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March 16, 2009 |
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Many Americans, says new polling from the Pew Charitable Trusts, don’t see inequality as a particular problem so long as society offers everyone an “opportunity” to get ahead. These Americans just might feel a bit differently if they had a chance to chat with the analysts behind a stunning new survey of the latest global research on mental health. We take a look at that survey in this week’s Too Much. We also take a look at the latest scorecard on global billionaires. The world's super rich, says this snapshot from Forbes, have lost humungous sums over the past year. Have billionaires now “suffered” their way back to the rest of us? Some observers seem to think so. We have our doubts. Read on and see why. |
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The world’s rich can run. But they now have fewer places to hide — their money. Switzerland, the world’s top tax haven, last week agreed to “hand over information on accountholders suspected of tax evasion by another country.” Super-rich tax cheats, investigators believe, have stashed at least $1.9 trillion in secret Swiss accounts. Multiple billions have also flowed into Europe’s second-tier tax havens, Liechtenstein, Andorra, Austria, Luxembourg, and Jersey. All these jurisdictions joined Switzerland last week and pledged cooperation against tax evasion. Why the change of heart? A desperate need for new revenues — amid the global financial crisis — has Europe’s dominant powers threatening to blacklist nations that lay out the welcome mat to tax evaders . . .
You don’t have to be a billionaire to live a life of over-the-top luxury. Take the Madoffs, for instance. On Friday, a day after money manager Bernie Madoff pled guilty to running a $65 billion Ponzi scheme, the release of court documents filed for Madoff’s bail appeal gave America’s hoi polloi a rare glimpse into the world of the near-billionaire. The Madoffs, worth $823 million, have been spending $293,869 a month to maintain their $7 million Manhattan apartment, just one of their four abodes worldwide. The Manhattan place features $4.1 million in furnishings and art, including $65,000 worth of silverware. What have the Madoffs been doing with all that tableware? Not much socializing. The U.S. Circuit Court filings claim that the Madoffs have been spending no more than $70 a month on entertaining . . . The Obama administration, the President told over 100 state officials Thursday, will name names if states start wasting their federal stimulus dollars. Promised Obama: “If we see money being misspent, we're going to put a stop to it, and we will call it out, and we will publicize it.” Unfortunately, Obama Treasury officials appear unwilling to flash that same bully-pulpit power. The hedge funds and other investors the feds want involved in the bailout program aimed at jumpstarting the auto loan market are balking at the bailout’s executive pay limits. Instead of calling these balky investors out, Bloomberg news reports, Treasury’s top brass have “eliminated executive-compensation limits for companies that bundle loans” for the $1 trillion program . . . Last year, Ecuador put in place South America’s first “maximum wage,” a measure that caps executive pay in publicly financed enterprises at 25 times Ecuador's minimum wage. Last month, a half-world away, the oil-rich nation of Kazakhstan announced plans to follow suit, with a maximum wage for state-sector banking, mining, and energy execs set at about $4,700 per month, the salary of Kazakhstan’s prime minister. That prime minister, Karim Masimov, is currently making 12 times the salary of his nation’s average workers. Says Masimov: “We know that even in the leading developed countries executive pay has come under intense scrutiny. I think we should not ignore this issue.” |
Quote of the Week “There are a lot of terrible things that have happened in the last 18 months, but what's happened at AIG is the most outrageous.”
New Wisdom Nate Silver, The Missing $1,000,000 Tax Bracket, 538.com, March 10, 2009. The Web's freshest political analyst explores the hefty benefits a real progressive income tax could deliver. Editorial, Yes, spread the wealth, Chico News & Review, March 12, 2009. Concludes this California paper: "Ike had the right idea: high tax rates on the rich good for the country." John Crace, The theory of everything, Guardian, March 12, 2009. An interview with two British academics whose dramatic new work shows "that almost every social problem, from crime to obesity, stems from one root cause: inequality."
