Too Much a commentary on excess and inequality
Too Much a commentary on excess and inequality

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April 2015

This Month

Nigeria’s really rich, the human rights researcher Damian Ugwu noted just before his nation’s presidential election last month, don’t bother to vote. They don’t need to. They’ve so rigged the political system that they win no matter which candidate captures the most votes.

How much have Nigeria’s uber affluent won over recent years? One chilling stat: The number of millionaires in Nigeria has jumped by 44 percent over the last decade — at the same that the share of the Nigerian population living in abject poverty has increased from 55 to 61 percent.

Could a political order as bankrupt as Nigeria’s ever rule the day anywhere in the “developed” world? Or, to be more blunt, has a political order that bankrupt essentially already arrived right here in the USA?

Political scientists in the United States have over recent years been wondering about questions like these. We’ve just spoken with one of the most incisive of them. We have his thoughts — and much more — in this month’s Too Much.

 

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Images of Inequality

Little Palm Island

So you can’t afford to buy your own private island. Have you ever considered renting instead? For a mere $250,000, you can book a “private island” package this spring at the Little Palm Island Resort & Spa in the Florida Keys. The entire 5.5-acre island will be yours for three whole days. The management is promising to “pamper” its privileged guests “with decadent fine dining” and “luxury accommodations.”

 

Greed at a Glance

In London’s choicest neighborhoods, full-time nannies for pooches “have become an essential part of the hired help,” the Telegraph reports. Agencies charge $150 per day for live-in sitters “recruited to actually live with the dog 24-hours a day, feeding, washing, grooming and even sharing a room.”

The armor-plated Dartz Prombron, the world’s most expensive SUV, rests on a Mercedes-Benz chasis and starts at $1.1 million.

The Oxbridge Academy in Florida’s West Palm Beach, an elite private school billionaire William Koch spent $60 million to create, is launching a polo team. The school is supplying horse-riding lessons worth $250 an hour and $500 helmets. Students have to supply their own $500-a-pair paddock boots.

Inequality by the Numbers

Wall Street Bonuses: A Bottom-Up Take

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Stats of the Month

All Walmart workers, the company promises, will soon be earning at least $10 per hour. Retired Walmart CEO Mike Duke, notes Center for Effective Government analyst Scott Klinger, left with a getaway package that brings him $1,070 an hour — even while he sleeps.

In the 2014 congressional elections, less than 2 percent of Americans made a campaign contribution. Of those who did contribute, the biggest 100 donors gave as much as the bottom 4.75 million.

Some 61 percent of Americans feel bothered “a lot” that “wealthy people don’t pay their fair tax share,” reports a new Pew Research study.

Six of today’s ten wealthiest Americans now owe their good fortune to the huge fortunes they’ve inherited.

Listen up, baristas: A new Reuters analysis shows that Starbucks CEO Howard Schultz realized $366 million in compensation over the five years after 2008.

Ancient Rome’s 1 percent likely held about 16 percent of the empire’s wealth. America’s top 1 percent now holds about 40 percent of the nation's wealth. 

Why some folks love fracking: North Dakota's ranks of ultra-rich individuals worth over $30 million swelled 14.3 percent in 2014, the nation’s largest state increase of the year.   

Why CEOs love corporate wheeling and dealing: A newly negotiated merger pact will bring Robert Duggan, the CEO of cancer drug maker Pharmacyclics, a  $3.55 billion payout. 

The Too Much Interview

The ‘Stealth Politics’ of Our Unequal Age

Average Americans today have essentially zilch influence on public policy. You don’t need to trust your gut on that. Political scientist Benjamin Page has the data.

What happens — to democracy — when income and wealth concentrate?

A half-century ago, that question hardly seemed worth asking. In the decades right after World War II, Americans were living in a nation — and a world, for that matter — growing ever more equal.

Benjamin PageBut that America no longer exists. Robber barons once again walk among us. Grand fortunes once again tower over America’s social landscape.

Political scientists have noticed. They’ve begun generating a wealth of scholarship on wealth’s impact on our politics, and no researcher may be more central to that scholarship than Northwestern University’s Benjamin Page.

