Everything you really need to know about life, a fun best-seller posited a few years back, you learn in kindergarten. Like share everything and don't take things that aren't yours. But what if you want to go a bit deeper into life’s mysteries? What if you want to better understand what happens when people don’t share — and you can’t fit on a kindergarten stool?

No problem. Everything you need to know about inequality, about the perils of letting grand concentrations of wealth settle in the pockets of a few, you can actually learn, if you pay close enough attention, just by turning on your TV and watching ESPN's SportsCenter all day.

Last week, lots of folks did tune in to SportsCenter — to hear superstar Alex Rodriguez, the nation’s highest-paid ballplayer, confess that, yes, he has imbibed illicit performance-enhancing drugs. In this week's Too Much, we place poor A-Rod in the context of our top-heavy world.

We also, in this issue, revisit the ongoing interplay between health and inequality. Last week, we looked at health at the bottom of the income ladder. This week, we explore the health of the wealthy.

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The stimulus compromise blessed last week by House-Senate negotiators — and then sent to the White House — is missing one key Senate provision: a $400,000 cap on executive pay at bailed-out enterprises. The rationale for axing the cap: Some lawmakers apparently argued that the $400,000 limit would lower tax revenues — because top execs would have less income that could be taxed. Notes Institute for Policy Studies analyst Sarah Anderson: “By this reasoning, Congress should let companies dump their toxic waste in the nearest river. Think how much more in corporate profit taxes we could be collecting if factories didn’t have to follow environmental standards.” The stimulus does include one encouraging new pay restriction: a provision that limits executive bonuses to one-third of total annual compensation . . .

New York’s Park Avenue may be starting to feel the nation's economic pain. Earlier this month, the owner of a 14-room Park Avenue duplex on sale for $34 million dropped the asking price — to $29 million. Crain’s, a New York business journal, estimates that a Wall Streeter needs at least $500,000 in annual income to afford a Park Avenue address. In 2007, the latest year with stats available, 75,000 New Yorkers met that threshold. Who can afford a Park Avenue co-op these days? More people than you might think. Banking giant Merrill Lynch, New York Attorney General Andrew Cuomo revealed Thursday, “secretly” awarded 700 of its power suits $1 million or more in bonuses right before Bank of America swallowed Merrill whole this past January 1 . . .

A generation ago, high-flyers from firms like Merrill Lynch contributed, via taxes, a significant share of their paychecks to the upkeep of their city and state. A coalition of New York citizen groups has launched a campaign to recreate these fiscally fairer days of yore — by upping the tax rate on New York’s wealthiest. The new Fair Share Tax Reform campaign is mobilizing behind legislation from state senator Eric Schneiderman that hikes the top state tax rate on income over $1 million to 10.3 percent. New York’s top tax rate on high income has sunk by 50 percent over recent decades, and state working families now pay taxes on income over $40,000 at the same 6.85 percent rate as New York’s richest pay on income over $4 million. The Fair Share bill would raise $6 billion in new revenues, enough to offset all the education and health care cuts Governor David Patterson is demanding in his new state budget . . .

Voters in the canton of Zurich, Switzerland's banking capital, have just opted to eliminate the tax break that has helped make Switzerland a top tax haven for the world’s super rich. Current Swiss law lets foreigners negotiate their tax bills secretly with Swiss local governments. They end up paying taxes, on average, at one-tenth the rate for Swiss citizens. This sweet giveaway has convinced about 4,000 deep pockets — celebrity rich who range from superstar singer Shania Twain to Swedish furniture baron Ingvar Kamprad of Ikea fame — to take up Swiss residence. The left-of-center organizers of the Zurich tax initiative are hoping Switzerland’s other cantons will now follow suit . . .

The Zurich voter uprising against wealth and power caps what has been a rather worrisome winter for Switzerland’s most financially fortunate. The global banking meltdown, by itself, would have been bad enough. But then came Bernie Madoff. Switzerland’s huge private wealth industry — 600 “asset managers” for the rich operate out of Geneva alone — has so far seen $8.5 billion of client cash evaporate. Also evaporating: private jet trips to Geneva, down 26 percent, and sales of Switzerland’s most coveted skis, the $5,000 aluminum-titanium Zai Spadas. One top Geneva nightspot, the Coco Club, has had to lower the price on house champagne down to $215 a bottle, from $260. Notes the Coco Club's Hayley Menzies: “We're trying to be sympathetic to the current climate.”

