We've been speaking with top economists to better understand what's next
for the US economy as we battled the coronavirus pandemic and the
recession. Today, I'm speaking with Professor Robert Reich.
He teaches at UC Berkeley.
He was the secretary of labor from 1993 to 1997, served under four
different presidents and is an accomplished author.
Most recently. His book is called The System Who Rigged It How to Fix It.
Hi, Professor, thanks so much for meeting with me.
Have Congress and the Fed done enough to stimulate the economy or is more
stimulus needed? More stimulus is needed.
I mean, the two problems the economy faces, the two big headwinds, our
number one, obviously the pandemic, and we're not going to see the economy
fully recover until the pandemic is totally contained.
But the other is we've got to have adequate money in people's pockets.
We've got to have a stimulus that enables people to spend.
And obviously, if people don't have enough money to spend, they're not
going to they're not going to be able to get the economy moving.
This the multiplier effect that comes from the bottom 80 percent of this
economy spending is really what this economy fundamentally depends on.
In that case, what's your boldest idea for how to stimulate the economy?
Are you a UBI guy?
Should we have helicopter money?
Should we be cutting taxes?
What what would you do over the long term?
We do have to have a universal basic income of some sort.
I mean, it's it's good for the economy.
It's a it's efficient.
It needs to be there in terms of the kind of economy we are becoming,
which is a very unreliable economy for most workers.
More and more people, whether they call themselves contract workers or
full time employees, are still seeing a lot of variability in their
income. And that variability is scary.
It puts everybody in a situation of great insecurity and it puts the
economy in a position of vulnerability as well.
More immediately, we've got to have a revival of the Keres Act.
Six hundred dollars a week amount over and above unemployment insurance.
We've got to make sure that all contract workers get it as well.
You see, this is this is the thing that kept the economy from going into a
complete slide before July 31st.
And without it, the whole economy becomes much more vulnerable than it was
before. Credits of that idea are worried about the national debt.
Is now the time to be worried about the national debt?
Does it not matter? Talk to me a little bit about that.
Now is not the time to worry about the national debt.
I mean, how loudly can we say this over and over and over when you have
this much unemployment, when you have this much underutilized capacity?
This is the time when government has got to be the spender of last resort.
We know this. If you don't do it, we're just going to continue to sputter
at 80 to 90 percent of capacity for on and on and on.
Which sectors of the economy do you expect will recover the fastest and
what will be the slowest? And are there parts of the economy that you
expect will never return to normal?
Housing is already recovering, and that's largely because there's limited
supply. Interest rates are very low.
There's pent up demand.
And I expect that housing is going to continue to do fairly well.
The sector the economy I'm most concerned about, obviously, is retail
restaurant generally the sectors of the economy that cater to consumers
who are outside on the go.
And it is worrying because I'm not sure it's coming back or if it does
come back, it's not going to come back anything like it was before.
The other thing I'm watching carefully, Lindsay, is the virtual economy.
And by that, I simply mean that there has been and this hasn't been talked
about nearly enough, in my view, a move in the overall economy from the
tangible to the intangible over the last twenty years.
And what the pandemic has done is it's sort of it's iced that cake, if you
will. That is, we are now very much in an intangible economy in terms of
communication, teaching all sorts of meetings, all sorts of ways in which
people would get together.
Now, if it is possible, we are not getting together.
And I think that a lot of that's going to continue on that.
People have been talking about the digital divide.
So as the economy moves forward into these sort of intangibles, as you
mentioned, are we leaving a huge population behind?
And what can the US government or policymakers or companies do to help
those individuals? We are leaving many people left behind.
And the problem is that these are poor people.
Many of them are people of color.
Many of them are poor white people, working class families.
And they cannot afford laptop computers.
Many of them during the pandemic, continue to risk their health because
they are the ones who are, even though we're not now doing a lot of inside
dining. They are doing outside dining, they're waiting on tables, they're
providing whatever essential services that we still have.
I worry frankly about them, their incomes, their health, being outside the
mainstream economy.
What can we do for them?
Well, I think that we've got to make every effort in terms of getting them
the hardware they need, getting their children the hardware they need,
making education budgets in our state and local governments.
And to the extent the federal government has a role to play, it does
making sure that they compensate to the extent possible for this
educational backslide.
And it really is going to be a backslide for millions of children who can
least afford it. Do you think and you studied the conversation between
government and individual companies for a long time, should the U.S.
government create an Internet that is provided by the federal government?
The United States government should certainly provide the infrastructure
for this new economy that goes to everybody.
Let's put it that way. I mean, this is we're in an intangible economy that
has a lot of public goods attached to it that we are still treating as if
they're private investments, such as all of the Internet connections we
need. We've got to make sure that everybody is online.
What would the labor force look like if the U.S.
shuts down immigration over the next two years as we battle a pandemic?
And what about for other countries?
If the United States shut down immigration, we would find ourselves with
shortages of workers doing the kind of work that a lot of Americans,
frankly, don't want to do.
And there is already a labor shortage.
I mean, for example, look at construction trades.
Now, we do have a unionized construction trade sector that is doing OK.
But there are a lot of elements of construction that a lot of Americans
really rely upon, young workers and a young immigrant workers to do.