Six years ago, Page and the University of Minnesota’s Lawrence Jacobs co-authored Class War? What Americans Really Think about Economic Inequality, an in-depth look at 70 years of public opinion polling on wealth and opportunity.

Last year, Page and Princeton’s Martin Gilens released what one commentator has called the “first-ever scientific study” of whether our contemporary United States still ranks as a democracy.

And what did that study conclude? Too Much editor Sam Pizzigati explored that question and more with Page last month in an interview conducted just off the Northwestern campus in Evanston, Illinois.

Too Much: A good many pundits these days are wondering why Americans aren’t doing more to protest inequality. Most Americans aren’t protesting, one school of thought holds, because they admire the rich and want to become rich themselves. You’ve spent a great deal of time studying poll data. What have you learned?

Ben Page: That conventional wisdom is about half right. Average Americans really do like the idea of social mobility, of having a chance to get ahead. In fact, people have exaggerated ideas about how well they or their kids might do.

But we also have all sorts of evidence that people are really quite unhappy with the present high level of inequality and unequal opportunity.

The more complicated question: What do they want to do about it? If you ask abstract questions about whether the government should take money from the wealthy and redistribute it, there is not a lot of support for that. 

Average Americans favor many policies that would have strong redistributive effects.

But if you ask about concrete policies — like taxing the wealthy at higher levels or getting rid of loopholes that favor hedge fund managers — average Americans turn out to favor many policies that would have strong redistributive effects.

On the spending side, we see lots of support for things like jobs programs, the earned income tax credit, and Social Security. Most people want to increase these programs — at the very time when many political figures and pundits are telling us you have to cut, cut, cut.

Too Much: So do we have, in effect, a silent egalitarian majority?

Ben Page: Larry Jacobs came up with a phrase for our Class War book, “conservative egalitarianism.” Not so much egalitarianism in the abstract, but a great deal of desire for the government to make it easier for people to get ahead and to help those left behind.

Too Much: You’ve observed in the past that most Americans don’t really realize how unequal we’ve become as a nation. How wide has the gap grown between inequality’s reality and public recognition?

Read the rest of the full Too Much interview . . .

 

Quotable

“The Florida Senate has evolved into a kind of Cracker House of Lords without the wigs, where the average member is worth $3.77 million.”
Fred Grimm, In Florida, the rich (politicians) get richer, Miami Herald, March 2, 2015

“Following NAFTA with the Trans-Pacific Partnership is like turning a bad television show into a terrible movie. It will be on a bigger screen and cost a lot more money. A few might walk away happy and rich, but it won’t be the audience.”
Robert Reich and Richard Trumka, Let's debate the Trans-Pacific Partnership, Los Angeles Times, March 3, 2015

“There’s a generational time-bomb ticking — and the student debt crisis is the trip wire. Adults under 35 disproportionately bear the brunt of escalating inequality.”
Chuck Collins, The Student Debt Time Bomb, OtherWords, March 11, 2015

“These people are successful. To make these kind of people feel relaxed and happy, I get a sense of achievement.”
Alvin Hu, a Chinese butler school student who began his butler career wiping fingerprints off the mobile phone of U.S. casino magnate Steve Wynn, Butlers a must for China super rich, March 19, 2015

“Wealth is used to entrench inequality, not to trickle down and solve it.”
Winnie Byanyima, Another world is possible, without the 1%, Oxfam International, March 24, 2015

“Most lawmakers don't give a damn about what the voters need or want and are only fixated on pleasing the super rich in order that they can get jobs from them when their terms are up.”
Jack Lessenberry, Michigan Public Radio senior political analyst, Michigan, sailing down the drain, Detroit Metro Times, March 25, 2015

“The total spent on the 2016 presidential campaign is likely to reach near $5 billion, with each major party candidate raising over $1.5 billion directly. To raise that money, the candidates will spend far more time talking to the wealthy than addressing the voters. It should surprise no one that the winner of the money primary is the money.”
Robert Borosage, Who Wins the Money Primary? March 31, 2015


Petulant Plutocrat of the Month

Mark FieldsThe Ford Motor Company saw its earnings drop $4 billion in 2014 from the previous year. But CEO Mark Fields remains defiantly optimistic. Noted the new chief exec in an interview last month: “We will handle what the world deals to us.” The way folks at Ford “work as a team,” explained Fields, will get the company “through a very tough period of time.” In the spirit of this “teamwork,” Fields and Ford are asking the United Auto Workers union to accept a new three-tier pay scale at Ford’s assembly plants. The current two-tier contract compensates workers hired before 2007 at $28 an hour and newer hires at $19.28. Ford wants a new third tier at a still lower rate. In 2014, his first year as CEO, Fields himself took home $18.6 million.

