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Too Much

THIS WEEK

This past week has brought another splash of new data on the continuing good fortune of our wealthiest few. The income share of our richest, both in the United States and globally, turns out to be hitting several different all-time records.

Inconvenient truths like this complicate life mightily for some among us. Take, for instance, those think tank analysts who owe their employment to billionaires who see income gains at the top as far more cause for celebration than concern. The more dramatic these gains, the more inventive these analysts must become.

The analysts at the Cato Institute, an outfit the billionaire Koch brothers bankroll, are not shrinking from this challenge. To deflect attention off the top 1 percent, they've fixed on a bold solution. They're attacking the bottom 1 percent, endeavoring, as this delightful dissection of their new work details, to shift public attention — and anger — onto “freeloaders living large on our tax dollars.”

This approach once worked rather well, of course, for Ronald Reagan. But we live today in a far different world. More on this world in this week's Too Much.

 

About Too Much, a project of the Institute for Policy Studies Program on Inequality and the Common Good

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GREED AT A GLANCE

Journalist Neil Irwin last week marked the fifth anniversary of Wall Street's high-finance collapse by offering up “a complete list” of banking CEOs “prosecuted for their role in the financial crisis.” The gag: The list had no names. No CEOs, Irwin notes, have even come “close to facing criminal charges.” And so what are Wall Street’s all-star CEOs from 2008 doing these days? A new Center for Public Integrity report explores the “luxurious obscurity” that five of them — from Lehman, Bear Stearns, Merrill Lynch, Citi, and Bank of America — have settled into. Ex-Bear Stearns CEO Jimmy Cayne, the busiest of this crew, has parlayed his free time — and the $376.8 million he pocketed between 2000 and 2008 — into a 22nd-place global ranking on the contract bridge tourney circuit . . .

Alice WaltonWashington, D.C. mayor Vincent Gray has, as expected, just vetoed legislation that sets a $12.50 “living wage” for workers at Wal-Mart and all other big-box retailers that locate in the District. The mayor's veto message dubbed the City Council-okayed bill a “job killer.” The mayor, Economic Policy Institute's Ross Eisenbrey quickly retorted, “has taken the side of the exploitative rich.” By coincidence, on the same day as the veto, Bloomberg News ran a detailed analysis of the tax avoidance strategies that billionaire Alice Walton and other heirs to the Wal-Mart fortune have used to shield their inherited billions from the federal estate tax. Thanks to one charitable loophole, the analysis explains, billionaire families like the Waltons can “save so much in tax” that they end up richer than if they “hadn’t given a dime to charity.”

Primary voters in New York last week gave a whopping plurality to Bill de Blasio, the mayoral candidate who made his city’s deep divide between the rich and everyone else his prime campaign focus. Critics are calling de Blasio “divisive” and predicting a rich people’s exodus from Manhattan. But the city’s luxury hotels, meanwhile, are moving along a major upscale, Crain’s New York Business reports, for “the growing number” of wealthy foreign visitors descending on New York. The new three-story “Champagne Suite” at the Palace Hotel features a “private rooftop deck with a raised hot tub overlooking the Manhattan skyline.” Just $25,000 per night. Room rates like that, says St. Regis hotel manager Paul Nash, hit the “price point that scares many but appeals to the few.”

 

 

Quote of the Week

“America's income disparity has reached a level not seen since the 'Roaring '20s.' Students of history will recall what happened next.”
Editorial, Peoria Star Journal, September 11, 2013

PETULANT PLUTOCRAT OF THE WEEK

Zygi WilfZygi Wilf, the owner of football's Minnesota Vikings, wants his net worth kept a secret. Having to reveal his wealth, Wilf claimed last week, would open his family to attack and extortion from “malicious individuals.” Wilf’s problem: A New Jersey judge considers Wilf a tad malicious himself. Judge Deanne Wilson ruled last month that Wilf had cheated his partners in a mega-million real estate deal. Last week, to help determine the damages Wilf should pay, Wilson ordered him to disclose his “minimum net worth.” Wilf's now appealing the judge’s order. Press reports put his fortune somewhere between $310 million and $1.3 billion. What makes the actual total so sensitive? Wilf is trying to finalize details on a new stadium Minnesota taxpayers will be expected to subsidize.

