The Real Economic Story of Our Time

Robert Reich's video speaks for its self!

The alarming statistics that show the U.S. economy isn’t as good as it seems

by Heather Long

The U.S. economy has a problem. The usual economic bench marks look really good: America in 2018 is enjoying faster growth, low unemployment, record numbers of job openings and a stock market near an all-time high. Yet an alarming number of Americans are still struggling to get by.

In the past week, two reports — a new Federal Reserve survey of more than 12,200 Americans about their finances and a new United Way report on financial hardship — reveal just how unstable life remains for a large number of people. Here's a rundown of the key findings:

• Forty percent of American adults don't have enough savings to cover a $400 emergency expense such as an unexpected medical bill, car problem or home repair.
• Forty-three percent of households can't afford the basics to live, meaning they aren't earning enough to cover the combined costs of housing, food, child care, health care, transportation and a cellphone, according to the United Way study. Researchers looked at the data by county to adjust for lower costs in some parts of the country.
• More than a quarter of adults skipped necessary medical care last year because they couldn't afford it.
• Twenty-two percent of adults aren't able to pay all of their bills every month.
• Only 38 percent of non-retired Americans think their retirement savings is “on track.”
• Only 65 percent of African Americans and 66 percent of Hispanics say they are “doing okay” financially versus 77 percent of whites.

The Fed and United Way findings suggest the U.S. economy isn't nearly as strong as statistics such as the unemployment rate and the GDP growth rate suggest. Taken alone, these metrics mask the fact that some Americans are doing well and some are not.

“We have a ‘Two Realities’ economy in America,” said William Rodgers, a professor at Rutgers University and chief economist at the Heldrich Center for Workforce Development. “One segment has truly recovered from the Great Recession and is at full employment. The other continues to experience stagnating wages, involuntary part-time employment, inflexible work schedules and weaker access to health care.”

Rodgers is worried about how families that don't have $400 in savings are going to handle rising gas prices, higher rents and credit card rates that are climbing as U.S. interest rates rise.

President Trump and many Republicans in Congress are focused on getting people back to work with the belief that once people have jobs they will be able to lift themselves out of poverty. But a growing body of research like the Fed and United Way studies and anecdotes from people working on the front lines at food banks and shelters indicates that a job is no longer enough.

Wages in the United States, especially for workers who aren't managers, have stagnated for two decades, making it difficult to save for emergencies, let alone save to buy a home or take extra classes to get ahead.

There's hope that low unemployment and the large number of companies complaining they can't find enough workers will finally cause wages to rise, but so far, that has yet to happen on a wide scale.

The result is that more and more people are showing up at food pantries who have jobs, but still don't have enough income for food and rent.

“Half of the people we serve are above the poverty level. They are working, but they are not making it,” said Catherine D'Amato, president of the Greater Boston Food Bank. “It’s a deep struggle for people to provide for themselves based on their wages.”

D'Amato has worked at food banks and pantries since 1979, but she says she's never seen it like it is today with so many people with jobs but still unable to survive. October and November were the highest food bank usage on record for her organization, a reminder that many are still not stable years after the Great Recession officially ended in 2009.

Nonwhite households continue to have a harder time finding good-paying employment. The unemployment rates for African Americans and Hispanics, while at record lows, are still significantly higher than that of whites. The Fed survey highlighted that far fewer minorities in America feel “okay” financially compared with whites.

In addition to low pay, many struggling Americans say a major problem is that their hours vary greatly from month to month. They may be able to make it one week, but not the next because their hours — and their earnings — fall substantially. Three in 10 adults say their family income varies from month to month, according to the Fed survey, and one in 10 say their income varies a lot, making it difficult to pay bills on time.

One of the most widely watched statistics in the Fed's “Report on the Economic Well-being of U.S. Households” is how many adults say they could cover an unexpected $400 expense. When the survey was released for the first time in 2013, half of those surveyed said they didn't have enough savings to cover an emergency expense of a few hundred dollars.

Today that has fallen to 40 percent, a figure that is better but still troubling to many economists. It means nearly 48 million households aren't saving or are unable to save.

