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Entries tagged "Extreme Inequality"
May 2, 2012 · By Sam Pizzigati
How can you tell a really smart rich guy from a really silly one? The really smart one would never spend four years writing a book that tries to justify the incredible riches of incredibly rich people. Mega-millionaire Edward Conard has done just that.
Conard amassed his immense fortune — estimated in the hundreds of millions — working the private-equity circuit alongside his close friend Mitt Romney. Now Conard is reinventing himself as a "public intellectual." He has just published a new book, Unintended Consequences: Why Everything You’ve Been Told About the Economy Is Wrong, that will be featured this Sunday in the New York Times magazine.
Don't go looking for anything new in Conrad's tome. His themes — as highlighted in the upcoming New York Times profile — regurgitate the same pap we've been hearing for generations, ever since Andrew Carnegie penned The Gospel of Wealth in 1889. Carnegie argued back then, in America's original Gilded Age, that we average Americans should welcome the concentration of wealth in the hands of a few.
By dint of their "superior wisdom, experience, and ability," Carnegie assured us, these rich few can put their wealth to work for the benefit of us all.
Conard gives Carnegie a 21st century gloss. Mammoth financial rewards, he posits, give our most talented the incentive to go out, take risks, and nurture the innovations that benefit society as a whole. The prime problem in America today? As a society, Conard contends, we’re not offering our talented few large enough rewards. We’re underpaying our "risk takers"!
Conard’s New York Times interviewer, Adam Davidson, "kept raising" various critiques of wealth concentration during his chats with the private-equity superstar. Don't vast amounts of wealth, Davidson wondered, give the super rich the power to crush innovations that might threaten their privileged positions?
And doesn't the chase after outrageously large fortune create an incentive to behave outrageously — to squeeze workers and consumers and even place an entire society’s economic well-being at risk?
Conard refused to engage with any of these critical questions. He “repeatedly,” notes Davidson in his profile, “waved them off.”
Nor, predictably, did Conard try to rebut any of the critical research on inequality that comes from researchers outside economics — from political scientists, sociologists, psychologists, and epidemiologists, the scientists who study the health of populations. Over recent decades, these scholars have detailed how vast concentrations of income and wealth are eating away at our democracy and social fabric — and even limiting the length of the lives we lead.
I surveyed this compelling research in a 2004 book, Greed and Good: Understanding and Overcoming the Inequality that Limits Our Lives. Greed and Good, an American Library Association Choice magazine “outstanding title” of the year, now appears online for free perusing.
More recent books have updated the case against concentrated wealth. In the just-published Billionaires' Ball: Gluttony and Hubris in an Age of Epic Inequality, Canadians Linda McQuaig and Neil Brooks neatly demolish the sorts of facile rationalizations for grand fortune that the likes of Edward Conard insist on making.
Brian Miller and Mike Lapham, veteran egalitarian activists with United for a Fair Economy, zero in more closely on one particular rationalization for grand fortune in their new book, The Self-Made Myth: And the Truth about How Government Helps Individuals and Businesses Succeed.
And my Institute for Policy Studies colleague, Chuck Collins, places these rationalizations in a broader context in his recently released contribution to the inequality debate, 99 To 1: How Wealth Inequality Is Wrecking the World and What We Can Do About It.
All these books make for enlightening reading, on May Day or any other day. But none of these books will ever get the attention that Edward Conard is getting for his new tome. Conard, after all, has mega millions. That "earns" him the national spotlight.
We only have word of mouth. Let's use it.
February 6, 2012 · By Lacy MacAuley
This past weekend, I stood in the rain at Occupy DC as police in riot gear trampled through the camp at McPherson Square. I ran as they charged the crowd with police horses. I watched as they grabbed clothing, books, tents, shoes, and other personal property, and tossed it all into dumpsters.
Some are asking how the Occupy movement will accomplish anything now. I say, it already has. It has already changed our world.
I marched through New York in September of last year on the first day of Occupy Wall Street. I laid down my sleeping bag in the open air in Zuccotti Park on the first intense nights of the occupation. Then, I brought my sleeping bag back to Washington DC, where I live. With some hopeful companions, I began occupying McPherson Square on K Street, home to some of the most corrupt lobbyists in the world. We held meetings in the cool October air, not yet the biting chill of winter. And we went to work building a library, a clinic, a kitchen, a media center — a small village. A second camp quickly emerged in another part of town, within sight of Congress.
