Saving Democracy (and Capitalism) With Robert Reich


NewCo Shift Dialogs, In Partnership with EY

Robert Reich had a lot to say about Donald Trump at the Shift Forum last month. Not much of it was nice.

Robert Reich at NewCo Shift Forum

Since leaving office as Bill Clinton’s Secretary of Labor, Robert Reich has built a career as a fierce critic of corporate America, reserving particular rancor for Republican policies that have enriched the wealthy and driven historic levels of income inequality around the globe. Now a professor of public policy at UC Berkeley, Reich has authored 14 books, including the classic Work of Nations, and his fiery manifesto Saving Capitalism (my review is here).

If anyone can command the intertwined threads of policy, economics, and capitalism which informed last month’s NewCo Shift Forum, it’s Reich. In conversation with John Heilemann, author of Game Change, Double Down, and co-creator and host of Showtime’s The Circus, Reich pulls not a single punch, questioning President Trump’s policies, practices, and, at one point, his basic sanity. Below is the full, unedited conversation between Reich and Heilemann.

This is the third of many candid interviews held at the first annual NewCo Shift Forum, including John Podesta, Stephen Curry, and many more to come, including dozens of leaders from politics, entertainment, and technology.

John Heilemann: We’re going to talk about Trump in a direct way throughout this. I want to talk about some bigger issues, but the first thing I want to do is just…

Robert Reich: There’s no way to talk about Trump that is not direct.

That’s true. To start things off, let’s get this out of the way. We’re now almost three weeks into the new administration, and you have described it using the phrase…characterized it as, “We’re in a moment of incipient tyranny.” Those are strong words. What does that mean?

I simply mean that Donald Trump’s attack on the press, which even this last weekend suggested that the press was actively in a conspiracy to repress reporting of terrorist actions, his comments about the judiciary, again most recently the “so‑called” judge in Washington, his disdain for democratic institutions, his big lies about his mandate, “won by a landslide”…

“Historic landslide.”

…and the “massive voter fraud,” all of these, even if it weren’t for the people who he has put around himself and the use of executive orders in the way he has done, suggest to me an authoritarian personality that doesn’t really respect democratic institutions, doesn’t understand democratic institutions.

I think it’s dangerous, particularly at a time when so much of the public has been heated up to a level of hatefulness and rage, so that Donald Trump’s instigation can get and generate a lot of hate mail and even death threats to judges, members of the press, and to a lot of other people.

I don’t want to be alarmist, because obviously it’s not the 1930s, but it has too many parallels to other tyrannical movements we’ve seen historically.

I think specifically the thing with the judge, where he said, “If we have a terrorist in this country, it’s now on this judge and the court system.”

Yeah, “You will be blamed. You will be blamed.”

That’s, to me, a very significant demagogic move.

Frankly, I haven’t ever…I’ve been in and around presidents and White Houses…

Since the Coolidge administration.

Actually, the Harding administration. [laughter]

Honestly, I’ve never seen anything like this. The temptation of all of us is to want to normalize, to say, “Oh, well. Maybe he’s…you know, Richard Nixon had some problems.” There’s nothing about this that is normal, and this is not a left versus right, Republican versus Democrat, conservative‑liberal issue. I think this is fundamentally an issue about democratic institutions versus authoritarianism.

I want to think about the larger political dynamic here, and I think it’s fair to say that we are in a populist moment in America that gave rise to Trump. It also gave rise, on the other side, to Bernie Sanders. A lot of people still don’t really get this.

For someone who was out and spent 250 days out on the campaign trail last year, the number of people — especially early in the year — who you would meet in Iowa, New Hampshire, South Carolina, who were talking to you, and they would say, “I’m either going to vote for Bernie Sanders or Donald Trump.”

I know you had the same experience. You found that, at first, so baffling. I discussed it a fair amount with Senator Sanders. He said it happened to them all the time. He would meet people who were choosing between him and Donald Trump.

Just talk about how, in some weird way, the Sanders phenomenon and the Trump phenomenon, which were, I think, the two most electorally significant things, in terms of energy, passion out there in the country, how they’re two sides of the same coin.

I first realized this in the fall of 2015. I was out in Missouri talking to a bunch of farmers, right smack in the middle of Missouri. We were talking about the upcoming election, and I got from them exactly what you just said. I said, “Who are you interested in?”

