Understanding the Financial Crisis
Robert Kuttner has had an extensive career as a writer and editor at various national publications. He attended Oberlin College, University of California, Berkeley, and the London School of Economics. He has taught at Brandeis, Boston University, UMass, and Harvard’s Institute of Politics. He has also been a John F. Kennedy Fellow at Harvard University, a Woodrow Wilson Fellow at UC-Berkeley, a Guggenheim Fellow, and a Radcliffe Public Policy Fellow.
Robert Kuttner is the author of several books dealing with labor and economic theory, and his support of a liberal agenda. Kuttner has also appeared as a periodic commentator on National Public Radio, The Newshour With Jim Lehrer, Firing Line, Crossfire, and numerous other public affairs and debate programs. Kuttner is also the co-founder and editor in-chief of The American Prospect magazine, and has served in several capacities within the federal government.
On September 10, 2008, Kuttner appeared on Sean Hannity’s program, and there was a heated exchange over Kuttner’s assessment of the economy, with Hannity saying that Kuttner was “spewing garbage” by portraying the economy as being in dire straits.
Kuttner’s book,
The Squandering of America: How the Failure of Our Politics Undermines Our Prosperity
(released in November,2007) forecast the current financial crisis. The book presents many statistics relating to economic conditions, and how the middle class standard of living has declined in recent years. The numbers are presented in a very readable way, and contain many unpleasant surprises. Tax loads are shifting to the middle class; during the LBJ era, corporations paid 4% of GDP, now it’s just over 1%.
Over the past three decades, America’s GDP has nearly doubled and unemployment is fairly low. But, most of the economic gains have gone to the top 10%, and more yet to the top 1%. Kuttner notes that, contrary to the belief that the most successful in today’s economy have earned their wealth, it is often the result of abuse of power – crony boards of directors, tax-encouraged financial engineering (hedge funds), and others reaping the benefit of lobbyists; not “the Market”.
Kuttner sees both Republican and Democrat leaders tied to big business, with policies that enrich those at the top while undermining the lower 80%. Too many voters fail to become informed and vote, and are distracted by issues such as patriotism and homophobia. Kuttner believes that around 1980, with the election of Ronald Reagan, political power shifted from ordinary citizens to financial elites. The financial deregulation that followed has created many of the speculative excesses we’ve seen, and are experiencing now. Kuttner argues that a more managed form of capitalism is required, not only in finance, but also in foreign trade.
Kuttner offers arguments that proper regulation of markets does not damage prosperity, but leads to greater stability and wider dispersion of gains. He compares the Great Depression, which was preceded by an almost religious belief in “self-regulating markets”, with the same mantras repeated today, with similar results. Kuttner also names names of the architects of the financial debacle we are living through today.
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