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

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September 2015

This Month

How unprecedentedly intense has the economic inequality that surrounds us become? This intense: We’ve had to invent all sorts of new words to help us more accurately describe life in our unequal age.

Luxury realtors are propagating one such new word. They’re gushing about “glomads,” a somewhat grating contraction for “global nomads.”

Glomads, explains realtor Zoe Rose, “tend to rent in different places across the world.” They live “a sociable, exciting lifestyle” and think nothing of spending $7,500 a week — and more — for just the right accommodations. And to guarantee they get those just-right spots, they’ll put down deposits that can average $75,000 in our poshest precincts.

If your daddy owns a billion-dollar fortune, of course, that deposit rates as nothing more than a rounding error. And if your daddy has a trillion-dollar fortune . . . wait, no one has a trillion-dollar fortune. Not yet, at least. Could a trillionaire soon be walking among us? In this month’s Too Much, we tackle that question — and a great deal more.

 

About Too Much

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Images of Inequality

sky pool

Look, up in the sky! It’s a bird. It’s a plane. No, it’s a really rich guy swimming laps in the world’s first glass-bottomed sky pool, now set to be constructed in 2017. The 25-meter-long pool will soar ten stories above street level and connect two new luxury complexes in southwest London. Critics see this new construction as “symbolic of London’s housing problems”: Developers promise to provide affordable housing, then focus on building luxury flats for wealthy foreign buyers. Apartments on either side of the new sky pool will start at $1.28 million each.

 

Greed at a Glance

Realtor Nancy Hardy says no potential buyer has ever asked her how much the cheapest home is going for in the Hamptons, the prime summer getaway for Wall Street’s rich. Her clients, says Hardy, “only want to talk about the most expensive.” The Hamptons median price for a place on a top street: $18 million.

Ultra high net worth individuals — deep pockets worth over $30 million — are flooding the Caribbean these days. The attraction goes way beyond beaches. Barbados and other islands now offer “citizenship by investment.” For a minimum $250,000, ultras can get a passport good for visa-free travel to 130 countries and enjoy dirt-cheap tax rates.

London’s hottest new boutique development may be the four “bespoke luxury apartments” that make up the Gatti House. The units run from $4.7 to $8.6 million. Their most special feature: a “pizza lift” that takes pies from the celebrated Nell Gwynne Tavern straight into each unit’s master bedroom.

Inequality by the Numbers

September Too Much infographic

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Stats of the Month

Since 2004, top U.S. executives have had their companies spend nearly $7 trillion buying up their own corporate stock, an outlay that equals around half of all corporate profits. Buybacks artificially raise corporate share prices and trigger, in the process, performance-based windfalls for top execs.

Who gets more cash from Yale’s endowment, students or the private equity fund managers hired to invest the university’s money? Not even close! Private equity kings pulled in $480 million in fees last year from Yale. The endowment, notes analyst Victor Fleischer, provided all of $170 million to Yale students.

What the Center for Responsive Politics calls the “political 1 percent of the 1 percent” — just 31,976 Americans — gave $1.2 billion, or 29 percent of all disclosed spending in the 2014 congressional elections, up from 25 percent in 2012 and 21 percent in 2010.

Out of nearly 4 million grants made by U.S. foundations since 2004, notes Foundation Center president Brad Smith, only 251 in any way reference the word inequality to describe their purpose.

 

 

 

The Too Much Interview

In Search of America’s First Trillionaire

No 13-digit fortune has yet appeared on the horizon. But if we wait until we get close enough to see one, warns wealth analyst Bob Lord, we may find our plutocracy set eternally in concrete.

Bob LordWhite House hopeful Bernie Sanders has been doing his best lately to place America’s “billionaire class” right at the heart of the nation’s political discourse. But Phoenix attorney Bob Lord would like to see us start contemplating the next chapter in the ongoing concentration of America’s wealth: the emergence of our first trillionaires.

Lord doesn’t stand alone. Other observers also see trillionaires — billionaires a thousand times over — in our future. Last year, for instance, CNBC explored whether America’s first trillionaire might arrive in time for that network’s 2039 50th anniversary.

But Lord may be doing more than any other analyst to track the trends bringing trillionaires ever closer. As both an estate planner and an engaged political activist, he has sat front-row to those trends, and his thoughts on them have appeared in the Los Angeles Times, the Arizona Republic, and a variety of other outlets.

Lord currently serves as an associate fellow at the Institute for Policy Studies in Washington, D.C. Last month, he shared his thoughts on trillionaires with Too Much editor Sam Pizzigati.

Too Much: So why do you spend time thinking about trillionaires? We don’t seem particularly close to actually having one.

Bob Lord: I’ll readily admit that I have had kind of a morbid curiosity about whether and when America will see its first trillionaire. But I actually do see a point to trillionaire speculation.