I occupied because the rich are too rich, because Wall Street and the corporations control too much, and because all of our governments won’t even begin to seriously address some of the biggest challenges of our time, like climate change. I occupied because, like so many in the 99 percent, I am fed up with the status quo. I occupied because people are suffering all over the country and all over the world, while the power to build a better future is in our hands.
Now, most of Occupy DC has been emptied. Many occupiers were made homeless. Miraculously, the cops spared my humble little tent, with a newly broken pole, but sleeping in the park would now likely get me arrested. (I hadn’t slept at the park recently anyway. Another occupier was staying in my tent.)
Was it all worth it? Yes, and I’ll do it again.
This week, the Senate Budget Committee will hold a hearing about inequality and social mobility, hearing from experts like Sarah Anderson at the Institute for Policy Studies, who has published studies on the CEO-worker pay gap for 18 years. Would the Senate be doing this before Occupy? Probably not.
Mitt Romney is struggling to shed the stigma of being a “one percent candidate,” because his Richie Rich image continues to harm his campaign. Even Newt “Huge Tiffany’s Tab” Gingrich is making jabs at Romney’s wealth. Would this have happened before Occupy? Probably not.
One of President Barack Obama’s favorite stump speeches these days is on making the wealthiest Americans and biggest corporations pay their fair share, which would reduce inequality in this country. Would this have become a favorite presidential refrain before Occupy? Probably not.
A thousand plans are afoot to “re-occupy” this spring. But even if the camps were to end now, the Occupy movement has made millions of Americans think harder about our economic, environmental, and political realities, and that has the potential to change everything. It has created spaces for us to bring a bold new world to life. It has sparked conversations and ideas that no police barricade can hold back. And it has opened dreams that we are all still dreaming — whether we campers are allowed to sleep or not.
Lacy MacAuley wears two hats, which isn’t always easy. She is the media relations manager at the Institute for Policy Studies and a participant in the Occupy movement. www.ips-dc.org
December 24, 2011 · By Salvatore Babones
The economy is expanding, the unemployment rate is down, and consumers are spending again. The National Retail Federation expects holiday season sales to be up 3.8 percent over 2010, and other organizations predict increases of 3.5 percent to 4 percent. It all sounds like it's shaping up to be a happy holiday season for America's retailers.
But which retailers? Black Friday sales at JC Penney were down 2 percent compared with 2010 and 5 percent at the Gap, Bloomberg News reported. Sales at Kohl's were down 6.2, while Gap's discount line Old Navy reported a fall of 7 percent.
On the other hand, sales at upscale stores are up — and up more the more upscale the store. Black Friday sales at Macy's were up 4.8 percent, Nordstrom's rose 5.6 percent, and Saks Fifth Avenue's spiked by 9.3 percent, according to The New York Times.
Meanwhile luxury leader Neiman Marcus sold out of the Ferraris in its Christmas catalog in less than one hour. Neiman's $125,000 bookshelves are also selling well, New York magazine reports. (Not to worry, they come pre-stocked with books). "The most affluent luxury customer is spending with confidence," Neiman Marcus CEO Karen Katz told Reuters.
Whew! We were all worried about the most affluent luxury customers. After all, sales growth at Tiffany's has recently slowed to the low double-digits. Its stock has taken a beating.
The premiumization of holiday shopping is nothing new. It's all part of the premiumization of life that has been creeping up on us for forty years. Retail trends began to favor the wealthy long before the beginning of the current downturn.
In 2005 three Citigroup stock analysts announced the arrival of a new kind of economic system, which they dubbed the "plutonomy." They pointed out that aggregate statistics like national retail sales had become so skewed by the spending of a few wealthy people as to be almost meaningless. In their own words:
The World is dividing into two blocs — the plutonomy and the rest. The U.S., UK, and Canada are the key plutonomies — economies powered by the wealthy. In plutonomies, the rich absorb a disproportionate chunk of the economy and have a massive impact on reported aggregate numbers like savings rates, current account deficits, consumption levels, etc. There is no "average consumer" in a plutonomy. Consensus analyses focusing on the "average" consumer are flawed from the start.