 

Plutocrats at Play

Now available for the restless rich: a $36,000 “private jet escape” that takes sun worshipers from a sunrise in Maine’s Acadia National Park to a sunset later that same day just off Key West in Florida.

Russian billionaire Roman Abramovich is having a subterranean tennis court built under his $140 million London home.

Antidotes to Inequality

Time for Some $58,000 Traffic Tickets?

Apple CEO Steve Jobs used to brazenly park in handicapped spaces, notes the Atlantic’s Joel Pinsker, and motor around without license plates. And why not? A $50 or $100 traffic fine would barely register as even a nuisance for a billionaire like Jobs.

But what if traffic fines varied by income? In Finland — and a host of other nations from Denmark to Switzerland — they actually do. “Sliding fee” fines in these nations give deep pockets reason to think twice before they speed or otherwise trample on community safety norms.

One Finnish businessman recently had to pay a 54,000-euro fine, the equivalent of over $58,000, after police caught him going 65 in a 50 zone. That speeder took home just over $7 million in income last year.

Might the time be ripe for sliding-scale fees in the United States? Judith Greene of the nonprofit Justice Strategies thinks so.

The protests that followed last year’s deadly police shooting in Ferguson, Greene notes, have revealed how routinely local courts are gouging poor people on fines for minor offenses. Instead of gouging the poor, she posits, maybe we should make like the Finns and make sure our penalties amount to penalties for everyone, even the rich.

Rep. Barbara LeeIn Congress, California’s Barbara Lee is also now looking at tax justice and America’s rich. Rep. Lee has just introduced a new version of her Income Equity Act, legislation that denies corporations tax deductions for any executive pay that runs over $500,000 or 25 times the pay of a company’s most typical workers.

Under current law, corporations can deduct off their taxes whatever excessive sums they lavish on their execs, so long as they label these outlays “performance-based.” In effect, notes Rep. Lee, average working American families are now subsidizing windfalls for America’s most outrageously paid corporate chiefs.

Corporations in the United States haven’t historically had to reveal the pay ratio between their top execs and workers. But the Dodd-Frank Act enacted in 2010 includes a provision that mandates this disclosure.

Unfortunately, this mandate has never been enforced. The Securities and Exchange Commission, under heavy pressure from corporate lobbyists, has been dragging its feet on issuing the regs that would enable the mandate’s enforcement. Last month 58 members of Congress sent the SEC a formal letter protesting the long delay and demanding action.

Why is Corporate America working so hard to kill executive-worker pay ratio disclosure? Look no further than Rhode Island for an answer.

Rhode Island state senator William Conley has introduced legislation that directs state officials to start “giving preference in the awarding of state contracts” to business enterprises whose highest-paid execs receive no more than 25 times the pay of their median workers.

A similar bill last year won a Rhode Island Senate majority, but never came up for a House vote.

Bills like Conley’s could quickly multiply if corporations actually had to follow the Dodd-Frank law and annually publish their top executive-median worker pay ratios. Overall, major corporate CEOs now pull in over 300 times the average American wage.

No state has more billionaires than California. That hasn’t helped kids in the state much. Nearly a quarter of them, 23.5 percent, live in poverty, and the state is spending less on child care and preschool programs than it spent eight years ago, before the Great Recession.

That’s reason enough, proposes Roy Ulrich of the University of California-Berkeley’s Goldman School of Public Policy, for a state wealth tax, an annual levy on household assets worth over $10 million.

This net worth tax, adds Ulrich, should include penalties for substantially undervaluing or attempting to hide an asset. What sort of penalties? One possibility: In India, if a taxpayer’s listed appraisal grossly undervalues an asset, the government can purchase that asset for the taxpayer’s listed assessment price plus 15 percent.