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'Hard Times' on Billionaire Boulevard Forbes magazine, our globe’s premier scorekeeper for the games rich people play, last week delivered its latest annual tally of the world’s billion-dollar fortunes, the first since the world economy went into meltdown mode. The Forbes verdict: We’re seeing some mighty bad times for billionaires. “Like the rest of us,” intones Forbes, “the richest people on the planet have endured a financial disaster.” That theme quickly bounced around the world. The global economic crisis, noted a Times of South Africa editorial, has “hit the super-rich in the bread basket.” “The very wealthiest men and women,” echoed the Times of London, “are suffering too.” The evidence? Since last year, says Forbes, the world’s billionaires have lost $2 trillion off their $4.4 trillion collective net worth. The total global billionaire population has shrunk 30 percent, down to a mere 793 deep-pocketed souls. In at least one case, these numbers certainly have translated into real suffering. This past January, Germany’s fifth-richest billionaire, Adolf Merckle, killed himself. The industrialist stepped in front of a commuter train shortly after losing $500 million in the German stock market. But Merckle may have been the meltdown’s only real billionaire casualty. The super rich have actually survived the first stage of the global economic crisis quite nicely. Even those former billionaires who now count their fortunes in mere hundreds of millions, like former Citigroup CEO Sandy Weill, remain comfortably insulated from any state remotely close to suffering. Not too many current or former billionaires, as the Toronto Star’s Andrew Chung suggested last week, need “give up the $6,000 Dorchester Suite in London, or the $5,000 nightclub outing at Famous in Moscow, or the $7,000 Kiton suit from Saks Fifth Avenue in New York.” Some 44 billionaires, Forbes notes, have actually grown their fortunes over the past year. Hedge fund manager John Paulson, for instance, doubled his personal fortune to $6 billion, mainly by cashing out on bets that the mortgage market would nosedive. Big Pharma exec Patrick Soon-Shiong did almost as well. He added $2 billion to a fortune that started the year worth $3.5 billion. Soon-Shiong scored big on the sale of APP Pharmaceuticals, one of his drug companies, after a contamination scare in China left APP the only U.S. source of a widely used blood-thinner. Most of the world’s billionaires, to be sure, did lose money last year. Some 87 percent, says Forbes, “saw their personal balance sheets falter.” But those faltering balance sheets still packed considerable financial punch. In billionairedom, even losers smile. The colorful Donald Trump, for one. He has lost almost half his fortune since last year’s Forbes billionaire tally. No matter. “We're going up,” says Trump. “We're buying things we couldn't have dreamed of buying two years ago. And we have a lot of cash.” Indeed, a fortune worth even a single billion makes for a nearly unfathomable nest egg. An average person who makes $50,000 a year would have to work 20,000 years to accumulate a fortune worth a simple $1 billion. The world’s 793 billionaires now hold fortunes that average $3 billion. More of these billionaires live in the United States than anywhere else. Thanks to the still expanding economic crisis, notes Forbes, the United States “is regaining its dominance as a repository of wealth.” American billionaires currently hold 44 percent of today’s global billionaire collective fortune. Of the world’s 14 richest billionaires, seven hail from the United States. Amazingly, four come from a single American family. The four top heirs to the fortune of Sam Walton, the founder of Wal-Mart, now sport a combined $70.6 billion in net worth. Numbers these large tend to numb. We need some perspective here. Try this: Over 19 million Americans work for state and local governments, mostly in education. The pension funds they depend on for their retirement security, the Federal Reserve reported last week, have lost $108.3 billion, 35 percent of their value, since the meltdown began. Who bears the responsibility for this meltdown? Forbes editor-in-chief Steve Forbes seems to feel no one really bears any personal responsibility for our current carnage. He sees the meltdown as more or less a natural catastrophe. “The global economy has been battered by a financial hurricane,” says Forbes. “It's no surprise that billionaires are being battered along with everybody else.” But billionaires have not been battered like ”everybody else.” They and their fellow super rich, in their chase after more billions, have been the batterers. Their reckless behaviors, on Wall Street and in Corporate America’s executive suites, have essentially hollowed out America’s middle class. These super rich, despite their recent losses, remain super rich. They can still afford any luxury. More dangerously, for the rest of us, these super rich can still afford to powerfully influence — and distort — the political decisions that determine who will pay and who will really suffer in the troubled days ahead. |
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Is Inequality Driving Us Crazy? Mental Health, Resilience and Inequalities, prepared for the World Health Organization Regional Office for Europe by Dr. Lynne Friedli, in conjunction with the Mental Health Foundation. London. March 2009. Back in the 19th century, amid choking levels of infectious disease, scientists and eventually political leaders came to realize that sewers and clean water could actually keep people healthy far better than any medical potion. Now here in the 21st century, amid the scourge of heart disease and other degenerative conditions, we may once again be poised for another great conceptual leap.
