Book Review: “Aftershock: The Next Economy and America’s Future” by Robert B. Reich

No, this isn’t a mistake. I didn’t just publish the same post twice. This summer, I read two separate books titled “Aftershock”. Each one was about our economy and fortunately they were both outstanding! For my review of the other “Aftershock” book by Wiedemer, Wiedemer, and Spitzer, click here.

“Aftershock” by Robert Reich was a liberal perspective towards understanding our economic mess, what it could turn into, and how we can solve it. The theme of this book is simple:

• Without change, the middle class will not be able to sustain our economy.

Summary:

The fundamental problem that Reich points out with our economic situation is that “the basic bargain is broken”. The basic bargain goes back to the days of Henry Ford and says that employers should pay workers well so they will have the means to buy from your economy and thus keep it going.

How is the basic bargain broken? Wages have been unchanged for the last 30 years. Jobs have been lost to foreign nations and automation. And although there are still jobs available, they are less paying. To cope, Americans:

• Sent women to work

• Worked longer hours

• Saved less and borrowed more

If this continues, Americans will not be able to get good jobs or high paying wages, borrow money, get out of debt, or recoup lost retirement investments. They will not be able to supply sufficient demand to keep the economy going.

So why is the Middle class declining? Reich points out that wealth and power is too concentrated in the hands of the few. Politicians are not willing to help because the government is too concerned about the “Financial Economy” and protecting the rich rather than the real economy felt on “Main Street”. Most of the big name politicians are ex-Wall street executives.

Eventually, the Middle class will be forced into lower standards of living. As the rich continue “rig the system” and bounce back with each financial crisis, this will outrage those at the bottom opening the doors to radical outrage.

What Does Reich Suggest We Do About This?

In Reich’s opinion, we need to subsidize the poor and increase the tax rate as wealth increases. He feels that an implementation of such as policy would tip the scales towards receiving money from those who have it rather than burdening those that do not have any.

Reich also suggests plenty of other changes such as a “reemployment system” rather than an unemployment system, school vouchers based on family income, college loans to be linked to subsequent earnings, and Medicare for all.

Finally, he also wants to get the “money out of politics”.

My Thoughts:

Whether or not you agree with his taxation proposals or democratic views on the wealthy, it is obviously clear that many of the points Reich brings up are already taking place. For example, he is absolutely right about the stagnation of wages and the loss of “high quality paying” jobs. In the other “Aftershock” book as well as other articles, this fact has also been cited. Also, the unemployment figures and jobs-created numbers reported on the News are misleading because they don’t take into account that a high paying one may be replaced with a low paying one.

Reich’s assessment of the strain put on the budgets of Middle class America has also been a personal observation of mine. Take a look around. If you’re a dual-income family, think about how hard it would be to get by on just one income. How about saving any money for retirement or your children’s college funds? Think back to when you were a kid and how many of your friends had parents that were dual income? Probably not as many as the families you know now! One of my big fears for the future (and for my children) is that our society will divide wider and wider into those who “have” and those who “have-not”.

The issue of the wealthy “rigging” things in politics has been addressed in many other publications for a while now. Did anyone see Michael Moore’s movie “Capitalism: A Love Story”? Although it is an issue which is becoming more transparent, I fear there is very little being accomplished to combat this issue. Even as I write this post, our own President is being met with all kinds of opposition towards his “Buffet Tax” on the wealthy or any other proposal which includes sacrifices to help close the debt gap. Unfortunately, the next step beyond civilized debate is radical reform; a process that I’m sure everyone would rather avoid.

I would recommend this book for anyone interested in a hearing a unique viewpoint about what is wrong with our current economy and the haunting predictions that they may result in.