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

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May 2015

This Month

Could Dan Price, the CEO of a Seattle credit card processing company, represent America’s corporate future? Until just recently, Corporate America certainly thought so. Last year, a top business magazine named Price the nation’s “2014 Entrepreneur of the Year.”

But then this 30-year-old entrepreneur did something that has unsettled — and embarrassed — Corporate America. Price last month announced he was setting a $70,000 annual minimum for all his employees. He also called current U.S. CEO pay “absurd” and “out of whack” and announced he’ll be cutting his own million-dollar pay by over 90 percent.

America’s business leaders, Price predicts, “will follow suit” when they see how well his company will do with a much more equal salary structure.

A noble thought. But don’t hold your breath. America’s top execs and their pals aren’t treating Price as a hero anymore. The Acton Institute, for instance, has dubbed Price’s pay move “not a rational business decision.” Seems to us that we need plenty more of Dan Price-style irrationality. And this month in Too Much we offer plenty of reasons why.

 

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Images of Inequality

Picasso Algerian women

The “single most important painting by Picasso to remain in private hands” — the 1955 version “O” of Les femmes d’Algerwill hit the auction block at Christie’s this month in New York. Auctioneers are expecting the painting to go for over $140 million, a figure that would make this Picasso the most expensive painting ever sold at auction. The painting originally sold in 1956 as part of a 15-piece set. The price for the entire set: $212,500. The current all-time record for a Picasso: the $106.5 million that a 1932 work realized in a 2010 Christie’s auction.

 

Greed at a Glance

South Florida billionaire Jeff Greene is asking $125 million for a Manhattan building he bought for $26.3 million four years ago. The subprime mortgage king has turned the seven-apartment building into luxury condos. Last year he put his Beverly Hills pad on the market for $195 million.

NetJets, the Ohio-based company that supplies well-heeled travelers with private-jet transport, flew 80,000 passengers last year — and 2,000 pets. The smallest private-jet lease NetJets offers, for 25 hours of air time, runs $120,000.

Dress up warmly if you venture inside a Cartier or Chanel shop in Hong Kong. Air conditioners keep the stores at 59 degrees. Cold, explains wealth chronicler Ewan Rambourg, signifies “chic” to rich locals. Hong Kong’s malls drive 60 percent of the city’s summertime energy use.

Inequality by the Numbers

May Too Much infographic

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Stats of the Month

Fifty years ago, General Motors rated as America’s largest employer, and the typical GM worker earned $35 an hour, after adusting for inflation. In 2014, the typical entry-level worker at Walmart, America’s largest employer today, earned about $9 an hour. 

On the latest Forbes list of the world’s billionaires, four heirs to the Walmart fortune — Christy Walton, Jim Walton, Alice Walton, and S. Robson Walton — occupy four of the top 12 slots. Their combined fortune: $160.8 billion.

Fun with fossil fuels: Pay for Exxon Mobil CEO Rex Tillerson jumped $5 million to $33 million last year.

Thanks to the federal tax break for business meals, a single $1,600 dinner evening out for 10 execs will save a corporation $280 in taxes, more help from taxpayers than the $279 the average American family on food stamps receives for an entire month.

How concentrated have income and wealth become in the United States? In 1984, the top 0.01 percent of campaign contributors gave 11.9 percent of U.S. political donations. In 2012, the top 0.01 percent of contributors gave 41.8 percent of all contributions.

In its first four years, the new federal Consumer Financial Protection Bureau has forced financial services companies to return over $5 billion directly to consumers that they cheated. Yet not one of today’s top financial industry execs has so far seen the inside of a jail cell.

 

 

 

The Too Much Interview

A Promising Partnership, for 1 Percenters

What do corporate chiefs want out of the latest global trade talks? On their wish list: a veto over government decisions that complicate their profiteering. Will they get that veto power? Trade union analyst Thea Lee sees reasons they just might not.

Global economic inequality, the latest stats show, has reached astounding proportions. The world’s richest 1 percent last year held 48 percent of the world’s wealth, up from 44 percent in 2009. The world’s poorest 80 percent, for their part, hold a meager 5.5 percent world wealth share.

“The gap between the richest and the rest,” as Oxfam's Winnie Byanyima puts it, “is widening fast.”

This wasn't supposed to happen. NAFTA and other global trade pacts negotiated over recent years, America’s top elected leaders assured us, would usher in a new win-win era of global prosperity.

