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

Email not displaying correctly? Click here for Too Much online | Subscribe | Share


March 2015

This Month

Film aficionados of a certain age may never forget the hubbub that surrounded the release of A Clockwork Orange back in 1971. The movie dramatized a dystopian near-future where gangs of totally alienated young thugs viciously — and joyously — pillage their surroundings.

How could a social fabric, movie viewers back then wondered, ever tear so completely? Those viewers lived in a much more equal world than ours. They could not imagine life truly imitating the art of The Clockwork Orange. We can. In fact, that imitation has already begun.

Journalist Shane Croucher has just made that plain in new reporting that follows “a black-clad gang of moped-riding hammer-wielding robbers” that last year terrorized a posh London precinct. We can expect more such terror, his account suggests, wherever the affluent live separate existences totally divorced from the destitution that surrounds them.

How deep does our spatial separation today go? In this week’s Too Much, we put that question — and many more — to one of our globe’s top thinkers on our growing economic segregation.

 

About Too Much

A publication of the
Institute for Policy Studies

Subscribe
to Too Much

Invite a friend
to subscribe

Donate! Support the Institute for Policy Studies Program on Inequality
and the Common Good

inequality-org
Sign up for content updates

Follow us on Facebook! Follow us on Twitter!

Images of Inequality

Princess room

America’s high-end interior designers are certainly doing their part to pave the way for a new aristocracy of wealth. They’ve made “princess décor” the nation’s hottest new design trend for deep-pocket parents. This bedroom for a Northern Virginia two-year-old, the Wall Street Journal reports, came with a $200,000 price-tag. Princess beds from PoshTots, a top source for luxury children’s furnishings, start at $35,000.

 

Greed at a Glance

The dog collars regularly available from the pet jeweler Tsavari run from $2,500 to $73,699. Need something flashier? Tsavari now offers a $12 million pink diamond special.

United Tech CEO Louis Chenevert “retired” last fall shortly after his board of directors groused about a side trip to Taiwan he took during a business trip to check on his new personal yacht. Easing Chenevert’s “retirement” pain: a $195 million getaway package.

What worries today’s owners of Downton Abbey-style manses? Their servants, says a new report from luxury realtor Knight Frank, always seem to be “on leave or holiday.”

Inequality by the Numbers

March infographic

Share this infographic

 

Stats of the Month

Walmart has announced plans to raise entry worker pay to $9 an hour. Some context: The $6.6 billion Walmart spent on stock buybacks in 2013 would be enough to raise Walmart worker pay by $5 per hour.

Global deep pockets now spend about $8 billion a year for New York City residences that cost over $5 million each, triple the total a decade ago.

Manhattan’s most costly condo — a unit in the new luxury tower One57 that sold for $100.5 million — faces annual property taxes of just $17,268, thanks to a tax subsidy available to condo developers.

California, the most top-heavy U.S. state, currently hosts 111 billionaires and 10 of America’s 20 least affordable rental markets.

Private equity kingpins take the bulk of their take-home as dividends. The top U.S. private equity dividend haul in 2014: the $568 million Blackstone’s Steve Schwarzman collected.

Since 2010, corporations have grabbed 71 subsidy “incentive” deals worth $100 million or more from U.S. states and localities. The total $100 million subsidy deals in Europe over that same span: six.

Over two-thirds of Americans, 68 percent, feel the nation’s wealthy pay too little in federal taxes, shows a new  Associated Press poll. Only 11 percent feel the wealthy pay too much.

The Too Much Interview

Segregation’s Insidious New Look

Racial segregation dominated the American residential landscape for generations. We can’t afford, suggests the research of Stanford’s Sean Reardon, to let economic segregation have anywhere near as long a run.

The world’s ultra rich, the filmmaker Jacques Peretti observed last month, now inhabit “their own Elysium-style biosphere.” They live in “a floating bubble high above Earth,” a “chrome Business Class tube in the sky.”

Peretti was, of course, speaking metaphorically. The rich don’t really live in their own biosphere. They live on terra firma, just like the rest of us. But they don’t live with the rest of us. In our increasingly unequal world, those of high income live more and more apart.

Sean ReardonJust how apart? And what does this apartness mean for the rest of us?

Researchers like Stanford sociologist Sean Reardon and his collaborator Kendra Bischoff of Cornell have been exploring questions like these. Too Much editor Sam Pizzigati recently spoke with Reardon about our new economic segregation — and why it so matters.

