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

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February 2015

This Month

At last month’s World Economic Forum in Davos, the annual confab of our planet’s most fabulously rich, the billionaire Jeff Greene had some words of advice for the rest of us. The “lifestyle expectations” of average Americans, Greene pronounced, have climbed “far too high and need to be adjusted so we have less things and a smaller, better existence.”

Greene himself, one bemused observer quickly noted, just happens to own three mansions in Los Angeles, two more in Palm Beach and the Hamptons, and “a 145-foot party yacht called Summerwind that once severely damaged a protected coral reef off Belize.”

A question: Should we be ridiculing the hypocritical excess of billionaires like Jeff Greene — or worrying about it? Count economist Robert Frank in the worry column. The massive consumption of our deepest pockets, he has argued in a string of classic books on our great divide, may be the most difficult obstacle between us and a “smaller, better existence.”

In this month’s Too Much, an interview with Robert Frank — and plenty more, too, on our unequal world and what we can do to fix it

 

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Images of Inequality

Burkle penthouse

Billionaire venture capitalist Ron Burkle paid $17 million eight years ago for this Manhattan penthouse with “soaring 17-foot-tall ceilings.” Now Burkle has just put the triplex on the market for $37 million. The buyer will get five bedrooms, six and a half bathrooms, two kitchens, a mahogany library, and a heated rooftop pool. Burkle also owns four homes in Southern Cal, a pair in Mexico, and still another in London.

 

Greed at a Glance

The most expensive home in Beverly Hills, an eight-bedroom manse that just sold for $70 million, features an onyx dining room table for 24 — along designer place settings that cost $3,700 each.

The latest must-have amenity in ultra-luxury New York condos: a Turkish-style “hamam” complete with plunge pool, steam room, dry sauna, and both ribcage and “deluge” shower. Never been in a deluge shower? Think, says one hamam pro, a “bucket with a lever.”

In 2012, Boat International reports, global deep pockets shelled out $2.5 billion for 270 new super yachts. They bought 355 boats over 100 feet in 2013 and spent $3.7 billion for 412 more in 2014.

Inequality by the Numbers

February infographic

 

Stats of the Month

In 2014, the world’s richest 1 percent held 48 percent of global wealth. By the end of next year, a new Oxfam analysis projects, the top 1 percent will own more wealth than the entire bottom 99 percent combined.

Insurer giant Aetna has announced plans to hike all employee pay to a $16 per hour minimum. The boost will cost Aetna $25 million in 2016. Total 2013 Aetna CEO pay: $30.7 million.

America’s top 0.01 percent — taxpayers making over $8,460,500 — pulled in 4.48 percent of the nation’s income in 2013, an analysis of new IRS data shows. The top 0.01 percent share in 1978: over five times less, only 0.86 percent.

Target is pulling out of Canada. The retailer’s 17,600 newly jobless Canadian workers will collect $59 million in severance. Gregg Steinhafel, the CEO Target fired last May, walked off with $61 million.

The 100 biggest campaign donors in the 2014 U.S. elections gave $323 million, notes Politico, almost as much as the $356 million pols took in from the 4.75 million under-$200 donors.

Time Warner Cable CEO Rob Marcus stands to collect a $79.9 million “golden parachute” once Comcast completes its merger takeover of his company. Marcus became Time Warner CEO just two months before the merger deal’s announcement.

The Too Much Interview

Our Grand Fortunes, Our Grand Waste

Good things trickle down from the top, cheerleaders for grand fortune like to argue, when wealth concentrates. In real life, suggests economist Robert Frank, growing inequality makes things worse even for its ostensible beneficiaries.

Robert FrankCornell University economist Robert Frank can do grand theory. He has authored textbooks on both micro and macro economics, including two with fellow economist Ben Bernanke, who would later go on to chair the Federal Reserve Board.

But Robert Frank can also zero in on the most mundane aspects of our daily lives. Why, for instance, do we spend so much time stuck in traffic commuting — and hit so many potholes? Big picture, little picture. Frank has explored both. What drives his exploring? A deep concern, as scholar and citizen, about our widening inequality.

What’s concentrating wealth in America today? What impact is this concentrating having on us? In vividly titled books like The Winner-Take-All Society and Luxury Fever, through engaging columns and op-eds in the popular press, Frank has been working for decades to shove these questions onto the public agenda.

From his office high above Cayuga’s waters in upstate New York, Frank spoke recently with Too Much editor Sam Pizzigati about the promise of a less unequal world — and the prospects for it.

