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

Too Much

THIS WEEK

Developers in Manhattan have just placed ten underground parking spaces at a new condo complex up for sale. At $1 million each.

The spaces may well sell out. Just this past May, another Manhattan developer listed 25 parking spaces for sale at $500,000. The 25 spots all quickly found buyers. That didn’t surprise the developer. The adjacent apartments, the developer explained to the New York Times, were selling for $47 million.

“Another $500,000 for the luxury of not walking a block or two and having your own spot,” the developer observed, “I guess it becomes a rounding error.”

The real error here? Letting wealth concentrate so extremely that some people of privilege are spending over four times more for a parking space than most Americans spend on a home. In this week’s Too Much: new research that offers the latest reason why tolerating this extreme inequality simply makes no sense.

 

About Too Much, a project of the Institute for Policy Studies Program on Inequality and the Common Good

Subscribe to Too Much

Inequality.Org

Join us on Facebook
or follow us on Twitter

FacebookTwitter

GREED AT A GLANCE

The ultimate luxury? Daniel Hedaya, a realtor who helps global deep pockets buy getaways in Manhattan, has a ready answer: “to travel the world and always feel like you’re at home.” One Hedaya client takes that goal literally. He has homes in five watering holes for the mega rich. Each home comes outfitted with the exact same furniture, linens, coffee mugs, and toothbrushes. Where do high-enders like Hedaya's client most often sit their mugs? Researchers at New World Wealth last week ranked the world's most attractive cities for the super rich. At the summit: London. Some 9,700 swells worth at least $10 million maintain their primary residence in the city, and 22,300 other deca-millionaires maintain second (or third, fourth, or fifth) homes there. New York ranks second . . .

Gina RaimondoThe next governor of Rhode Island may be a candidate who spent her term as the state’s treasurer cutting public employee pensions and using the proceeds to pay billionaire hedge fund managers fat fees for managing the state’s pension investments. Rhode Island treasurer Gina Raimondo, a former venture capitalist herself, owes her victory in the Democratic Party gubernatorial primary last Tuesday to massive Wall Street campaign contributions — and a split in her opposition. She had two opponents running against her, and together the pair picked up 58 percent of the primary vote. Rolling Stone’s Matt Taibbi has dubbed Raimondo’s looting of Rhode Island’s public employee pension funds — “at the behest of powerful out-of-state financiers” — a “test case for the rest of the country.”

Some 70 percent of Harvard’s graduating seniors submit résumés to Wall Street banks and consulting firms, reports sociologist Lauren Rivera. Nearly a third of Harvard’s latest graduating class, 31 percent, ended up in Wall Street jobs. What makes Wall Street so irresistible to America’s purported “best and brightest”? The money helps, of course. New grads can start on Wall Street at $90,000 a year. But sociologist Amy Binder points as well to the unrelenting recruitment pressure Wall Street puts on students at Harvard and a other elite institutions. The Wall Street business model, Binder notes, relies “on the appearance of brainpower in order to win clients,” a strategy that puts “a premium on recruiting from a handful of universities with the highest worldwide brand equity.”

 

 

Quote of the Week

“American democracy has been captured by the wealthy donor class.”
Editorial, While America sleeps, plutocrats are stealing its government, St. Louis Post-Dispatch, September 11, 2014

 

PETULANT PLUTOCRAT OF THE WEEK

David SiegelMeet the man who’s making airline travel an ever more uncomfortable ordeal. Or at least one of the men. David Siegel runs Frontier Airlines, and no carrier probably does more squeezing — of passengers — than Frontier. The airline now shoehorns 168 seats into its Airbus A320s. In 2003, Frontier flew a maximum 116 passengers in the same plane. Siegel’s not apologizing to anyone, least of all passengers. Earlier this year the CEO threatened to place a complaining customer on the TSA “do not fly list.” Siegel’s reward for all this squeezing? No one outside Frontier knows. A private equity firm now owns Frontier, and privately held companies don’t have to disclose executive compensation. CEO pay at publicly traded airlines last year averaged $4.4 million.

 

 

 

Like Too Much?
Email this issue
to a friend

IMAGES OF INEQUALITY

A $25,000 hotel suite

You don’t just get a spectacular view when you shell out $25,000 to spend a night in the “champagne suite” at the New York Palace hotel. You get, gush the hotel’s publicists, “carefully curated art and elements of contemporary opulence,” a combination sure to create “an optimal atmosphere for relaxation and revelry.”

