|December 8, 2014|
|The holidays can be a difficult time for the super rich. All those people who serve them during the year — from manicurists and personal trainers to nannies and doormen — are expecting gifts. How can a wealthy person possibly keep track of them all and make the appropriate holiday giving gesture?Jacqueline Whitmore, the founder of the Protocol School of Palm Beach, is trying to help. Whitmore has prepared a list that suggests the proper holiday gift for every service worker essential to the well-heeled life. That manicurist? Up to $50. A live-in nanny? A bonus that equals two weeks pay. The doorman: up to $100.Average folks, unlike the rich, get no professional help at holiday gift-giving time. No etiquette experts are standing by to help us make giving decisions, and we here at Too Much certainly don’t qualify as experts on “proper” giving.|
But we do hope you’ll consider making a donation this holiday season to the Institute for Policy Studies. Too Much operates as a project of the Institute’s Program on Inequality and the Common Good. That support is making Too Muchaccessible all over the world. To people like you. Thanks for your consideration!
|GREED AT A GLANCE|
|You have to give this to the extremely wealthy: They may cheat on their taxes. But they sure do love their pooches. Some new evidence: Private jet operators are now chartering flights — at $67,000, on average, a pop — to deep pockets who can’t bear the thought of flying without their pets. About a half the charters that Jet Edge International books, says company CEO Bill Papariella, end up having pets on board. His typical customer, Papariella adds, has a billion-dollar fortune. Another new firm, Sit ’n Stay Global, specializes in providing “pet-friendly flight attendants.” One divorced couple — with joint custody of the family dog — pays $50,000 every other month to fly the canine back and forth between New York and L.A., with only a Sit ’n Stay nanny for company . . .Millions of Americans are still reeling, over six years later, from the titanic collapse of America’s housing market. One of the architects of that mess, former Goldman Sachs global mortgage chief Jonathan Sobel, happens to be doing just fine. Better than fine. Sobel has just placed on the market — for $43 million — his 4.8-acre estate in Southampton, Wall Street’s favorite Long Island summer watering hole. He bought the estate three years ago for a mere $13 million. Sobel, now a private equity kingpin, has been “trading up” quite nicely. He picked up $20 million earlier this year for a summer estate near Southampton he bought for $2.6 million in 2003. He picked up even more, $21 million, on the 2012 sale of a Manhattan penthouse be bought for $9 million . . .Local bankers in Massachusetts have their own get-rich-quick scam. They’re converting their banks from institutions mutually owned by depositors into publicly traded financial companies. Their incentive: The huge pay jackpots that conversions typically bring. The community bank in Danvers, for instance, became a publicly traded bank in 2008. Three years later, Danversbank CEO Kevin Bottomley sold out to an out-of-state regional bank and pocketed $16 million. One local banker in Massachusetts is definitely not taking Bottomley’s lead. The Reading Co-operative Bank’s Julieann Thurlow is leading a charge to keep local banks local. Thurlow admits to having watched Jimmy Stewart in the Christmas classic It’s A Wonderful Life “too many times.” Says the local banker: “This walking away with millions of dollars after a conversion is just ridiculous.”|
Quote of the Week
“Are we prepared to take on the enormous economic and political power of the billionaire class or do we continue to slide into economic and political oligarchy?”
|PETULANT PLUTOCRAT OF THE WEEK|
|Style.com has dubbed Peter Marino global fashion’s “go-to architect,” and that status has elevated Marino well into the upper reaches of the top 1 percent. His specialty: designing luxury boutiques, at a cost up to $100 million each, for the likes of Chanel and Louis Vuitton. Marino has a long waiting list of other brands “that want us to work for them” and, in an interview last week, said he won’t even return a call from a potential corporate client unless the call comes from the client’s CEO. Says Marino: “I’m the head of my company, I expect the head of theirs.” What advice does he have for architects starting out? He’s not offering any advice, says Marino, because that might jeopardize his “unique career.” Adds the luxury superstar: “I make a hell of a lot of money.”|
|IMAGES OF INEQUALITY|
|Meet Tabatha. She’s dying — for her own private jet to go on shopping trips to Europe. You can learn more about Tabatha and her equally needy fellow ultra rich in this clever new holiday charity appeal satire. This holiday season, the video appealurges, let’s give 100 percent to the top 1 percent. After all, the richest 85 people on earth only have as much wealth as the poorest 3.5 billion!|
Community Wealth Building in the United States/ This interactive directory from the Democracy Collaborative maps the initiatives in the United States hard at work building local counters to concentrated wealth.
