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For the first time anywhere Scott Lucas’s interview with Bill Clinton’s Secretary of Labor and professor at the Goldman School of Public Policy, Robert Reich: Complete, unedited and no-holds barred. Or something like that. Anyway, we present the full version of the interview that runs in today’s paper. His new book is called “Supercapitalism,” and word on the street is that he’ll be teaching an undergraduate class for the first time next semester.
Scott Lucas: I’m here with Robert Reich, former Secretary of Labor and currently a professor at the Goldman School of Public Policy. He is the author of 11 books. His most recent is called “Supercapitalism.” Thank you for taking the time. Now your book focuses on the central paradox of our society in that as capitalism has increased in power, democracy has decreased. We as consumers and investors are doing much better, yet as citizens, in many respects, much worse. Why is that?
Robert Reich: Well, you got the overview, Scott. Thank you for reading my book! I’m impressed. My thesis is that supercapitalism has involved a greater degree of power for consumers and investors than before, because of new technologies: everything from container ships, cargo ships, satellite communication technologies, and eventually the Internet. We as consumers and investors have been able to choose much more widely and can get access to much better deals than ever before. This has put companies under greater pressure to cut their costs and provide us with better deals. That pressure has resulted, ironically, in jobs that are less stable, wages for many people that are lower, outsourcing great jobs abroad, even cutting corners with regard to pollution and the other social ills. So, although we may not realize it, in our role as consumers and investors, we are the flywheels for almost everything else that is happening.
SL: One thing that I was struck by in your book is that you don’t take the easy way out. You don’t blame the large corporations; you don’t blame some sort of failures of democracy. You write, basically, that we’re all complicit in the system.
RR: We are complicit, although we don’t acknowledge it. Every time we buy a cut-rate airfare in order to get to a different part of the United States, we are undermining U.S. jobs of airline workers of major carriers. Every time we order something online we’re undercutting jobs in independent bookstores, retailers, all sorts of other people on Main Street. Every time we get great deals on products, the chances are we are encouraging companies to outsource abroad and to bring wages down. Now again, it’s almost as if there are two sides to our brain: The consumer and investor side that wants great deals and the citizen side that’s concerned about rising inequality, stagnant wages, unstable communities, unstable jobs, global warming, whatever have you. But, there’s a cognitive dissonance between the two sides of our brain. And ideally, democracy is the arena in which we address these trade-offs, this cognitive dissonance. But democracy isn’t working very well in this regard.
SL: One response that, say, a conservative might have is that the market just is a better aggregator of people’s preferences. And so that if this is the current situation, it’s simply because we want it to be that way. How would you respond?
RR: Even a conservative would acknowledge that there are social costs and social benefits associated with market transactions. We’re not just consumers and investors, we’re also citizens affected by social costs. Take pollution for example. As citizens we don’t want global warming, I don’t imagine. The question is whether as consumers we’re willing to pay a carbon tax that may be quite costly. Well, again, that trade-off needs to be addressed somewhere and it is in democracy that we have addressed such trade offs in the past.
SL: Why aren’t we addressing those trade-offs in democracy now?
RR: Because in our capacities as consumers and investors we fuel corporations to engage in an arms race in Washington. A huge increase in corporate lobbyists and corporate campaign activities of one sort or another has come about because corporations are in intensifying competition with one another. Google goes to Washington in 2004 because Google is now a public company and worries about Microsoft and Yahoo, with regard to countless other costs, among them trade, intellectual property and antitrust. My company is at a disadvantage unless it can protect itself. So it is really an arms race. The consequence, however, is that the citizen in us is left out, while the consumer and investor in us might be rewarded by such arms competitions, we as citizens have no common means of expressing ourselves. By contrast, forty years ago, there were unions that were 35-40% of the American workforce, pluralist interest groups indirectly represented us, regulatory agencies were chartered to act in the public interest, though many were captured by the industries they regulated, they still had by their charter a kind of autonomy, political parties were in states and communities in a much bigger way. Now they’re just financial devices for financing campaigns. So, the loss of all the intermediaries that used to provide us as citizens the means of expressing our citizen values.
