The 10 Biggest Myths About Our Economy

Summary

Robert Reich's video debunks prevalent myths surrounding the economy by highlighting how politics and morality are intertwined with economics. The series delves into the rigged nature of economic systems and how wealth inequality has grown over the past five decades. They discuss the impact of historical shifts away from political economy towards a more 'scientific' view of economics, and how power and influence guide rule-making which benefits the wealthy. Key myths addressed include the neutrality of markets, the nature of corporate donations, the misconceptions about taxing the rich, and the role of globalization.

Highlights

• The belief that economics is purely a science is misleading 🎓.
• Big money in politics leads to policies favoring the rich 💵.
• Union influence has drastically declined, impacting worker power 🤝.
• Government-created rules shape economic market dynamics 🏛️.
• Myths about inflation and wealth often hide deeper power imbalances 📈.

Key Takeaways

• Economics cannot be separated from politics and morality 🎭.
• Markets are not neutral – they reflect who holds the power 💪.
• Wealthy individuals and companies have rigged the system for personal gain 💰.
• Global trade benefits the rich, leaving workers and the environment at a disadvantage 🌍.
• Corporate donations heavily influence political outcomes, undermining democracy 💼.

Overview

Robert Reich takes on the biggest myths surrounding our economy by unpacking how deeply politics and morality are embedded into what many consider the 'science' of economics. With a historical perspective, he challenges the separation of these fields and underscores how this has historically shifted control and wealth upward to a select few.

The video critiques how legal and political frameworks have been manipulated to favor wealthy individuals and corporations, while diminishing the power of working people. It highlights the mechanisms of influence such as political donations, lobbying, and weakened labor unions – all of which contribute to a wide economic divide.

Reich also sheds light on the impact of global trade and corporate welfare policies, questioning the true benefits of neoliberal economic strategies. He raises awareness on how these myths perpetuate economic inequality, urging for systemic changes to create a fairer economy for all.

Chapters

• 00:00 - 01:00: Introduction The Introduction chapter discusses how Donald Trump is not the cause but a consequence of the current crisis, highlighting the last five decades of increasing wealth inequality and growing distrust in American institutions. These issues are intertwined, with many Americans feeling that the system is rigged against them. The chapter sets the stage for a series of videos aimed at debunking common and harmful myths about these problems.
• 01:00 - 03:00: Economics, Politics, and Morality The chapter titled 'Economics, Politics, and Morality' explores the myths surrounding the economic system, suggesting that these myths obstruct genuine discussions about the system's manipulation, the affected parties, and the shifting power dynamics. It challenges the notion that economics is purely objective, devoid of political or moral considerations, emphasizing the importance of understanding these dimensions to grasp the true nature of the economy.
• 03:00 - 05:00: Rules of the Market This chapter discusses the interconnectedness of politics, economics, and morality, which are often treated as separate disciplines. Historically, economics was known as political economy, highlighting the intrinsic link between these areas. Influential economists like Adam Smith viewed these fields as fundamentally intertwined, emphasizing their interdependence.
• 05:00 - 08:00: Wealth and Power Dynamics The chapter explores the historical roots of economic thought, focusing on Adam Smith, often considered the father of economics. Contrary to popular belief, Smith viewed himself as a moral philosopher rather than an economist. He was deeply concerned with the moral questions surrounding the formation of a good society. This raises fundamental questions about what kind of society we aspire to create, emphasizing that economics is not only about wealth and numbers but also involves moral and ethical dimensions.
• 13:00 - 17:30: Global Trade The chapter titled 'Global Trade' delves into the societal rules and norms that govern economic inequalities and labor rights. It poses questions on the acceptability of poverty, child labor, and the necessity of minimum wage laws. Furthermore, it questions the ethics of wealth inheritance, highlighting disparities between the super wealthy and the working class.
• 17:30 - 26:00: US Economic System and Safety Nets The chapter discusses the intersection of morality, power, and economics in the US economic system. It raises questions about the extent of power the wealthy should possess, the morality of corporate monopolies, and the rights of workers to unionize. The chapter also notes the shift in the late 19th century when economists began viewing economics more as a science and less through the lens of politics and morality.
• 30:00 - 36:00: Inflation and Monopolies In this chapter, the exploration of the interplay between economics, politics, and morality is highlighted. It references Alfred Marshall's significant 1890 work 'Principles of Economics,' which was pivotal in establishing economics as a distinct scientific discipline. However, the chapter underscores the inseparability of economics from its moral foundations, suggesting that a holistic understanding of economics must encompass its ethical implications.
• 36:00 - 46:30: Economic Growth vs. Sustainability The chapter addresses a common misconception in political discourse regarding the governance of the economy. It argues that the rules governing the economy are not solely determined by either the free market or the government. Instead, it suggests that the free market and government are interdependent, as a market cannot function without a government to organize and enforce it. Thus, the market is conceptualized as an arena for goods and services, emphasizing the necessity of governmental involvement in its existence and operation.
• 52:00 - 57:00: Conclusion and Call to Action The chapter discusses the functioning of markets and emphasizes the key role of government rules in determining the nature of market transactions. It explores various regulatory aspects such as property ownership, market power, contractual agreements, and bankruptcy procedures. These regulations, essential for market execution, are established by human decision-making, highlighting the human influence over economic structures. The chapter concludes by addressing a call to action for readers to engage with and possibly influence these governing rules.

