establishment firms, The raiders were putting an end to the super high CEO salaries and over the top perks. Once Milken was in jail and it was clear to Wall Street that anyone who attempted to mess with establishment CEO perks faced ending up in the slammer, the era of the hostile takeovers stopped cold. There was not a word about this in the film. Instead, Reich mentions the absurd leftist claim that it was the lifting of regulations that caused the expanding difference in wages of the 1% and the middle class. In fact, it was the stretching of regulations by Giuliani that put fear into raiders that allowed CEO salary abuses to skyrocket.