This report will analyze Robert Reich’s Saving Capitalism: For the Many, Not the Few. Reich has been Secretary of Labor and on the economic advisory board for the United States involving himself in years of political experience. Overtime, Reich has analyzed the American economy and has identified many issues. The issues Reich has addressed, will affect businesses in the future and the strategies they adopt. The Presidential Election and what we have learned in class also correlate with the arguments Reich presents.
In Saving Capitalism by Robert Reich, Reich discusses the factors that contribute to inequality between the rich and poor in the United States. One of the main issues Reich addresses is that the inequality gap between the rich and the poor continues to grow. In the graph below, you can see that the income dramatically dropped between 2001-2007 and continues to worsen in 2009. Secondly, Reich’s believes that as money flows up and corporations thrive, more money is spent toward elections and lobbying.
Companies have gained the ability to shape public policies and other laws that benefit large industries and corporations. There is a 60% chance a bill is passed when a corporation is in favor of it, and a near zero percent chance when citizens want something passed.
Robert Reich’s are extremely important to business in the future. It has become apparent that companies underpay employees and over pay executives. Companies are using their abundance of money to pay their executives more and spend their money in favor of corporations.
Trumps recent tax cuts benefitted corporations immensely by taxing corporations 14% less. If corporations are to continue to thrive, they will have to start supporting the lower and middle working class.
I believe businesses will be forced to raise wages in order to please their ethical image and keep employees. Hard working people work full-time but barely make ends meet while the employing companies flourish. In Saving Capitalism, a woman testifies working full-time at McDonald’s while barely making it paycheck to paycheck. While working she can see how much money the one store makes each day in comparison to her low pay. Reich highlights that an average employee is paid 100 times less than CEOs. In order to not only close the income inequality gap, but to keep employees, I believe companies will be forced to raise wages.
If businesses continue to act unethically, I believe they will lose support. Studies have shown that 56% of consumers will not continue to shop at brands they believe are unethical (Mintel Group, 2015). If major corporations continue to publicly support policies such as tax cuts, they will lose paying customers. Many companies have used their tax cut profits to raise salaries and provided bonus but have also bought back stocks. When a company buys back their stocks and the billions in dividends will continue to make the top 10% and 1% richer (Phillips, 2018). Therefore, Americans will see the amount of money and power corporations are gaining and will have to stop supporting them.
Strategies that businesses might consider dealing with the future implications of the issues he presents, would be to raise wages to close the gap between equality. Studies show that 48% of consumers decide whether a company acts ethically based on how the employees are treated (Mintel Group, 2015). I believe in order for businesses to continue to thrive they need to act ethically by paying their employees more and providing them with benefits.
Major industries, companies, and associations should adopt strategies that will help the economy as a whole. Dark money spending has increased over the years, which reflect rich corporations funding Presidential Candidates. If the people’s vote in a democratic society does not reflect who they wanted to be president, then is it a true democracy? No. In Saving Capitalism, Reich states that for every dollar spent by Unions and Public interests, corporations spend $34. I believe corporations and other various entities contributing dark money in elections will need to stop in order to save the lower class. By acting more ethically, consumers will be able to support themselves and ethical corporations.
The issues raised by Reich may play into the upcoming Presidential elections in the U.S. Many view President Donald Trump as a businessman instead of a politician, which he is. The tax rate was decreased from 35% down to 21% (Amadeo, 2019). Trump signed off on tax cuts that will only increase the gap between the rich and the poor. Additionally, Trump did make changes in favor of individual tax payers, however, these changes will no longer be effective after 2025 (Amadeo, 2019). I believe because of this Trump will get reelected due to the power corporations have, and because his tax cuts will be seemingly beneficial for many people.
Tax cuts will only set back the economy in the long run by increasing the current debt and budget deficit of the United states. However, the Unites States Government is a nonmarket stakeholder in many corporations. A nonmarket stakeholder does not directly exchange money with the firm, but they can affect or be affected by a corporation’s actions. As a stakeholder in a large corporation, both parties can take actions that mutually benefit one another, regardless of how it affects the rest of the population. The Trump Tax Cuts are an example of how the President and corporations have worked together to benefit the rich, not the poor.
I believe if Trump continues to make changes in favor of corporations, he will be reelected. Corporations use Dark Money to contribute anonymously in presidential elections. President Trump has also donated candidates in the past as pointed out in Saving Capitalism. I believe he will use his knowledge and experience to get reelected because he knows what corporations want. In my opinion, President Trump will get reelected in the upcoming elections due to the corporations he supports, and those who support him.
I believe Robert Reich’s research in Saving Capitalism: For the many, Not the Few is imperative for students. In order to continue to fight for what the middle and lower class need, we need to be educated on what is happening to the United States. In class we have learned about the relationships between the government and businesses, and this video has shown how they have worked together over the years. Businesses will need act ethically, and people need to vote in midterm and Presidential elections. Protesting, voting and getting into job positions that can make a difference are the only thing that can truly save capitalism.