The 10 Biggest Myths About Our Economy Transcription

• 00:00 - 00:30 Donald Trump is not the cause of the crisis we find ourselves in he's a consequence the last five decades have been marked by an explosion in wealth inequality and a growing distrust of America's institutions they go hand in hand many Americans believe that the system as a whole is rigged against them so how did this happen and how can we fix it to answer these questions we made this series of videos which debunk the most common and destructive myths about
• 00:30 - 01:00 our economy these myths make it almost impossible for us to have a real discussion about how this system got rigged who's being hurt by it and how power has shifted have you heard this lie economics is an objective science that has nothing to do with politics or morality [Music] bunk if you really want to understand the economy you have to understand
• 01:00 - 01:30 politics and also morality they're treated as separate Fields separate disciplines each has its own experts and Specialists but the three are completely intertwined in fact through most of the 1800s the field of study that we call economics was called political economy people who studied it saw that the two Fields were the same Adam Smith the Scotsman who wrote the wealth of nations
• 01:30 - 02:00 in 1776 is considered the father of economics especially by conservatives but he never called himself an economist he called himself a moral philosopher why because he was really interested in the meaning of a good Society that's what it's all about or should be all about what sort of society do we want these are basically moral questions
• 02:00 - 02:30 s a society has the ability to make its own rules and determine how much inequality is acceptable how much poverty is slavery acceptable is it okay for young children to have to work should there be a minimum wage is it okay for an adult who works 40 hours a week or more to earn so little that her family is impoverished is it okay for children of the super wealthy to inherit so much wealth they never have to work a
• 02:30 - 03:00 day in their lives when we talk about morality we can't avoid the issue of power how much power should the wealthy have is it okay for a corporation to monopolize a market is it okay for workers to join together to form a labor union in the late 19th century economists began to deemphasize politics and morals they started treating economics as more of a science and less
• 03:00 - 03:30 of a philosophical study that took into account morality Alfred Marshall's Monumental work principles of economics established economics as its own science in 1890 but economics politics and morality canot be separated we need to see the moral underpinnings of economics [Music]
• 03:30 - 04:00 that's bunk politicians of all Stripes talk as if the rules that govern the economy are determined either by the free market or by government but that's wrong there can't be a choice between the free market and government because a market cannot exist without a government to organize and enforce it a market is an arena where good goods and services
• 04:00 - 04:30 are exchanged how that market functions depends upon rules determined by government the rules govern property what can be owned Monopoly what degree of Market power is permissible contracts what can be exchanged and under what circumstances bankruptcy what happens when borrowers can't pay up and how is all of this enforced these rules are decided on one way or another by human beings but who
• 04:30 - 05:00 exactly and whose interests are they represented over the past few decades large corporations Wall Street and Wealthy individuals have gained increasing influence over politics corporate PX spending has reached hundreds of millions of dollars a year business lobbyists spend 68 times as much on lobbying as labor unions and big corporations March into courtrooms with
• 05:00 - 05:30 platoon of lawyers simultaneously centers of counterveiling power that between the 1930s and 1980s enabled America's middle and lower middle class to exert their own influence have withered for example labor union membership has fallen from a third of private sector workers in the 1950s to just 6% in 2023 small businesses have been repaced
• 05:30 - 06:00 by giant big box and online retailers small investors by giant institutional investors political parties once anchored at state and local levels have become giant washington-based fundraising machines as a result the rules of the American economy are now largely organized by big corporations and those with great wealth for their own gain ever larger upward distributions in inside the market from the poor and
• 06:00 - 06:30 working class to the top have become normalized as functions of a market that is assumed to be neutral but remember markets are not neutral they reflect who wields power get ready for this lie the richest people have worked the hardest and therefore deserve their wealth bunk