 

Peasants
with Pitchforks

The CEOs at America’s pharmaceutical giants don’t see an eminent oncologist these days when they look at Dr. Hagop Kantarjian, the leukemia chief at the prestigious M.D. Anderson Cancer Center in Houston. They see only pitchforks.

For good reason: The good doctor has just launched a petition drive to protest the unconscionably high prices pharmaceutical CEOs charge for cancer drugs. Prices for new drugs are now running over $120,000 per year.

Sky-high drug prices have helped make John Martin, the chief exec at Gilead Sciences, the nation’s highest-paid corporate CEO since 2008. His haul by this summer, Reuters projects, will top $600 million.

Take Action
on Inequality

Join the new online petition drive protesting the incredibly high prices that enormously overpaid pharmaceutical CEOs charge for cancer drugs.

 

 

Reports

Major new studies released over the past month

When Less Is More: The Benefits of Limits on Executive Pay
The Review of Financial Studies, March 10, 2015

Peter Cebon and Benjamin Hermalin

Pay-for-performance bonuses, suggests this new research from business school profs at the University of Melbourne in Australia and the University of California at Berkeley, can tempt top corporate executives to egregiously mismanage their companies. Notes Cebon in an interview on this new research: “If you want to live in an economy full of companies that create long term capability in their organizations, then a regulated cap on bonuses would appear to be what you want.

Taking on Big Data as an Economic Justice Issue
Data Justice, March 16, 2015

Nathan Newman

We need to start seeing the issues that “big data” raise as a matter of economic justice, argues this landmark new study, not just a privacy concern. The transfer of personal individual data into “increasingly centralized corporate hands,” notes Data Justice executive director Nathan Newman, “is helping drive a large portion of the economic inequality that has become central to the political debate in our nation.”

Wealth Report 2015The Wealth Report: The global perspective on prime property and wealth, 2015
Knight Frank, March 2015

Andrew Shirley, editor

What do the ultra rich have against fine furniture? The value of investment-grade furniture has dropped 28 percent over the past decade. Every other luxury asset class, from wine and fine art to jewelry and classic cars, has increased in value over that span, with many more than doubling.

Another eye-opener in this new rundown of global fortunes and the global fortunate: Over 80 percent of the world’s ultra rich now fear they may have to pay new wealth taxes.

2015 County Health Rankings Key Findings Report
The Robert Wood Johnson Foundation and the University of Wisconsin Population Health Institute. March 2015.

Researchers at the University of Wisconsin Population Health Institute have been ranking the health of nearly every American county to examine just what “is keeping people healthy or making people sick.”

In this latest edition of their work, the researchers have added income inequality to their list of “risk factors” that help explain why people in some counties live healthier lives than others — and a powerful factor that inequality turns out to be.

Notes project co-director Bridget Catlin: “It’s not just the level of income in a community that matters — it’s also how income is distributed.”

Wall Street Money in Washington
Americans for Financial Reform, March 18, 2015

Wall Street banks and financial interests spent $1.4 billion over the two-year course of the 2014 election cycle. That total amounts to over $1.9 million per day — “or an average expenditure of about $2.6 million to elect or influence each of the 535 members of the Senate and House of Representatives.”

Nearly 350 financial firms and trade associations spent at least $500,000 in the lead-in to last November’s congressional elections.

Power from the People
International Monetary Fund,
Finance & Development, March 2015

Florence Jaumotte and Carolina Osorio Buitron

The smaller the trade union presence in an advanced economy, these IMF researchers relate, the larger the income share of the economy’s richest 10 percent. The decline in unionization rates over recent decades, the two conclude, “has fed the rise in incomes at the top.”

 

New Wisdom
on Wealth

Jeff Madrick, Why Economists Cling to Discredited Ideas, American Prospect, winter 2015. Free-market theory fits the needs of our rich and powerful.

Felix Salmon, Naming Wrongs, Slate, March 6, 2015. Why a Hollywood magnate deserves no cheers for his latest $100 million charitable donation.