Thea LeeThea Lee, the current deputy chief of staff at the AFL-CIO and the labor federation’s former policy director and chief international economist, has spent much of the last two decades challenging this and other claims from those who wave the “free trade” banner. She’s now engaging the proposed Trans-Pacific Partnership, the latest major global trade agreement.

Does this new agreement represent a new departure for U.S. global economic policy, as the White House insists? Or does the TPP represent more of the same?

Too Much editor Sam Pizzigati put these questions — and more — to the AFL-CIO’s Lee late last month. 

You’ve debated over the years a variety of “free trade” deal advocates. Have they changed their tune over time? Do you see any change in substance behind that change in tune?

On content, we’ve seen some important improvements, mostly as a result of pressure applied from labor, environmental, and consumer groups.

But on balance, unfortunately, the agreements remain lopsided. They deliver benefits that enhance the mobility, flexibility, and profitability of multinational corporations over working families and the general public.

Recent trade pacts have helped shove inequality to ridiculous heights.

An increasing number of mainstream economists — including many who consider themselves “free traders,” like Joseph Stiglitz, Jeffrey Sachs, and Paul Krugman — now see all this. They’re agreeing that these seriously flawed trade deals haven’t delivered on their promises.

The proponents of the Trans-Pacific Partnership, meanwhile, are using a lot of the same recycled arguments we’ve been hearing since NAFTA.

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

 

Quotable

“America, period, is unequal. Once we accept that, we can change that.”
Chasten Florence, 26-year-old New York construction worker, A Nationwide Protest on Pay, April 15, 2015

“I wish the president had early and often talked about income inequality and rallied the American people to address the issue. I wish that had happened earlier on in his administration.”
New York mayor Bill de Blasio, remarks at Drake University, Des Moines, Iowa, April 16. 2015

“I scream, you scream, we all scream against creating an aristocracy of wealth.”
Ben Cohen and Jerry Greenfield on the notion of repealing the estate tax, USA Today, April 16, 2015.

“Hillary Clinton has warned that ‘extreme inequality has corrupted other societies.’ Uh, yes. But what about our society?”
Jim Hightower, Where Are the Populist Democrats? April 22, 2015

“Oligarchy aptly describes the direction of change in America during the past four decades. The idea is not that oligarchy has replaced democracy; rather, the two have become fused in a system where those at the pinnacle of the economy are able to tilt politics and law sharply in their own favor.”
Paul Starr, How Gilded Ages End, American Prospect, April 27, 2015


Petulant Plutocrat of the Month

Sheldon AdelsonThose GOP White House hopefuls genuflecting before casino billionaire Sheldon Adelson for campaign cash may want to think twice. Adelson doesn’t always play nice with those he anoints. Just ask Steven Jacobs. Adelson made him the CEO of his gambling empire’s Macau subsidiary, then gave him the heave-ho. In a Nevada court last month, Adelson claimed that Jacobs had “tried to kill the company.” Jacobs has filed a wrongful termination suit that says Adelson required him to do “outrageous“ things, like collect compromising info on Macau officials. The lesson for White House wannabees: Never underestimate the vindictiveness of the super rich. Notes one bemused Las Vegas observer: “If you have a back, Adelson has a knife.”

 

Plutocrats at Play

How “gilded and chic” does a resort have to be “to make a billionaire blush”? The new beachfront Four Seasons in Dubai, one review notes, has butlers who carry sunglass cleaners and a spa locker room that features bird sounds and ice showers, all for a mere $1,000 per night.

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Antidotes to Inequality

Curbing Subsidies for America's Elites

Elite private universities like Harvard and Princeton get from five to ten times more in taxpayer subsidies per student than do public colleges and universities. How can that be? These elite schools pay no taxes on their huge endowments — $35 billion for Harvard alone — and land holdings.

The savings from this tax-free status can mount up quickly, in Harvard’s case, to a $48,000 taxpayer subsidy per student. The leading public university in Massachusetts, by contrast, receives only $9,800 in taxpayer subsidies per student.

A modest annual excise tax on private college endowment value over $5 million, the Nexus Research and Policy Center noted last month, could raise $6 billion, a total that could be used, notes Mark Schneider of the American Institutes for Research, to advance the public interest in higher ed far more effectively than massive tax breaks to elite private schools.

Asks Schneider, a former U.S. commissioner of education statistics: “What is the public purpose of a school that educates wealthy people and foreign students?”