“Nothing is more fundamental to achieving financial stability than having savings that can be drawn upon when the unexpected occurs,” said Greg McBride, chief financial analyst at Bankrate.com.

The real Adam Smith

He might be the poster boy for free-market economics, but that distorts what Adam Smith really thought 

By  Paul Sagar

 a lecturer in political theory in the Department of Political Economy, King’s College London.

If you’ve heard of one economist, it’s likely to be Adam Smith. He’s the best-known of all economists, and is typically hailed as the founding father of the dismal science itself.

Furthermore, he’s usually portrayed as not only an early champion of economic theory, but of the superiority of markets over government planning. In other words, Smith is now known both as the founder of economics, and as an ideologue for the political Right.

Yet, despite being widely believed, both these claims are at best misleading, and at worst outright false.

Smith’s popular reputation as an economist is a remarkable twist of fate for a man who spent most of his life as a somewhat reclusive academic thinker. Employed as professor of moral philosophy at the University of Glasgow, the majority of Smith’s teaching was in ethics, politics, jurisprudence and rhetoric, and for most of his career he was known for his first book, The Theory of Moral Sentiments (1759). His professional identity was firmly that of a philosopher – not least because the discipline of ‘economics’ didn’t emerge until the 19th century, by which time Smith was long dead. (He died in July 1790, just as the French Revolution was getting into full swing.)

Admittedly, Smith’s reputation as an economist isn’t entirely mysterious. His oft-quoted An Inquiry into the Nature and Causes of the Wealth of Nations (1776) was undoubtedly important in the eventual formation – in the next century – of the discipline of economics. But even here things are not as straightforward as they appear. For The Wealth of Nations – a 1,000-page doorstopper that blends history, ethics, psychology and political philosophy – bears little resemblance to the ahistorical and highly mathematical nature of most current economic theory. If anything, Smith’s best-known book is a work of political economy, a once-prevalent field of enquiry that suffered a striking decline in the latter half of the 20th century.

Smith’s reputation, however, began to get away from him early on. Shortly after publication, The Wealth of Nations was fêted in the British Parliament by the Whig leader Charles James Fox. Ironically, Fox later admitted that he had never actually read it (few subsequent non-readers of the book have showed such candour, despite plenty of them citing it). Indeed, Smith suspected that those quickest to sing his praises had failed to understand the main arguments of his work. He later described The Wealth of Nations as a ‘very violent attack … upon the whole commercial system of Great Britain’. Despite this, his vocal political cheerleaders in Parliament continued to prop up the very system that Smith was railing against.

Yet if Smith was disappointed by his work’s immediate reception, he would likely have taken even less cheer from the future uses to which his name would be put. For it has been his fate to become associated with the strain of Right-wing politics that rose to dominance in the early 1980s, and which continues to exert a strong influence on politics and economics today. Usually known as neoliberalism, this development is most famously associated with Ronald Reagan and Margaret Thatcher. But it is in fact a movement with deep intellectual roots, in particular in the mid-century writings of the economists Friedrich Hayek and Ludwig von Mises. Later, the Chicago economist Milton Friedman and the British policy adviser Keith Joseph championed it during the 1980s, as did the extensive network of academics, think tanks, business leaders and policymakers associated with the Mont Pelerin Society.

Neoliberals often invoke Smith’s name, believing him to be an early champion of private capitalist endeavour, and a founder of the movement that seeks (as Thatcher hoped) to ‘roll back the frontiers of the state’ so as to allow the market to flourish. The fact that there is a prominent Right-wing British think tank called the Adam Smith Institute – which since the 1970s has aggressively pushed for market-led reforms, and in 2016 officially rebranded itself a ‘neoliberal’ organisation – is just one example of this tendency.

It is certainly true that there are similarities between what Smith called ‘the system of natural liberty’, and more recent calls for the state to make way for the free market. But if we dig below the surface, what emerges most strikingly are the differences between Smith’s subtle, skeptical view of the role of markets in a free society, and more recent caricatures of him as a free-market fundamentalist avant-la-lettre. For while Smith might be publicly lauded by those who put their faith in private capitalist enterprise, and who decry the state as the chief threat to liberty and prosperity, the real Adam Smith painted a rather different picture. According to Smith, the most pressing dangers came not from the state acting alone, but the state when captured by merchant elites.