Quote of the Week

“If we don't start taxing the wealthy more now, then you can be sure that the mountain of debt created by tax cuts and the bailout will be used to drive 'entitlement reform.' Workers' last forms of security — Social Security and Medicare — will be on the chopping block to pay for the wreck the truly entitled made of our economy.”
Holly Sklar, Corporate executives overpaid, undertaxed, Belleville News Democrat, February 13, 2009

New Wisdom
on Wealth

Paul Carpenter, A jarring juxtaposition raises questions about CEO salaries, The Morning Call, February 11, 2009. Asks this look at pay outrages: “If America can legislate minimum wages, why not legislate maximum wages?”

Kenji Hall, No Outcry About CEO Pay in Japan, Business Week, February 11, 2009. Japan's top 100 execs average $1.5 million. The U.S. average: $13.3 million.

Brian Bucks, Arthur Kennickell, Traci Mach, and Kevin Moore, Changes in U.S. Family Finances from 2004 to 2007: Evidence from the Survey of Consumer Finances, February 2009. Late Friday, the Federal Reserve released initial data from its triennial study that offers the most detailed snapshot of U.S. income and wealth. More data will be released this week. Next week's Too Much will carry a complete rundown.

Sarah Anderson and Sam Pizzigati, Pay-Cap Populism. The Nation, March 2, 2009

A-Rod and Inequality: A Lesson for Us All

The drug taking by baseball superstar Alex Rodriguez, pundits and pols spent last week angrily pronouncing, has sent a horrible message to America’s youth. True enough. But the Rodriguez uproar also sends a message about the perils of inequality, a message that the sports world seems to deliver, week in and week out, with a clarity we seldom see in the “real world” beyond the outfield fences.

Apologists for inequality, in whatever sphere they operate, regularly contend that the greater the rewards our society offers, the more the most talented among us will strive to succeed. The more they strive and succeed, the better off the rest of us will most certainly be.

In sports, none of these claims hold any water, as the story around “A-Rod” so grippingly reminds us.

That story starts in 2001, the year Rodriguez signed a ten-year, $252 million contract to play ball for the Texas Rangers. No pro athlete, at the time, had ever inked a deal anywhere near that mammoth.

Tom Hicks, the billionaire Rangers owner, justified the new contract with the same pep-talk PR we hear when corporate boards sign up a new celebrity CEO. Rodriguez would turn the Rangers franchise around, Hicks promised, and open up an era of untrammeled on-the-field success.

Baseball fans should have known better. High-priced stars seldom turn their new teams around. Rodriguez certainly didn’t. His new team struggled. In the meantime, the team he left, the Seattle Mariners, promptly tied an all-time baseball season record for wins.

Not a coincidence, says the research of Matt Bloom, a management expert at the University of Notre Dame business school. In the 1990s, Bloom subjected nine years worth of Major League baseball salary and performance data to close analysis. His research would draw one clear conclusion.

“The bigger the pay difference between a team’s stars and scrubs,” as the Wall Street Journal summed up Bloom’s findings, “the worse its record.”

But sports franchise owners, just like corporate boards, continue to believe that mega millions act as an unbeatable incentive for excellence. They have that half right.  Huge rewards do function as an incentive, just not for excellence.

In life as people actually live it, the bigger the reward, the greater the incentive to do anything, no matter how risky or destructive, to win the reward — or, as in the A-Rod case, to justify it.

“When I arrived at Texas in 2001,” Alex Rodriguez told ESPN last week, “I felt an enormous amount of pressure. I felt like I had all the weight of the world on top of me and I needed to perform, and perform at a high level every day.”

So Rodriguez went reckless. He started taking banned drugs — at the risk of his health and reputation. That decision, at the time, probably seemed reasonable. All around Rodriguez, other top stars were making the exact same choice.

“For many years nobody in the sport cared who cheated,” Washington Post sports columnist Thomas Boswell observed last week. “So, many did. For deals of up to $250 million, would any group of humans in history stay totally clean?”

In Corporate America, top executives don’t have to take drugs to score windfalls. In their chase after the golden ring, they typically engage in more socially destructive behaviors. They downsize and outsource jobs to boost their quarterly bottom lines. They wheel and deal companies, creating workplace chaos as they go. They even, at times, ship out tainted peanut butter.

Power suits in corporate boardrooms, ironically, often attempt to rationalize the rewards that prompt these behaviors by pointing to sports. CEOs may be making mints, the suits acknowledge, but just look at the stupendous fortunes pro athletes are making.

Let’s not. In reality, athletes earn nowhere near the paydays of power suits. Not one athlete has ever entered onto the annual Forbes 400 list of America’s wealthiest. Alex Rodriguez, the best-paid athlete of them all, would have to make ten times more a year than he currently does, new IRS stats make clear, to merely match the average of America’s 400 highest annual incomes.

The real money in sports is going to team owners. They regularly pocket lush taxpayer subsidies for new ballparks and arenas, giveaways that send the market value of their franchises soaring.