SL: One example you give in the book of these sorts of problems is the debate over labeling food “organic.” And I think that’s especially pertinent here in Berkeley, sort of the home of California Cuisine. I was wondering if you could talk a little bit about that particular situation?
RR: It’s just one example of what happens in Washington. If you’re outside Washington, and you read the media it looks like many controversies on paper pit corporate interests against citizens. The closer you look at it, you see that most of the time it’s one set of corporations against another set of corporations. In this case, we’ve got certain organic farmers using certain practices that may result in quote-unquote pure organic products competing against other organic farmers using practices that comport to a lower standard. Which is correct? Well, there’s no answer to that question because it depends upon how much you’re willing to pay as a consumer what kind of label is most useful to you. What should the meaning of organic be? There again there’s no necessarily good answer unless you listen to us as citizens. The outcome of this fight between two different segments of the organic food market may have absolutely nothing to do with what we as citizens want.
SL: In the book, you write that, “The only way for the citizen in us to trump the consumer and investor in us is through laws and regulations that make our purchases and investments a social choice as well as a personal one.” I was wondering if you could expand on that. How? What institutions are there?
RR: Well, that’s exactly the problem. We don’t have a citizens’ movement to take back democracy. And so it’s very difficult to create laws and rules that reflect our social choices and social values. Going back to pollution, do we have a carbon tax? And will we have a cap and trade system? We don’t have a single Presidential candidate talking in detail what this will cost us. Why? Because we’ve evolved a culture in which we think of ourselves as consumers and investors first and we are never asked to sacrifice anything as citizens. So candidates are very reluctant to tell us what things will cost.
SL: Had you your druthers, what big-picture reform would you like to see that would move us to better balancing the scales?
RR: Well, I’d like to see money out of politics. How do we do that? For one thing, for example, we might have a blind trust where every candidate might accept as much contributions as he or she wants, but the contributions have to be entered into a blind trust so that the candidate won’t know who gave them what. That would preserve First Amendment rights, to the extent anyone believes that giving money to a candidate is protected by the First Amendment. But it would also sever the link between a candidate and the expectation that a contribution will result in favorable treatment by that candidate. There are many other ideas. I list some of them in the book. But we’re not going to get any of these ideas implemented until we have a genuine citizens’ movement– akin to the civil rights movement of the 60s and 70s, or the feminist movement, or the gay rights movement, or the environmental movement– that recognizes that none of these other objectives can be met unless we first rescue democracy.
SL: Something you talk about in the book is getting away from a notion of the corporation as a person. What do you mean by that, and why is it a bad idea?
RR: Well, first, corporations are not people. They are pieces of paper. The fiction that they are people has led us to all kinds of absurd positions, such as giving corporations the rights to political participation, constitutional rights, standing to sue government regulations and laws they disagree with. Lawsuits, criminal lawsuits against corporations, when in fact individuals in the corporation may have acted criminally, but very often, as in the case of Arthur Anderson, the people who were hurt by such indictments and prosecutions, had nothing to do with the bad deeds and malfeasance of the corporate officials. And the list is quite long. The idea that corporations are somehow moral beings leads us to criticize Wal-Mart without any political strategy for changing the rules of the game, so that Wal-Mart or any of Wal-Mart’s competitors have to behave differently. Frankly, I don’t see that corporate social responsibility, for example, has as a movement much teeth in it.
SL: And why not?
RR: Because corporations are locked into intense competition. They will not sacrifice investor returns or consumer deals for the sake of some social objectives if it’s easier for them to spend money on public relations to reduce the intensity and the consequence of any negative public relations fallout from a campaign of corporate social responsibility against them. I’d much rather that people interested in corporate social responsibility focused their attention on changing the rules of the game rather than on acting as if companies will or can be moral.