The context of Smith’s intervention in The Wealth of Nations was what he called ‘the mercantile system’. By this Smith meant the network of monopolies that characterised the economic affairs of early modern Europe. Under such arrangements, private companies lobbied governments for the right to operate exclusive trade routes, or to be the only importers or exporters of goods, while closed guilds controlled the flow of products and employment within domestic markets.

As a result, Smith argued, ordinary people were forced to accept inflated prices for shoddy goods, and their employment was at the mercy of cabals of bosses. Smith saw this as a monstrous affront to liberty, and a pernicious restriction on the capacity of each nation to increase its collective wealth. Yet the mercantile system benefited the merchant elites, who had worked hard to keep it in place. Smith pulled no punches in his assessment of the bosses as working against the interests of the public. As he put it in The Wealth of Nations: ‘People of the same trade seldom meet together, even for merriment and diversion but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.’

The merchants had spent centuries securing their position of unfair advantage. In particular, they had invented and propagated the doctrine of ‘the balance of trade’, and had succeeded in elevating it into the received wisdom of the age. The basic idea was that each nation’s wealth consisted in the amount of gold that it held. Playing on this idea, the merchants claimed that, in order to get rich, a nation had to export as much, and import as little, as possible, thus maintaining a ‘favourable’ balance. They then presented themselves as servants of the public by offering to run state-backed monopolies that would limit the inflow, and maximise the outflow, of goods, and therefore of gold. But as Smith’s lengthy analysis showed, this was pure hokum: what were needed instead were open trading arrangements, so that productivity could increase generally, and collective wealth would grow for the benefit of all.

Even worse than this, Smith thought, the merchants were the source of what his friend, the philosopher and historian David Hume, had called ‘jealousy of trade’. This was the phenomenon whereby commerce was turned into an instrument of war, rather than the bond of ‘union and friendship’ between states that it ought properly to be. By playing on jingoistic sentiments, the merchants inflamed aggressive nationalism, and blinded domestic populations to the fact that their true interests lay in forming peaceful trading relationships with their neighbours.

The peace and stability of the European continent was imperilled by the conspiracies of the merchants, who goaded politicians into fighting wars to protect home markets, or acquire foreign ones. After all, being granted militarily-backed private monopolies was far easier than having to compete on the open market by lowering prices and improving quality. The merchants in this manner constantly conspired to capture the state, defrauding the public by using political power to promote their own sectional advantage.

Indeed, Smith’s single most famous idea – that of ‘the invisible hand’ as a metaphor for uncoordinated market allocation – was invoked in precisely the context of his blistering attack on the merchant elites. It is certainly true that Smith was skeptical of politicians’ attempts to interfere with, or bypass, basic market processes, in the vain hope of trying to do a better job of allocating resources than was achievable through allowing the market to do its work. But in the passage of The Wealth of Nations where he invoked the idea of the invisible hand, the immediate context was not simply that of state intervention in general, but of state intervention undertaken at the behest of merchant elites who were furthering their own interests at the expense of the public.

It is an irony of history that Smith’s most famous idea is now usually invoked as a defence of unregulated markets in the face of state interference, so as to protect the interests of private capitalists. For this is roughly the opposite of Smith’s original intention, which was to advocate for restrictions on what groups of merchants could do. When he argued that markets worked remarkably efficiently – because, although each individual ‘intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention’ – this was an appeal to free individuals from the constraints imposed upon them by the monopolies that the merchants had established, and were using state power to uphold. The invisible hand was originally invoked not to draw attention to the problem of state intervention, but of state capture.

Smith was, however, deeply pessimistic about the stranglehold that the merchants had managed to exert over European politics, and despaired of it ever being loosened. Accordingly, he labelled his preferred alternative – of liberal markets generating wealth to be passed on to all members of society – a ‘Utopia’ that would never come to pass. History has to some extent proved him wrong on this score: we now live in an era of comparative market freedom. But nobody should deny that merchant conspiracy, and the marriage of the state to what we now call corporate power, remain defining features of our present-day political and economic reality.