Will the first trillion-dollar fortune come from the mining of near-Earth asteroids?

I find the possibility that one single person or family might control $1 trillion in wealth deeply repugnant, and I think most Americans would feel the same way if trillion-dollar fortunes actually started materializing.

Maybe if we openly talk about that possibility, we’ll all collectively end up saying “enough” — and do what needs to be done to prevent those first trillionaires from emerging. And maybe years ago, if we had done that sort of talking before billionaires started appearing, we wouldn’t have the incredibly unequal United States we have today.

Too Much: Who has the best shot at becoming America’s first trillionaire?

Lord: One simple approach to answering that question would be to identify a billionaire young enough to invest his way to a trillion-dollar net worth during his lifetime. Mark Zuckerberg would be a prime candidate under this approach.

Zuckerberg, the Facebook founder, just turned 30. Last September, Forbes put his net worth at $34 billion, up from $19 billion the year before. The Bloomberg Billionaires database now puts his net worth at about $60 billion.

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

 

Quotable

“I recommend we stop using the term ‘contributions’ to describe the campaign spending of oligarchs and start using the term they themselves often use: ‘investments.’ The very rich invest to change the rules in their favor. And they expect, and often receive, a remarkably high return on their investment.”
David Morris, Common Dreams, August 12, 2015

“Nearly every person I worked with, I saw cry at their desk.”
Bo Olson, former Amazon white-collar employee, explaining the brutally competitive office culture fostered by billionaire Amazon CEO Jeff Bezos, Inside Amazon: Wrestling Big Ideas in a Bruising Workplace, New York Times, August 16, 2015

“Rebuilding a political movement means espousing what is desirable, then finding ways to make it feasible. The hopeless realists propose the opposite. They assemble a threadbare list of policies they consider feasible, then seek to persuade us that this package is desirable.”
George Monbiot, Guardian, August 18, 2015

“Judging by the speed at which U.S. billionaires are going unfiltered on the airwaves and in print, the U.S. may soon find itself indelibly defined as a nation of well-heeled meatheads.”
Pam Martens and Russ Martens, U.S. Billionaires Are Boosters for the Ugly American Brand, Wall Street on Parade, August 20, 2015


Petulant Plutocrat of the Month

Michsel BloombergMichael Bloomberg, the billionaire ex-mayor of New York, is back running, his way, the media empire that made him his fortune. At one recent staff meeting, Bloomberg mused that maybe his company, an operation that gets most of its revenue from data terminals Wall Streeters pay dearly to access, didn’t need a Web site. Veteran Bloomberg staffers know their boss often utters such provocative comments. Most also know he expects deference. Joshua Topolsky, a noted designer hired to redo the Bloomberg web site, didn’t. He “responded sarcastically” to Michael’s musings. A “furious” Bloomberg had Topolsky axed. About 100 other staff, the New York Post reports, are also expecting the heave-ho as Bloomberg shifts his company’s focus to subjects that interest his “wealthy corporate readers.”

 

Plutocrats at Play

Excess over the ears: A Southern California firm is now marketing personalized headphones that merge “jewel-grade 3D printing with consumer electronics” — at $40,000 a pop.

What goes well with bejeweled headphones? How about a taste of the world’s most expensive wine? The Richebourg Grand Cru is now going for $15,195 a bottle.

Antidotes to Inequality

Executive Orders Could Redefine CEO Pay

Publicly traded U.S. corporations, starting in 2017, will have to calculate the ratio between their CEO and typical worker compensation and then publicly disclose that ratio number. Under the new regulations the Securities and Exchange Commission adopted last month, we’ll likely see the first wave of disclosures in spring 2018.

How soon before we see Congress link these new ratios to legislative action designed to rein in over-the-top CEO pay? That’s anybody guess.

But President Obama — or his successor — doesn’t have to wait until Congress acts. The White House could issue an executive order that builds CEO-worker pay ratios into the federal procurement process.

An executive order could deny federal contracts to firms with huge CEO-worker pay gaps.

One direct approach would be to deny federal contracts to firms that pay their CEOs over 100 or 200 times more than their median workers. An alternative would be an executive order that gives companies bidding for government contracts a “preference” in the procurement process if they have only modest gaps between CEO and worker pay.

The White House is already issuing executive orders in other pay-related areas. President Obama has used these orders to raise the minimum wage federal contractors must pay to $10.10 an hour, and his administration is also moving to require contractors to offer their employees sick leave.

More antidotes: The top candidate to become the next leader of the UK Labour Party is calling for a national “maximum wage.” Jeremy Corbyn, a current member of Parliament, told an interviewer last month that he considers capping income an important “philosophical question.” Why do “bankers on massive salaries require bonuses to work,” he asks, “while street-cleaners require threats to make them work?”  

Let’s deny corporate directors their fees if shareholders reject their CEO pay plans.