Gar Alperovitz, Inequality’s Dead End — and the Possibility of a New, Long-Term Direction, Nonprofit Quarterly, March 10, 2015. The struggle to democratize wealth ownership.

Kathleen Geier, Inequality in Black and White, Pacific Standard, March 12, 2015. Five studies that explain our rigged economics of race.

Jill Lepore, Richer and Poorer: Accounting for Inequality, New Yorker, March 16, 2015. Insightful musings on a variety of new inequality-related books.

Davin O'Dwyer, How smart is Apple’s attempt to woo the rich? Irish Times, March 16, 2015. Apple’s new watch exploits the world’s widening wealth inequality.

Harvey Kaye, The Rich’s Class Warfare Is Winning, Daily Beast, March 16, 2015. A perceptive review of new work comparing the original Gilded Age to ours. 

George Joseph, 9 Billionaires Are About to Remake New York’s Public Schools, Nation, March 19, 2015. Why kids are losing.

Andrew O'Hehir, The GOP’s Oliver Twist budget and the comeback of class warfare, Salon, March 21, 2015. Victorian England as an ideological inspiration for today’s American plutocrats.

Robert Kuttner, 7 Reasons Why the 99 Percent Keeps Losing, American Prospect, March 24, 2015. A step beyond the usual suspects.

Lauren Smiley, The Shut-In Economy, Medium, March 25, 2015. In the new world of on-demand everything, you’re either pampered royalty or a servant.

Ian Welsh, Making the Rich and Powerful Work for Everyone, March 31, 2015. Reflections on how public institutions should work.

Eduardo Porter, The False Hope of a Limited Government Built on Tax Breaks, New York Times, March 31, 2015. Elected officials “spend” plenty — on behalf of the rich.

Retorts

Handy rejoinders to the apologists for our top-heavy status quo

The claim: Taxing every penny America’s wealthy own wouldn’t even balance the federal budget.

The reality: Senator Lindsey Graham, a conservative Republican from South Carolina, just made this “every penny” claim on a trip to New Hampshire to test the waters for a Presidential bid.

The unstated message Graham’s claim implies: Don’t even think about taxing the rich. They don’t have enough money to make a difference. Actually, points out Politifact New Hampshire’s Clay Wirestone, they do.

America’s top 1 percent, according to data compiled for the National Bureau of Economic Research, hold about $23 trillion in personal wealth.

Last year’s annual budget red ink: $483 billion, about 2 percent of that.  

The claim: The estate tax is killing the American family farm.

The reality: This charge resurfaced earlier this month as House and Senate majorities rushed to place an estate tax repeal bill on President Obama’s desk. But this claim, notes Pulitzer Prize-winning journalist David Cay Johnston, remains an outright “lie.”

Johnston started trying to hunt down a farmer done in by the estate tax in the early 1990s. Then a New York Times reporter, he found not a one. Nothing has changed since then.

Real family farmers have zero to worry about from the federal estate tax.

In 2013, Johnston detailed last month, “just 660 taxable estates included any farm assets” — and these farm assets averaged just $2.8 million.

Married couples can curently exempt from estate tax liability all assets worth under $10.86 million.

The claim: The richer the rich become, the more they spend on restaurants, dry cleaners, maids, child care, and other services that typically employ lower-wage workers. The more spent on these services, the higher the incomes of low-wage workers will rise.

The reality: Brookings has just updated a 2014 study that looks at how top and bottom incomes in 50 major American cities have fared since the Great Recession. Overall, the study finds, lower-income households in most major cities are earning less now than they earned in 2007.

But some cities have seen increases at the lower end, and these cities turn out to be places where incomes at the top have tended to increase the least. Rising incomes at the top, Brookings concludes, “are not — at least in the short term — lifting earnings near the bottom.”

The claim: Taxing the rich kills jobs and wrecks economies.

The reality: If this claim actually held any water, Minnesota’s economy would have sunk out of sight by now.

Minnesota has taxed the rich and gone on to live, quite comfortably, to tell the tale.

The state’s current governor, Mark Dayton, has been a tax-the-rich advocate ever since he first took office in 2011.

