Tags: Gregory | Reich | wealthy | heir

Prof. Gregory: Reich is Wrong, the 1 Percent Do Work

By    |   Monday, 20 April 2015 06:40 AM

Paul Roderick Gregory, professor of economics at the University of Houston, has a bone to pick with former Labor Secretary Robert Reich.

Reich, now a professor at the University of California, Berkeley, wrote on The Huffington Post: "America's legendary 'self-made' men and women are being fast replaced by wealthy heirs. . . . The nation's assets [are being put] into the hands of people who have never worked."

Gregory's response in an article for Forbes: "Reich should do his homework. His only offered evidence is that 'six of today's 10 wealthiest Americans [most notably the Wal-Mart Waltons] are heirs to prominent fortunes.'"

But a 2013 study in the American Economic Review showed that only 32 percent of the Forbes 400 in 2011 were members of extremely wealthy families, down from 60 percent in 1982, Gregory explains.

A total of 69 percent on the Forbes list started their own business, compared with just 40 percent in 1982.

"Reich, in his usual fashion, simply assumes what he says is true."

Meanwhile, MarketWatch columnist Paul Farrell says the growth in income inequality may lead to revolution.

"America may soon be at what we call Bastille Day levels, an inequality gap so great it is the fuel and trigger that can ignite an angry people into revolution," he writes.

Farrell cites 14 possible triggers for such a revolution, borrowed from a 2013 blog by famed money manager Barry Ritholtz. The list, as written by Ritholtz, includes:
  • "Inequality in America today is twice as bad as in ancient Rome, worse than it was in in czarist Russia, Gilded Age America, modern Egypt, Tunisia or Yemen, many banana republics in Latin America, and worse than experienced by slaves in 1774 colonial America.
  • "Extreme inequality helped cause the Great Depression, the current financial crisis and the fall of the Roman Empire.
  • "Inequality isn't happening for mysterious or uncontrollable reasons. Bad government policy is responsible for runaway inequality.
  • "Bush was horrible, but income inequality has increased even more under Obama than under Bush.
  • "It's a myth that conservatives accept runaway inequality. Conservatives are as concerned as liberals regarding the stunning collapse of upward mobility."

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Paul Roderick Gregory, professor of economics at the University of Houston, has a bone to pick with former Labor Secretary Robert Reich.
Gregory, Reich, wealthy, heir
Monday, 20 April 2015 06:40 AM
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