America's economy today has plundered to a new low and unless we do
something about the current trends, the situation will only worsen. In
2008, America experienced a tragic financial crisis and the blame was
instantly placed on the shoulders of Wall Street. However, many economists,
such as Robert B. Reich, argue that the cause of this economic meltdown did
not come from people messing around with the stocks and corporate shares
but rather from the actual structure of the country's economy. In the book,
Aftershock, Reich discusses the structure of our economy in what he calls
the basic economic bargain. At the root of a highly productive economy, the
workers are not only employees but also consumers (Reich 28). The earnings
from these workers are used to purchase the goods and services produced by
other workers. But when the workers' taxed earnings no longer suffice for
their most basic needs, then the basic bargain becomes broken. This causes
the production of goods and services to be greater than what the consumers
are capable of purchasing. The broken basic bargain attributes to the
growing gap between the rich and the poor by allowing the wealthy to earn
more while the working middle class pays more. Raising the tax rates on the
wealthy will help repair the basic bargain and allow for the economy to
Production of goods and services comes at a cost and those costs must
be balanced out by an equal amount of demand. So the real problem is not
just the fact that the vast majority of people have less purchasing power
but there also needs to be more demand. The nation's economy is driven by
the needs and wants of the everyday consumer. Jobs arise from the consumer
sector, especially from services, which in turn spur up growth. During
economic downturns like the one we are currently in, consumers purchasing
investments such as real estate, automobiles, and other physical capital
have s...