Too Much: Most people today hear the word segregation and think racial segregation. You’ve spent a great deal of time thinking about economic segregation. Why?

Sean Reardon: We’re concerned about racial segregation, in part, because of the economic segregation that goes along with it. Racial segregation often means that blacks or Latinos are unequally concentrated in poor, disadvantaged neighborhoods, with poor quality schools and institutions.

I’ve been worried that in an era of rising income inequality we may also be seeing rising spatial inequality economically. I worry about the consequences that this might have, particularly for children growing up in increasingly unequal neighborhoods.

Too Much: We can see racial segregation. Economic segregation we can’t see in the same way. How do you go about measuring economic segregation?

Read the full Too Much interview . . .

 

Quotable

“I like to be reminded where I came from and putting myself in modest surroundings helps me do that.”
Apple CEO Tim Cook, on why he lives in a condo that cost just $1.9 million, Business Insider, February 6, 2015

“You can wear a T-shirt with it, but you still get the girls.”
Milton Troche, 29, son of a New York textile magnate, on why he had just purchased a $450 belt from a Ferragamo’s flagship store, February 7, 2015

“The real struggle is whether we can prevent this country from moving to an oligarchic form of society in which virtually all economic and political power rests with a handful of billionaires.”
Senator Bernie Sanders (I-Vermont), speaking at the Brookings Institution, February 9, 2015

“Rich people and their children live increasingly isolated, and fabulous, lives, counting their treasure in luxury colonies while the rest of us drown in student loan debt and hope this isn’t the month we’ll have to start selling our bodies on Task Rabbit.”
Grace Wyler, Will 2015 Be the Year People Actually Do Something About Income Inequality? February 17, 2015


Petulant Plutocrat of the Month

Stuart Gulliver Stuart Gulliver, the CEO of the banking giant HSBC, can’t fathom why reporters can’t extend to execs like him the same slack they give generals and bishops. Fumed Gulliver last month: “It seems to me that we are holding large corporations to higher standards than the military, the church, or civil service.” That outburst came two weeks after a team of journalists detailed how HSBC has used secret Swiss accounts to help the super rich sidestep taxes — and just hours after the Guardian revealed that Gulliver himself had stashed $7.7 million in his own secret Swiss account. Gulliver says he needed the secrecy to keep the size of his pay bonuses hidden from his envious colleagues. Even in the corrupt culture of HSBC, notes bank watchdog William Black, Gulliver apparently “stood out for his greed.”

 

Plutocrats at Play

In Dubai, the Middle East luxury hub, one hotel has been bouncing guests — by helicopter — from one local eatery to another for an evening of fine dining. Just $5,000 per couple.

The annual cost of operating a superyacht? Fuel alone: $400,000, says a new study.

In January, at the Prime Steakhouse in Las Vegas, Vice Media CEO Shane Smith hosted a meal for 30 of his nearest and dearest. The cost: $300,000.

Antidotes to Inequality

Thieving CEOs and New Thinking in Tokyo

Making quality products can be hard. Many corporate execs don’t even try. They steal from their workers instead. Wage theft — denying workers the minimum wage and a host of other shady maneuvers — may add as much as $50 billion a year to business bottom lines. One of America’s largest localities, Cook County in Illinois, is taking aim at that wage theft with a newly enacted ordinance that bars any business caught stealing wages from county government contracts or tax subsidies. The precedent this ordinance sets — using procurement to punish corporate greed grabs — could be applied in the future against companies that pay their top execs hundreds of times what they pay their workers.

Iain McKenzieIn the UK, a member of Parliament is calling for a more direct approach to ending executive pay excess: a maximum wage. Former IBM production line worker Iain McKenzie, a lawmaker from Scotland, wants to see legislation that would limit corporate executive compensation to 100 times a company’s average wage. Such a maximum, says McKenzie, “could actually help businesses, by discouraging risk taking behavior in the search for gargantuan bonuses.” Capping excessive pay, he adds, in no way rates as an “anti-business” move. Explains the Labour MP: “There is nothing pro-business about letting a small group of chief executive officers take far larger rewards than their shareholders or staff.”

By law, publicly traded American corporations must now let their shareholders take votes on the executive pay they shell out. But these advisory votes have had only a marginal impact. “Say on pay,” economist Dean Baker suggested last month, could do much more to moderate CEO compensation if the members of corporate boards of directors — the power suits who set executive pay levels — had to forfeit their own personal compensation as directors whenever shareholders vote no in a CEO pay advisory vote. Pay for corporate directors today routinely runs into hundreds of thousands of dollars a year.