• 06:30 - 07:00 income and wealth increasingly depend on who has the power to set the rules of the game CEOs of large corporations and wall Street's top Traders effectively set their own pay and their pay has gone into the stratosphere they've linked their pay to the stock market through stock options used corporate stock BuyBacks to increase stock prices and timed the sale
• 07:00 - 07:30 of their options to those increases some get inside information about corporate profits and losses before the rest of the public and trade on that information others create or work for companies that have monopolize their markets that means they can charge consumers higher prices than if they had to compete for those consumers and they can keep wages low because workers have fewer options of whom to work for others use use their
• 07:30 - 08:00 political influence to get changes in laws regulations and taxes that benefit themselves and their corporations while harming those who don't have this kind of influence others were just lucky enough to be born into or marry into wealth these days the most important predictor of someone's future income and wealth in the United States is the income and wealth of their parents 60% of all wealth is inherited and we're on the cust of the biggest
• 08:00 - 08:30 intergenerational transfer of wealth in history from Rich Boomers to their children meanwhile the pay of average workers has stagnated because they have lost economic power and the political influence that goes with it corporations have lowered wages by Outsourcing work abroad replacing workers with software and preventing workers from unionizing wealth doesn't measure how hard someone has worked or what they deserve but how
• 08:30 - 09:00 well our economic system has worked for them here's a barefaced lie corporate political donations are free speech rubbish that's not free speech that's bribery in 1971 Lewis Powell urged the
• 09:00 - 09:30 leaders of American corporations to devote a portion of their profits to politics since then America has witnessed the largest and most entrenched system of legalized bribery in its history big corporations and the super wealthy have rigged the free market for their own benefit throughout the 1980s corporate pack spending on Congressional races increased nearly fivefold labor union pack spending Rose only about half as fast by the 2016
• 09:30 - 10:00 campaign cycle corporations and Wall Street contributed $34 for every $1 contributed by labor unions and all public interest organizations combined in 1980 the richest 100th of 1% of Americans provided 10% of all donations to Federal elections by 2012 they provided 40% both political parties have become Giant fundraising machines fueled by
• 10:00 - 10:30 money from the top what's the result of all this bribery politicians use the money to get elected and reelected and then lawmakers do what corporations and Wealthy individuals want it's legalized [Music] bribery here's a real Whopper the market doesn't play favorites bunk
• 10:30 - 11:00 many of the most vocal proponents of the so-called free market have for years been actively reorganizing the market for their own benefit they don't want us to notice what's happened over the last half century as big money has corrupted our politics laws that limit campaign donations have been weakened or repealed allowing wealthy individuals and corporations to essentially bribe
• 11:00 - 11:30 politicians antitrust laws have been virtually abandoned with the result that big corporations have got much bigger and merges and Acquisitions far more common so-called right to work laws have made it harder to organize labor unions so the unionized portion of the private sector Workforce has dropped to just 6% high- paid Bankers have pocketed huge sums while exposing America to
• 11:30 - 12:00 extraordinary economic risk after the 2008 Wall Street crisis and the taxpayer funded bailout of the big Banks only one top Banker went to jail corporations have been able to use bankruptcy to get out of Labor contracts but homeowners cannot use bankruptcy to protect their homes from being taken back by lenders and former students can't use bankruptcy to protect their earnings from being garnished to pay their student loans
• 12:00 - 12:30 hedge fund and private Equity managers get a low tax rate on their incomes courtesy of a special loophole that neither Democratic nor Republican presidents have closed lower trade barriers have enabled corporations to Outsource work to Nations that pay lower wages and then sell the goods back to the United States Americans get the benefit of Cheaper Goods but lose unionized manufacturing jobs it it's been a vicious cycle each change in laws
• 12:30 - 13:00 has ratcheted wealth and power upward making it easier for the wealthy and Powerful to gain further legal changes that ratchet even more wealth and power [Music] upward you heard this livee global trade is good for everyone [Music]
• 13:00 - 13:30 that's bunk many economists believe in the doctrine of comparative advantage which posits the trade is good for all nations when each Nation specializes in what it does best but what about costs to workers and the environment what if a country's comparative advantage comes from people working under dangerous or