 

Web Gem

Compare Your Country/ This interactive OECD site lets you contrast by nation the shares of income going to the top and bottom 10 percent — and much more. .

antidotes to inequity

A new effort to resuscitate the estate tax — the only federal tax levy on grand fortune — will open this week when U.S. senator Bernie Sanders, the Vermont independent, introduces an improved version of his Responsible Estate Tax Act. The legislation raises the tax on estates worth between $10 million and $50 million to 50 percent and the rate on estate value over $50 million to 55 percent. Also included: a 10 percent surcharge on the value of estates worth over $1 billion. Under the legislation, only the richest 0.3 percent of Americans would face a tax levy on the estates they leave behind. The legislation, notes Sanders, also closes the loopholes that have allowed America’s wealthiest “to avoid paying an estimated $100 billion in estate taxes since 2000.”

 

Take Action
on Inequality

Urge your U.S. senator to become a cosponsor of the Responsible Estate Tax Act, the Bernie Sanders bill to restore a real check on dynastic fortunes.

inequality by the numbers

wealth distribution

 

 

 

 

 

Stat of the Week

The Walt Disney company, notes analyst Eleanor Bloxham in Fortune, could have paid all its employees $10,400 more each last year and still booked profits of over $4 billion. Disney CEO Robert Iger took home $34.3 million in 2013.

IN FOCUS

America's Distinctly Unequal Playing Fields

Teenagers are learning lessons — about inequality — on America's high school gridirons. When are their elders going to catch on?

This weekend, in thousands of communities across the United States, millions of Americans will gather for one of the nation’s most time-honored autumn rituals: the high school football game.

Shoulder pads will thump. Spirals will whistle through the air. Cheerleaders will chant. And economic inequality will be the furthest thing from anybody’s mind.

A mistake. Gridiron savvy won’t determine the outcome of many of the games played this weekend. Inequality will. So suggests some quirky new research from analyst Eric Segal for the Massachusetts-based Class Action.

Segal has matched won-loss records for all the high schools in Eastern Massachusetts with the median incomes of the communities the high schools serve. His number crunching has uncovered a clear pattern. Teams from richer towns regularly win. Teams from poorer towns regularly lose.

To be more specific: The top 10 schools by income win over 60 percent of their games. The bottom 10 lose over 60 percent. Not one single school in the bottom 20 by median income has an overall winning record. In Massachusetts high school sports, the “level playing field” has essentially disappeared.

We don’t have any comparable data for the nation as a whole. But the Massachusetts pattern most likely prevails throughout the United States. The reason? Throughout the nation, as in Massachusetts, America’s communities are growing more segregated by income.

Back in 1970, sociologists Sean Reardon and Kendra Bischoff have detailed, 65 percent of America’s families lived in “middle-income” situations, in neighborhoods where incomes ranged from 80 to 125 percent of the median, or most typical, income of the larger metro area.

By 2008, only 43 percent of U.S. families lived in middle-income neighborhoods.

Meanwhile, over that same four-decade span, the share of families living in either predominantly poor or rich neighborhoods soared over 60 percent.

A generation ago, in other words, most high school football games pitted teams from school districts with similar income bases. Today's games don't. High school games these days are routinely pitting teams from communities with ample resources against communities without.

That’s not fair, of course, to the kids involved. But if our contemporary economic segregation only led to lopsided scores at high school football games, we could as a society probably survive quite nicely.

Our increasing economic segregation, unfortunately, wreaks havoc on much more than the games our kids play. The more we live starkly divided in rich and poor neighborhoods and communities, researchers Sean Reardon and Kendra Bischoff point out, the more unequal our exposure to crime and pollution and other social and environmental hazards.

The more economically segregated our communities, economist Joseph Stiglitz adds, the more unequal our exposure to economic opportunity.

The poor increasingly can't afford to live where the jobs may be, Stiglitz explains. They have to somehow manage to get from their own neighborhoods “to part-time, low-paying and increasingly scarce jobs at distant work sites.”

“Combine this urban sprawl with inadequate public transportation systems,” the Nobel laureaute notes, “and you have a blueprint for transforming working-class communities into depopulated ghettos.”

We experience economic segregation on a myriad of different fronts, agrees David Dante Troutt of the Rutgers Center on Law in Metropolitan Equity. We “see it in the quality of local schools and their test scores, smell it in the access to healthy food or not, feel it in a sense of safety or danger as we walk the streets.”

