Should we rent or should we buy? Middle-income families ask themselves that question all the time. But these days so do the fabulously rich. The rise of “the increasingly itinerant global rich,” notes CNBC analyst Robert Frank, has sent the demand for luxury rentals to record heights. How high do these heights go? In hot spots like Manhattan, Miami, and Beverly Hills, units renting for $100,000 per month now raise few luxury realtor eyebrows. New York currently hosts at least seven $100,000 publicly listed rentals. Some run higher into the six figures. One apartment that composer Cole Porter called home in the 1930s comes with five bedrooms and twice-daily maid service. Only $150,000 at the monthly rate . . .
Carlos Ghosn, the CEO of the Nissan autoworks since 2001, has become the highest-paid corporate exec in Japan. Ghosn last week announced that he took home $12.38 million in 2011, an enormous windfall by Japanese standards. Ghosn’s top competitor, Toyota CEO Akio Toyoda, only earned $1.7 million last year. Ghosn’s Nissan paycheck in 2011 totaled more than the entire combined pay that went to the top 21 executives at Sony. But Ghosn apparently feels underpaid. His top U.S. automaker rival, Ford’s Alan Mulally, pulled in over twice his pay, $29.5 million, and nine other U.S. CEOs grabbed over $30 million in 2011. Japan, says Ghosn, is “going to have to make more investments in executive compensation” to remain “competitive” in world markets . . .
If stuffing CEO pockets made economies more “competitive,” then the most competitive nation on Earth ought to be the United States, home to the world’s most highly compensated CEOs. But a new report from the OECD, the economic research agency for developed nations, says the United States is “stagnating” on the innovation front and “slowly slipping down the global rankings” for coming up with “valuable new products or processes.” The OECD study, released last week, rates the U.S. capacity to innovate as no better than “average.” Where the United States remains distinctly above average: its level of economic inequality. That level, says the OECD, “has continuously increased over the last four decades.” High-income Americans, the OECD urges, should pay more in taxes.
Quote of the Week
“Apple is rapidly becoming the symbol of what’s wrong with our economy: a highly profitable enterprise where all the gains go to those at the top and the vast majority, including those with college degrees, struggle to get by.”
Larry Mishel, Working Economics, June 25, 2012
In July 1776, only about 2.5 million souls lived within the confines of the newly independent 13 American colonies, about the population of today’s Denver area.
But a great deal more than population size, of course, separates all of us from the generation of 1776 we fete this week. We live, for instance, in one of the world’s most unequal nations. They didn’t.
This week in Too Much we explore the egalitarian back story to the original red, white, and blue. Our contemporary fans of grand fortune always do their best to blur this story. The rest of us can’t afford to let them.
So this Fourth of July holiday week, why not share this issue of Too Much with a friend who could use a little hidden history. Too Much, by the way, will be going on a little holiday break the next two weeks. We’ll be returning later this month. In the mewantime, keep cool — and stay committed!
|PETULANT PLUTOCRAT OF THE WEEK|
The American who runs the British banking giant Barclays chose to play offense when he testified last year before a UK parliamentary panel. Barclays CEO Bob Diamond called for an end to banker bashing and pointedly declared that his bank “never took a single penny of taxpayer money anywhere in the world.” But Barclays, we now know, was taking plenty, skimming “off the top” in an interest rate manipulation scheme that helped the bank score billions in phony profits — and helped make Diamond the UK’s highest-paid CEO. Barclays last week agreed to pay $450 million in fines to regulators in Britain and the United States, and Diamond says he won’t take a bonus this year. Back in 1980, the top Barclays executive took home the equivalent of $210,000. Diamond last year walked off with $32.6 million.
Stat of the Week
Business Insider is giving the title of world’s most unequal city to Hong Kong, with New York the first runner-up. One metric in the Business Insider analysis: Full-time domestic servants make up 4 percent of Hong Kong residents and only 0.01 percent in New York.
|inequality by the numbers|
Urge the national groups that count you as a member to endorse Americans for Tax Fairness, a new drive to end the Bush-era tax breaks on income over $250,000.
Urge the SEC to require companies to report their CEO-to-worker pay ratios.
Richard Wolff, Mondragon shows the way, Guardian, June 24, 2012. In Spain’s massine Mondragon cooperative industrial and retail cooperative network, no boss makes over 6.5 times the pay of any cooperative worker member.
Yves Smith, France Pushing for a Maximum Wage; Will Others Follow? Naked Capitalism, July 1, 2012. The newly elected Hollande government is moving ahead on pledges to crack down on executive pay excess.
The Tea Party’s 1776 Shtick: History Mangled
America’s revolutionary generation, new research documents, lived in a society much more equal than our own. And early Americans prized that equality, an inconvenient reality for conservatives today.
Not too long ago, Americans only dressed up in George Washington wigs, waistcoats, and tri-corner hats on the Fourth of July. But then the Tea Party came along, and colonial garb started turning up at rallies all year around.
In quick order, the legacy of 1776 started “belonging” to the anti-“Big Government” Tea Party crowd. The Founders, claimed Tea Party types, wouldn’t abide government interference in their lives. And neither should we. If we today just stayed true to 1776, the United States would remain forever “exceptional.”
And how do we stay true? The Tea Party — and like-minded GOP leaders in Congress — had a ready answer. No new taxes. Ever. Not even on the super rich. Forget that fussing about inequality. Starve the beast. Keep government small.
This basic Tea Party line has now become the reigning mantra within conservative circles. But this mantra totally mangles the historical record. The patriots of 1776 didn’t stage a revolution to keep government small. They revolted to keep their America relatively equal.