“Well, the two most interesting people who attract us,” they said, “Bernie Sanders and Donald Trump.” I began asking them why. It turns out it’s fundamentally a sense they had, and I picked it up all over the country, that the game is rigged. It’s rigged by people who are in positions of power.

For the farmers, it was the suppliers, Monsanto and others, that were taking in more and more money and squeezing the small farmers, the big fertilizer companies, and the big food processors. Their beef was the same general anger I found in Cincinnati, in Michigan, and every place else.

People who were working harder than ever, who knew — they didn’t know literally any of the data — that some people were doing very well. They harkened back…and here’s another thing that’s very important.

Everybody, when I pushed them hard on, “Why do you think the game is rigged?” Whether they were Republicans or Democrats, they came back to the bailout of Wall Street. The bailout of Wall Street, which really did create the impetus behind the Tea Party on the right and the brief Occupy movement on the left, was in people’s minds, even in 2015, 2016, when they were talking about Bernie Sanders and Donald Trump.

Bailed out, and no one went to jail.

Nobody went to jail. The big guys on Wall Street who created the problem got bailed out, and in the meantime, they — that is, most people, the farmers, everybody else — lost their homes, many of them, their jobs, many of them, their savings, many of them, and they felt…

This is an example, it’s the biggest example, but it revealed…it was as if you pressed the Reveal code button, and suddenly you see the whole pattern. They saw it. This was across the Midwest, this is across the industrial belt, and they were indignant.

The word “indignance” I think is the most important word. Any candidate who came…what they liked about Donald Trump and what they liked about Bernie Sanders is that they were indignant. They were angry. They were going to upset the apple cart. It was not going to be business as usual.

They were going to change things, and they talked about changing them in ways that would help average working people like them.

We traditionally think about politics as a left‑right continuum. Now I think it’s fair to say there are a couple different continuums. One is the continuum between establishment politics and populist politics. Then within populist politics, you have the reactionary populism versus progressive populism.

I think that’s exactly what’s happened. I would say that the most important drama to be played out over the next 20 years is not Democrat versus Republican. It is authoritarian populism against what might be called progressive populism. There is not really an establishment alternative.

A lot of people in Washington that I talk with don’t get it, because that’s the center of where things have always been. But when I talk to people, for example who are candidates to be new chair of the Democratic National Committee, and bring up these points, they — for completely understandable reasons, I don’t want to in any way criticize them — do not understand the point that I am making with you.

A lot of people focus with Trump on his base. They focus on xenophobia, nativism, racism, all of which are valid. There are people who are all of those things within the Trump coalition. But it seems to me — I think we’re in agreement about this — that what’s at the core of that is not…those things have always existed in our society…

They’ve always existed.

…and there’s economic angst that’s fueling that.

What Trump did was marry what has always been around, that is racism, misogyny, and xenophobia, with this growing economic insecurity and anger. That is what is new, and that is not going to go away.

That was true when we first met. We were just discussing this. We first met in the fall of 1998, which is nearly 30 years ago and horrifies me…

What horrifies you about that?

[laughs] That I’m that old now.

I’m still young. [laughter]

That’s true, younger than me in almost every way that matters.

You were working on a book called “The Work of Nations,” which is a seminal book. I got to play a little part in helping you make that book happen. The two big things that were identified in that book are with us now with a vengeance. Globalization and the digital revolution were changing the economy in this big structural way.

The argument of that book was to say, in order to deal with the genuine sense that people had then and now have times ten, the sense that the old order is shifting in a way that’s not advantageous to most ordinary workers, “Hey, embrace the change. It’s unstoppable. Educate, train, invest in human capital.”

We’ve done a little bit of that over the last 30 years, probably not enough, in your view. But these forces are now so fierce that they are giving rise to this populist moment. So what do we do now?

I would say that we develop, number one, a reemployment system that almost certainly gets people new jobs that pay as much as the old job paid. Number two, we expand the Earned Income Tax Credit, which is a wage subsidy. We, number three, lay the groundwork for a universal basic income, because technology is going to take away a lot of those jobs over the next 10 or 20 years.