|ANTIDOTES TO INEQUITY|
|Jack Gerard, the CEO of the American Petroleum Institute, pulled down $13.3 million in compensation last year. Yet his Institute operates as a “nonprofit” — and reaps a variety of tax benefits from that status. In effect, average Americans are subsidizing this lobbying giant for the fossil fuels industry. Back in 1998, a member of Congress from New Jersey, Robert Menendez, introduced legislation to cap the salary that nonprofit executives could grab at no more than the salaries of U.S. cabinet secretaries, currently just under $200,000. That legislation never moved. But economist Dean Baker recently resurrected the notion of limiting the executive pay nonprofits could dish out and still qualify for nonprofit status. That limit could be tied to the ratio between a nonprofit’s CEO and typical worker pay. The 2010 Dodd-Frank Act requires for-profit corporations to disclose this ratio. Menendez introduced this disclosure mandate provision.|
Not to early to start thinking about what you can do to help fight inequality in the new year ahead. Why not think about launching a resiliency circle?
|INEQUALITY BY THE NUMBERS|
Stat of the Week
The richest 2 percent of Americans, a new Center for Global Development study reports, produce four times as much in greenhouse gas emissions per person as the poorest 20 percent of the population.
The Flacks for Plutocrats Need a New Analogy
New research and another dose of on-the-ground reality are shredding what little credibility the rationalizers of inequality have left.
A rising tide lifts all boats. A growing economic pie means bigger slices for everybody. Wealth that flows to the top will always trickle down.
Cheerleaders for wealth’s concentration have over the years invoked a variety of images to justify the ever larger fortunes of our society’s most fortunate. These images all rest on a single economic assumption: that letting wealth accumulate in the pockets of a few grows an economy’s capacity for investment and ultimately, as investments create jobs, leaves everybody better off.
That assumption has dominated mainstream economics for generations. But that’s changing. Even mainline economic institutions are these days challenging the notion that good fortune for the few eventually and automatically translates into better fortune for the many.
Now we have a new analysis that essentially shreds what little credibility remains from that once dominant “rising tide” case for accepting inequality.
The co-author of this new analysis, former World Bank lead research economist Branko Milanovic, has had quite a year. The sensational international success of French economist Thomas Piketty’s Capital in the Twenty-First Century may owe more to Milanovic than anyone else other than Piketty himself.
Last fall, Milanovic published the first widely circulated review — in English — of Piketty’s masterwork. His rave write-up ignited within the chattering class a massive pre-publication buzz about the book. Piketty’s chronicle about concentrating wealth would go on to sell over 500,000 copies, more in a shorter period than any other economics tome in global publishing history.
Milanovic is currently doing his research work at the City University of New York Graduate Center. His new paper, prepared with the World Bank’s Roy van der Weide, begins by noting a paradox within the economic literature on the relationship between inequality and economic growth.
Measures of income inequality, the two authors note, address how income levels can vary substantially from one economic class to another. But the measures that researchers have used to gauge whether the benefits from a growing economy do indeed “lift all boats” almost always focus on what’s happening to an economy’s average income or GDP per capita.
In their new paper, Milanovic and van der Weide set out to “unpack growth,” to explore how actual individuals “at different steps of the socio-economic ladder” are faring. The two zero in on state-level inequality in the United States over the half-century between 1960 and 2010.
For each state, the co-authors use micro-census data to highlight the income shares of rich and poor at the beginning of each of that half-century’s five decades. How does this initial inequality, they ask, impact how much the incomes of poor, middle class, and rich households grow over the next 10 years?
