 | October 6, 2014 |
| THIS WEEK | |
| The behind-the-scenes strategists who run America’s political campaigns like to see themselves as the ultimate data-driven realists. Only poll numbers matter. If a position “polls” well, they’ll urge their candidates to push it. If not, forget it.That may be why precious few Democrats this fall are campaigning against our top-heavy status quo. The strategists apparently have some polling that shows voters lukewarm about candidates who pledge “to reduce income inequality.”But plenty of other polling, journalist David Moberg points out, shows a public really eager to back candidates willing to fight for “an economy that works for everyone, not just the wealthy few.” Why are our high-priced political consultants ignoring this polling? They can’t afford to discomfort the wealthy few who bankroll their high-priced campaigns. Neither can their candidates.We’ve got to break this cycle — before inequality breaks us. Inside this week’s Too Much, more on that breaking and our truly wealthy few. | About Too Much, a project of the Institute for Policy Studies Program on Inequality and the Common Good Join us on Facebook
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| GREED AT A GLANCE | |
What goes up when the gap between the rich and everyone else rises? Incidents of child abuse. Researchers at Cornell University have crunched data on inequality and child maltreatment for all 3,142 U.S. counties. The higher the inequality in a county, they found, the higher the reported rate of child maltreatment. A 15 percent drop in U.S. inequality, the researchers estimate, would “translate into about 100,000 fewer child victims of abuse or neglect” per year. What goes down when inequality rises? Levels of trust. Psychologists from San Diego State and the University of Georgia have traced the decades-long fall in the share of Americans who believe “most people can be trusted” to the cultural impact of America’s growing economic divide . . . Sales have been slumping at Darden, the world’s largest full-service restaurant chain. Servers at Olive Garden and Darden’s other eateries are feeling that slide. A fifth of Darden’s over 150,000 U.S. employees make just the $2.13 federal hourly minimum wage for tipped workers. But Darden CEO Clarence Otis Jr. isn’t feeling much pain. The resigning — under pressure — Otis will be walking away with an exit package worth $35.9 million, a new Institute for Policy Studies report calculates. His two exiting executive pals, Andrew Madsen and David Pickens, will also be enjoying soft landings, with golden parachutes worth another $32.4 million. In Switzerland, they do things differently. Voters there last March passed a referendum that bans golden parachutes . . .Some 354 U.S.-dollar billionaires now grace China, calculates a new study, a total up 13 percent from last year. In 2012, a mere 65 billionaires called China home. Times have simply never been better for China’s rich. But can these good times last? Many of China’s rich have their doubts. Nearly half the nation’s millionaires say they plan to emigrate within the next five years. The rush out has already begun. The U.S. program that grants visas to foreign investors with lots of cash to invest has run out of immigration slots. Rich Chinese, news reports have revealed, make up 85 percent of the program’s applicants. | Quote of the Week “You would expect that the world of the Qing dynasty, Tsar Nicholas I, and the British East India Company would be more unequal than today’s. Yet in China, Thailand, Germany, and Egypt, income inequality was about the same in 2000 as it had been in 1820. Brazil and Mexico are even more unequal than they were at the time of Simón Bolívar. Only in a few rich nations — such as France and Japan — do you find the expected long-term decline in income inequality.” |
| PETULANT PLUTOCRAT OF THE WEEK | |
 Maurice “Hank” Greenberg is finally having his day in court. Greenberg ran the giant insurer AIG for decades, until an accounting scandal forced him out. Now Greenberg is claiming that the 2008 federal bailout of AIG illegally forced AIG shareholders — like himself — to swallow substantial losses. In a Washington, D.C. courtroom last week, the high-gloss legal team for the 89-year-old Greenberg demanded $25 billion in damages. In reality, AIG shares would have become worthless without the federal bailout. That bailout enabled Greenberg to realize an estimated $400 million off the sale of 10 million of his shares. Still, the trial could have some redeeming social value. Greenberg’s lawyers are spotlighting the sweetheart bailout deals between federal officials and Wall Street’s biggest banks. | |
| IMAGES OF INEQUALITY | |