Six years later, this analysis is more accurate than ever. Yes, total retail sales are up this year. And the economy is growing. But is the recession over?
The Stagnant Realonomy
If it doesn't feel like the recession is over, that's because nearly all of the country's national income growth is going to the top 1 percent of the population. It's that same top 1 percent of the population that's driving the rise in retail sales. The plutonomy is growing, but the "realonomy" — the real economy in which the rest of us live — has been stagnant for three years now. In fact, it's hardly grown at all since 1999. And it wasn't going all that strong even then.
It's been widely reported that median incomes have been stagnant since the 1970s. What's been much less reported is that even college-educated professionals' incomes have been falling for a dozen years. Adjusting for inflation, no group below the top 5 percent has seen its income rise since 1999.
Among Americans with high school degrees only, median incomes have fallen 10.4 percent since 1999. Among Americans with college degrees, median incomes have declined by 7.6 percent. As a result, even families at the 95th percentile of the U.S. income ladder have seen no raises since 1999. Their incomes are down on average 1.2 percent in real terms, from $202,850 to $200,354.
When the data show that no one in the bottom 95 percent of the national income distribution has seen a raise in over 12 years, it's no wonder that holiday sales are driven by luxury goods.
All that talk about "the 1 percent versus the other 99 percent" really is true. Before 1973, America's economic prosperity was widely shared. In the 1980s and 1990s most of the country's economic growth went to the top 20 percent. In the 2000s, rising prosperity benefited only the top 5 percent.
Since 2008, only the top 1 percent have seen their incomes grow. They're Neiman's "affluent luxury customers." Pity them. At Christmas of all times it is wise to remember that "it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God."
There's no word on what books are included with that Neiman Marcus $125,000 bookshelf, but I know one I might recommend.
Salvatore Babones is an American sociologist at the University of Sydney and an Institute for Policy Studies associate fellow. His book on the American economy, Benchmarking America, is due out in 2013. www.ips-dc.org
May 25, 2011 · By Sam Pizzigati
Great wealth, the philosopher Philip Slater once noted, tends to make wealthy people instinctively suspicious because they can never be quite sure whether others love or admire them for their fortunes or themselves.
"If you gain fame, power, or wealth, you won't have any trouble finding lovers," Slated added, "but they will be people who love fame, power, or wealth."
Exhibit A for Philip Slater's wisdom: the long, sad life of Huguette Clark, the copper mining heiress who died this week at the age of 104.
Over a century ago, Clark's father, the fearsome William Andrews Clark, abused mine workers and poisoned the environment on his way to one of the Gilded Age's greatest fortunes. Mark Twain called Clark "as rotten a human being as can be found anywhere under the flag," and the enormous wealth he left daughter Huguette in 1925 would define — and burden —the rest of her life.
Huguette Clark married in 1928, then divorced in 1930. She never had children and, after her mother's 1963 death, lived as a recluse in a 42-room Manhattan Park Avenue apartment. She also owned — but hadn't visited since the 1950s — a beach house in Santa Barbara.
At Clark's third home, a country home in Connecticut now worth $23 million, the guard who had spent almost his entire adult life watching over the property never even knew the name of the estate's owner until a reporter asked him about Clark the day after she died.
Clark did have some cousins, nephews, and nieces, but she refused to see them. Her closest friends, an acquaintance once told MSNBC, "have always been her dolls." She used to pay servants to iron their clothes.
Clark's father died before the stiff federal estate tax rates of the 1940s and 1950s — as high as 77 percent on estate value over $10 million — kicked in. Now estate tax rates are running back close to their 1920s-era levels, and Clark's cousins, nieces, and nephews may eventually inherit most of the $500 million fortune Clark has apparently left behind.
Will congratulations be in order?
Sam Pizzigati, the co-editor of Inequality.Org, also edits Too Much, the online weekly on excess and inequality published by the Washington, DC-based Institute for Policy Studies. Read the current issue or sign up to receive Too Much in your email inbox.