 

 

 

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IMAGES OF INEQUALITY

payroll card

Rich people have, of course, more moolah than poor people. But poor people spend far more to access the money they do have than the more affluent, says a new Tufts University study. Americans making under $38,000 a year spend three times more in fees to access cash than Americans making over $100,000. Among the reasons: Major corporate execs are replacing paychecks for low-paid hourly workers with prepaid bank cards that carry high fees to cash out.

 

 

 

 

Web Gem

Community-Wealth.Org/ An online clearinghouse for initiatives aiming to democratize asset and wealth ownership.

PROGRESS AND PROMISE

Danny GloverHave an idea for making the world a more equal place? Next month’s 50th anniversary festivities of the Institute for Policy Studies in Washington, D.C. will include an innovative “Idea Slam” judged by veteran actor Danny Glover and a panel of fellow activists. The “Idea Slam” victor will receive a one-year Institute fellowship designed to help turn the winning idea into action. Interested in entering the Idea Slam? Submit a brief essay or video about your idea by next Monday, to meet the entry deadline. Interested in watching the Slam? Make plans to bring yourself to Washington for the October 13 event, part of a full weekend calendar of special IPS 50th anniversary activities, or check out the Idea Slam live video.

 

Take Action
on Inequality

Organize a viewing party to watch the premiere of Inequality for All, the award-winning feature film starring Robert Reich that opens next week in theaters across the United States.

inequality by the numbers

Income shares

 

 

Stat of the Week

Americans make up just under a third of the world’s ultra wealthy, the newly released World Ultra Wealth Report noted last week. The 65,505 Americans worth at least $30 million hold a combined 2013 wealth of more than $9 trillion.

IN FOCUS

At the Top, a Recovery Now Totally Complete

The exceedingly comfortable who sit in America's richest 1 percent have finally regained the outsized share of the nation's income they held just before the economy cratered five years ago.

The future just keeps getting brighter for Americans with unique specialties.

Randy Stearns has one such specialty: “home-tech integration.” Stearns helps people install and maintain high-tech gadgets. But we’re not talking “geek squad” and hooking up home networks here. We’re talking rich people — and electronic toys that can cost more than houses.

Randy Stearns offers “24/7 white glove” service for clients who typically pay between $150,000 and $450,000 per project. These affluents get plenty for their money. Call Randy and you, too, could end up with a home monitoring system that sends out alerts whenever your wine cellar temperature rises too high.

Annual sales in luxury home-tech integration, Stearns estimates, are going to nearly double — to $3.7 billion — by 2016. He may be underestimating his potential market. America’s rich, two top economists revealed last week, are actually getting richer faster than almost anyone thought possible.

Last year, report Emmanuel Saez from the University of California Berkeley and Thomas Piketty from the Paris School of Economics, the incomes of America’s top 1 percent — families that took home over $393,941 — shot up just under 20 percent over the year before. America’s really rich, families in the top 0.01 percent, saw their incomes soar by over 32 percent.

The just over 16,000 families that make up our top 0.01 percent finished up last year averaging $30,785,699 in income each.

And the rest of America? The incomes of the nation’s bottom 99 percent rose all of 1 percent last year. Since 2009, bottom 99 percent incomes have barely bumped up at all, just 0.4 percent on average, after taking inflation into account.

Emmanuel Saez has a stat that puts the matter even more starkly. America’s top 1 percent, he notes, has “captured 95 percent” of all income gains over the first three years of the recovery.  Overall, since 1993, top 1 percenters have grabbed “just over two-thirds” of total family income growth.

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This massive surge at the top has — no surprise — significantly hiked the share of national income that's flowing into the pockets of America's most comfortable.

For most of the middle of the 20th century, America’s most affluent 1 percent took in less than $1 of every $10 in national income. In some of these years, the top 1 percent share even dipped under 9 percent.

Those days now come across as almost mythic ancient history. In 2007, the year before the Great Recession hit, the share of the nation's income the top 1 percent claimed hit 23.5 percent, or nearly $1 out of every $4.