 This open-air swimming pool will sometime next year sit atop the principality of Monaco’s first new skyscraper in 30 years. The four-story penthouse the pool graces will likely rate, once complete, as the world’s most expensive condo. The current asking price: $400 million. Included in that price: four kitchens, a gym, sauna, cinema, and a master bedroom as big as two and a half tennis courts. The pad’s even bigger drawing card: Monaco’s tax haven status. | Web Gem How Was Life?/ Interested in how real wages or life expectancy or levels of income inequality have evolved, by nation, over the last two centuries? Researchers at the OECD have released this interactive site to accompany their new report, reviewed below, on long-term trends in global well-being. |
| ANTIDOTES TO INEQUITY | |
| An influential Democrat in the U.S. House of Representatives has just introducedlegislation that denies tax deductions for any executive pay over $1 million to corporations that short-change workers at paycheck time. Under the new Chris Van Hollen proposal, corporations would lose these deductions if workers don’t receive“annual raises that, on average, at least keep pace with increases in living costs and labor productivity.” Between 1979 and 2011, analyst Harold Meyerson notes, America’s productivity rose 75 percent, but median worker pay edged up just 5 percent. CEO pay rose 937 percent over about the same years. Van Hollen’s bill has no chance of passage anytime soon. But the legislation does signal an encouraging new willingness — on the part of at least some House political heavyweights — to challenge America’s overstuffed power suits. | Take Action The Spirit Level inequality documentary is now heading for an early 2015 premiere. Watch the trailer and help build the outreach effort. |
| INEQUALITY BY THE NUMBERS | |
 | Stat of the Week After adjusting for inflation, notes economist Ben Casselman, the income of the median — most typical — U.S. household stands 8 percent lower than before the Great Recession, 9 percent lower than at its 1999 peak, and “essentially unchanged since the end of the Reagan administration.” |
| IN FOCUS | |
| America’s Ridiculously Rich: the 2014 Edition Forbes has just released its latest list of America’s wealthiest 400. Imagine yourself part of the typical American family. Your household would have, the Federal Reserve reported last month, a net worth of $81,200. Not much. But 50 percent of America’s households would actually have less wealth than you do. The other half would have more. Now imagine that your net worth suddenly quadrupled to about $325,000. That sum would place you within the ranks of America’s most affluent 20 percent of income earners. You would be “typical” no more. On the other hand, you still wouldn’t be rich, or even close to grand fortune. So suppose we quadrupled your wealth still again, enough to get your net worth — your assets minus your debts — all the way up to $1.3 million. Congratulations. You now hold 16 times more wealth than the typical American. You probably have paid off your mortgage. You have a healthy balance in your 401(k). You have investment income. You have it made. But not really. You still have to worry financially, about everything from losing your job to helping your kids with their college tuition. So let’s quadruple your net worth once again — to $5.2 million. You now sit comfortably within the ranks of America’s richest 1 percent. You can afford, well, just about anything you want. A getaway in the mountains, another getaway on the shore. Two beamers in the driveway. Impressive philanthropic gestures. Direct access to your U.S. senators. Enough already? Actually, no. With a fortune of just $5.2 million, you still have to put up with the inconveniences of mere mortal existence. Yes, you can fly first class anywhere you want. But you have to fly with the great unwashed back in coach — and they take forever getting their carry-ons up in those overhead bins. You need relief. We’re going to give it to you. We’re going to multiply your $5.2 million fortune 1,000 times over — to $5.2 billion. Now you can buy your own private jet. Even better, now you get your name printed in the annual Forbes magazine list of America’s 400 richest. At $5.2 billion, your fortune would nearly rate as an average Forbes 400 stash. America’s top 400, Forbes revealed last week, now hold a combined net worth of $2.29 trillion. That places the average Forbes 400 fortune at $5.7 billion, an all-time record high. Like this article? Sign up Remember back when you held that median American nest-egg of $81,200? The average member of the Forbes 400 holds a fortune over 70,000 times that size. And the richest of these 400 hold far more than that average. Take Larry Ellison, the third-ranking deep pocket on this year’s Forbes list. Ellison just stepped down as the CEO of the Oracle business software colossus. His net worth: $50 billion. What does Ellison do with all those billions? He collects homes and estates, for starters, with 15 or so scattered all around the world. Ellison likes yachts, too. He currently has two extremely big ones, each over half as long as a football field. Ellison also likes to play basketball, even on his yachts. If a ball bounces over the railing, no problem. Ellison has a powerboat following his yacht, the Wall Street Journal noted this past spring, “to retrieve balls that go overboard.” Hiring