Those colonists, new archival research by economists Peter Lindert and Jeffrey Williamson documents quite dramatically, lived in a society that sported far more equality than mother England. In 1774, on the eve of the American Revolution, the 13 American colonies enjoyed what appears to be “a more egalitarian income distribution” than “any other place on the planet.”
Our colonial top 1 percent, Lindert and Williamson calculate in research published last year, took in just 8.9 percent of colonial household income. Back in England, the richest 1 percent were raking in 17.5 percent, nearly twice that share.
Free American colonists — from average working families — had significantly higher incomes than their English counterparts. But the rich in the colonies had significantly smaller incomes than England’s richest.
What explained the difference? In mother England, American patriots saw clearly, wealthy aristocrats were manipulating the levers of government to enrich themselves and deny average people the “fruits of their labor.”
Our generation of 1776 considered aristocracy a direct threat. They struggled to free themselves from it. Their new nation, they pledged, would be a republic.
Our founders, adds historian James Huston, believed their new republic would endure only so long as they kept “an equal or nearly equal distribution of landed wealth among its citizens.” These early Americans had read their history. Previous attempts to establish republican rule — in Athens, Rome, Venice, and Florence — had all failed. Inequality had wrecked them.
Our generation of 1776 would not repeat that mistake. They would celebrate the relative equality of their young nation as a bulwark of republican liberty.
“We have no paupers,” Thomas Jefferson would write. “The great mass of our population is of laborers; our rich, who can live without labor, either manual or professional, being few, and of moderate wealth.”
Added Jefferson: “Can any condition of society be more desirable than this?”
To Jefferson and his generation, equity seemed nature’s way. Most colonials lived on small family farms. The earth they farmed could yield only so much wealth. If government just let the economy alone, America’s original revolutionaries believed, gross inequality would never appear.
No one could ever become fabulously wealthy in an economy where labor, and labor alone, determined a citizen’s worth.
This advocacy for “limited government” seemed to make sense in an agrarian nation. But the United States would not remain agrarian. A century after 1776, giant corporations lorded over America’s economic landscape, and new industrial elites were enriching themselves at the expense of average Americans.
But average Americans would fight back over the first half of the 1900s. They would use government to limit the corporate power to exploit. They would put in place progressive tax systems that cut the new corporate rich down to democratic size. They would, in short, stay true to Jefferson’s original egalitarian vision.
Over recent decades, we’ve lost sight of that vision. Our top 1 percent are now expropriating a greater share of national income than did the aristocrats back in old mother England.
The tea partisans and their pals, meanwhile, advise us to pay no heed. The founders would not agree. They cared deeply about the link between democracy and equality. And not just on the Fourth of July.
No Paine, No Gain: A Legacy Worth Renewing
Thomas Paine, Agrarian Justice, 1797.
Every American school kid encounters Thomas Paine. Early in 1776, the familiar story goes, Paine authored a rousing pamphlet that most all historians agree had a “powerful influence” on the Declaration of Independence.
In his Common Sense pamphlet, Paine railed against a Europe “too thickly planted with kingdoms to be long at peace” and called eloquently for separation and a new age of representative rule.
Thomas Paine would never, after the American Revolution, stop battling for that “new age.” But that part of life his story that seldom gets much attention today. A shame. His later life offers us insights aplenty.
In the 1790s, a decade after the American revolutionary struggle, Paine would find himself in France, right in the middle of the French Revolution. Paine’s focus by then had broadened. The United States, he believed, had introduced the world to “liberty.” Now revolutionary France had placed “equality” front and center.
But equality, Paine would note, appears “often misunderstood.” Midway through the 1790s, He wrote a new pamphlet, entitled Agrarian Justice, to help overcome that misunderstanding.
By “agrarian” justice, Paine actually meant “economic” justice. Paine lived before the industrial age. Wealth in his time came mainly from rural land, and control over that land had all over the civilized world fallen to “landed monopoly.”
In our “natural and primitive state,” Paine relates in Agrarian Justice, the earth had been “the common property of the human race.” With civilization, much of humanity had been dispossessed — without “indemnification for that loss.”
The resulting inequality had left “spectacles of human misery” plainly visible “in all the towns and streets in Europe.”
Paine had a solution. He spells out in Agrarian Justice a plan that would tax away from 10 to 20 percent of the wealth the rich leave behind when they die and use that revenue to fund a one-time cash grant to every person who turns 21 and an annual old-age stipend for everyone who turns 50.
Paine’s Agrarian Justice. widely available today online, makes for fascinating Fourth of July reading in our unequal times. Paine’s sensibilities come across as appealingly contemporary and pragmatic. He expends considerable effort, for instance, explaining how inequality leaves all of us poorer, even the rich.
No one, Paine writes, can “enjoy affluence with the felicity it is capable of being enjoyed, while so much misery is mingled in the scene.”
The “contrast of affluence and wretchedness” would strike Paine as “like dead and living bodies chained together.”
We still chafe from those chains. Our new age has not yet arrived.
|About Too Much|
Too Much, an online weekly publication of the Institute for Policy Studies | 1112 16th Street NW, Suite 600, Washington, DC 20036 | (202) 234-9382 | Editor: Sam Pizzigati. | E-mail: email@example.com | Unsubscribe.
Let’s keep this award-winning site going!
Yes, audiences applaud us. But do you?
If yes, then buy us a beer. The wingnuts are falling over each other to make donations…to their causes. We, on the other hand, take our left media—the only media that speak for us— for granted. Don’t join that parade, and give today. Every dollar counts.
|Use the DONATE button below or on the sidebar. And do the right thing. Even once a year.|
Use PayPal via the button below.