Wednesday, May 03, 2006


U.S. Savings Rate Last Year Was Negative...

Check out this little article by Robert Reich. It raises the question why the U.S. savings rate went into the red last year for the first time since The Great Depression. Reich asserts that Americans aren't saving because they can't save. Despite the fact that corporate profits have doubled since 2000, the wages of the average American worker have stagnated. And that's all across the board - from blue collar to white collar. He cites the usual suspects - weak unions, off-shore outsourcing - and suggests that one way to raise wages without triggering inflation might be for corporations to channel employee pay increases directly into their 401K's. I'll believe that when I see it.

Still, it is good to see Robert Reich taking the American economy seriously again. For a while, he had been afflicted with a bad case of complacent bloviation. Just before the Dot Com Crash, he published a book with the fatuously boosterish title The Future of Success. He imagined an economy transformed by The Creative Force of Youth. He didn't define what was "creative" about it, except maybe to say that it didn't involve technical skill or experience but simply "ideas". A vague optimism worthy of a three-martini-lunch ad exec circa 1962 suffused his rhetoric and made it almost comically weightless. It was also not the shrewdest move to relegate everyone over forty to the back seat of both "creativity" and the economy - especially since he ran for office a little while after that and voters are disproportionately older people.

But perhaps by then he didn't feel like succeeding. He had already succeeded enough, and it was time to kick back and rest on his laurels. When interviewed by Charlie Rose, he claimed he was satisfied just being a Dad to his teenaged sons, whose souls he said were like "onions - you peel one layer, and there is another one beneath that". Having once been a teenaged boy myself, I would aver instead that those souls are more like scabs, red and angry and painful. When you peel off one layer, another grows back just as ugly. Reich's take on youth is perhaps typical of an Ivy League professor - the brilliance of your students induces the illusion that the entire generation is a pack of movers and shakers.

He can be an eloquent critic of the status quo. He once described the creative accounting of corporations as "paper entrepreneurialism", and it would be nice to have that suavely iconoclastic astuteness return. Besides, at four-foot-eleven, he is way too short to succeed in politics - at least anywhere this side of a dictatorship.

"The Shrinking Nest Egg" from The American Prospect

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