Too Much: You’ve noted that inequality today is “feeding upon itself.” What do you mean?

Robert Frank: I have in mind mainly the process where labor market advantages get translated from parents to children. Top jobs today pay much more than they used to, and the competition to get them has become much more intense.

Credentials naturally play a bigger role in determining who has a shot at these jobs. If you want to be an analyst for JPMorgan — which 90 percent of the graduates from Princeton seem to want to be when they finish their education — having a resume that says Princeton on it gives you a way better shot at landing an interview with JPMorgan than if you’ve come from Slippery Rock State . . .

Read the full Too Much interview . . .

 

Quotable

“We are tired of people talking about inequality as if nothing can be done.”
Richard Trumka, AFL-CIO president, Raising Wages summit, January 7, 2015

“A lot of people here feel they’re a failure if they haven’t made a few million by the time they are 25.”
Glenn Elliott, former Google compensation manager, Bloomberg, January 9, 2015

“The giant that must be slayed is income inequality — where some few have far too much and the many have too little.” 
Archbishop of York John Sentamu, January 13, 2015

“Will we accept an economy where only a few of us do spectacularly well?”
Barack Obama, State of the Union, January 20, 2015

“I know hedge fund managers all over the world who are buying airstrips and farms in places like New Zealand because they think they need a getaway.”
Robert Johnson, a former hedge fund director, at the Davos World Economic Forum, January 23, 2015

“Running for office shouldn’t be a job defined by permanent begging at the feet of the wealthiest donors in the country.”
Zephyr Teachout, Fordham University professor of constitutional law, New York Times, January 26, 2015

Petulant Plutocrat of the Month

Jamie DimonJPMorgan CEO Jamie Dimon is complaining again. He told reporters last month that banks like his have come “under assault.” JPMorgan, he sputtered, has “five or six regulators coming at us on every issue.” One reporter asked for details. Replied Dimon: “Are you kidding?” Actually, details would be nice. JPMorgan has refused requests from Dow Jones MarketWatch for a list “of all the legal settlements the nation’s biggest bank has been forced to enter in recent years.” Among the assorted scandals that have made the public record: JMorgan’s manipulation of energy markets, frauds on mortgages and credit cards, and currency rigging. The billions JPMorgan has payed in fines don’t seem to have hurt Dimon too much personally. The CEO, we learned last month, took in $20 million last year.

 

Plutocrats at Play

On the private Caribbean island of UK super CEO Richard Branson, visitors who pay $29,000 for a week’s stay can hit environmentally friendly golf balls out into the ocean. The balls, made of fish food, eventually dissolve.

At Masa, the most expensive restaurant in Manhattan, dinner for one — before tax, tip, and drinks — now runs $450.

Antidotes to Inequality

On Capitol Hill, Signs of Shifting Times?

Two new anti-inequality packages have surfaced on Capitol Hill. Neither has any chance of passing into law this year. But both may help frame the political debate in the 2016 elections.

The more visible of the two, the tax proposals in President Obama’s new federal budget submission, would raise taxes on capital gains income and eliminate the “step-up” loophole that lets America’s wealthiest avoid paying capital gains taxes on their assets.

These and other elements of Obama’s tax reform, the Tax Policy Center estimates, would lower taxes on families earning $25,000 or less about $175 a year and raise taxes on the nation’s top 0.1 percent — households making at least $3.4 million a year — by an average $168,000.

Representative Chris Van Hollen from Maryland, meanwhile, has proposed “an action plan to grow the paychecks of all, not just the wealth of a few.” Van Hollen’s plan would deny corporations tax deductions on any executive pay over $1 million if their workers aren’t getting pay hikes “that reflect increases in worker productivity and the cost of living.”

Also appearing in the Van Hollen package: a “financial transaction tax” on Wall Street speculation that matches a pending European tax plan.

Van Hollen serves in the Democratic Party’s House leadership. His new initiative, suggests one analyst, could signal that at least some top Democrats realize that trying to play nice with Wall Street, the economy’s “800-pound gorilla,” ensures ever-widening inequality.

 

Peasants
with Pitchforks

University students in the UK staged protests last month to raise awareness about the “grossly unequal distribution of wealth on our campuses.” They’re calling for a 5:1 pay ratio between the highest and lowest paid at all UK colleges.

Over 150 executives have resigned from Egypt’s banks in the wake of a new decree that sets a maximum on public sector pay at 35 times the minimum wage. Most Egyptian banks sit in the public sector. The new maximum: about $6,000 per month. Maximum wages for both the public and private sector emerged as a key demand during Egypt’s Tahrir Square protests.