• 13:30 - 14:00 exploitative conditions or from preventing them from forming labor unions or allowing employers to hire young children or from polluting the atmosphere or the ocean or destroying rainforests and polluting groundwater my old boss Bill Clinton called globalization the economic equivalent of a force of nature like wind or water but globalization is not a force of nature
• 14:00 - 14:30 global trade is structured by rules negotiated between nations about which assets will be protected and which will not these rules determine who benefits and who is harmed by trade over recent decades trade deals such as the North American free trade act and agreements under the World Trade Organization have protected the assets of us corporations including intellectual property for example if another Nation
• 14:30 - 15:00 adopts strict environmental regulations that reduce the value of US oil Assets in that country us oil companies can seek compensation for their reduced profits trade deals have also benefited the pharmaceutical industry with extended drug patents they benefited stock Traders by ensuring they can move Capital into and out of countries regardless of local banking laws and trade deals have protected big
• 15:00 - 15:30 agriculture now it's true that American consumers benefit from lower priced goods from China Mexico and other countries where wages are lower than in the United States but trade deals have caused millions of Americans to lose their jobs between 2000 and 2017 a total of 5.5 million manufacturing jobs vanished partly due to increasing Imports mostly from China
• 15:30 - 16:00 global trade on its own is neither good nor bad but the way trade is now conducted protects the wealth of those who already have it and burdens those who [Music] don't here's a lie you'll hear on conservative talk radio taxing the rich is socialism bunk
• 16:00 - 16:30 far from being a socialist country the United States provides corporate welfare for the rich while subjecting everyone else to the harshest form of capitalism in the world most Americans who lose their jobs are not eligible for unemployment benefits less than 30% of working Americans have access to Paid Family Leave only 36% of Americans have government subsidized health health insurance and while people in most other
• 16:30 - 17:00 countries get 3 to 5 weeks of paid vacation Americans on average only get 11 days Executives who run their companies into the ground are getting goldplated exit packages while their workers get pink slips after a security breach in Equifax that exposed the personal information of 145 million customers to hackers Richard Smith retired with an $18 million pension the Wells Fargo CEO in charge of the unit that opened more than 2 million
• 17:00 - 17:30 unauthorized consumer accounts departed with $125 million exit package meanwhile thousands of big American corporations are raking in billions each year in government subsidies bailouts and tax loopholes all funded on the taxpayers dime when their workers have to rely on programs like food stamps and Medicaid corporations that don't pay their workers a living wage in effect get fat government subsidies this government laress raises stock
• 17:30 - 18:00 prices for the richest 1% who own half of the stock market as well as CEOs and other top Executives who are paid largely in shares of stock the money is there money that could instead be used for more generous social safety nets but we're using it to pad the pockets of the wealthy corporations and CEOs are job creators who need made tax cuts and fat
• 18:00 - 18:30 profits to generate [Music] jobs most American jobs are created by poor working and middleclass people whose spending on goods and services causes businesses to create jobs if most Americans don't have enough purchasing power businesses won't hire in 1914 Ford Motor Company boosted
• 18:30 - 19:00 its workers wages their employees could afford to buy Model T Fords enlarging the demand from model te's thus creating more jobs at Ford the great crash of 1929 ushered in the Great Depression of the 1930s because people didn't have enough money to buy the goods and services the economy could produce which caused a vicious cycle of fewer jobs and even less money in the pockets of average people the cycle only ended when the government stepped in through vast
• 19:00 - 19:30 public spending on World War II so when you hear that corporations need tax cuts in order to create more jobs or that tax increases on corporations and the wealthy are job Killers know that this is baloney the best way to create more jobs is to put more money into the pockets of more workers which is why we need a higher minimum wage an expanded Earned Income Tax Credit and stronger unions that can bargain for
• 19:30 - 20:00 higher wages remember it's working people who create jobs when they have enough money in their pockets to buy you hear this rubbish all the time inflation is caused by too much government spending along with wage increases bunk [Music]