More antidotes: At Macalester College in Minnesota, a student assembly called by the Macalester Students Against Income Inequality has passed a resolution that calls for an 18-to-1 ratio between the college’s top and bottom paychecks. The latest available data show Macalester’s president making 53 times the pay of the college’s lowest-paid contract workers . . .

In the run-up to the UK’s May 7 parliamentary elections, the Green Party has put the notion of a maximum wage on the table. The Party’s proposal caps corporate execs at 10 times the pay of their enterprise’s lowest-paid workers. Also in the UK election mix: a Labour Party proposal to ban unpaid internships longer than four weeks. But some activists are contending that all unpaid internships need to go. The rich, they note, can afford to take short placement after placement, “building up a wealth of experience and contacts, while the poor but talented will be left behind.”

To reimburse average Americans for the use of their share of the nation’s commonly held air, land, and water,  US Uncut activist scholar Paul Buchheit is urging a $15,000 dividend for every family in America. Along a similar line, Harvard economist Richard Freeman is pitching a society-wide profit sharing “to give all workers some share of the returns to capital that now only benefit the rich.”

 

Peasants
with Pitchforks

The day after the April 15 Tax Day, protestors marched into a Manhattan luxury tower where the rich residents pay precious little in taxes, the 90-story One57. Their target: Bill Ackman, the hedge fund kingpin who’s built a fortune off low-wage labor at Burger King and privatizing prisons.

Ackman and his One57 neighbors are all benefiting from a special real estate tax break that costs New York over $1 billion a year.

How much does that tax break save Ackman and his neighbors? One neighbor who shelled out $100.5 million for his penthouse is this year enjoying a 95 percent tax discount, a $360,000 savings.  

Ackman will save a bit less. His One57 condo only cost $91.5 million.

 

Take Action
on Inequality

Get the latest on the campaign to save and revitalize the estate tax.

 

 

Reports

Major new studies released over the past month

Morbidity and Mortality Weekly Report
Centers for Disease Control and Prevention, April 3, 2015
Lindsey Black and Renee Gindi

Everybody knows that income in America has become staggeringly unequal. And everybody knows that wealth has become incredibly unequal as well. But now we have a new inequality frontier: sleep!

Higher-income people, notes this new CDC study, sleep significantly more than lower-income people. What explains the sleep gap? Lower-income people, other research shows, are often juggling multiple jobs.

People who don’t sleep enough, the CDC adds, end up more likely to suffer from chronic diseases that range from diabetes and depression to obesity and cancer.

The High Public Cost of Low Wages
UC Berkeley Labor Center, April 13, 2015

Ken Jacobs, Ian Perry, and Jenifer MacGillvary

The vast majority of America’s workers — a whopping 70 percent — have seen, after inflation, not a penny of increased earnings over the last decade. And fewer workers are getting decent benefits as well.

So how are America’s workers getting by? Taxpayers in the general public have essentially come to the rescue. The social safety net programs they finance are providing the badly needed support that America’s top corporate executives simply refuse to provide.

“Taxpayers,” details this first-ever look at the cost to states of public assistance programs for working families, “bear a significant portion of the hidden costs of low-wage work in America.”

At both the state and federal levels, the report adds, over half of the total spending on the nation’s most basic public assistance programs — Medicaid, TANF, EITC, and food stamps — “goes to working families.”

The total bill for taxpayers: $153 billion a year.

 

New Wisdom
on Wealth

Nick Galasso, Is the world a ‘plutonomy’? The Politics of Poverty, April 6, 2015. Why it matters that consumption by the rich dominates our economy.

Robert Reich, The Political Roots of Widening Inequality, American Prospect, spring 2015. The key to understanding the rise in inequality? The power of moneyed interests to shape the rules of the market.

Susan Holmberg, Clinton’s Executive Pay Comments Show We’re Still Too Focused on Fairness, Next New Deal, April 17, 2015. Excessive pay counts as a danger, not just unfair.

Cody Sibley, America should install a maximum wage to curb income inequality, Daily Reveille, April 19, 2015. A plea from Huey Long country. 

Jonathan Taplin, Sleeping Through a Revolution, Medium, April 22, 2015. It's time to ask who benefits from the technological revolution.

Retorts

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

The claim: “Taxes are through the roof on affluent Americans and business profits, but for the rest of Americans things are not so bad.”

The reality: Fox TV personality Bill O’Reilly, the host of cable’s most-watched news hour, last month used the exact words above to describe “Income Inequality in America.”

“How much more can the government take from the affluent,” O’Reilly went on to ask, “without crashing the entire free market economy?”