 

 

 

Reports

Who Pays reportWho Pays? A Distributional Analysis of the Tax Systems in All Fifty States, Institute on Taxation and Economic Policy, January 2015

In virtually every state, the fifth edition of this state tax analysis shows, “the lowest fifth of earners pay a greater share of their incomes toward state and local taxes than the next three-fifths and considerably more than the top 1 percent.”

In 2015, the study calculates, Americans in the nation’s poorest fifth will average 10.9 percent of their income in state and local taxes. The top 1 percent? They’ll average just 5.4 percent.

Justin Wolfers and Jan Zilinsky, Higher Wages for Low-Income Workers Lead to Higher Productivity, Peterson Institute for International Economics, January 13, 2015

This review of the economic research literature shows that higher wages for workers pay dividends for corporations in all sorts of ways, from attracting more capable staff and reducing turnover to enhancing customer service and reducing absenteeism.

So why are corporations today so consistently shortchanging workers at pay time? This report doesn’t explore that question. But a recent analysis by former U.S. labor secretary Robert Reich does. Low worker pay, he points out, does pay dividends — for CEOs and Wall Street.

CAP commission reportReport of the Commission on Inclusive Prosperity, convened by the Center for American Progress, co-chairs Lawrence Summers and Ed Balls, January 2015

The New York Times has dubbed this blue-ribbon study “the first draft” of an agenda for Hillary Clinton’s 2016 White House bid, and this “first draft” offers lots of useful insight on the developed world’s “toxic combination of too little growth and rising inequality.”

But the report never stops to ponder a deeper question: What kind of democracy lets wealth concentrate in so few pockets and does so precious little to help its struggling majority? This hesitation to probe plutocracy, notes one Inequality.org analysis, rates as a serious blindspot.

Deborah Hardoon, Wealth: Having It All and Wanting More, Oxfam, January 2015

The global charity Oxfam released this latest look at the global 1 percent’s outsized share of the world’s wealth on the eve of the annual summit of the rich and powerful at the Davos ski resort in Switzerland.

The report’s most spectacular stat — that 80 billionaires now have as much wealth as our planet’s poorest half — went viral almost immediately. That stat also drew some big-time policy wonk pushback.

But Oxfam has survived that challenge, and that should help bring even more attention to the group’s landmark ongoing Even It Up campaign to shear the super rich down to democratic size.

Estelle Sommeiller and Mark Price, The Increasingly Unequal States of America: Income Inequality by State, 1917 to 2012, Economic Policy Institute, January 26, 2015

The best numbers on U.S. inequality by state have come, over recent years, from the Economic Policy Institute. But the U.S. Census data behind those numbers didn’t allow EPI researchers to calculate income shares for any group loftier than the top 5 percent.

Now EPI’s state research network has just come out with new figures that reflect the tax return-based methodology that economists Thomas Piketty and Emmanuel Saez have applied to the United States as a whole.

The result: some eye-opening stats on top 1 percent incomes by state. In 2012, top 1 percenters in New York and Connecticut averaged incomes over 48 times greater than the bottom 99 percent.

 

New Wisdom
on Wealth

David Cay Johnston, Inequality damages marriage, Al Jazeera, January 6, 2015. Wedded bliss as an elite privilege.

Julie McDowall, The Super Rich And Us, The Herald, January 8, 2015. On the arrogance of the ultras.

Henry Grabar, The Uber-ization of Everything, Alternet, January 11, 2015. Waiting lines demand the only thing we all have in equal measure: time.

Joanna Scutts, Portrait of the Artist as a Dying Class, In These Times, January 15, 2015. In an unequal America, we’re losing the middle-class jobs that help creative scenes thrive.

Suzanne Moore, Inequality isn’t inevitable, it’s engineered, Guardian, January 20, 2015. Think deregulation, privatization, safety net cuts, and attacks on worker rights.

Seumas Milne, The Davos oligarchs are right to fear the world they’ve made, Guardian, January 22, 2015. We need a new balance of social power, not crocodile tears about inequality.

Sean McElwee and Liz Kennedy, The true cost of Citizens United, Salon, January 24, 2015. In 1980, the top U.S. political donor gave $1.7 million. The 2012 top donor gave $150 mil.

Chris Dillow, Marginal product and incomes, Stumbling and Mumbling, January 28, 2015. Academics and CEOs can have similar skill levels, but enormously different incomes. Five reasons why.

 

Now featured on
Inequality.org

Too Much editor Sam Pizzigati on the kerfuffle over global wealth stats . . .

