Sorry, Mr. Reich: Your Economics Grade Is Still F (Reply to Robert Reich)

In my Robert Reich’s F Minus In Economics: False Facts, False Theories, I gave Professor Reich an F for his Higher wages can save America’s economy — and its democracy. For those who missed it, the reasons for my grade (as a 40-year teacher of economics) are Reich’s lamentable disregard for facts and his lack of knowledge of basic economics. My specific criticisms included:

First, Reich’s assertion that America’s growth and prosperity rest on a “basic bargain” that corporations pay their workers enough so that they can buy their products is wrong.  Reich claims the bargain was pioneered by Henry Ford in 1914, who decided to pay his workers enough to buy his Model T’s.

Second, historical statistics show Reich’s assertion that the Great Depression was caused by businesses allowing wages to stagnate and profits to soar in the 1920s is false.

go to forbes.com