Overall, economist Rebecca Diamond from Stanford's Graduate School of Business has just calculated, the sort of “economic well-being inequality” that Troutt evokes increased 67 per cent between 1980 and 2000. If current trends continue, she predicts, “you’re going to see even more segregation.”

The most powerful of these trends? That would be, argue sociologists Reardon and Bischoff, “the rapid growth in income inequality in the United States.”

The more income concentrates, the two researchers note, the more those with the most income concentrate themselves geographically. The more they isolate themselves, the less they interact with people of less affluent class backgrounds. The less they interact, the less willing they become “to invest in shared public resources or to support equality-generating social policies.”

We wind up with school districts that can’t afford to field high school sports teams unless students pony up $600 per season to participate. And we could wind up, New York Times analyst Eduardo Porter observes, with much worse.

“Growing inequality of income,” Porter wrote last week, “could become the last nail in public education’s coffin” as residential segregation “cordons off rich school districts from the poor and reduces support for public education among the wealthy Americans who can opt out.”

We can certainly slow this segregation, David Dante Troutt of the Center on Law in Metropolitan Equity relates, with targeted policy reform initiatives.

Tax base revenue sharing, for instance, can “help struggling areas enjoy the benefits of regional growth.” Inclusionary zoning — requiring developers to set aside a share of new housing for lower-income families — can “embed affordable housing” into more affluent communities.

But if income inequality writ large keeps increasing, resistance to strategies like these will only get more potent. Segregation now. Segregation forever.

 

New Wisdom
on Wealth

James Laxer, Scottish referendum: World’s first vote on economic inequality, Toronto Globe and Mail, September 9, 2014. London's wealthy elite lords over Britain.

Robert Weissman, Is There a Billionaire Cancellation Effect? Huffington Post, September 10, 2014. Billionaire Republicans and billionaire Democrats do not cancel each other out. They comprise plutocracy.

Steve Fraser, Playing God: The Rebirth of Family Capitalism or How the Koch Brothers, Sheldon Adelson, Sam Walton, Bill Gates, and Other Billionaires Are Undermining America, TomDispatch, September 11, 2014.

Richard Eskow, 5 Reasons The SEC’s Executive-Pay Rules Matter — And 5 Ways to Use Them, Campaign for America's Future, September 11, 2014. On the SEC's upcoming CEO-worker pay ratio disclosure mandate.

David Cay Johnston, How Corporate CEOs Get Rich off of Taxes, Newsweek, September 12, 2014. Imagine if your every paycheck came with a zero-interest loan from Uncle Sam. That’s the deal America’s CEOs have cut.

Newsweek cover

Charlie Cray and Peter Montague, The Kingpins of Carbon and Their War on Democracy, Greenpeace, September 2014. To stop global warming, we'll have to overcome the billionaire campaign against progressive government

Lars Osberg, Is Education the Answer to Income Inequality? Inequality.Org, September 12, 2014. Don't expect education to solve the problem of rising inequality anytime soon.

 

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

Read the intro to Too Much editor Sam Pizzigati's gripping history of the forgotten triumph over America's plutocracy 1.0.

new reads

Thinking Fairness, Thinking Wealth Tax

mansionRichard Lavoie,  Dreaming the Impossible Dream: Is a Wealth Tax Now Possible in America? University of Akron School of Law Legal Studies Research Paper No. 14-01, March 2014.

Goldburn Maynard Jr., Addressing Wealth Disparities: Reimagining Wealth Taxation as a Tool for Building Wealth, Denver University Law Review, April 2014.

These two new papers offer us a window into the stimulating new scholarship now breaking out around taxing grand concentrations of private wealth.

Legal scholar Richard Lavoie makes the case for subjecting these concentrations to a 10 percent annual assessment. That 10 percent levy — an “Equality Tax” — could kick in on assets over $500 million.

The purpose of the tax: to establish, as a societal value, “that for the health of society, no individual should accrue wealth beyond a certain point.”

Goldburn Maynard shows us how current tax policies — on everything from mortgage interest deductions to retirement accounts savings — primarily help those with wealth amass more of it. He offers a gameplan for reorienting the estate tax into a wealth-building tool for those without wealth.

Among his suggestions: Cap the deduction current estate tax law gives the rich for charitable contributions at 50 percent of their estate value. Allow uncapped deductions only for bequests “targeted to help the nonwealthy build wealth.”

 

 

 

Enjoy Too Much? Email
this issue to a friend who
might like Too Much, too

 

About Too Much

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.

Subscribe to Too Much

Forward to a Friend