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Robert Reich – a Recession is a Terrible Thing to Waste

Posted on July 13 2010 4:00 pm

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It’s an oft repeated truism that those who won’t learn from the mistakes of history are doomed to repeat them. While this is undeniably true for most of us at one time or another, there remains a special class of people—largely resident within the beltway—who have elevated it to an art form.

Consider Robert Reich, former Labor Secretary, New Deal apologist and truly a man who has never met a regulation, tax or government-takeover he didn’t like.

Just as a refresher, his views on de facto nationalization of BP below.

Given such views on the rule of law and the role of government, it probably won’t send anyone reaching for the digitalis to learn that Reich believes the Great Recession is in fact the fault of the evil rich and government hasn’t yet done enough to confiscate redistribute their money. 

Wall Street’s banditry was the proximate cause of the Great Recession, not its underlying cause. Even if the Street is better controlled in the future (and I have my doubts), the structural reason for the Great Recession still haunts America. That reason is America’s surging inequality.


Each of America’s two biggest economic crashes occurred in the year immediately following these twin peaks—in 1929 and 2008. This is no mere coincidence. When most of the gains from economic growth go to a small sliver of Americans at the top, the rest don’t have enough purchasing power to buy what the economy is capable of producing.

(Full article in The Nation here.)

Reich is actually recycling—without attribution I note—the “underconsumption thesis” (which for overall common sense rates right up there with the “all tariffs are our friends” thesis). This was used to great effect by FDR in promoting the New Deal, which in turn was instrumental in extending what could have been a depression of a few years to a Great Depression that lasted ten.

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