Minnesota now sports the nation’s fourth-highest income tax rate on couples making over $250,000. And how has that rate impacted the state’s economy? Minnesota also sports the nation’s fifth-lowest unemployment rate and a $1 billion budget surplus.

Typical Minnesotans today, adds analyst Carl Gibson, make over $8,000 more than the national income median.

Dayton’s predecessor as governor, by contrast, spent his eight years in office refusing to take any move in a tax-the-rich direction. He left the state with a $6.2 billion budget deficit.

 

What to Watch

Growing inequality. Political stalemate. Climate change. These realities all point to the same conclusion: We live in a broken system. But we have alternatives, and the just-launched Next System Project is aiming to help explore them. A new video introduces this ambitious endeavor.

Does lots of money make you mean? This two-minute BBC video introduces the landmark research of social psychologist Paul Piff.

The Rules, a network of activists, artists, and dreamers aiming to push the globe in an equal direction, has a new six-minute, high-production-value video that challenges the notion that “who we are rests with what we buy.”

 

Now featured on
Inequality.org

Sarah Anderson on how the TV hit House of Cards made one egalitarian wonk’s day

Josh Hoxie on public support for taxing the rich

Marjorie Wood on the Dollar General CEO’s unintended admission that inequality pays — for Dollar General

Chuck Collins on farmers as props for billionaires

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Books

Blowing the Roof OffBlowing the Roof Off the Twenty-First Century: Media, Politics, and the Struggle for Post-Capitalist Democracy
Robert McChesney
(Monthly Review Press, 2014, 272 pp)

Activist University of Illinois scholar Robert McChesney has for some time now been a compelling voice on the “political economy of communication,” an emerging new discipline that’s probing how our media go about entrenching “the privileges of those at the top.”

This field, McChesney argues in this engaging new book, belongs on our political center stage. Our deeply unequal social order, he explains, has simply ceased working for average people.

“The classroom fantasy of capitalism as a bunch of heroic little-guy entrepreneurs competing for the betterment of consumers and creating jobs in the communities they inhabit,” McChesney quips, “has about as much to do with the American economy and society today as the official rhetoric of ‘worker’ democracy’ did to Soviet communism.”

Yet the system hangs on. People see no alternatives, partly because we increasingly live in “information deserts.” We have witnessed over recent years a “stunning collapse of journalism as it has been known for the past century.” Newsrooms have emptied out the nation over.

“Much of public life,” observes McChesney, “is barely covered by working reporters any longer.”

The wealth the Internet has generated has concentrated in a precious few hands.

And the online world has not come to the rescue: “The prayer that new technologies would magically create a business model for a sufficient and viable democratic journalism is not panning out.”

Our new online world is instead adding to wealth’s concentration. In 1996, some 15 major Baby Bell, long-distance, and cable/satellite TV companies were going at it. Today just three — AT&T, Verizon, and Comcast — dominate telephony and Internet access. The wealth the Internet has generated has cascaded “into a very small number of hands.”

So what do we do? McChesney lays out a radical — by current standards — program. Let’s aggressively support, he writes, local municipally owned broadband operations. Some 400 already exist, many struggling now to survive against a state-level corporate push to make them illegal.

Let’s get even more aggressive, McChesney suggests, and stomp our online corporate giants: “Let’s cash them out at a price that reflects actual investment, not speculative frenzy. Then let’s make cellphone and broadband access ubiquitous and as close to free as possible.”

Even rank-and-file GOPers don’t want their kids’ brains marinated in advertising

Finally, let’s “recognize journalism as public good the market can no longer provide” with vouchers citizens can spend on the media of their choice.

Actions like these, McChesney argues, would find support across the political spectrum. Even rank-and-file Republicans, he relates from his own experiences crisscrossing the United States, “don’t like their kids’ brains marinated in advertising.”

Our 1 percent “tend to have access to the information they need to run the world to their benefit,” McChesney sums up. “The issue is whether everyone else will have the information they need to participate effectively.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rich Don't Always Win

Auto factory work in the United States used to be low-wage labor. Henry Ford didn’t end that situation. Who did? Too Much editor Sam Pizzigati has the answer in his gripping history of the triumph over America’s first plutocracy. Learn more.


About Too Much

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