that ball-retriever qualifies Ellison a “job creator,” right? Maybe not. Ellison has regularly destroyed jobs on his way to grand fortune. He has become, over the years, a master of the merge-and-purge two-step: First you snatch your rival’s customers, then you fire its workers. In 2005, for instance, Ellison shelled out $10.6 billion to buy out PeopleSoft, an 11,000-employee competitor. He then proceeded to put the ax to 5,000 jobs . Five years later, Ellison bought out Sun Microsystems and indignantly denied that any “massive layoff” would be in the offing. Five months later, Ellison’s Oracle quietly acknowledged a major downsizing in an official federal regulatory filing. Job massacres like these been hollowing out America’s middle class ever since Forbes started annually identifying the nation’s richest 400 back in the 1980s. Since 1989, Federal Reserve figures show, the median net worth of families in America’s statistical middle class — the middle 20 percent of income earners — has dropped from $75,300 to $61,700, after taking inflation into account. This year, for the first time ever, Forbes has assigned a “self-made score” to every one of America’s richest 400. More than two-thirds of this year’s 400, Forbes claims, rate as “self-made,” Ellison among them. Forbes doesn’t bother asking how those rich went about self-making their fortunes. We should. Our top 400, after all, haven’t just made monstrously large fortunes. They’ve made a monstrously large mess. To unmake it, we need to unmake them. | New Wisdom Roger Martin, The Rise (and Likely Fall) of the Talent Economy, Harvard Business Review, October 2014. A former business school dean makes a compelling case for taxing the rich and their financial transactions. Michael Hiltzik, Watch a conservative economist try to wish income inequality away, Los Angeles Times, September 30, 2014. An inequality denier gets exposed. Martin Wolf, Why inequality is such a drag on economies, Financial Times, September 30, 2014. Big divides in wealth can hollow out our republic. Christopher Ingraham, The 1 percent is way more politically active than you are, Washington Post, September 30, 2014. A look at new research. Paul Buchheit, 8 Things Mainstream Media Doesn’t Have the Courage to Tell You, AlterNet, September 30, 2014. News outlets can’t seem to differentiate between the top 5 percent and the rest of society. Josh Hoxie, When Income Tax Cuts Masquerade As Estate Tax Repeal, Forbes, October 1, 2014. If repealers get their way, billions in capital gains will never be taxed at all. L. Randall Wray, Rising Tides Lift All Yachts: Why the 1% Grabs All the Gains from Growth, New Economic Perspectives, October 1, 2014. On the inadequacy of growth as as inequality-busting strategy. Michael Powell, Sniffing for Dollars at Home of the Vikings, New York Times, October 3, 2014. How mega-rich owners fleece the football-loving public.
Need some inspiration? Try Too Much editor Sam Pizzigati’s gripping historyof the forgotten triumph over America’s original plutocracy. You can read the intro chapter online. |
| NEW READS | |
| Life Could Be Worse, Life Should Be Better
We have plenty of reasons to celebrate what we, as a human family, have achieved over the past two centuries. This new study from the OECD, the Paris-based research agency that draws its funding from the governments of the world’s developed nations, leaves no doubt on that score. Just look at the numbers. Worldwide, construction laborers can on their average daily wages afford to buy over seven times more in the way of subsistence goods than they could in the 1820s. The share of the global population with at least a basic education has more than tripled, from 24 percent in 1870 to 82 percent in 2010. In the 1880s, life expectancy at birth amounted to a frighteningly low 27 years. The average today: 69 years. We could go on. But you get the idea. By all sorts of measures, our global glass appears to be way more than half-full. So why aren’t the editors of this hefty collection of data and trends celebrating? Simple. We ought to be much further along the road to “global well-being.” Over the past 40 years, in many nations, our progress has stalled on one front after another. Trust. Crime. Social mobility. Health and educational achievement. Behind that stall, this OECD research suggests, lurks the widening global gap between our affluent and everyone else. “It is hard not to notice the sharp increase in income inequality experienced by the vast majority of countries from the 1980s,” How Was Life? observes. “There are very few exceptions to this.” “The importance of income inequality at the local, regional, and global scale,” the report goes on, “hardly needs to be stressed.” Our celebrating will have to wait. | Enjoy Too Much? Email |
| 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: editor@toomuchonline.org | Unsubscribe. | |
How Was Life? Global Well-Being Since 1820, edited by Jan Luiten van Zanden, Joerg Baten, Marco Mira d’Ercole, Auke Rijpma, Conal Smith, and Marcel Timmer, OECD, October 2, 2014.