Robert Reich's Vicious Cycle Case Study

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Robert Reich's Vicious Cycle is a cycle that the American economy is currently stuck in. It refers to a series of variables that all feed into each other to increase economic inequality. It is possible to start anywhere in the cycle, but here wages stagnating will be first. When wages stagnant, workers can't buy as much. When workers can't buy as much, companies have to downsize because less people are buying their products. When companies downsize, their tax revenues decrease because the payroll amounts go down. The payroll tax is important in terms of generating revenue for the government. Because the government has less revenue, they have to cut programs. Cutting programs leads to rising costs in education, because education is less subsidized.

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