• 20:00 - 20:30 higher wages and government spending don't push up consumer prices in many cases Mega corporations raise prices to increase their profits they can do this because they face such little competition worried about Sky High airfares and lousy service that's largely because Airlines have merged from 12 carriers in 1980 to only four today concerned about drug prices between 1995 and 2015 60 leading
• 20:30 - 21:00 pharmaceutical companies merged to only 10 upset about food costs four large companies now control 85% of Beef Processing 70% of the pork market and 54% of poultry worried about grocery prices just three Giants Albertson's Kroger and Walmart controls 70% of the grocery sales in 167 cities monopolies can raise prices and keep
• 21:00 - 21:30 them high because there's not enough competition to charge lower prices and grab their consumers away right now responsibility for fighting inflation lies with the Federal Reserve which raises interest rates to slow the economy when prices rise but this causes more unemployment keeps wages low and harms many working people an important way to avoid inflation would be to fight it at the source break break up monopolies using antitrust laws so that
• 21:30 - 22:00 a handful of private companies can't artificially raise prices many people fall for this lie unconstrained economic growth is always good that's bunk [Music]
• 22:00 - 22:30 unconstrained economic growth is causing such grave harm to The Climate that its costs are likely to be greater than the gains mainstream economists don't measure the costs of growth they talk about climate change as a so-called externality as if it were just incidental to growth wrong if you consider the death and injuries caused by chemical
• 22:30 - 23:00 pollution wildfires more intense hurricanes and storms the costs of growth are huge it's possible to shift from an economy organized around growth to one organized around sustainability how dramatically reduce the use of fossil fuels limit what can be mined and extracted treat the Earth the same way we treat any limited natural resource we prevent over fishing by limiting the amount of fish that can be taken out of the sea over a given
• 23:00 - 23:30 period of time we should also limit the amount of Gunk that can be put into the air limit how much plastic can be produced how much of our coastlines can be developed and how much land can be owned and developed in other words if we accept that the Earth is a finite resource let's also agree that infinite growth will destroy the Earth it's already on its
• 23:30 - 24:00 [Music] way many people dismiss Trump supporters as ignorant bunk if we want to reduce the lure of authoritarianism we need to address its root causes the truth is many of the key political and Economic Institutions of our Society have abandoned American
• 24:00 - 24:30 workers the free market has been rigged and power has shifted upward to corporate Executives and investors who engage in organized bribery bankrolling lawmakers who change laws and regulations to their benefit this allows the powerful to monopolize bash unions pay lower taxes make big Financial bets on Wall Street and get bailed out when they go sour Outsource jobs abroad and pretend their job creators who deserve
• 24:30 - 25:00 all this power by 2016 the richest on10th of 1% owned nearly as much wealth as the bottom 90% put together for many people the American dream has become a nightmare most Americans without college degrees are working longer hours than they worked decades ago and taking fewer sick days or vacations meanwhile life expectancy
• 25:00 - 25:30 has been falling since 2010 for Americans without college degrees that's because income and wealth have direct impacts on Health and Longevity they determine access to life supporting services like highquality preventive Health Care nutritious foods and housing and income and wealth have a lot to do with whether someone is endangered by handguns opioids and economic stress as a result of all of this Americans have become angrier and more frustrated more
• 25:30 - 26:00 vulnerable to demagogues pedling the politics of hate gross inequality is the enemy of democracy but this doesn't have to be Our Fate we have the power to make a system that works for the many not the [Music] few congratulations you've made it to
• 26:00 - 26:30 the end you're now armed with the facts you need to counter these pervasive economic myths which have been used to justify a system whose gains increasingly go to the top While most Americans have been working harder but getting nowhere we cannot separate what has happened to the typical American from the dangerous lure of trumpism trump has exploited the anger and anxiety of many Americans for his own ends but the anger and anxiety are real unless addressed they will continue to
• 26:30 - 27:00 be exploited by other authoritarians long after Trump is gone the first step to fixing the economy is understanding the real problem big money corrupting our politics and rigging the system against working people so please share this video to help spread the truth [Music]