That’s not a message we normally expect to hear from mental health professionals. We tend to think about mental health, after all, as a matter of individual pathology — and we tend to separate mental from physical health. The eminently distinguished mental health professionals behind this new report don't make that separation. They link mental health to the diseases that ravage our physical health — and tie both mental and physical health to levels of social and economic injustice. Our “individual and collective mental health and well-being,” as Mental Health, Resilience and Inequalities pronounces, “depend on reducing the gap between rich and poor.” The British Mental Health Foundation backs this pronouncement up by walking us through a wide-ranging array of recent international medical research. “People with mental health problems,” this research tells us, “have much higher rates of physical illness.” Smoking, most of us understand, increases the risk of suffering cardiovascular disease. But researchers have documented that “the absence of positive mental health” will put you at greater risk for cardiovascular disease than smoking. Mind over matter? Stress over immune system might be a better formulation. Chronic stress beats down our body’s defenses, upsets our physiological balances, leaves us open to disease. What stresses us? Living in poverty, for starters. Coping with deprivation and disadvantage, day in and day out, wears us out. But stress doesn’t just come from deprivation, trying to make do without the material basics of life. Stress comes, perhaps even more powerfully, from inequality, from the constant pressures that come with life in deeply divided societies. “The adverse impact of stress is greater in societies where greater inequalities exist,” notes the Mental Health Foundation, “and where some people feel worse off than others.” And this stress impacts everyone, not just the poor. Deep-seated inequality “heightens status competition and status insecurity across all income groups and among both adults and children.” The reverse also holds. The smaller a society’s economic divides, the less stress, the more health. “Both high and low income populations,” points out Mental Health, Resilience and Inequalities, “benefit in more equal societies.” This Mental Health Foundation analysis goes on to detail how the dynamics of unequal societies play out, with a level of medical specificity that readers outside the health professions may sometimes have trouble digesting. But if your eyes don’t glaze over when the discussion turns to “C-reactive proteins,” you’ll have no trouble navigating your way. And even those of us who stumble over “neuro-endocrine” pathways and “bio markers” will find plenty of value — and even inspiration — in these pages. We can become more healthy, the Mental Health Foundation reminds us, because we can become more equal. “This is not about utopian visions,” the foundation sums up. “The comparison between Sweden and the United Kingdom shows that relatively small differences in levels of inequality can have very significant effects on health.” |
Stat of the Week If Congress okays the federal budget the Obama White House has proposed, notes a new Citizens for Tax Justice analysis, America's most affluent 1 percent — households that average $1,467,185 — would pay $1,780 more in 2011 taxes, the equivalent of 0.1 percent of their reported incomes. Middle-income taxpayers who take home $41,875 would each pay $740, 1.8 percent of their incomes, less.
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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. |
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How sad when love goes sour, how sweet the bargains when billionaires part. Edra and Timothy Blixseth split last year, after 25 years of matrimony, and the two real estate tycoons, 
We still, of course, need those sewers and that clean water. But we need something else, suggests this new British