Remember that old saw about buying a new car? Any vehicle you buy, the adage goes, will be worth 20 percent less than what you paid as soon as you drive off the dealer's lot. Private jets don't quite work that way. in fact, the demand for private jets has grown so intense, the news last week informed us, that anyone buying a hot ticket like an over $40-million Dassault Falcon 7X can turn around and resell it for a $10 million profit.

Should we be paying any attention to the games rich people play with private jets? The Institute for Policy Studies is going to address that question this coming week with an eye-opening new report on the costs we pay — in everything from wasted time waiting in airports to environmental degradation — for living in a private-jet world.

We'll have a full rundown on this fascinating new study in next week's Too Much. In this week's Too Much, we look back at a remarkable business leader who didn't live long enough to ride in a $40-million jet — and would be aghast, were he with us today, to see anyone rich enough to own one.

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You don't have to look far to find a nation growing more unequal faster than Russia. Try next door. The Ukrainian Korrespondent magazine has just published its third annual list of Ukraine’s 50 wealthiest individuals. In 2007, says the magazine, the Ukraine top 50 saw their wealth nearly double, to $112.7 billion. Together, the top 50 hold a fortune that equals 85 percent of Ukraine's gross domestic product. The combined fortune of Russia's top 50, by contrast, equals only a 35 percent GDP share. The richest of Ukraine's rich: Rinat Akhmetov, a  holding company top gun whose net worth now tops $30 billion. Ukraine's enormous top-heavy concentration of wealth, warns the Ukrainian sociologist Viktor Stepanenko, poses a great “threat to civil society and the country as whole since this doesn’t give the middle class a chance to form.”

Here's a coincidence: The $30 billion that Ukranian kingpin Rinat Akhmetov has amassed just happens to match the exact stash of cash a top United Nations official says the world this year needs “to enable 862 million hungry people to enjoy the most fundamental of human rights: the right to food.” Just $30 billion invested in rural infrastructure, UN Food and Agriculture Organization Director-General Jacques Diouf told the World Food Security conference in Rome earlier this month, could help “lay to rest the specter of conflicts over food that are looming on the horizon.” Another UN rep at the Rome meeting, from the Conference on Trade and Development, heaped a good bit of the blame for the world's growing food affordability crisis on global financial “speculators looking for assets with rising prices.” Added the UN analyst: “It is simply obscene to let greed and speculation cause massive starvation.”

In 2007, the research firm Equilar revealed last week, top oil company executives in the United States saw their median pay jump four times faster than their fellow CEOs — and made over twice as much as the top execs of their foreign oil company competitors. These inconvenient facts haven't stopped flacks for ExxonMobil, Occidental, and other U.S. oil giants. They're continuing to deny that U.S. companies and executives bear any responsibility for higher oil prices. But if Big Oil's chief execs don't bear any blame for higher oil prices, asks CEO pay critic Paul Hodgson of the independent Corporate Library, “why are they getting rewarded for them?”

America's oil company CEOs may be running pay circles around their fellow CEOs, but hold your sympathy for the execs not lucky enough to ply their trade in the oil industry. Pay for the typical big-time U.S. corporate CEO, the Associated Press reports, last year “chugged to yet more dizzying heights.” Typical CEO earnings, over the year, jumped $280,000, despite an economy “choked by a housing market in free fall, layoffs, and soaring prices for fuel and food.” The year's poster-boy CEO? That has to be Jeffrey Mezger, the top exec at KB Home, a Los Angeles builder that lost $930 million last year. Mezger took home $24.4 million, including a $6 million cash bonus for exceeding his performance targets. How could an exec whose company lost nearly a billion dollars exceed his performance targets? The KB board of directors, in its infinite wisdom, measured Mezger's performance on a somewhat less-than-demanding yardstick. Among last year's performance goals for Mezger: improving the company's score on customer satisfaction surveys.