Number four, we begin to very seriously talk about how capitalism itself, as a system, needs to be modified, beyond those three ways. For example, we’ve moved, over the past 40 years, from stakeholder capitalism to shareholder capitalism. There’s no reason that we have to stick with shareholder capitalism.

Stakeholder capitalism, which got us, I think, pretty far between 1946 and 1978 actually has a lot going for it. Other countries have various versions of stakeholder capitalism. Nobody does shareholder capitalism as exclusively the way we do, and it has contributed, I think, to a lot of the problems we’re now seeing.

I think we should use this as an opportunity, led by the business community, high technology, a lot of other people, to fundamentally rethink the rules of the game.

I think we should use this as an opportunity, led by the business community, high technology, a lot of other people, to fundamentally rethink the rules of the game.

Let’s just be specific about this. You were just down at Google in the last week or 10 days, and you gave a talk that touched on some of these issues, but also touched more specifically on the questions of Google’s role, like a lot of other companies in the sector.

AI is coming, automation is coming, things that are going to create a greater sense of anxiety and fuel more of this populism and fear on the part of a lot people, a lot of economic job displacement.

Specifically, what’s your message to companies in this sector about what they can do to try to ameliorate the down sides of some of the amazing things they’re doing that obviously has huge up sides for society and the economy, too?

Number one, there are some technological issues that need to be addressed. It may sound like a small thing, but it’s actually a big thing. The Earned Income Tax Credit…people don’t know about it.

Suppose there was an app that anybody could use. You could find out every government program, every specific health care insurance possible, everything you needed to actually maintain your family’s standard of living — unemployment insurance — you could do it all from this app. That would be a help, for example.

Number two, I think that the technology community needs to be much more active, politically, in getting some of the changes that we’re talking about. That is, instead of just worrying about intellectual property or trade… immigration’s a big deal. That’s good that the tech community is beginning to fight back against this.

I think there needs to be a much bigger effort to rethink some of the rules of capitalism and be an active player in changing what those rules are. One thing we haven’t talked about is technology, technological change, technological displacement, globalization, which are…

All part of this story.

…really very much the same thing, is part of it. Another big part of it has to do with the role of big money in politics.

Other countries that are affected by technological change, technological displacement, and globalization don’t have nearly the degree of inequality and rent‑seeking payoffs to big companies and to wealthy individuals that we have, in part because we allow big money to have such a huge impact on our electoral process and on our everyday politics. That has to be rethought, as well.

I want to get to questions from the audience relatively quickly, but I want to ask you this. You mentioned there’s obviously this sense that there’s an incipient activism among the tech sector now on the immigration thing, filing the amicus brief (on immigration).

There’s going to be a big backlash if Trump decides to change the H1B visa system [ed note — he has, and there hasn’t been, yet]. You now also saw some companies, in a more oblique way, sort of staking out oppositional positions with their Super Bowl ads — not quite as confrontational as filing an amicus brief, but still there.

Have you ever seen anything like this before, where less than three weeks into a new administration, a big and arguably the most important, or at least the part of the economy that drives most of the innovation, is already adopting, en masse, an oppositional stance to the new president of the United States? What does that look like as it plays out over the next four years?

No, I haven’t seen it. But what really impressed me and impresses me is that it’s not being driven entirely by the bottom line and by the Washington lobbyists who are saying, “You know, you ought to do this,” to the high‑tech CEOs.

When I was at Google last week, right after I addressed a bunch of people there, executives and others, there was a massive rally of Google employees against the immigration ban, up against let’s call it Muslim travel ban. That’s what we all know it really is.

I had never seen a demonstration at Google, thousands and thousands and thousands of Google employees who were outraged. I think what’s happening, for the first time, is that a lot of companies are being pushed into doing these things, not by political and bottom‑line business considerations, as they normally are, coming out of Washington, but by their employees and customers.

All right, I want to get to these folks out here. Start over here.

Audience Member: Hi, thanks. This is clearly a moment where there’s a big opportunity for some new kinds of coalitions across lines that are new. The progressive side often stereotypes business and seems hostile to business, from the outside. What shifts have to happen on the progressive side to make these coalitions possible?

The progressive side is really a large conjury of everything from Democrats to lefties to Bay Area who‑knows‑what. [laughter]

I would say that, as a practical matter, what you need is leaders who are recognized in the progressive circle and in Democratic circles meeting with and establishing with business leaders who understand it is in the interests of American business, their businesses, and also everyone, to reverse some of the trends that have now generated Donald Trump.