Actually, as the Atlanta Constitution’s Jay Bookman points out in a response to O’Reilly’s rant, the “entire free market economy” did nearly crash in 2008 – after a decade of tax cuts for America’s most affluent.

In the 1950s, the rich paid federal income taxes at over twice today's rate.

Bookman offers a variety of additional facts to rebut O’Reilly. Corporate taxes going “through the roof”? In 1989, corporate taxes amounted to 1.9 percent of GDP. Last year, a quarter-century later, corporate taxes amounted to 1.9 percent of GDP.

How about the personal income taxes the rich pay? Not much of a going “through the roof” there either. Between 1989 and 2011, the effective tax rate on America’s top 1 percent increased by a somewhat less-than-whopping one percentage point.

But to really get at the utter fraudulence of O’Reilly’s claims, we need to extend our historical frame of reference beyond Bookman’s 1989.

In 1963, all earned income over what these days, after adjusting for inflation, would equal $1,522,595 faced a federal income tax rate of 91 percent. In 2013, after new Obama higher taxes on the rich went into effect, the basic federal income tax rate on income over $1,522,595 stood at 39.6 percent, less than half the top rate in 1963.

For the record, this take-from-the-affluent 1963 saw the United States right in the middle of the nation’s greatest period of middle class prosperity ever. That middle class prosperity has long since vanished, done in by four decades of public policies that have funneled America’s wealth ever more lopsidedly upward.

How much has this growing inequality cost average Americans? A National Public Radio Planet Money analyst ran the numbers earlier this year.

If the United States today, this analysis notes, had the same distribution of income as in 1979, the year before Ronald Reagan won the White House, average incomes of America’s middle 20 percent of families would be $8,752 more than today’s current middle class incomes and the average incomes of the nation’s top 1 percent would be $824,844 less.

 

What to Watch

Rampant lying for personal gain. A culture of secrecy. A refusal to admit wrongdoing. All apt descriptions of the Atlanta school test scandal — and the Wall Street party that ushered in the Great Recession. The difference between the two? This new Jon Stewart video explains.

A sparkling new video shows how private equity kingpins shoved a scam through the Maine legislature, then took in $8 million in a day and foot taxpayers with a $16 million bill.

 

Now featured on
Inequality.org

Jim Hightower on where are the Populist Democrats

Chuck Collins on whether an Olympics can fight inequality

Josh Hoxie on the ongoing estate tax wars.

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on Inequality.org postings

 

 

 

 

 

 

Books

Why We Can't Afford the RichWhy We Can’t Afford the Rich
Andrew Sayer
(University of Chicago Press, 2015, 448 pp)

Talking about unfairness, savvy egalitarians have always understood, only gets us so far.

Count British social scientist Andrew Sayer among those savvy egalitarians. We won’t see grand movements for greater economic justice, he understands, until more people understand just how much tolerating grand accumulations of private wealth is costing us.

Sayer explores those costs — everything from the psychological to the environmental — in his new Why We Can’t Afford the Rich.

And along the way he takes on — and demolishes — the old canards that apologists for grand fortune regularly trot, everything from “When did you last get a job from a poor person?” to “You can’t make the poor rich by making the rich poor.”

The wealthiest among us, Sayer shows, don’t create wealth. They extract it from the rest of us. They then use that wealth to hollow out and dominate our democracy and rig the rules to speed still more extracting.

The resulting ill-gotten wealth, Sayer shows just as compellingly, ends up ill-spent on luxuries that encourage ever broader wastes of resources.

The really rich don't create wealth. They extract wealth from the rest of us.

Yes, Sayer readily agrees, the level of our inequality has become profoundly unjust. But this inequality has also left us “profoundly dysfunctional and inefficient” — and trapped in what amounts to an “inhumane rat-race.”

We need fairer. We need better. We need more equality.

You can get a great sense of Andrew Sayer’s perspective on grand fortune from a new Web site he now authors, as well as from an excerpt of Why We Can’t Afford the Rich that Salon has just published online.

 

 

Do any of our current pols rate the “populist” label? One useful frame of reference: the Democratic Party’s 1936 platform. The first plank: “We shall continue to use the powers of government to end the activities of the malefactors of great wealth who defraud and exploit the people.”

Want more on populism past? Check Too Much editor Sam Pizzigati’s gripping history of the triumph over America’s original plutocracy. Learn more.

Rich Don't Always Win

 


About Too Much

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