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Too Much

THIS WEEK

Simple numbers can sometimes tell incredibly powerful stories, as tax analyst Bob Lord demonstrated once again last week. Start with 100,000, the approximate population of Lansing, Michigan and Burbank, California. Residents of those cities spent about 100 million hours or so working last year.

For that 100 million hours, the Phoenix-based Lord points out, each city’s residents earned about $3.5 billion.

David Tepper last year took home that same $3.5 billion. He labored no more than a few thousand hours — as a hedge fund manager. He spent his working hours shuffling the investments of America’s most financially fortunate.

What kind of nation, Lord wonders, values the work of one individual as much the work of an entire city? We wonder, too. In this week’s Too Much, more musings on the fruits of our labor — and their distinctly less-than-wonderful distribution.

 

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GREED AT A GLANCE

The one thing you’ll never find on Craigslist: a billionaire. So where do deep pockets go trolling online for bargains? They click their way to “POSH,” the online classifieds that come with an annual $24,000 subscription to the Bloomberg terminal. You’ll find these terminals all over Wall Street. Heavy-duty financial industry types simply cannot live without the constantly refreshed Bloomberg market stats. But investment bankers need a little escape time, too, and they can get plenty of it from POSH. Among the recent POSH listings: a dressage horse for $40,000 and a 15th-century Italian castle for just over $27 million . . .

Stanley FischerU.S. Justice Department officials last Monday announced a $7 billion fine on banking giant Citicorp for its “egregious” mortgage misconduct before and after America's 2008 financial meltdown. The reaction in Citi’s executive suites? Relief. Citi shares actually rose in price after the fine went public. Citi execs have plenty of other cause to celebrate. None of them have yet been personally indicted for Citi’s frauds and cover-ups. Nor have they had to disgorge the windfalls they pocketed during the subprime years. Among the windfall recipients: current Federal Reserve vice chair Stanley Fischer, who has of late been speechifying against breaking up America’s biggest banks. Fischer’s three-year stint as a Citi exec helped him build, says Bloomberg News, a personal fortune now worth up to $56.3 million . . .

What’s summering in the Hamptons like? Fantastic sunsets from oceanfront manses that list for $20 million. What’s working a Hamptons summer like — as a nurse or a gardener? Journalist Frank Eltman has just told that not-so-pretty story. Few workers, he notes, can afford to live anywhere close to their jobs in the Hamptons, that stretch of Long Island shore 80 miles east of Manhattan where the awesomely affluent congregate every July and August. Commutes on the traffic-clogged local roads regularly run three hours round-trip. All that wealth in the Hamptons drives up prices on more than housing. Milk and eggs run double the prices elsewhere on Long Island. Southampton’s food pantry is now helping 6,000 people per year. Income disparities in the Hamptons, former pantry director Mary Ann Tupper says simply, have become “tremendous.”

 

 

Quote of the Week

“No state has ever lost revenue by raising taxes on rich people.”
Michael Mazerov, Center on Budget and Policy Priorities, Governing, July 16, 2014

 

PETULANT PLUTOCRAT OF THE WEEK

Paul GosarArizona congressman Paul Gosar likes to tell his constituents that “I live just like the rest of you folks.” He doesn't. Gosar's lawmaker salary alone runs five times his district’s median income. Gosar also owns “substantial real estate,” plus a local business and a dental practice. His total net worth runs north of $2 million. A fortune that “modest” won't by itself, of course, gain Gosar entry into top plutocratic circles. What will: his push last week to slash funding for the IRS. A Gosar House floor amendment to ax the IRS budget by $353 million passed on a voice vote. Gushed Gosar: “I am ecstatic.” Gosar’s move cuts a quarter of the resources the IRS can devote to keeping tabs on tax cheats. The IRS already only audits 0.4 percent of partnership returns, a tax return category near and dear to the hearts of wealthy tax evaders.

 

 

 

 

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IMAGES OF INEQUALITY

John Oliver

Comedian John Oliver, the host of HBO’s Last Week Tonight, last weekend ended his latest charming rant against America’s wealth gap with a brilliant send-up of the rigged lottery the American economy has become. The 14-minute video of Oliver’s performance would quickly go viral online. A little pinched on time? Start watching at the 12:09 point, the beginning of the lottery segment.

 

Web Gem

Against Monopoly/ This research-rich site zeroes in on the intellectual property rackets that contribute so much to the concentration of contemporary corporate power and wealth.

PROGRESS AND PROMISE

Democrats in the U.S. House of Representatives may be getting serious about checking executive pay excess. At least a little. Last week, House Democratic leaders unveiled a package of reforms designed to spotlight what Democrats will accomplish next year if they gain a House majority this November. The package includes a proposal — the “CEO/Employee Pay Fairness Act” — that would deny corporations tax deductions on any CEO pay over $1 million unless “they give their employees a raise.” House Democratic leaders gave no further details on the proposition. The good news here: House Democrats have never before as a group hinted they would in any way support linking tax code provisions on CEO compensation to worker wages. Whether this proposal signifies anything more than rhetorical progress on that front will have to await the details.

 

Take Action
on Inequality

The next great film about inequality, Katharine Round's The Spirit Level, has just finished filming in the United States. Watch the trailer and share the buzz.

inequality by the numbers

Top 1 Percent Wealth Shares

 

 

 

 

 

Stat of the Week

Ex-hospital CEO Herbert Pardes, news reports last week revealed, walked off with $5.6 million in 2012 compensation. The taxpayer subsidy for the Pardes paychecks, economist Dean Baker calculates, equaled 16,800 months of food stamps.

