Robert Reich: “The Next Crash”

By Robert Reich
Reprinted from robertreich.org

Sorry to deliver the news, but it’s time to worry about the next crash.

The combination of stagnant wages with most economic gains going to the top is once again endangering the economy.

Most Americans are still living in the shadow of the Great Recession that started in December 2007 and officially ended in June 2009. More have jobs, to be sure. But they haven’t seen any rise in their wages, adjusted for inflation.

Many are worse off due to the escalating costs of housing, healthcare, and education. And the value of whatever assets they own is less than in 2007.Which suggests we’re careening toward the same sort of crash we had then, and possibly as bad as 1929.

Clear away the financial rubble from those two former crashes and you’d see they both followed upon widening imbalances between the capacity of most people to buy, and what they as workers could produce. Each of these imbalances finally tipped the economy over.

The same imbalance has been growing again. The richest 1 percent of Americans now takes home about 20 percent of total income, and owns over 40 percent of the nation’s wealth.

These are close to the peaks of 1928 and 2007.

The underlying problem isn’t that Americans have been living beyond their means. It’s that their means haven’t been keeping up with the growing economy. Most gains have gone to the top.

But the rich only spend a small fraction of what they earn. The economy depends on the spending of middle and working class families.

By the first quarter of this year, household debt was at an all-time high of $13.2 trillion. Almost 80 percent of Americans are now living paycheck to paycheck.

It was similar in the years leading up to the crash of 2007. Between 1983 and 2007, household debt soared while most economic gains went to the top. If the majority of households had taken home a larger share, they wouldn’t have needed to go so deeply into debt.

Similarly, between 1913 and 1928, the ratio of personal debt to the total national economy nearly doubled. After the 1929 crash, the government invented new ways to boost wages – Social Security, unemployment insurance, overtime pay, a minimum wage, the requirement that employers bargain with labor unions, and, finally, a full-employment program called World War II.

After the 2007 crash, the government bailed out the banks and pumped enough money into the economy to contain the slide. But apart from the Affordable Care Act, nothing was done to address the underlying problem of stagnant wages.

Trump and his Republican enablers are now reversing regulations put in place to stop Wall Street’s excessively risky lending.

But Trump’s real contributions to the next crash are his sabotage of the Affordable Care Act, rollback of overtime pay, burdens on labor organizing, tax reductions for corporations and the wealthy but not for most workers, cuts in programs for the poor, and proposed cuts in Medicare and Medicaid – all of which put more stress on the paychecks of most Americans.

Ten years after the start of the Great Recession, it’s important to understand that the real root of the collapse wasn’t a banking crisis. It was the growing imbalance between consumer spending and total output – brought on by stagnant wages and widening inequality.

That imbalance is back. Watch your wallets.

Code Red is an “Outdated System” (according to this NY Times article)

“The decision to issue alerts and evacuation orders rests with local authorities, and as the Camp Fire began on Nov. 8, the Butte County Sheriff’s Department decided to use what experts say is an outdated system — called Code Red — to notify residents of danger with a phone call.

“But only residents who sign up for the service receive alerts — and only a fraction of them had. The decision not to issue an Amber Alert-style message, a federal government system that could reach all cellular phones in the area, was partly out of fear of causing panic and traffic jams on the one main roadway out of Paradise, according to Kory L. Honea, the Butte County sheriff.”

Read the full article here:

A Frantic Call, a Neighbor’s Knock, but Few Official Alerts as Wildfire Closed In

“In the frenzied first hours of the Camp Fire as it bore down on Paradise, Calif., only a fraction of residents received emergency alerts or evacuation orders from local authorities.”

Brian Gibb: EVACUATION PLANNING: WHERE TO GO? (Facebook Discussion)

Editor’s Note: Nevada County resident, Brian Gibb, posted the following statement to the Facebook discussion group “Happening Now.” He kindly gave me permission to reprint it here.

EVACUATION PLANNING: WHERE TO GO?

I posted on this page a few days ago about the urgent need for a mass community evacuation plan so that we do not suffer the fate of Paradise. There is an incredible amount of useful information online about how to make your own home fire-safer and what to have packed ready to go in case you do need to leave your house.

What is missing is a detailed plan on how our community could best organize in order to provide either fire-safe gathering areas in Grass Valley and Nevada City (and elsewhere in the county) and how to handle the chaotic situation that thousands of cars leaving simultaneously would cause on our local narrow roads.

Nevada County’s Office of Emergency Services is the department responsible for preparing emergency plans and coordinating the multiple agencies and first responders that would be needed in a major fire. You can see their website here:

www.mynevadacounty.com/1238/County-Emergency-Plans

Although the website has a document called Mass Evacuation, it is mainly an outline of the organization and responsibilities of the primary agencies. It is not a guide to the community about how to behave and where to go if fire threatens our towns.

It’s obvious to us all that our local major roads could be easily blocked as they are all 2 lane roads. Having 4 lanes on Highway 49 (southbound) and Highway 20 (westbound) would double the traffic that could escape quickly. However, that will take time, a lot of money and state help to bring about.

But in this post I want to focus on what each of our towns and county could do very quickly NOW to save thousands of lives without much expenditure or time needed. We need to designate large community gathering areas in each town which could be more easily defended from fire and which would be easy to access. We might not have enough fire fighters or time to defend every street but we could focus on a few defensible areas where thousands could come together quickly, without much driving.

Some of the main criteria for choosing these places would be absence of nearby trees; large paved areas for parking, large buildings for taking shelter in and having access to food and water; central locations along or close to the Golden Chain Highway (Hwy 49); close to hospital and/or fire stations.

A few examples. 1. In Nevada City, SPD on Zion St and the surrounding business district on Argall Way and Searles Avenue. 2. The county offices, jail and public library on Maidu Avenue, off 49.

In Grass Valley. 1. Brunswick basin by Safeway and CVS and other large chain stores. 2. Sierra Nevada Memorial Hospital grounds. 3. Veterans Hall downtown 4. Pine Creek Shopping Center (from Raleys up to Kmart).

In Paradise, many of those declared dead and many of the 1,200 missing are elderly, infirm or lacked transport. Many of these local gathering points could become places where people in these categories could be easily transported, or walk to, especially if our towns or neighborhoods set up “buddy” arrangements so that people can partner with neighbors to offer or get rides if there is a need to evacuate.

If firefighting resources can be centered on these large community gathering places, many lives would be saved and it would also alleviate the inevitable congestion that would occur if everyone simply tries to get out of town fast.

Last word for now.

Sign up for CODE RED alerts on the www.mynevadacounty.com website

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Comments from Brian’s readers included these thoughts:

” … Bear River high school might be another good location for the south part of Nevada County.”

” … During the Oroville Dam Flood evacuation last year it took us 5 hours to get from western Yuba City to the town of Sutter (5 miles)!!!”

” … Existing neighborhood associations could also meet and identify residents who might need help evacuating, routes for driving, for walking or on bicycle or horseback, and phone trees for local communication.”

” …  First thing that needs to get going is harden the electrical grid so it doesn’t start a fire, lots more vegetation management, and better secured power lines to withstand wind and any objects hitting them.”

Heidi Hall: “There will be a County community meeting in early December to discuss what the County is doing and look at what else we can do. Stay tuned.”

See Also:
Dr. Jo Ann Fites-Kaufman: What we and Nevada County can do now to make fire evacuations safer and quicker

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