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Too Much

THIS WEEK

Folks who find themselves rich — and getting richer — typically tend to react psychologically in one of two ways. They can either see themselves as incredibly fortunate or incredibly deserving.

Those rich who come to see the luck in their lives also usually come to understand that they have no more talent — and work no more diligently —  than plenty of people who hold not much wealth at all. Those among the rich who see their wealth as a well-deserved reward, on the other hand, often come to see those without wealth as undeserving — of anything except contempt.

The latest sign of that contempt: The rush by localities to criminalize sleeping in cars. Communities where the wealthy predominate — like Palo Alto in Silicon Valley — have been particularly eager to do this criminalizing. Palo Alto last year had over 12 times more homeless people than available shelter beds.

We have housing meanness in America today. We also have housing madness. This week’s Too Much has a bizarre example of the latter. And lots more, too.

 

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GREED AT A GLANCE

Last year’s congressional “fiscal cliff” deal raised the tax rate on ordinary income over $450,000 from 35 to 39.6 percent — and the tax on capital gains from 15 to 20 percent. On paper, taxpayers making over $2.6 million a year — America’s top 0.1 percent — should now each be paying about $232,000 more in federal taxes this year than last. In real life, many may not. The reason: Federal budget cuts have left the IRS, the Associated Press reports, with “fewer agents auditing returns than at any time since at least the 1980s.” IRS funding this year has dropped 7 percent. Last year the agency audited only 10.9 percent of taxpayers with over $1 million in income. This year’s audit rate, IRS chief John Koskinen acknowledged last week, will run lower. That will mean that “some people we should catch,” says Koskinen, “we’re not going to catch.”

Lee ScottThey pay Yahoo CEO Marissa Mayer the big bucks — $24.9 million last year — to make the big decisions. Mayer two years ago decided to hire Henrique De Castro to overhaul her stumbling company’s operations. De Castro, Mayer led everyone to believe, “had a unique set of highly valuable skills and experiences.” Fifteen months later, after still more corporate stumbling, Mayer gave Mr. Unique the heave-ho. De Castro is walking away, Yahoo has just disclosed, with $58 million in severance. Shareholders seem none too happy about that. Mayer’s answer? To calm down anger over Yahoo's executive pay giveaways, she’s bringing on to the Yahoo board H. Lee Scott Jr., the retired Wal-Mart CEO. In his last year as Wal-Mart’s chief, Scott took home $30.2 million, over 1,500 times average Wal-Mart worker pay . . .

For generations, the Guardian reported earlier this month, “fine dining” has meant “haughty waiters, hushed rooms, starched table linen, and endless interruptions to pour wine and water.” But celebrity chefs these days are going casual. At the UK’s uber trendy House of Tides, for instance, Michelin-starred chef Kenny Atkinson has “dispensed” with “hovering waiters” — and has diners pouring their own wine.  And no fancy-pants dress code either. Atkinson doesn’t mind if people come dressed in jeans: “Their money is as good as anybody else’s.” Any diners in jeans will need, of course, to bring plenty of the money Atkinson so prizes. His tasting menu starts at $92.

 

 

Quote of the Week

“Even in this era of extreme partisanship, broad bipartisan agreement supports an agenda that helps the wealthy — including austerity budgets, free trade, big bank bailouts, and policing the world. Big Oil, Big Pharma, Big Agra, the health insurance industry, and Wall Street deploy legions of lobbyists to make it clear that messing with them costs dearly.”
Robert Borosage, Populism? Where are the pitchforks? April 16, 2014

PETULANT PLUTOCRAT OF THE WEEK

Howard LutnickRecreation? Howard Lutnick, the CEO at high-finance power Cantor Fitzgerald, can’t get enough of it. The 40-acre Hamptons estate he bought back in 2003 — at a cost of $56 million — came with a swimming pool, spa, and tennis court. Lutnick moved quickly to add a basketball court and a barn big enough to house an equestrian team. But three different zoning and planning boards refused to grant the permits for Lutnick’s additions. The chief exec then sued the boards — and all their individual members — for $56 million in damages. Wall Streeters who frolic in the Hamptons every summer, one of those sued noted last week, “don't like to be told what you can or can't do.” Lutnick’s lawsuits, he added, amount to an attempt at “'intimidation plain and simple.”