Worker-owned enterprises, studies have shown over the years, outperform their competitors on an array of measures and generate more equitable social outcomes. Given this evidence, what’s holding worker-owned enterprises back? The many reasons, a cogent new analysis from a financial industry insider argues, range from culture to capital — and need to be confronted for worker ownership to have a greater impact.

Privatizing can pay well. In one recent three-year period, the top five execs at America’s three largest for-profit higher ed providers pocketed a combined $130 million. Now students shortchanged by one of these for-profits, Corinthian Colleges, are fighting back — with a debt strike. Working with the Occupy-inspired Debt Collective, the students have stopped repaying their loans. Their civil disobedience multiplied on a mass scale, activists believe, could transform America’s $1.2 trillion in student debt “into leverage to demand better terms, or even a better way of funding higher education altogether.” As the Debt Collective puts it: “If you owe the bank a thousand dollars, the bank owns you. If you owe the bank a trillion dollars, you own the bank. Together, we own the bank.”

Critics of Thomas Piketty’s best-selling Capital in the Twenty-First Century have assailed the French economist for advancing what they consider to be politically unrealistic proposals — like a global tax on wealth. But the notion of taxing the wealth of the wealthy continues to pick up support. Last month, a key economic adviser for Japan’s prime minister noted that Piketty has become a “very strong influence” on economic thinking in his country. Tokyo University’s Motoshige Itoh now expects wealth taxation to “attract more attention in the near future.”

 

Peasants
with Pitchforks

Fans fuming over the high ticket prices for English Premier League soccer unfurled huge protest banners last month after team owners cut a new TV deal that ups broadcast revenues 70 percent. Read the fan message: “£5 billion pounds in the trough yet supporters still exploited. Share the wealth, pigs.”

The cheapest Premier League seats currently cost eight times more than the cheapest seats for matches in Germany’s Bundesliga.

But German fans are protesting, too, after their league’s CEO hinted that German teams may move to English-level prices.  Read a fan banner at a Bayern Munich match: “This ain’t no Premier League, No to the English model.”

Bayern’s top exec has in the past agreed. Noted the exec three years ago: “We do not think the fans are like cows, who you milk.”

Now featured on
Inequality.org

Claire Goldstene reflects on America’s Social Darwinists then and now.

Salvatore Babones contrasts income concentration in four developed nations.

Nick Galasso and Marjorie Wood look at eight ways to narrow global inequality.

Sign up for updates
on Inequality.org postings

 

 

Reports

Socioeconomic inequalities in adolescent health 2002–2010
The Lancet, February 4, 2015
Frank Elgar, Timo-Kolja Pförtner, Irene Moor, Bart De Clercq, Gonneke Stevens, and Candace Currie

In this new study, researchers from Canada, Germany, Belgium, the Netherlands, and Scotland looked at the health records of about a half-million 11- to 15-year-olds over an eight-year span.

In the 34 North American and European nations examined, those adolescents living in countries with greater income inequality reported more psychological and physical symptoms of ill-health. The adolescents in more unequal nations also showed lower levels of “life satisfaction.”

“The many health and social problems that relate to income inequality and current global trends in rising income inequality,” notes lead researcher Frank Elgar from McGill University, “all lead to a grim prediction about future population health.”

Most overpaid CEOsThe 100 Most Overpaid CEOs: Executive Compensation at S&P 500 Companies
As You Sow, February 13, 2015
Rosanna Landis Weaver

This ambitious new study from a California-based nonprofit working to make corporations more accountable took two different methodological approaches to identifying America’s most undeserving chief execs. Both ended up pointing to largely the same suits.

Some names and companies on the As You Sow most-overpaid CEO list — like Oracle software’s Larry Ellison — will be familiar to many Americans. Others won’t.

The most overpaid top exec turns out to be Anthony Petrello of the under-the-radar energy giant Nabors Industries. He pulled down an incredibly undeserved $68.2 million in fiscal 2013.

But the CEO pay problem, this new research emphasizes, goes far beyond a few rotten apples. Overall CEO pay, the study notes, has grown 937 percent over the last 35 years.

Have a 401(k)? You most likely have your retirement future, As You Sow points out, invested in a company with an overpaid CEO.