IN FOCUS

Must Modern Economies Nurture Narcissism?

To really take on grandiosity and greed, a new report from a prestigious CEO pay watchdog suggests, we may need to shove onto the global political stage the notion of a maximum wage.

Narcissists don’t happen to be particularly nice people. They preen. They grab. And they never ever really feel our pain.

Narcissists, some fascinating new business school research reminds us, also don’t make for particularly effective corporate CEOs.

This new research — out of the University of Southern California and the University of Arizona — examines the impact of CEO narcissism on corporate tax policies. That impact turns out to be fairly robust. The corporations that America most narcissistic CEOs run seem to be prone to engaging in highly risky corporate tax-avoidance maneuvers.

How did the authors of this new research, Kari Joseph Olsen and James Stekelberg, identify the narcissists in America’s top CEO suites? They used a variety of yardsticks, everything from the pay gap between CEOs and their fellow execs to the prominence of CEO photos in corporate annual reports.

In the end, the two business school researchers had no problem finding a statistically significant subset of CEO narcissists within the Fortune 500. And that hefty number of narcissist CEOs begs a rather obvious question: Do narcissists just naturally gravitate to America’s corporate pay summit or do the incredibly cushy rewards at that summit turn otherwise normal people into narcissists?

Until fairly recently social scientists left that sort of question to philosophers. But recent years have brought a surge of research into the impact of affluence on behavior. Experiments and field observations have shown that upper-crust life may be breeding, as University of California-Berkeley psychologist Paul Piff puts it, “increased entitlement and narcissism.”

None of this, Forbes commentator Elizabeth MacBride suggested last week, would likely surprise Harold McInnes, the former CEO at AMP, the Pennsylvania-based company that rated a quarter-century ago as the world’s largest supplier of electronic connectors and America’s 150th-largest corporation.

MacBride still vividly remembers interviewing McInnes before his 1992 retirement, after the MIT-trained engineer had pledged not to take, as CEO, any more than 14 times the wage of AMP’s lowest-paid worker.

MacBride asked MacInnes why he made that pledge. Excessive compensation, MacInnes told her, can ruin a CEO’s judgment. Indeed, MacBride would soon learn, McInnes considered excessive compensation no less dangerous to a chief executive than an excessive intake of alcohol.

In effect, McInnes saw the narcissism coming — and tried to do his part to derail the onrushing excessive pay engine.

Now we need to do ours. Quickly. America's top CEOs are now pulling down well over 300 times what their workers average.

Where to start? In London last week, Britain's most respected watchdog over executive compensation — the High Pay Centre — released a new paper that spells out eight specific moves that could help modern industrial societies “deliver fairer, more proportionate pay for those at the top.”

Most of the moves on this valuable new list haven’t yet gained much traction in the United States. The High Pay Centre report, for instance, calls for worker representation on all corporate boards of directors and executive pay panels. Taking such a step, the new How to Make Top Pay Fairer report notes, would “bring a degree of ‘real world’ perspective to deliberations on executive pay.”

The boldest proposal on the High Pay Centre list? A cap on executive pay set at a fixed multiple of a corporation’s lowest-paid employee.

“We need to build an economy where people are paid fair and sensible amounts of money for the work that they do and the incomes of the super-rich aren’t racing away from everybody else,” explains High Pay Centre director Deborah Hargreaves, the former business editor at the UK’s Guardian daily newspaper.

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“A maximum pay ratio would recognize the important principle that all workers should share in a company’s success,” adds Hargreaves. “The idea must now be properly debated.”

 

New Wisdom
on Wealth

Christina Wilkie and Joy Resmovits, How the Koch Brothers Are Buying Their Way into the Minds of Public School Students, Huntington Post, July 16, 2014. Price gouging does no harm: The billionaire Koch brothers are now foisting claims like this on U.S. high schoolers.

Mike Stout, 'Market fundamentalism' bad for society, Springfield News-Leader, July 16, 2014. Fundamentalists are concentrating our wealth.

 

 

 

 

 

 

 

 

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

Still looking for that one great read for your summer vacation? Re-energize yourself with Too Much editor Sam Pizzigati's gripping new history of the triumph over America's original plutocracy. Don't forget the online discount.

new and notable

pamphletOn Labor's Indispensability

Richard Wilkinson and Kate Pickett, The importance of the labour movement in reducing inequality, Center for Labour and Social Studies, July 2014

We can have a “fairer and more sustainable future.” But we won’t get one, argues this insightful new pamphlet, unless we see a broad-based renewal of the labor movement.

The weakening of trade unions worldwide over the closing decades of the 20th century, note British social scientists Richard Wilkinson and Kate Pickett, didn’t just open the door to corporate power grabs that have concentrated income and wealth at record levels. This same weakening essentially ended any serious discourse over “how to improve our societies.”

“Politics lost a sense of idealism and the ability to inspire,” note Wilkinson and Pickett, the authors of the landmark 2009 book The Spirit Level: Why Greater Equality Makes Us Stronger. “Attempts at reform became piecemeal, lacking a sense of coherence and direction.”

A revitalized labor movement, the two analysts explain, could help restore that coherence and direction. These pages will speed that revitalization.

 

 

 

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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.

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