 

 

 

 

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IMAGES OF INEQUALITY

Huguette Clark mansion

Get the dust mops ready. This French-style chateau in Connecticut’s New Canaan has gone empty the last 60-odd years. But fashion designer Reed Krakoff has just picked up the 52-acre estate for a relative song, a mere $14 million. The manse went on the market after the 2011 death of the long-time owner, Hugette Clark, the 104-year-old copper heiress. Clark had bought the manse in 1951 as a refuge in case the Russkies ever threatened to drop an atom bomb on her Manhattan isle home. She never moved in. She never even furnished the place.

 

 

 

 

Web Gem

Populist Majority/ This Campaign for America's Future site tracks poll data to show that Americans remember when we shared our prosperity and want that America back.

 

 

 

PROGRESS AND PROMISE

PayWatch siteWith vivid graphics and first-person worker testimonials, the 2014 edition of the AFL-CIO’s online PayWatch is putting some needed new pressure on executive pay excess. CEOs at companies listed in the S&P 500, the labor site calculates, took home 331 times the pay of average American workers last year — and 774 times the take-home of minimum-wage workers. The backdrop for this gap: Corporate profits in 2013 — for the nation’s top 500 corporations — averaged $41,249 per employee, a 38 percent jump over the profit level in 2008. If the minimum wage had kept up with top 1 percent income gains since 1968, adds the new PayWatch, minimum-wage workers would now be making $31.45 per hour.

 

Take Action
on Inequality

At the new PayWatch site, Americans working at major firms can compare their pay to their CEO’s compensation — and CEO pay in their state. Spread the word and help build the charge for a smaller corporate pay gap.

inequality by the numbers

real wages since peak years

 

 

Stat of the Week

Oracle CEO Larry Ellison leads the latest New York Times list of America's most highly paid CEOs. Ellison makes more per second, notes analyst Deborah Meier, then the current federal hourly minimum wage.

 

 

 

IN FOCUS

Why Our Sky Sometimes Does Start Falling

You don't have to be a rocket scientist to be able to demonstrate the link between inequality and catastrophic environmental change. But a little help from rocket scientists can certainly help.

The sky, we all learn as children, is not falling — and never falls. Only silly Chicken Littles prattle about “precipitous collapses.”

Only silly Chicken Littles, apparently, and applied mathematicians.

One of those mathematicians, the University of Maryland’s Safa Motesharrei, has joined with two colleagues to publish a new paper that sees the “precipitous collapse” of our global order as a distinct possibility.

In fact, the three conclude, that possibility will become a hard-to-avoid probability unless the world becomes a far less unequal place.

Motesharrei and his fellow researchers — University of Maryland meteorologist Eugenia Kalnay, a former Goddard Space Flight Center exec, and University of Minnesota political scientist Jorge Rivas — reached that conclusion after running “a range of hypothetical scenarios” through an innovative model developed with funding support from NASA, America’s space agency.

Scientists at NASA usually spend their time looking up at the heavens. The investigators behind this new study kept their focus distinctly earth-bound.

Sophisticated human civilizations, the three investigators point out, have in the past collapsed and on a fairly regular basis. The Romans broke down, as did the Han in China and the Gupta in India, the Maya in Central America, and a variety of Mesopotamian civilizations.

These collapses, Motesharrei and his collaborators note, naturally raise the question whether we today remain “similarly susceptible.” Or can our modern civilization, with all our “greater technological capacity, scientific knowledge, and energy resources,” survive whatever did in our sophisticated predecessors?

And what did do in these predecessors? In previous collapses, we see some similar patterns. The doomed societies overextended themselves environmentally. They depleted their natural resources at an unsustainable pace — and failed to see, despite their sophistication, the warning signs of their impending implosion. They soldiered on, oblivious to the danger.

Or rather, to be more precise, the elite movers and shakers of these societies soldiered on. In deeply unequal societies, elites seldom feel the strain and pain that environmental degradation engenders — until that degradation has gone too far to reverse.

This “buffer of wealth,” as the Motesharrei team puts it, “allows elites to continue ‘business as usual.’”

Could we go down the same clueless path? The Motesharrei study explores that question with “the first model of its kind that studies the impacts of inequality on the fate of societies.” Under conditions “closely reflecting the reality of the world today,” the study finds an eventual collapse “difficult to avoid.”