Corporate CEOs, technically, don’t set their own sky-high pay. They have corporate boards of directors do that dirty work. This board service pays well, an average $250,000 for showing up at 10 or so meetings a year. Economist Dean Baker is proposing that corporate directors get not one cent of these generous annual stipends if shareholders vote to reject their company’s CEO pay package. Shareholder “say on pay” votes, required by the 2010 Dodd-Frank Act, currently only count as advisory.

We have the wrong people on stage during presidential candidate debates, says nationally syndicated columnist Jim Hightower. In today’s political universe, Hightower explains, the opinions voters really need to know come from the handful of billionaires who bankroll most all of the candidates. These big contributors, says Hightower, enjoy “putting enormous piles of chips on a name in hopes of getting lucky, then cashing in for governmental favors.” Adds Hightower: “Why not put them on stage and make each one answer pointed questions about what special favors they're trying to buy?”

 

Take Action
on Inequality

Check out 99% Rise, a new effort to build a nationwide movement to get big money out of American politics through nonviolent action.

Peasants
with Pitchforks

For those who don’t have the strength to carry a pitchfork, how about a self-inking stamp you can use to imprint a message on your money? Designed by activists at the Other 98%, this spring-loaded stamp prints on your dollar bills a timely protest against billionaire domination of the the 2016 election season. Reads the red-ink message: “Not to be used for bribing politicians.”

Reports

A look at major new studies

Why Didn't Higher Education Protect Hispanic and Black Wealth?
Center for Household Financial Stability
at the Federal Reserve Bank of St. Louis, August 2015
William Emmons and Bryan Noeth

In the struggle against economic inequality, education has often been the first refuge of scoundrels. We don’t need to challenge inequitable distributions of income and wealth to help people get ahead, apologists for inequality assure us. We just need to help people get more education.

Fed CenterBut more education — specifically, the earning of a college degree — hasn’t been helping black and Latino households outlast the recessions of recent years.

Indeed, report Fed Reserve Bank of St. Louis researchers William Emmons and Bryan Noeth, the median net worth of black Americans with a college education since 1992 has dropped by substantially more than the median net worth of black households without a college degree.

By contrast, the net worths of white households with college degrees have increased since 1992, while the net worths of white households without college degrees have fallen.

What explains this stark contrast? Debt.

Minority households with college educations had to borrow heavily to achieve middle class status before the Great Recession hit in 2008. They had to borrow heavily because their parents and grandparents had precious little wealth to share with them — to help pay college tuition, for instance, or put down a bigger downpayment on a home.

Prior family wealth, in America today, still powerfully shapes future family wealth.

And these older minority generations had little wealth, in turn, because public policies on everything from housing to banking, combined with widespread employment discrimination, had made accumulating wealth oppressively difficult for most minority households.

Against that history, suggests the new Emmons and Noeth St. Louis Fed study, “higher education cannot level the playing field.”

Adds one analyst of the study, Duke Consortium on Social Equity’s William Darity: “Prior family wealth shapes both income-generating opportunities and the capacity to allow wealth to grow more wealth.”

The Color of Money
Every Voice Center, August 2015
Tam Doan

America’s political system, notes former President Jimmy Carter, has become an “oligarchy” with “unlimited political bribery.” And the super rich making those bribes live in a remarkably small number of neighborhoods, finds a new report from the Washington, D.C.-based Every Voice Center.

Half the $74 million in large individual donations to the 10 presidential candidates so far leading the 2016 money race have come from just 1 percent of U.S. zip codes. Big donors from the six poshest zip codes of Manhattan gave more to these 10 presidential candidates than all 1,200 majority African-American zip codes in the entire United States.

 

New Wisdom
on Wealth

Sarah Anderson, This is why your CEO makes more than 300 times your pay, Fortune, August 7, 2015. Let’s award more government contracts to firms with decent CEO-worker pay ratios.

Robert Reich, The Outrageous Ascent of CEO Pay, August 9, 2015. Let’s also tax firms at higher rates if they overpay their CEOs at worker expense.

Sam Pizzigati, A Welcome New Yardstick for Measuring CEO Greed, TruthOut, August 12, 2015. On the significance of the latest SEC CEO pay regulations.

Chris Dillow, Inverting the rhetoric of inequality, Stumbling and Mumbling, August 16, 2015. Who really rate as “risk takers”?

Scott Klinger, Meet You in the Pitchfork Aisle? Center for Effective Government, August 17, 2015. On the inanity of one prominent solution to inequality.

Paul Krugman, Republicans Against Retirement, New York Times, August 17, 2015. What explains the attacks on Social Security by GOP White House hopefuls? The clout of rich donors.

Ravi Kanbur and Joseph Stiglitz, Wealth and income distribution: New theories needed for a new era, Vox, August 18, 2015. On the emptiness of limiting the struggle against inequality to "equality of opportunity."