In other words, it’s not just the symptoms that we want to deal with — the ban on immigration. We really do need to have a broad‑based and not just Democratic, but Democratic, Republican, business, worker coalition in favor of changing the rules of the game, so that more people feel a stake in prosperity.

For 35 years, the median wage has barely budged. For the first time in American history, since we’ve been looking at polls, most Americans feel that their children will live worse that they are living.

For the first time, we are seeing that children born in the early ’80s, the millennials, only half of them have a chance at doing better than their parents, relative to the baby‑boomers, 95 percent of whom have done better than their parents.

In other words, there is something fundamental going on with the way we have organized our economy that, if it’s not changing, Trump is just the beginning of our problems. That’s what business, Democrats, Republicans, and concerned citizens have got to do. We’ve got to actually address the beast directly.

There is something fundamental going on with the way we have organized our economy that, if it’s not changing, Trump is just the beginning of our problems. That’s what business, Democrats, Republicans, and concerned citizens have got to do. We’ve got to actually address the beast directly.

Audience Member: Yesterday at my table we were discussing the affect of AI or even just continuing technological change. In the long term, is it going to produce more jobs? Is it not? Obviously, that debate has a lot of dimensions, but we did agree that, in the short terms, there will be a lot of people dislocated. That will continue.

You mentioned a four‑point plan for that. We were discussing one of the challenges. We picked this archetypal, Midwestern, 55‑year‑old coal worker. It’s like, “OK, we’re going to do our online retraining now, sir,” and wondered if there’s a set of people who will have to ride out generationally, who won’t be able to make those changes.

What do you think we can do? You did mention something about almost everybody gets a job that’s equal pay. Can you explore that a little more?

The goal would be that anybody that loses a job, within six months, gets a new job that pays as well as the job they lost. How do we do that? We could have, for example, wage insurance. We could have relocation assistance and relocation insurance.

We could do a lot of things that sound big government‑y and sound like social safety net stuff, but actually do accomplish that. It’s not an impossible goal. The issue is not so much the number of jobs. It’s the quality of the jobs.

Right now, we have relatively low unemployment, as we measure unemployment. We’ve got a lot of men who have left the labor force altogether. But the big challenge over the next 20 years is not jobs. It’s the quality of those jobs. We can do a lot of things — Earned Income Tax Credit, a wage subsidy. Milton Friedman came up with the idea years and years ago.

I mention the universal basic income that is still on the drawing boards. I think if the technology community got behind it and helped actually be a very loud lobbying agency for that, not a universal basic income that allows people to just do nothing, but sets a floor. They will still work, but it gives some assurance that they’re not going to be on the street.

All right. We have time for one more if you have a true‑false question.

Audience Member: Trump’s pick for secretary of labor, Andrew Puzder, which you served as under President Clinton, true or false, do you think he’s the right answer to help support wage growth and economic development?

[laughter]This is an easy one.

[Reich demurs, audience applause]

Any other questions? [Ed. note, Pudzer subsequently withdrew from consideration under fire.]

True‑false, Donald Trump is mentally unstable? True, false.

I would like to respectfully request a slightly different question. Does he have a serious personality disorder?

True‑false, Donald Trump has a serious personality disorder?


What is that disorder, Dr. Reich?

I would say that it is somewhere on the spectrum between…the most innocent version is pathological narcissism. The most serious version is sociopath and sociopathology. I thought, initially, it was on the pathological narcissistic side. To run for president, as you know, you’ve got to be something of a pathological narcissist.

Yeah, I was going to say. Pretty much, that’s every candidate I’ve ever seen.

On that spectrum, I believe it is much closer to sociopathology. That worries me deeply.

You think he’s sort of like the character Dexter, who was a serial killer, basically?

No, but if he weren’t so incompetent and ignorant, I would really worry. In other words, if we have a sociopath who is really competent, really smart, and devious, then we are in terrible, terrible trouble. I don’t think he is that smart and that competent.

I’m liking ending this conversation on a slight note of optimism. Thank you, Robert Reich for your time and effort.

I am optimistic. I really am optimistic. It’s been a pleasure.

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