Tax Fairness: An Answer to State Budget Problems
Keystone Research Center and Good Jobs First, February 2015
Greg LeRoy and Stephen Herzenberg

America’s 1 percenters are currently paying just 5.4 percent of their incomes in state and local taxes. Americans in the middle 20 percent of income earners — the statistical middle class — are paying almost twice as much of their incomes, 9.5 percent, in those same taxes.

So what if we evened those rates off? If our top 1 percent paid state and local taxes at the same rate as middle-class taxpayers, states and localities would collect an extra $88.5 billion in revenue. If all the top 20 percent paid at the middle-class rate, the extra would total $200.5 billion.

Top 1 percenters are grabbing staggeringly sweet deals on their state and local taxes.

What could all these billions do? Just $30.5 billion of that $200.5 billion would be enough annually to fully fund the endangered pensions of all the nation’s state and local employees, from teachers to first responders.

And the $170 million remaining would be more than enough to cover the long overdue maintenance of America’s infrastructure. The American Society of Civil Engineers puts the annual tab for restoring our roads and bridges, electric grids, airports, seaports, and more at $157 billion.

Also new last month: The American Psychological Association’s annual stress survey finds a growing stress gap between America’s haves and have nots . . . Another growing divide: the college completion gap between students from low- and high-income families, reports a new study of the last 45 years from the Alliance for Higher Education and Democracy and the Pell Institute for the Study of Opportunity in Higher Education . . . Since 1983, Center for American Progress researchers detail in The Effect of Rising Inequality on Social Security, the growing share of the nation’s income flowing to the nation’s top-earners has cost the Social Security Trust Fund $1.1 trillion . . . In the Roosevelt Institute’s new Disgorge the Cash: The Disconnect Between Corporate Borrowing and Investment, J.W. Mason shows how today’s CEOs are borrowing simply to reward shareholders like themselves.

 

New Wisdom
on Wealth

Bas Bakker and Joshua Felman, The rich and the Great Recession, Vox, February 6, 2015. How the wealthy sink our economy.

Richard Trumka, Investors Should Know Pay Gap Between CEOs and Workers, New York Times, February 9, 2015. The AFL-CIO president explains why.

How Luxury Feeds Global Corruption, Fast Company, February 10, 2015. If you have millions to spare, luxury condos make a fine place to stash your cash.

Jonathan Soros, Big money can’t buy elections, influence is something else, Reuters, February 10, 2015. On the subtle difference so basic to our plutocracy.

James Carr, Football's Super-Rich Owners Are Killing the Game Fans Used to Love, Bleacher Report, February 13, 2015. On the global soccer scene.

Doug Henwood, What the Sharing Economy Takes, Nation, February 16, 2015. How Uber and Airbnb monetize desperation.

Robert Reich, How Trade Deals Boost the Top 1% and Bust the Rest, February 17, 2015. Trade pacts today protect only the assets of our global corporate elite.

Ben Walsh, No, The Rich Have Not Gotten Poorer Since The Financial Crisis, Huffington Post, February 18, 2015. Rebutting a New York Times analysis that claims no increase for inequality since the financial crisis.

S. Andrew Starbird, Business should declare war on income inequality, MarketWatch, February 19, 2015. A business school dean makes the case. 

Paul Krugman, Knowledge Isn’t Power, New York Times, February 23, 2015. Why education offers no serious answer to inequality.

Timothy Taylor, Piketty and Wealth Inequality, Conversable Economist, February 23, 2015. The debate a year later.

Chris Dillow, The Relative Income Problem, Stumbling and Mumbling, February 25, 2015. The wisdom of the Mencken quip that defines a rich man as someone making $100 more than his wife's sister's husband.

State of Inequality, Capital & Main, February 2015. This landmark series on what California’s grand divide.

Retorts

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

The claim: The federal estate tax amounts to double taxation. We tax the rich on what they earn during life and we tax them again at death.

The reality: If a deep pocket buys and holds on to an asset until death, as the Center on Budget and Policy Priorities points out, the increase in that asset’s value from the time acquired until death will never be taxed, thanks to a longstanding loophole known as “step-up basis.”

This tax code provision, the Center explains, encourages the wealthy “to turn as much of their income as possible into capital gains and hold on to their assets until death, when they can pass them to their heirs.”

Should heirs like Paris Hilton be able to inherit tens of millions of dollars tax-free?

President Obama’s latest budget proposes to end this “step-up basis” loophole. That would be a welcome change, notes Institute for Policy Studies estate tax analyst Josh Hoxie.

