Aftershock: The Next Economy and America’s Future
by Robert Reich

–Reviewed by Jake de Grazia

Meet Margaret Jones, your new President. She’s putting a freeze on immigration. She’s increasing tariffs on all imports. She’s withdrawing from the United Nations, defaulting on our debt to China, and abolishing the Federal Reserve. She’s outlawing investment banking, taxing capital gains at a rate of 80 percent, and capping personal income at $500,000 per year. She’s the new populist, the destroyer of both the Democratic and Republican parties, the voice of an overworked, underpaid, absolutely unsatisfied American people.

Margaret Jones, of course, doesn’t exist. Not yet. By the year 2020, however, according to economist Robert Reich, she might. Reich’s book is called Aftershock. It’s a short, accessible plea for sensibly radical economic reform.

Thanks to bank bailouts and stimulus packages, writes Reich, we’ve weathered the “Great Recession” and averted economic collapse. But he argues that we haven’t addressed the fundamental problem that led not only to this crisis but also to the Great Depression: widening economic inequality. If we don’t solve that problem fast, he says, we’re in trouble. The underlying trend of the last thirty years will continue. Median incomes will remain flat or decline, and most families will stay economically insecure. Inequality will continue to widen. Consequently, the middle class will not be able to buy nearly enough to keep the economy going. Neither richer Americans nor foreign consumers will fill the gap. All of this will constitute what Reich fears: the Great Recession’s aftershock.

All of that and someone like Margaret Jones, the political manifestation of a population’s chronic frustration with government, big business, and their collective failure to create security and prosperity for all.

But the aftershock, according to Reich, is something we can avoid. Just as 20th century American history has taught that periods of widening economic inequality lead to economic crises, that history also offers us a counter-example.

Reich calls it The Great Prosperity: the late ‘40s, the ‘50s, the ‘60s, and most of the ‘70s. Unemployment was low. Productivity was high. Business was booming. And the gap between the biggest American incomes and working class incomes was shrinking. Workers were sharing in the fruits of the economy’s growth, and, consequently, by using their growing incomes to purchase more goods and services, they fueled still more growth.

Reich thinks we can bring that prosperity back, and he closes his book by proposing a fascinating set of economic policies, including a reverse income tax, free public transportation for all, and “blind trust” campaign finance reform.

His policy prescriptions are bold, but Reich is convincing, and President Jones is terrifying.

Buy the Book: Skylight, Powell’s, Amazon, Borders

Excerpt: By averting the immediate financial crisis and then claiming that the economy was on the mend, he left us with a diffuse set of ongoing economic problems that seemed unrelated and inexplicable – rather like the citizens of a village whose fire chief succeeds in protecting the biggest office buildings but leaves smaller fires simmering all over town.

Further Reading: Supercapitalism: The Transformation of Business, Democracy, and Everyday Life by Robert Reich and Freefall: America, Free Markets, and the Sinking of the World Economy by Joseph E. Stiglitz

Jake de Grazia is Director of Education for the iMatter Campaign. He blogs here and here.

*Photo courtesy Ben Sutherland.