Amid the gloom that passes for economic news these days, South Carolina's Charleston Business Journal had some good cheer to pass along last week. Hip local businesses, the paper gushed, have figured out a strategy for near-sure success. They're “going after wallets that can spend like there’s no tomorrow.” The Tiger Lilly Florist shop, for instance, is now hawking floral arrangements “made with exotic blooms from all over the world.” The cost per arrangment: up to $350. The city's high-end hoteliers are humming along, too. The Wentworth Mansion, a decade-old retreat for the rich, just booked its first “Ten Years of Luxury” anniversary package. Included in the $1,000 price for a one-night stay: a carriage ride, champagne, and truffles. Other local hotel execs see plenty more good days ahead. Notes the Charleston Place's Paul Stracey: “Somebody who’s got a Rolls Royce isn’t going to be worried about the price of gas.”

Quote of the Week

“When the economy is good, it’s difficult to justify the kind of salaries and perks enjoyed by many of America’s highest paid CEOs. When the economy is sluggish, it’s fair to suggest they’re making out like bandits.”
CEO pay unjustified,  editorial, Free Press (Mankato, Mn.), June 18, 2008

New Wisdom
on Wealth

Reuven Hammer, Tradition Today: A utopian vision, Jerusalem Post, June 19, 2008.  An  rabbi describes the biblical Jubilee vision of  “a society of freedom and equality” and argues “that a situation in which there is both great poverty and great wealth contradicts our contract with God.”

Greed Breeds Xenophobia, New Era, editorial, June 20, 2008. Namibia's top paper: “A strong and empowered middle class is the ideal vehicle through which wealth can be distributed and that is what we have to strive to build and not a super-rich elite.”

Tax Policy Center, A Preliminary Analysis of the 2008 Presidential Candidates' Tax Plans, June 20, 2008. A revision of the study profiled in last week's Too Much, where a typo misstated the Obama tax plan's impact on the middle 20 percent of U.S. incomes. This group would average $1,042 in savings.

Tony Paradiso, Good times for CEOs, Nashua Telegraph (N.H.), June 22, 2008. A look at the argument that corporate boards need to pay sky-high to compete for executive talent.

Lobbyists and top executives from the hedge fund and investment banking industries descended upon Capitol Hill en masse last week. Their not-so-secret mission: to put the kabosh on any congressional move to regulate the lucrative speculation that has so pumped up prices at the gas pump.

The hedgies and investment bankers may soon have some more broad-based business lobbying help. The U.S. Chamber of Commerce, the Washington Post reports, is “seriously considering” joining the alliance to keep the world safe for global commodity speculators.

That move, at first glance, make little senses. Higher oil prices are making life more aggravating for the vast majority of businesses the U.S. Chamber of Commerce is supposed to represent. So why is the Chamber even considering a cozy up with the crowd that's raking in billions from higher oil prices?

The answer: The U.S. Chamber of Commerce no longer has much interest in standing up for average businessmen and women. The Chamber has become an ideological warrior fixated on fighting anything that smacks of government “intervention” in the “free market,” be that intervention higher taxes on the rich or regulation of the corporate shenanigans that make the rich richer.

The wealthier the wealthy become, the Chamber firmly believes, the better the business climate for all business people. The sad irony in this stance: Nearly a century ago, a co-founder of the original U.S. Chamber of Commerce believed the exact opposite.

That co-founder, Edward A. Filene from Boston, ranked among the most eminent businessmen of his time. He still ranks high, as a business leader. Indeed, Filene may well be America's most innovative business thinker ever.

Filene began his business career, one of his biographers notes, at a time when standard business operating procedure held “that it is better to sell an article at a profit of one dollar than to sell it at a profit of one cent.” Filene championed the reverse of that notion. The lower the profit margin on an article for sale, his long years of merchandizing experience had taught him, the greater the potential sales volume — and business success.

True mass production, Filene went on to explain, rests not on production of masses of goods, but production for masses of people. Commercial success, he believed, hinges ultimately on the average customer’s power to purchase. Given this reality, Filene argued in lectures and books, sound business policy should always strive to expand the average consumer’s purchasing power.