SL: To bring a sort of more local spin on this discussion, in the book you talk about the corporate “corruption of knowledge.” One of the examples you pull out is the deal between Exxon Mobil and Stanford University whereby Exxon donated an enormous amount of money to set up something called the Global Climate Energy Project at Stanford a couple years back, and then reaped all sorts of public relations benefits from this. Would you categorize the BP- Berkeley deal in a similar light?
RR: Well, I haven’t followed the details of the deal since I contributed to a faculty forum last spring raising a host of questions about that. I believe in academic freedom. I think that any faculty ought to be able to get money from whomever, but I also think it’s very important that the university protect itself from being used by a corporation. And that set of protections would include protections against a corporation that gives money to Berkeley or any other university having an influence on faculty hiring and promotion. Protections against that corporate entity using the university’s imprimatur to that corporation’s own political agenda, as Exxon did with Stanford. And protections of academic freedoms so that the parts of the university that are not financed by corporations have adequate financing to pursue whatever it is that they want to pursue, so that a corporation does not indirectly or directly skew the research agenda of the university.
SL: Now, the city of Berkeley is an interesting example in light of this discussion because it is polity that very much, arguably, tips the scale back towards democracy in large respects. We don’t have a lot of big box stores like Wal-Mart; we have a culture of independent retailers and supporting those things. Do you think that Berkeley has struck closer to the right balance that you would like to see?
RR: Well, it depends on the citizens of Berkeley. Remember, big box retailers like Wal-Mart provide lower cost goods and services. That’s enormously helpful for blue-collar workers. Most blue-collar workers can’t afford to live in Berkeley. Is that right? Is that the best balance? Many of the people who work for the city, many police officers, fire fighters, and social service providers In Berkeley can’t even afford to live here. Is that the right balance? If they did, if they could afford to live here, would they choose to prevent big box retailers from being here? I don’t know the answer to many of these questions, but they have to be asked if we are going to answer your question about what is right and important.
SL: Now, I have to ask you. You’ve had a long career in politics, served many with many people, for example, during the nineties and today, who are touchstones for my generation, inspirations. Now, I’d be remiss if I didn’t ask you what it was like having, as a boss, Conan O’Brien?
RR: (Laughs.) It was a lot of fun to do that skit. And he’s been talking to me about doing another one and we’ll see when it debuts.
SL: A sequel. And I would also be remiss if I didn’t ask you about a specific claim you make in the book. At one point you say, “To confuse greed with opportunity is to confound desire with availability. The libidos of college students are not higher than they were forty years ago; the ease with which they can exercise them, however, are more bounteous.” Can we expect any sort of follow-up survey on this point?
RR: I doubt it. I’m not in that business. I’m simply assuming and extrapolating on the base of what I see. But I can tell you, forty years ago when I was in college, we had the three feet on the floor rule. That means if you were entertaining a guest in your room, three of your four feet had to be on the floor at all times. That led to some gymnastics.
SL: Are there any lessons that you would want young people and college students to draw from the book going forward as we enter the marketplace and become investors and consumers and members of the democracy?
RR: I guess lots of lessons. I think that all of us have to learn how to practice citizenship as well as we practice being consumers and investors. It’s very important to understand that corporations are not our enemy. Corporations don’t exist! They are not people. They are legal fictions. We need to understand the economy and politics well enough to see where the real problems are. Vulgar Marxism is as misleading as the vulgar right-wing pronouncements of Rush Limbaugh. Issues are more complicated. But they can be solved. Most basically, it’s very important to avoid the luxury of cynicism. I’m not suggesting young people are cynical, but I do see cynicism as the most important of enemies. We hide behind cynicism as an excuse for not doing what we need to do as citizens. We use cynicism as a cover for our lack of willingness to step into the ring [in] politics, community organizing, whatever else we need to do. I’m very hopeful about this democracy. We have gone through much more difficult times. Consider the Depression, World War Two, Joe McCarthy’s tirades against anti-Communists, the Nixon Administration. There’s much to be done, much that can be done. And I expect my students, and Berkeley students will be in the forefront of social change in the next decades.
