Robert Reich – Ignorant or Evil?

Today on Marketplace Robert Reich, professor of public policy at the University of California, Berkley, weighed in on the idea that America turning into an ‘entitlement state’ or worse, ‘European style welfare system.”

Mr. Reich’s full comments are pasted below (emphasis mine):

“One of the few things the Republican presidential candidates agree on is that President Obama is turning America into what they call a “European-style welfare culture.”

“In his standard stump speech, Mitt Romney charges Obama with replacing our merit-based society with an “entitlement society.” Yesterday’s big winner Rick Santorum says, “There’s a push to get more and more people dependent.” Newt Gingrich calls Obama the best food-stamp president in American history.”

“Government data do show direct payments to individuals shot up by almost 32 percent since the start of 2009, and almost half of Americans now live in homes where at least one person is collecting a federal benefit — such as Social Security, food stamps, or unemployment insurance.”

“The GOP candidates argue our economic problems stem from this sharp rise in what they see as dependency on government. But they have cause and effect backwards. The reason for the rise in these federal benefits is Americans got clobbered in 2008 with the worst economic catastrophe since the Great Depression. Many are still in it. They and their families have needed whatever helping hands are available.”

“That’s why the percentage of Americans falling into poverty has grown dramatically over the past three years.”

“Most of the new jobs being created are in the lower-wage sectors of the economy — hospital orderlies, nursing aides, secretaries and retail clerks, hotel and restaurant workers. Millions of other Americans remain working in their old jobs only because they’ve agreed to cuts in wages and benefits. And millions of others have become temps or contract workers.”

“If anything, America’s safety nets have been too small and shot through with holes. Only 40 percent of the unemployed qualify for unemployment benefits.”

“We haven’t entered an entitlement society. Too many Americans have entered a downwardly-mobile society.”

It is true that the great recession of 2008 caused many to go on government assistance but Mr. Reich fails to note that the recovery (if you can call it that) has been nothing but a dead cat bounce and by his own admission over half of Americans are still living on some form of government assistance.  The reason for this is not a mystery to those who believe in fiscally conservative principles and our pitiful recovery is a direct result of Obama’s business killing regulation which is evident in a recent post from the Heritage blog.  Here is a chart comparing the recoveries (output relative to potential GDP) from two deep recessions – 1981 and 2008 – and this shows how Reaganomics beats Obamanomics hands down.

 Liberals fail to link increased government assistance (extended unemployment benefits and increased welfare spending) to hindering the economic revival because we incentivize people to stay on government assistance instead of looking for work.  As proof of that theory, I have shown in a previous post how increasing Welfare spending as a percent of GDP increases the poverty rate.

Mr. Reich reaches the conclusion that we are not turning into an entitlement state and doubles down by stating that the safety nets we have aren’t big enough!  Astounding!  From the 2009 IRS tax data (the latest available) I have shown that over 90% of all tax revenues go to pay Social Security, Welfare, Medicare, Medicaid and Unemployment Insurance.  How can you say we are not an entitlement state when almost all the money we take in from taxes pays for entitlement programs?  And yes, Social Security is an entitlement program.

It is ironic that Reich would make these statements the same day an exhaustive research article was published at the Heritage website showing that America’s dependence on government assistance is at an all time high.

Almost half of all Americans don’t pay any income tax.

Over 70% of government spending goes to pay for dependence programs.  Note that this differs from my 90% figure because ‘spending’ takes into account the money we borrow (I just used the money we take in from taxes).

Mr. Reich is a bright guy so how does he not see this?  Is he ignorant about how economics is always about motivations and when we provide handouts to those who are able to work we just enable them to remain on the government payrolls?  Or does he have a political agenda that is complicit with Obama in wanting to turn America into a Socialistic state?  There really is no other alternative to explain the statements he made today – he is either ignorant or evil.

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9 Responses to Robert Reich – Ignorant or Evil?

  1. Read Reich’s book “Supercapitalism” in grad school, or as I like to call it, “Superfascism.” The entire class panned it behind the professor’s back. It was basically a muddled screed arguing that capitalism can be ‘made better’ with more (unlimited and arbitrary) government intervention.

  2. A few more things. The first is that interest on the debt is killing the country, and a lot of that debt is due to so-called entitlement programs. Second is that one of my favorite correlations is “Hauser’s Law,” which shows that governments have been historically unable to suck more than 19% of GDP out of the economy, no matter what. Third is that the correlation of poverty rate and welfare as % GDP have reversed and are now positively tracking together. We must look to what has changed systemically, and the singly most powerful impacting variable is more government intervention. (As opposed to say, a more adverse export/import situation, inability to adapt technologically, military invasion, resource depletion, etc)

    • cosmoscon says:

      I appreciate the great comments Rogue. I had not heard of Hauser’s Law before and I’ll dig into that. My day has just started and I’ve already learned something new – Thanks!

  3. Ben Hoffman says:

    Gee… ya think maybe entitlement payments are high because there’s high unemployment? If Republicans didn’t destroy our economy, we wouldn’t have that problem. And we wouldn’t have the enormous debt if it wasn’t for the Bush tax cuts, the two wars, reduced revenues due to high unemployment, increased payouts for unemployment benefits, Medicare Part D…

    • cosmoscon says:

      I agree that in 2009 we should see an increase in entitlement payments due to the great recession but here we are at least 2 years into the ‘recovery’ and things are getting worse, not better.

      Take a look at the first graph and compare the 1981-1985 period (an equally tough recession) with 2008-2012. We are not growing and historically we have always seen a huge jump up in GDP following a major recession but this one is different.

      The last two graphs show that after the Reagan years we have been on a constant destructive trajectory – adding more people to governement dependancy programs and having fewer people paying income taxes. Both political parties are to blame as are Clinton, Bush and Obama. We have to stop this now.

  4. Thanks for bringing these data to bear. I’d offer a third alternative to ignorant or evil: willfully deluded. Liberals who should know better, like Reich and Krugman, can’t bring themselves to countenance free-riding and other moral hazards as a results of the incentive process for people. To do so would imply that some (not all) people can be bad or lazy, and that is anathema to the liberal worldview. It’s more palatable to their sensiblities just to blame Bush, Republicans, or rich people.

    • cosmoscon says:

      Excellent points cogitatingduck! Libs can’t grasp the fact that there are bad people in the world. Everybody is a winner!

      Thanks for stopping by and taking the time to comment!

  5. Pingback: Eight Killer Naps: The Left’s Drive to Put Western Civilization into a Coma | Rogue Government

  6. Pingback: Harvard Professor Niall Ferguson: Obama’s Gotta Go

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