The answer their research has generated: The higher the state-level inequality at the start of each decade — in effect, the larger the top 1 percent share of each state’s income — the lower the income growth of the state’s poorer households and the faster the income growth of the richest.
The magnitude of this dynamic turns out to be quite striking. A modest decrease in a state’s inequality level at the start of a decade more than doubles the income growth of a state’s poorest 20 percent of households over the next 10 years.
Milanovic and van der Weide have some thoughts of why higher income inequality so stunts income growth for a state’s poorest. They point to the phenomenon they call “social separatism.”
In a society where the rich are grabbing incomes “significantly greater than the incomes of the middle classes,” the rich have little interest in public services. Their lives revolve around private services, everything from private schools to private country clubs.
These wealthy, note Milanovic and van der Weide, “prefer not to invest in public goods like education, health, and infrastructure.” But these public investments — for the poor — make all the difference in the world. Paltry investments in public services translate into paltry, or worse, income growth for the poor.
The political implication? If income inequality speeds the growth of wealthy people’s incomes, Milanovic and van der Weide wonder, how can we expect the wealthy to accept public policy changes that reduce inequality?
We can’t, of course. Most rich will continue to claim that trickle down works, no matter how empty that claim may be. And the evidence for that emptiness is pouring in from more than academic sources.
We now have, for instance, the live-action contrast of Kansas and California. In Kansas, an exceedingly rich people-friendly governor and legislature two years ago slashed taxes on the state’s wealthy, most notably by making business profits tax-free.
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In California, meanwhile, voters at about the same time raised tax rates on taxpayers making over $500,000 by 30 percent.
The story since then: California, notes analyst David Cay Johnston, has grown jobs “at 3.4 times the rate of Kansas.” California’s weekly wages have also grown more than weekly wages in Kansas.
So maybe we do need a rising tide after all, a rising tide of voter anger at pols who keep winking at inequality.
Matt Phillips, America doesn’t have an education problem, it has a class problem, Quartz, December 2, 2014. Inequality brings an economic segregation that schools then perpetuate.
Scott Klinger, Corporate tax breaks come at the cost of the country’s future, Baltimore Sun, December 2, 2014. Only corporate CEOs benefit from the tax loopholes Congress hands U.S. corporations.
Emily Schwartz Greco and William Collins, Too Big to Ignore, OtherWords, December 3, 2014. The wealth gap has grown so vast that even Fed chief Janet Yellen considers it un-American.
John Feffer, The Life and Times of Michael B, Foreign Policy in Focus, December 4, 2014. Reflections on inequality and race.
Gaby Hinsliff, This obsession with inheritance shows how much we’ve lost confidence in the future, Guardian, December 4, 2014. In a healthy society parents let children cope on their own.
Damian Paletta, Which U.S. Cities Have the Biggest Income Gaps? Wall Street Journal, December 4, 2014. A Bronx cheer for Fairfield County, the capital of hedge fund America.
William Black, Aggressive ‘Broken Windows’ Policing but Carte Blanche for Banksters, Economic Perspectives, December 6, 2014. Arresting the poor for minor offenses while ignoring the far greater chaos the rich create.
Ajit Ranade, Ambedkar’s warning on inequality, Mumbai Mirror, December 6, 2014. Political equality “cannot coexist with widening social and economic inequality.”
Andrew Cherlin, The Real Reason Richer People Marry, New York Times, December 7, 2014. On inequality and marriage.
Your Holiday Cheer Coming a Little Harder?
Consumer Federation of America and the Credit Union National Association, 15th Annual Holiday Spending Survey, Washington, D.C., November 2014.
A third of Americans will spend less on the 2014 holiday season than they spent in 2013, reports this latest survey of holiday spending habits. That decrease, notes Consumer Federation of America executive director Stephen Brobeck, reflects a still widening gap between low- and high-income Americans.
“The rising economic tide has not raised all boats equally,” Brobeck points out. “Far fewer households with incomes above $100,000, than those with incomes below $25,000, have fared worse over the past year.”
This new report’e most dramatic stat: Of Americans making under $25,000, 83 percent do not have enough savings to meet an unexpected $1,000 expense.
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