In any case, Smith’s hostility to the merchants is a long way removed from a Reagan-style championing of the entrepreneurial capitalist hero, she who needs only to be released from the constraints of the state to lead us to the sunlit uplands of economic growth. On the contrary, Smith’s analysis implies that a free society with a healthy economy is going to need to put fetters on economic elites if the invisible hand is to have any chance of doing its paradoxical work.

Does this, then, make Smith an early proponent of the political Left? No, and it would be a serious mistake to draw that conclusion. The truth is both more complex, and more interesting, than that.
Although Smith was deeply critical of the way that the merchants conspired to promote their own advantage at the expense of the rest of society, he was under no illusion that political actors might successfully replace private merchants as the necessary conduits of economic activity.

Certainly, when merchants were allowed to rule as sovereigns – as the British East India Company had been permitted to do in Bengal – the results were disastrous. ‘Want, famine and mortality’, themselves the results of ‘tyranny’ and ‘calamity’, had been unleashed on India, all products of an ‘oppressive authority’ based on force and injustice. Under absolutely no circumstances, Smith thought, should merchants be put in charge of politics. Their monopolistic conspiracies would be ‘destructive’ to all countries ‘which have the misfortune to fall under their government’.

Nonetheless, something like the reverse was also true: politicians made for terrible merchants, and ought not to attempt to take over the systematic running of economic affairs. This was a product of the structural predicament faced by political leaders, whom Smith claimed have ‘scarce ever succeeded’ in becoming ‘adventurers in the common branches of trade’, despite often having been tempted to try, and often from a genuine desire to better their nation’s condition.

Politicians, according to Smith, were much poorer judges of where and how to allocate resources than the aggregated outcome of individuals spontaneously undertaking free exchange. As a result, in matters of trade it was usually folly for politicians to try to replace the vast network of buyers and sellers with any form of centralised command. This, however, included precisely those networks structured around the profit-seeking activities of merchant elites.

On Smith’s final analysis, the merchants were a potentially pernicious, but entirely necessary, part of the functioning of large-scale economies. The true ‘science of a statesman or legislator’ consisted in deciding how best to govern the merchants’ nefarious activities. Effective politicians had to strike a balance between granting economic elites the liberty to pursue legitimate commercial activities, while also applying control when such activities became vehicles for exploitation. In other words, Smith was very far from asking us to put our faith in ‘entrepreneurs’, those supposed ‘wealth-creators’ whom neoliberalism looks to as drivers of economic prosperity. On the contrary, giving the entrepreneurs free reign would be rather like putting the foxes in charge of the chicken coup.

Crucially, however, Smith did not offer up any kind of premeditated plan regarding how to strike the right balance between commercial freedom and watchful political control. On the contrary, he pressed home the deep underlying difficulties of the situation that commercial societies found themselves in.
Political actors, Smith claimed, were liable to be swept up by a ‘spirit of system’, which made them fall in love with abstract plans, which they hoped would introduce sweeping beneficial reform. Usually the motivations behind these plans were perfectly noble: a genuine desire to improve society. The problem, however, was that the ‘spirit of system’ blinded individuals to the harsh complexities of real-world change. As Smith put it in The Theory of Moral Sentiments in one of his most evocative passages:

[The man of system] seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chessboard. He does not consider that the pieces upon the chessboard have no other principle of motion besides that which the hand impresses upon them; but that, in the great chessboard of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.

Smith’s point is easily misunderstood. At first glance, it can look like a modern Right-wing injunction against socialist-style state planning. But it is much more subtle than that.

What Smith is saying is that in politics any preconceived plan – especially one that assumes that the millions of individuals composing a society will just automatically go along with it – is potentially dangerous. This is because the ‘spirit of system’ infects politicians with a messianic moral certainty that their reforms are so necessary and justified that almost any price is worth paying to achieve them.

Yet it is a short step from this to discounting the very real harm that a plan can unleash if it starts to go wrong – and especially if the ‘pieces upon the chessboard’ act in ways that resist, or subvert, or confound, the politician’s scheme. This is because the ‘spirit of system’ encourages the sort of attitude captured in such cheap sayings as ‘You can’t make an omelette without breaking eggs’. In other words, that inconvenient opponents and bystanders can be sacrificed to an overriding moral vision.