Filene practiced what he preached. Within his own enterprise, he bargained collectively with employees, instituted profit-sharing, and supplemented salaries with a then-novel array of fringe benefits.

But Filene’s vision extended far beyond the shelves of his showcase department store in Boston. To help average working people gain access to affordable credit, he laid the foundation for the American credit union movement. To help keep cash from concentrating at the top of the economic ladder, he actively supported high progressive tax rates on the incomes of the rich.

“Why shouldn't the American people take half my money from me?” he famously quipped. “I took all of it from them.”

Filene's personal mission included encouraging this sense of community-mindedness among his business brethren. His work organizing first the Boston Chamber of Commerce and later the U.S. Chamber reflected that commitment.

The U.S. Chamber has long since institutionally buried the memory — and philosophy — of Edward Filene. But the Filene name does live on, as the brand name of a chain store that trumpets one of his more enduring retail innovations, the “bargain basement.”

Maybe one day we'll remember Filene for something even more important. The life's work of Edward Filene helped forge the egalitarian social and political  consensus that beat back the plutocracy of the original Gilded Age and created the unprecedented economic equality of America's mid 20th century. That's a legacy worth honoring.

And that's the legacy our contemporary Chamber of Commerce is so venally staining.

Jared Bernstein, Crunch: Why do I feel so squeezed? (and other unsolved economic mysteries). Berrett-Koehler Publishers, 2008. 226 pp.

By Election Day this November, candidates for the White House will likely have spent close to $1 billion, an all-time record. Most Americans, by that time, likely still won't have a clear answer to the most pressing question of our time. And that question? Simply put: Why does the daily grind, as most Americans live it, keep getting more difficult, not less?

Analyst Jared Bernstein, a long-time stalwart with the Economic Policy Institute in Washington, D.C., has an answer for that question, and you don't have to be an economist to follow what he has to say. You just have to pick up his latest book, Crunch, an incredibly easy and even sometimes amusing read that gets at the questions Americans are asking about our current economy — or would ask if they thought they could get an intelligible answer.

Economists today, by and large, don't make much of an effort to be intelligible. They don't have to. 

“Economics has been hijacked by the rich and powerful,” author Bernstein explains early on, and refashioned “into a tool that is being used against the rest of us.”

The hijackers deeply appreciate the role that economists play. And they should, because economists have done a wonderful job obfuscating the basic truths of our economic status quo. Bernstein has set himself a formidable task: to clear away those obfuscations. In Crunch, he succeeds — by cutting to the chase.

“The name of the problem is economic inequality,” Bernstein tells us. “It's at the heart of the squeeze, and it's a sign that something important is broken: the set of economic mechanisms and forces that used to broadly and fairly distribute the benefits of growth.”

In the quarter-century right after World War II, Crunch helps us understand, the incomes of typical American working families and the overall productivity of the American economy — you won't have to worry about understanding productivity after reading Bernstein's engaging definition — both rose together. Average Americans shared in the wealth the nation's growing economy was creating.

This tight relationship between rising productivity and the rising standard of living that average Americans enjoyed in the 1950s and 1960s started breaking down midway through the 1970s.

“Whatever blew a hole in that relationship?” asks Crunch. “In a word: inequality. Starting in the latter 1970s, growth started to become more concentrated among higher-income families.”

Crunch delves into all the reasons behind that concentration. Even more importantly, Crunch stresses the necessity of confronting that concentration.

“The squeeze is on,” as Bernstein puts it neatly, “and we won't be able to call it off until we deal with our inequality problem.”

Stat of the Week

To enter the ranks of Britain's richest 0.1 percent now takes an income of  just over £17,300, or $34,134, a week. The UK minimum wage currently stands at £198 a week. The gap between Britain's top and bottom incomes, Labor Party MP Michael Meacher noted last week, has soared from less than 50-to-1 30 years ago to 2,620-to-1 today.

Too Much is published by the Council on International and Public Affairs, a nonprofit research and education group founded in 1954. Office: Suite 3C, 777 United Nations Plaza, New York, NY 10017. E-mail: editor@toomuchonline.org.