“Should heirs like Paris Hilton,” he asks, “be able to inherit tens of millions of dollars tax-free?”

The claim: Society shouldn’t make such a big deal out of CEO pay. After all, if you divvied up all the compensation CEOs collect among their workers, each worker would only see a few pennies more per hour.

The reality: CEO pay has actually in some cases risen to such heights that those pennies have become dollars. The $67.3 million that went to Oracle CEO Larry Ellison last year, for instance, would have been enough to raise the pay of over 32,000 Oracle workers a dollar an hour.

But the real problem with CEO pay excess sits elsewhere. To gain this excess, top corporate executives regularly engage in behaviors that undermine both the long-term viability of the enterprises they lead and the short-term well-being of their workers.

Consider the less-than-illustrious record of Meg Whitman, the CEO of Silicon Valley’s Hewlett-Packard since 2011.

The top problem with outsized CEO pay? CEOs do horrible things to gain their goodies.

Whitman’s H-P is systematically disinvesting in both the company’s today and tomorrow. The tech giant, notes Los Angeles Times analyst Michael Hiltzik, has axed more 44,000 jobs over the last three years and has plans to lay off 11,000 more by the end of this fiscal year.

The company has been expending, amid these massive layoffs, more on buying back its own shares on the open market — a piece of “financial engineering” designed to jack up its share price — than on building its business. In its last fiscal quarter, H-P “invested” over one-half billion dollars more in share buybacks than in internal capital investments.

All this financial engineering has engineered a higher share price for H-P and, not at all coincidentally, higher personal earnings for Whitman. She took home $19.6 million last year, her second straight year with nearly a $2 million pay increase.

Over those same last two years, H-P revenues — the money customers pay for the company’s goods and services — have dropped from $120.4 to $111.5 billion. The bottom line: H-P is going backwards as an enterprise while H-P workers are going jobless. What other reasons for caring about CEO compensation could a society possible need?

 

Take Action
on Inequality

Don’t let Wall Street banks hide the big bonuses they lavish on their execs who take government jobs. Help Americans for Financial Reform get the word out.

The “billionaire’s loophole” is costing average Americans billions. Learn more and help end the games our super rich play with the estate tax.

What to Watch

The Daily Show tackles the growing wealth inequality among the super-rich, February 27, 2015. Great guffaws with a star turn by Morris Pearl of the Patriotic Millionares.

The School Closure Playbook: How Billionaires Exploit Poor Children. Directed by Rebecca Rojer, this 22-minute video explores how corporate “school reform” is privatizing public education — and enriching the already rich.

 

 

 

 

Books

Breadline BritainBreadline Britain:
The Rise of Mass Poverty

Stewart Lansley and Joanna Mack
(Oneworld, 2015, 334 pp)

What’s this book about? The title could hardly be clearer, and, yes, this just-released analysis certainly does delve deeply into the rise of mass deprivation in the UK.

But this book achieves far more. Breadline Britain explores both our increasing concentration of income and wealth and the great lengths that those who welcome that concentration will go to minimize — or even dismiss — the shameful suffering this concentration creates.

Americans should pay particular notice. Britain and the United States have been dancing down the same luxury lane ever since Margaret Thatcher and Ronald Reagan first took office.

Why, with the UK twice
as rich as 30 years ago,
have poverty rates doubled?

The two societies have become, in effect, mirror images. In the British experience, Americans can see themselves. In painfully sharp relief.

Does runaway inequality at society’s summit, Breadline Britain co-authors Stewart Lansley and Joanna Mack at one point ask, “inevitably diminish the prospects of the poor?”

You don’t have to be British to appreciate their answer.

 

 

 

 

 

 

 

Rich Don't Always Win

We remember Hugo Black today as a great New Deal- era Supreme Court justice. What we’ve forgotten: his battle, as a U.S. senator, to keep corporations with overpaid CEOs from getting government contracts.

Too Much editor Sam Pizzigati tells that story in his gripping history of the triumph over America’s first plutocracy. Learn more.


About Too Much

ISP logoToo Much, an Institute for Policy Studies monthly publication | Institute for Policy Studies, 1112 16th Street NW, Suite 600, Washington, DC 20036 | 202-234-9382

Editor: Sam Pizzigati | editor@toomuchonline.org | Archive | Unsubscribe

 

 

 

Like Too Much?
Email this issue
to a friend