Smith was warning against all abstract plans alike. Certainly, his outlook urges skepticism about such strategies as taking over the industrial base of a state, presuming to know what goods citizens will want and need over the next five years, and thereby trying to eliminate the market as a mechanism for resource allocation. But it likewise views with deep suspicion a plan to rapidly privatise previously state-owned industries, exposing millions of citizens to the ravages of unemployment and the attendant destruction of their communities. In other words, while she certainly didn’t realise it, Thatcher’s violent restructuring of the British economy during the 1980s was as much a product of the ‘spirit of system’ as any piece of top-down Soviet industrial strategy.

The message that Smith conveys cuts across party and ideological lines, and applies to both Left and Right. It is about a pathological attitude that politicians of all stripes are prone to. If not kept in check, this can be the source not just of disruption and inefficiency but of cruelty and suffering, when those who find themselves on the wrong side of the plan’s consequences are forced by the powerful to suffer them regardless. Smith in turn urges us to recognise that real-world politics will always be too complex for any prepackaged ideology to cope with. What we need in our politicians is careful judgment and moral maturity, something that no ideology, nor any position on the political spectrum, holds a monopoly on.

In the fraught times that we now occupy, it is hard to believe that the careful and responsible political judges that Smith envisaged have much chance of emerging. (Does anybody in Western politics currently measure up?) Much more likely will be new men and women of system, with alternative abstract plans, seducing desperate electorates before attempting to impose their own forceful reforms, regardless of what the pieces on the chessboard happen to think or want.

Whether these reforms come from the Left or the Right might not, in the end, matter much. As Western economies continue to struggle, and politics becomes increasingly polarised, the results could yet be catastrophic. But if so, we should certainly not consign Smith to any parade of blame. On the contrary, he tried to warn us of the dangers that we face. It is time that we listened, a little more carefully, to what the real Adam Smith had to say.

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It’s a Myth That Corporate Tax Cuts Mean More Jobs

By SARAH ANDERSON

“The arithmetic for us is simple,” AT&T’s chief executive, Randall Stephenson, said on CNBC in May. If Congress were to cut the 35 percent tax on corporate profits to 20 percent, he declared, “I know exactly what AT&T would do — we’d invest more” in the United States.

Every $1 billion in tax savings would create 7,000 well-paying jobs, Mr. Stephenson went on to say. The correlation between lower corporate taxes and more jobs, he assured viewers, runs “very, very tight.”

As Congress prepares to take up tax legislation this fall, including an effort to reduce the corporate tax rate, this bold jobs claim merits examination. Notably, it comes from the chief executive of a company that’s already paying comparatively little in federal taxes.

According to the Institute on Taxation and Economic Policy, AT&T enjoyed an effective tax rate of just 8 percent between 2008 and 2015, despite recording a profit in the United States each year, by exploiting tax breaks and loopholes. (The company argues that it pays significant taxes, at a rate close to 34 percent in recent years, but that includes deferred taxes and state and local levies.)

Despite the enormous savings AT&T has realized, the company has been downsizing. Although it hires thousands of people a year, the company, by our analysis at the Institute for Policy Studies, reduced its total work force by nearly 80,000 jobs between 2008 and 2016, accounting for acquisitions and spinoffs each involving more than 2,000 workers.

The company has also spent $34 billion repurchasing its own stock since 2008, according to our institute report, a maneuver that artificially inflates the value of a company’s shares. This is money that could have gone toward research and development or hiring.

Companies buy back their stock for various reasons — to take advantage of undervaluation, to reward stockholders by increasing the value of their shares or to make the company look more attractive to investors. And there is another reason. Because most executive compensation these days is based on stock value, higher share prices can raise the compensation of chief executives and other top company officials.

Since 2008, Mr. Stephenson has cashed in $124 million in stock options and grants.

Many other large American corporations have also been playing the tax break and loophole game. Their huge tax savings have enriched executives but not created significant numbers of new jobs.

Our report analyzes the 92 publicly held American corporations that reported a profit in the United States every year from 2008 through 2015 and paid less than 20 percent of their earnings in federal income tax.