The U.S. population is aging, if you hadn't noticed.
Here I am a good example of the aging population, which means that we have
to have young workers coming into the United States population to fill in
for a lot of the jobs that need to be done.
Look at elder care, look at child care.
I mean, we have got to have the immigrants to do these things.
To other questions on globalization, do you think that coronavirus is the
end of globalization?
I hope that the coronavirus is not the end of globalization.
As some people are saying, the global economy is not a zero sum game in
which one side gains only to the extent that the other side loses.
It is and should be a positive sum game.
There are all sorts of advantages that we get and other countries get out
of globalization. The United States cannot afford to do everything inside
our borders. That kind of an economy would would cripple us, would make us
much, much poorer than we are right now.
Developing nations, if they can't export to the United States and to other
developed nations, they are going to stay poor.
This is crazy and crazy top to think that we can go back to the 1930s, the
kind of isolationism we saw then and remember what happened then, that
kind of isolationism made the Great Depression even worse.
Is this the turning point where the Chinese economy might surpass the
American economy?
Is this something we should even be worried about?
We should not be worried about the Chinese economy getting bigger than the
American economy. There are many, many more Chinese.
Their standard of living is still lower than Americans.
And even if they they caught up to us in standard of living, why should
that be a problem now?
There is a national security concern, but that national security concern
is not because they are bigger or eventually have higher incomes than we
do. That's not a national security concern.
The national security concern, maybe sometime in the future has to do with
the might of their sectors of the economy that are directly related to
national security. Well, let's deal with those when we have two.
Is capitalism the best system?
Do we actually have capitalism?
And how can we change the U.S.
system to more closely resemble capitalism?
If you think we should or should we do something different?
Capitalism is the only system in the world.
Even the Chinese communists actually have a capitalist system in terms of
private property and the free exchange of goods and services.
The Nordic countries also practice capitalism.
Although it's under the cloak of democratic socialism, it's still
capitalism. The real issue is not capitalism or no capitalism.
The real issue is what form of capitalism?
American capitalism.
Is sort of the harshest form in terms of very little public investment and
very little social safety net, the Nordic form is probably the softest
form of capitalism, a big, big safety net and a lot of public investment.
The problem with having a very harsh capitalism in the United States is
not only do we generate very, very large inequality, the most unequal of
all advanced nations, but we also breed a lot of resentment and anger that
finds its way into demagogic politics.
It is no longer possible, if it ever was, but it's no longer possible to
talk about the economy without talking about politics because they are
absolutely interwoven at the micro and at the macro level.
What do you think will be President Trump's economic legacy of his first
term? I don't think Trump is going to be remembered for any kind of
economic legacy because there's not any economic legacy to remember.
I mean, his job growth actually before the pandemic was worse than the job
growth in Barack Obama's second term.
I mean, there's nothing to write home about.
There's no reason to celebrate anything.
The only thing that that Trump did was give wealthy people and big
corporations a huge two trillion dollar tax cut, which of which nothing
trickled down. I mean, if you look at the actual earnings of the typical
worker, nothing, zero trickle down, trickle down economics is a cruel
hoax. We now should know that postpaid.
No. Well, look at it'll be a miracle if we get back all the jobs that we
have lost since March.
And then the question is, who's responsible for the pandemic being as
awful in the United States as it has been relative to other advanced
nations? Well, the buck stops with guess who do you think coronavirus
killed the city? And will cities recover after the pandemic coronavirus
has not killed the cities, although some people are talking about it that
way. No cities are more popular and will be more popular in the future
than ever because we as human beings love to come together.
We love to congregate.
We love the excitement.
We love the interest.
We also come together in knowledge intensive waves.
That is, the leading industries of the United States need people to come
together and rub shoulders with one another, even if they're not in
exactly the same companies.
That's why cities are going to be the future agglomerations of knowledge
workers. So for all these reasons, cities don't write the epitaph for
cities. The pandemic has brought us child care and education systems under
increasing scrutiny.
How can we improve these systems and how does covid inform your
suggestions moving forward?
Hopefully, most Americans now understand the need for child care, for
better health insurance, for better public health system, for paid sick
leave. I mean, there are a lot of things that many, many other advanced
countries take for granted that we don't have for our ordinary working
people. That might now be something that's on the public agenda.
Again, not because we've gone to the left or we've gone to the right, but
because people have experienced something very, very frightening and new
and they've been very vulnerable.
That's how politics changes.
How do you see the education system changing post coronavirus?
I would expect the schools of the future are going to be a blend of that
kind of basic education online with teachers who are helping students
understand in a unique and personal way what that all means for them.
You're a professor at a public institution.
Do you think that the cost of higher education will go down after
coronavirus? The cost of education?
Higher education has been going up faster than consumer prices for years
now. That's partly because of all the amenities that many colleges and
universities are now, because they're competing with each other, putting
in place to get the students and to get the faculty they want, partly
because insurance costs and health care costs are going up for
universities as they are for all organizations.
Also, because universities have been very slow to adopt the kind of
technologies that could reduce some of the costs of learning.
And hopefully this will be a boost in that direction, this horrible
coronavirus experience.