Robert Reich and Transport

I have been reading Robert Reich’s excellent book “Beyond Outrage” which explains how the how the economy of the United States has developed since the early 1980’s when Ronald Reagan was President. So, you might ask “how is this relevant to transport planning ?”. Well, there are many themes covered by the book which have direct implications on the transport scene here. Policy in the US is often copied by UK governments at a later date. However, we seldom pick-up on the aspects of policy which proved less successful in the long term. Therefore, Reich’s analysis is instructive.

images[8]Reich’s first point is that, in the US, almost all of the gains from economic growth since 1980 have gone to people living at the top end of the income distribution. Does this sound familiar ?

“In the 1960s and 1970s, the wealthiest 1 percent of Americans got 9-10 % of our total income. By 2007, just before the Great Recession, that share had more than doubled to 23.5%. Over the same period the wealthiest 0.1% tripled its share.”

Reich also claims that, since 2001 the median wage in the US has actually dropped in realm terms. The use of mean income or GDP statistics can be misleading when the distribution becomes increasingly skewed in this way.

Reich argues that the US will not bounce back until inequality is reversed. In his words

“No economy can run on the spending of very wealthy.”

Reich cites the example of Henry Ford who, in 1914, gave his workers three times the average wage of a typical factory employee at the time. The workers were enabled to buy the cars that they built, increasing profitability.

Reich also explains how the tax system in the US has been altered to benefit wealthy individuals and top management in large corporations (regardless of their performance).

State investment in transport has lost out in this period.

“Excellent schools, roads, parks, playgrounds, and transit systems were meant to knit the new industrial society together, create better citizens and generate widespread prosperity.”

UK governments have generally followed the US example. The public may sometimes find privatisation policies unpalatable and kick-back (e.g. on health), but in general we emulate the US.

As transport planners perhaps we should be looking even more carefully at who wins and who loses with each policy, strategy or scheme that we examine (i.e. by income group). Also, we should have the confidence to speak-up for the widespread benefits that some types of transport investment can bring to society when compared with other types of government spending. The Chinese commitment to investment in transport in the UK, which was reported in the papers yesterday (21 July 2014), shows that they understand these issues very well.

Reich’s analysis is refreshing in its clarity. Those on the right wing of the political spectrum will say that he is in favour of “big government” that we cannot afford any more. However, the North European and Scandinavian countries show what can be achieved in a more equitable society.

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About djtplan

Independent Transport Planner
This entry was posted in Transport Economics, Transport Planning, Uncategorized. Bookmark the permalink.

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