We chose this particular tax threshold because, as Mr. Stephenson mentioned, House Republicans are proposing to reduce the federal statutory corporate tax rate to 20 percent, down from the current 35 percent. President Trump wants an even deeper cut, down to 15 percent.

If claims about the job-creation benefits of lower tax rates had any validity, these 92 consistently profitable firms would be among the nation’s strongest job creators. Instead, we found just the opposite.

The companies we reviewed had a median job-growth rate over the past nine years of nearly negative 1 percent, compared with 6 percent for the private sector as a whole. Of those 92 companies, 48 got rid of a combined total of 483,000 jobs.

At the companies that cut jobs, chief executives’ pay last year averaged nearly $15 million, compared with the $13 million average for S&P 500 companies.

Instead of tax-rate cuts for these big corporations, the coming tax debate in Congress should focus on making wealthy individuals and big corporations pay their fair share.

American multinationals hold $2.6 trillion in profits “offshore,” on which they would owe $750 billion in federal taxes if the money was repatriated. In most cases, these foreign profit stashes are merely an accounting fiction. Companies retain full access to these funds for use in the United States and could, if their executives so chose, use them to create jobs here.

Ordinary Americans have to pay all the taxes they owe each and every year. Offshore corporations should be required to do the same.

Beyond closing loopholes, we need to explore new ways to raise revenue fairly, including a tax on Wall Street speculation.

Most of us already pay a sales tax on gasoline, clothes and other basics. Why should hedge fund investors and other Wall Street traders pay no tax at all when they engage in short-term buying and selling of millions of dollars’ worth of stocks and derivatives? A fee of just a small fraction of 1 percent on each Wall Street trade would encourage longer-term investment while generating huge revenue for real job creation.

At a town hall this month at AT&T headquarters in Dallas, Mr. Stephenson urged his employees to call Congress and demand a corporate tax cut.

The message policy makers really need to hear? Stop peddling the myth that “tax relief” for big companies will be good for the rest of us.

Stop being afraid of more government. It’s exactly what we need.

By Fareed Zakaria

Seeing the devastating effects of Hurricanes Harvey and Irma and of wildfires out West, one cannot help but think about the crucial role that government plays in our lives. But while we accept, even celebrate, the role of government in the wake of such disasters, we are largely blind to the need for government to mitigate these kinds of crises in the first place.

Ever since President Ronald Reagan, much of the United States has embraced an ideological framework claiming that government is the source of our problems. Reagan famously quipped, “The nine most terrifying words in the English language are: I’m from the government, and I’m here to help.”

Reagan argued for a retreat from the vision of an activist state and advocated instead a strictly limited role for government, one dedicated to core functions such as national defense. Outside of these realms, he believed, government should simply encourage the private sector and market forces. 

Reagan’s worldview grew out of the 1970s — a period marked by fiscal mismanagement, government overreach and slowing growth. It might have been the right attitude for its time. 

But it has stayed in place for decades as a rigid ideology, even though we have entered a new age in which America has faced a very different set of challenges, often desperately requiring an activist government. This has been a bipartisan abdication of responsibility.

For decades now, we have watched as stagnant wage growth for 90 percent of Americans has been coupled with supercharged growth for the richest few, leading to widening inequality on a scale not seen since the Gilded Age. It has been assumed that the federal government could do nothing about this expanding gap, despite much evidence to the contrary. 

We have watched China enter the global trade system and take advantage of its access to Western markets and capital, while still maintaining a massively controlled internal economy and pursuing predatory trade practices. And we have assumed that the U.S. government can’t do anything about it, because any action would be protectionist.

We watched as financial institutions took on more and more risk, with other people’s money, effectively gambling in a heads-I-win, tails-you-lose system. Any talk of regulation was seen as socialist. Even after the system blew up, causing the worst economic crisis since the Great Depression, the calls soon came to deregulate the financial sector once again because, after all, government regulation is obviously bad.

In this same period, technology companies have grown in size and scale, often using first-mover advantage to establish quasi-monopolies and quash competition. The digital economy was supposed to empower the individual entrepreneur, but it has instead become one in which four or five companies utterly dominate the global landscape. A new technology company today aspires simply to be bought by Google or Facebook. And we assume that the federal government should have had no role in shaping this vast new economy. That would be activist and bad. Better for government to simply observe the process, like a passive spectator watching a new Netflix drama.