Difficult but not impossible. We can avoid collapse, the Motesharrei paper notes, if we reduce the “per capita rate of depletion of nature” to a “sustainable level” and start distributing resources in a more “reasonably equitable fashion.”

For specifics on what that would actually mean in practice, we need to look elsewhere. The new Motesharrei paper soars at a theoretical level and offers no practical roadmap to a more sustainable and equal society.

Other analysts have made that effort, no one more so than Herman Daly, the former World Bank senior economist now widely considered the founding father of ecological economics.

Daly and his colleagues have been calling for a “steady-state economy” that acknowledges the limits of our physical world. We can’t go on, they contend, endlessly depleting our stocks of natural resources and polluting the world with the wastes from our resource exploitation.

“We need,” says Daly, “to build the physical constraints of a finite biophysical environment into our economic theory.”

And into that theory, he adds, we need to build justice, too. This past fall, Daly spelled out ten specific steps that could help us push back against our current unsteady state. Among them: “Limit the range of inequality in income distribution with a minimum income and a maximum income.” 

“Rich and poor separated by a factor of 500,” Daly observes, “have few experiences or interests in common.”

Maybe not even, the new Motesharrei study suggests, avoiding a cataclysmic environmental collapse.

 

New Wisdom
on Wealth

Matt Taibbi, The Super Rich in America Have Become 'Untouchables' Who Don't Go to Prison, Democracy Now! April 15, 2014. Our income gap reflects a “justice” gap.

Susan Holmberg, The Pay's the Thing: How America's CEOs Are Getting Rich Off Taxpayers, Next New Deal, April 16, 2014. The price we pay for tolerating the performance pay loophole.

Robert Reich, Antitrust in the New Gilded Age, April 16, 2014. America is facing the same concentrations of wealth and economic power that endangered democracy a century ago.

Howard Steven Friedman, American Inequality: Ticking Time Bomb, Huffington Post, April 17, 2014. Plutarch had it right: An “imbalance between rich and poor” remains our most “fatal ailment.”

Floyd Norris, Merely Rich and Superrich: The Tax Gap Is Narrowing, New York Times, April 17, 2014. A step toward a tax policy less hostile to work.

Will Hutton, Extravagant CEO pay doesn’t reflect performance, it’s all about status, Observer, April 19, 2014. We now live in an era of “conspicuous executive pay,” only understandable as a social phenomenon because its excess has ceased to have any economic logic.

Zoë Carpenter, Will Phony Populists Hijack the Fight Against Inequality? Nation, April 21, 2014. Plenty of top Dems are still arguing that wealth's concentration doesn't really matter.

 

The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class cover

Barbara Ehrenreich, Gar Alperovitz, and Jim Hightower would like you to read this book. Read this excerpt online and check out more details.

NEW AND notable

Do Americans Still Live in a Real Democracy?

Martin Gilens and Benjamin Page, Testing Theories of American Politics: Elites, Interest Groups, and Average CitizensPerspectives on Politics, forthcoming Fall 2014.

America’s political scientists have been arguing for generations over who really runs the United States. Do Americans have a democracy where the people rule? Or something else? Do American citizens, as political scientists Martin Gilens and Benjamin Page ask in this blockbuster new paper just published online, rate as “sovereign, semi-sovereign, or largely powerless”?

Gilens and Page, distinguished professors from Princeton and Northwestern, give a surprisingly chilling response to that question, based on their analysis of “a unique data set” that culled responses to 1,779 policy questions pollsters asked between 1981 and 2002.

The researchers crunched this set of response data by income level and then probed to see whose policy preferences actually prevailed.

“Economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy,” they conclude, “while mass-based interest groups and average citizens have little or no independent influence.”

One analyst is already calling this new Gilens-Page paper “the first-ever scientific study” of the question whether the United States can rightfully claim to be a democracy. Gilens and Page, for their part, pull no academic punches.

“Our analyses suggest that majorities of the American public,” the pair write, “actually have little influence over the policies our government adopts.”

The nation, the scholars note, does sport “many features central to democratic governance,” everything from elections to freedom of speech and association.

“But we believe that if policy making is dominated by powerful business organizations and a small number of affluent Americans,” they go on to add, “then America’s claims to being a democratic society are seriously threatened.”

 

 

 

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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.

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