These owners also never need worry about finding potential buyers when they take their teams to market. The growing concentration of America's wealth has left the top of America’s economic ladder packed with investors able and eager to shell out half a billion or more for a pro sports franchise.

And where has all this inequality left sports fans? Many can no longer afford to take their families to ballgames. Watching at home, they stew and steam as endless two- and three-minute commercial breaks — the vehicle that lets broadcasters guarantee themselves an ample return on the billions they hand owners for broadcast rights — disrupt the ebb and flow of competition.

Even worse, the chase after windfalls has soured the basic relationship between team and fan. Sports has become just another commodity. Owners now treat the sports-loving public as consumers in markets, not fans from communities. And that public has internalized this commodification.  

“Instead of hoping that your team wins, you begin to demand it,” as sportscaster Bob Costas has noted. “It’s like you bought a car and if it doesn’t work, you want to know why. When a team doesn’t win, instead of disappointment or heartbreak, you now have anger and resentment.”

And predictably so. Some emotions inequality always delivers.

How Healthy Our Wealthy?

Mauricio Avendano, M. Maria Glymour, James Banks, and Johan Mackenbach, Health Disadvantage in U.S. Adults Aged 50 to 74 Years: A Comparison of the Health of Rich and Poor Americans With That of Europeans. American Journal of Public Health, March 2009.

The United States spends two to three times more, per person, on medical care than European countries do. But Americans, by every significant measure of disease and “functional limitation,” display “worse health than Europeans.”

So concludes this exhaustive new transatlantic study, an analysis of over 35,000 individual medical histories that appears, at first glance, to document what health care reformers in the United States typically call the “failure of the American health care system.”

That system, these reformers have long maintained, routinely denies basic care to tens of millions of Americans. And they’re right, of course.

But the assumption behind this critique — that if we just extended decent, affordable medical care to all Americans, we will, as a society, have overcome our most basic health problem — simply does not explain the striking findings this new comparative study so dramatically details.

That’s because this new study compares people by class, not just by nation — the poor, the middle class, and the affluent in the United States against the poor, the middle class, and the affluent in Europe.

If the “worse health” of the United States represented simply the failure of the U.S. health care system, then the American poor should be suffering from heart disease, cancer, diabetes, and every other major ailment of our times at higher rates than the poor in Europe, who live in nations that provide the universal access to decent health care that the United States does not.

Indeed, this study does show appreciably lower levels of health among poor people in the United States. But if these lower levels of health just reflect the failures of American health care, then this same study should have found no appreciable difference between the health of high-income people in Europe and the health of high-income people in the United States.

After all, high-income Americans have access to high-quality medical care, the same care that U.S. reformers want to see extended to all Americans.

So what does the study show on the comparative health of the wealthy?

“In this international study, we found that U.S. adults of all wealth levels reported worse health than did Europeans at comparable wealth levels,” the study's authors note. “Poor Americans were at particularly worse health compared with their English or other European counterparts, but even well-off Americans reported health comparable to substantially poorer Europeans.”

How could this be? Maybe Europeans just have better health habits. The study’s researchers recognized that possibility. In their analysis, they take risk factors — like smoking — into account.

These “differences in behavioral risk factors,” the study authors conclude, help us understand “only a fraction” of the disparities their research catalogs.

Something else is going on here, something that the deficiencies of the U.S. health care system simply do not explain. In the end, this paper’s four authors — two from the United States, one each from Britain and the Netherlands — do not dive into this something else. They do suggest that “mechanisms outside the health care system may also be involved.”

What does that mean? Pare back the epidemiological jargon and their basic point boils down to this: Societies can make people sick. How we choose to organize ourselves for life impacts how long and how well we live.

And few things seem to impact how societies operate, more and more health researchers have come to believe, than how they distribute wealth and income.

Europe’s major nations, across the board, distribute wealth and income far more equitably than does the United States. Distinctly unequal distributions of wealth and income, many health researchers contend, magnify and multiply the stresses of everyday life and wear us all down, poor and rich and middle alike.

We need a new health care system in the United States. We may need, even more, a more equal United States.

Stat of the Week

What's too rich? Los Angeles Times columnist Rosa Brooks last week took a stab at an answer. The typical U.S. household had a $50,233 income in 2007, she notes. Just 5 percent of households that year hit over $177,000. If your income hovers near $500,000, concludes Brooks, “you're rich.” If you make as much as a Fortune 500 CEO — average 2007 pay in: $12.8 million — you're “very, very rich.” And if you made $657 million in 2007 — the average take-home for the year's top 20 hedge fund managers — “you're insanely rich.”

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.