And then there is climate. These hurricanes have not been caused by global warming, but their frequency and intensity have likely been magnified by climate change. Particularly calamitous hurricanes have their names retired, and in the last 20 years there have been about as many names retired as in the preceding 40 years. California has had more than 6,400 wildfires this year. The 17 hottest years on record have all taken place in the past two decades. 

And yet, we have been wary of too much government activism. This is true not just in tackling climate change but in other areas that have contributed to the storms’ destructive power. 

Houston chose not to have any kind of zoning that limited development, even in flood-prone areas, paving over thousands of acres of wetlands that used to absorb rainwater and curb flooding. The chemical industry has been able to persuade Washington to exercise a light regulatory touch, so there is limited protection against fires and contamination, something that was made abundantly clear in the past couple of weeks. And now, of course, low-tax and low-regulation Texas has come to the federal government, hat in hand, asking for more than $150 billion to rebuild its devastated state. 

We are living in an age of revolutions, natural and human, that are buffeting individuals and communities. We need government to be more than a passive observer of these trends and forces. It needs to actively shape and manage them. Otherwise, the ordinary individual will be powerless. I imagine that this week, most people in Texas, Florida and Puerto Rico would be delighted to hear the words “I’m from the government, and I’m here to help.”

President Barack Obama Weekly Address October 1, 2016 (Video/Transcript)

President Barack Obama
Weekly Address
The White House
October 1, 2016

There are a couple different stories you can tell about our economy.

One goes like this.  Eight years after the worst economic crisis of our lifetimes, our economy has created jobs for 71 straight months.  That’s a new record.  Unemployment has fallen below five percent.  Last year, the typical household saw its income grow by about twenty-eight hundred dollars – the biggest one-year increase ever.  And the uninsured rate is at an all-time low.

All that is true.  What’s also true is that too much of our wealth is still taken by the top – and that leaves too many families still working paycheck to paycheck, without a lot of breathing room.
There are two things we can do about this.  We can prey on people’s worries for political gain.  Or we can actually do something to help working families feel more secure in today’s economy.

Count me in the latter camp.  And here’s one thing that will help right away:  making sure more of our families have access to paid leave.

Today, having both parents in the workforce is an economic necessity for many families.  But right now, millions of Americans don’t have access to even a single day of paid sick leave.  So if you get sick, that sticks you with a lousy choice.  Do you go to work and get everyone else sick, too?  Or do you take care of yourself at the risk of a paycheck?  If your kid gets sick, do you send her to school anyway?  Or do you stay home to take care of her, lose a day’s pay, and maybe even put your own job at risk?

We shouldn’t have to make choices like that in America.  That’s why I’ve repeatedly called on the Republican Congress to pass a law guaranteeing most workers in America the chance to earn seven days of paid sick leave each year.  Of course, Congress hasn’t acted. But we’ve also worked with states, cities, and businesses to get the job done – and many have, pointing to research showing that paid leave actually helps their bottom line.  In fact, since I took office, another ten million private sector workers have gained paid sick leave – making up a record share of our workforce.

Unfortunately, there are still about 40 million private sector workers who don’t get a single day.  That’s why I’m doing what I can on my own.  Effective on January 1st, federal contractors will be required to give their employees working on new federal contracts up to seven paid sick days each year.  That’s happening.  It will help about one million workers when they or a loved one gets sick.  It will cover time you need for preventive care.  It will cover absences resulting from domestic violence or sexual assault.  And it means everyone else is less likely to catch what someone else has got – whether it’s a coworker or the person preparing or serving your food.

Paid sick leave isn’t a side issue, or a women’s issue, or something that’s just nice to have.  It’s a must-have.  By the way, so are economic priorities like child care, paid family leave, equal pay, and a higher minimum wage.  We need a Congress that will act on all these issues, too, because they’d make a meaningful difference in the lives of millions of Americans who are working hard every day.

It’s more than talk – it’s action.  And that’s what you should demand of every politician who wants the privilege to serve you.

Thanks, and have a great weekend.