Edward Frame, Dinner and Deception, New York Times, August 22, 2015. Serving elaborate meals to the ultra rich: a moving memoir.

Andy Borowitz, Sentiment Building to Deport Nation’s Billionaires, New Yorker, August 24, 2015. They don’t pay taxes. They circumvent our laws. They get free stuff from the government.

Retorts

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

The claim: In a free market, talent gets rewarded.

So asserted last month a Chicago Tribune editorial defending contemporary American corporate CEO pay. Top execs “get the mega paycheck,” the Trib pronounced, because “few people have the skill to run a complex, global, multibillion-dollar corporation.”

If so few folks have real CEO talent, why don’t firms try to steal today’s best CEOs?

Former U.S. senator Ted Kaufman from Delaware could hardly agree less. In a new analysis, Kaufman blows away the rationalizations that apologists for executive excess like the Trib regularly trot out.

Do corporate boards, for instance, shell out the big bucks because they fear their prize CEOs will take their highly rare skills someplace else? One recent study of 1,500 companies over 30 years, Kaufman notes, found only 27 instances where a CEO left one company for a top job at another.

If U.S. CEOs owed their good fortune to the natural workings of the free market, adds economist Dean Baker, then all CEOs operating in that market ought to have a shot at equally good fortune. But all CEOs in our globalized world economy don’t have that same shot.

“The fact that well-run and highly profitable companies in Europe and Asia typically pay their CEOs far less than companies in the United States,” Baker observes in a new commentary, “suggests that it is not necessary to have such exorbitant CEO pay to attract competent managers.”

The claim: Inequality need not worry us.

Douglas Holtz-Eakin, John McCain’s former top economic adviser, clearly fancies himself the “go-to guy” for GOP White House hopefuls struggling to find the right conservative line on inequality. Holtz-Eakin last month bestowed upon these candidates an open letter on how to talk about the economy. His main point: “Don’t buy the idea that all inequality is bad.”

Inequality denialism lives on. A top conservative analyst is recycling the old canards.

In fact, Holtz-Eakin insists, average Americans have been doing just fine. So no need to worry about all that wealth concentrating at the top!

Actually, as Los Angeles Times analyst Michael Hiltzik reminded us last month, we have plenty of reason to continue to worry about inequality. Hiltzik neatly dissects the sleight of hand in the major conservative studies that purport to show how well ordinary families have been doing.

Also last month: Frank Clemente, the executive director of the Americans for Tax Fairness Action Fund, does some equally neat dissecting on the “five tax myths” we figure to be hearing in this year’s GOP presidential debates.

 

What to Watch

From the tips of New York's new luxury towers — "safety deposit boxes with a view" — you can see the starkness of contemporary American wealth inequality, via this new BBC video.

Now featured on
Inequality.org

Chuck Collins asks if the rich rule America.

Marjorie Wood looks at the CEO greed pitting elderly Americans against the workers who care for them.

Jim Hightower wonders whether we need a telethon for shamed ex-corporate execs.

Sign up for updates
on Inequality.org postings

 

 

Books

Ursula Hws Digital EconomyLabor in the Global Digital Economy
Ursula Huws
Monthly Review Press, 208 pp.

Four years ago, just after Labor Day, a shocking newspaper exposé revealed the horribly dangerous working conditions in the warehouses of online powerhouse Amazon.

Last month, not long before Labor Day 2015, another shocking newspaper exposé revealed that tension-packed working conditions impact Amazon’s office workers as well. Amazon, this New York Times report concluded, is “conducting a little-known experiment in how far it can push white-collar workers, redrawing the boundaries of what is acceptable.”

But those boundaries, observes UK economist Ursula Huws, are stretching well beyond Amazon. We are seeing worldwide “an erosion of the clear boundaries of the workplace and the workday.”

Mutually reinforcing economic, political, and technological factors, Huws notes in this new analytical collection, have brought about “a sea change in the character of work.” That change — the “idea of work as something unbounded and ‘virtual’” — first started taking root in the 1990s, Huws relates, and has since become routine.

We now have a world “where you cannot know reliably in advance when you will be free and when you will have to work; where you can never say ‘No, that is not my job’ without fear of reprisal.”

Out of this “casualization” of work have come 24/7 tension and stress for workers — and windfalls for their billionaire employers. In the new cyber workspace, we urgently need limits on both.

 

 

Last month’s SEC vote on CEO-worker pay disclosure opens up opportunities for egalitarian legislative action that haven’t been seen since the FDR years. What happened then on the CEO pay front? You’ll find that fascinating and long-forgotten story in The Rich Don’t Always Win, Too Much editor Sam Pizzigati’s compelling history of the triumph over America’s initial plutocracy. Check out the first chapter online, then order at the special publisher’s discount.

RDAW cover

 


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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