Peter Marcuse on the language of inequality . . .

Sarah Anderson on distracting public attention from taxing Wall Street

Sign up for updates
on Inequality.org postings

 

 

 

 

 

Retorts

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

The claim: The poor live on easy street. New polling from the Pew Research Center shows that a majority of America’s most affluent believe that “poor people today have it easy because they can get government benefits without doing anything in return.”

The reality: The poor, notes this New York Times survey of recent research, don’t walk anywhere close to easy street. They face “the soul-rending omnipresence of worry and fear, of weariness and fatigue.”

A majority of our most affluent believe that ‘poor people today have it easy.’

That fatigue comes in part, the U.S. Bureau of Labor Statistics details, from working at jobs that don’t pay enough to keep families above the poverty line. More weariness, points out the St. Louis Federal Reserve, comes from a financial industry that subjects low-income households to as much as $1,200 in annual service fees.

Add in municipalities that “profit from police departments targeting poor communities” with a raft of stops, fines, and summonses, and you have more than enough, observes one analyst, to reveal the claim that poor have it easy as a fantasy of “the willfully callous and the haughtily blind.”

The claim: Income distribution — how we divvy up the economic pie — doesn’t really matter. We just need to concentrate on growing that pie.

The retort: Economic growth, the Global Justice Now campaign notes in a new look at the great economic policy myths of our time, offers no panacea, as the examples of Nigeria and Nepal show quite neatly.

Nigeria is booming, with the economy up 12-fold since 2001. Nepal is growing more slowly, up just 3.9 percent annually over the same span. But the more equal Nepal has plenty to show for its greater equality.

Elementary school enrollment in Nepal has soared by 42 percent, and the number of people living in poverty has dropped by over half. In deeply unequal Nigeria, meanwhile, the poverty rate has dropped, too, but only from 63 to 62 percent.

 

Take Action
on Inequality

Stretch your sense of what’s possible in the world today. Check out the egalitarian options the Real Utopias Project is highlighting.

 

What to Watch

Now available online: Videos of all the key talks at last month’s Creating Common Good conference in New York’s historic Trinity Church, including addresses by Cornel West, Barbara Ehrenreich, and Juliet Schor.

Watch your local movie listings for The Price We Pay, a new documentary that beguilingly explores the dynamics of inequality through the prism of high finance and tax havens

A richer world, but for whom? A new BBC two-part series, The Super Rich and Us, examines the winners and losers of our unequal world.

 

 

Books

The DivideThe Divide: American Justice
in the Age of the Wealth Gap

Matt Taibbi (Spiegel & Grau, 2014, 412 pp)

Statistics can help us understand inequality, but not as well as real-life stories. We need our storytellers. We need Matt Taibbi.

Many Americans first chanced upon Taibbi’s reportage when he was covering — blistering — the crimes of our banksters in the pages of Rolling Stone. In this new book, Taibbi shifts his attention somewhat, from the crimes of the comfortable to how we treat crime in America, the offenses of both rich and poor.

Taibbi wrote this book before Ferguson, but you don’t have to read all that many pages to start feeling that he wrote it to explain an eruption of protest that he knew had to be coming.

In an increasingly unequal America, Taibbi writes early on in The Divide, “we have a profound hatred of the weak and the poor, and a corresponding groveling terror before the rich and successful, and we’re building a bureaucracy to match those feelings.” 

Our criminal justice system criminalizes poverty and immunizes wealth.

This criminal justice bureaucracy, Taibbi notes, operates “to criminalize failure, poverty, and weakness on the one hand, and to immunize strength, wealth, and success on the other.”

In our criminal “justice” system, “common city courts become factories for turning poor people into prisoners, while federal prosecutors on the white-collar beat turn into overpriced garbage men, who behind closed doors quietly dispose of the sins of the rich for a fee.”

“If you grew up well off,” Taibbi adds, “you probably don’t know how easy it is for poor people to end up in jail, often for the same dumb things you yourself did as a kid.”

“And if you’re broke and have limited experience in the world,” he continues, “you probably have no idea of the awesome criminal capers that the powerful and politically connected can get away with.”

Want to know what you don’t? Read Matt Taibbi’s stories.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rich Don't Always Win

Someday, union organizer Mother Jones predicted in 1910, we’ll see that the “giants of industry” aren’t really giants. They just “seemed so because we were on our knees.”

How did Americans get off their knees? You’ll find that tale in Too Much editor Sam Pizzigati’s gripping history of the triumph over America’s original plutocracy. Read the intro online.


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

 

 

 

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