This top 1 percent share did dip with the Great Recession, down to 18.1 percent in 2009. But the “recovery” — for the rich — has since then been almost total. Last year, the top 1 percent income share jumped back to 22.5 percent.

We have come, as a nation, almost full circle back to the deeply unequal America of the late 1920s. That America’s deep economic divides ushered in the Great Depression of the 1930s.

We finally ended the Great Depression, Berkeley’s Saez points out, by nurturing a set of institutions that narrowed the gaps between America’s wealthiest and everyone else.

The two most fundamental of these institutions: a vibrant labor movement that established new social norms about fair pay and a steeply progressive tax system that subjected the nation’s wealthy to tax rates that topped 90 percent on income over $400,000.

These two institutions have both withered over recent decades, and the Great Recession hasn't yet done much to reverse that withering.

Recent equalizing policy changes — like the higher federal income tax rates on the rich that came in earlier this year — remain, notes Saez, “modest relative to the policy changes that took place coming out of the Great Depression.”

And this reality has insightful observers like the Atlanta Journal-Constitution’s Jay Bookman deeply worried. The nation’s most affluent 10 percent, Bookman notes, took in just a third of the nation’s income four decades ago. The top tenth last year, for the first time ever, took in over half the nation’s income dollars.

“Great concentrations of wealth” like this, Bookman wrote last week, “create great concentrations of political power and distort the terms of debate.”

How distorted has our debate become? Our lawmakers, observes Bookman, now see no problem cutting food stamps at the same time they refuse to raise taxes higher on America's ever-richer rich “because that wouldn't be fair.”

The bright side? In an America growing more unequal, people like Randy Stearns won’t have any trouble finding clients.

 

New Wisdom
on Wealth

Katrina vanden Heuvel, From ‘Inequality for All,’ a challenge for America, Washington Post, September 10, 2013. Why a feature film that debuts nationwide next week counts as much more than just a movie.

Dean Baker, Government Policy Gave Us Inequality, Not the Market, Center for Economic and Policy Research, September 11, 2013. We have it within us to reverse the trends that have concentrated America’s income and wealth.

Joseph Stiglitz, The People Who Break the Rules Have Raked in Huge Profits and Wealth and It's Sickening Our Politics, AlterNet, September 11, 2013. A Nobel Prize-winning economist at last week's AFL-CIO convention.

James Saft, Lehman's legacy of inequality, Reuters, September 12, 2013. On financialization, givingg “incentives to the talented to do perverse things with our money and keep too much of it for themselves.”

David Brodwin, Suffering Under the Weight of Inequality, US News & World Report, September 12, 2013. A business leader explores the three ways inequality dampens healthy economic growth.

Paul Krugman, Rich Man’s Recovery, New York Times, September 13, 2013. Hoping that last week's New York mayoral primary will be “the leading edge of a new economic populism.”

Jeff Faux, Larry Summers and the Economists’ 'Greed Exception,' American Prospect, September 12, 2013. Why do we assume those who study money cannot be corrupted by it?

 

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

Check this review of the best new book on the triumph over America's original plutocracy

NEW AND notable

What's Another Trillion or Two?

Ultra Wealthy ReportThe World Ultra Wealth Report, Wealth-X and UBS, September 10, 2013.

If you want to be taken seriously today in private wealth management circles, you almost have to publish an annual scorecard on world wealth and who holds it. Almost every big bank and consultancy after deep-pocket customers already does.

This latest scorecard comes from the Singapore-based research group Wealth-X and the Swiss banking giant UBS. What makes this scorecard stand out a bit from the crowd? A laser-like focus on the global “ultra wealthy,” those individuals worth at least $30 million.

Researchers from Wealth-X and UBS have counted 199,235 of these fortunate souls, a new world’s record. Their combined wealth: $28 trillion, up $2 trillion from last year. The average wealth for one of these ultras: $139 million.

But this average overstates the median — most typical — ultra fortune. The world of the ultra wealthy turns out to be as top-heavy as the rest of the world.

The world’s more than 2,000 billionaires, notes this new World Ultra Wealth Report, make up just 1 percent of the world super-rich population. But this 1 percent holds 23 percent of the world’s ultra wealthy net worth.

 

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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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