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Entries tagged "Inequality"Page Previous 1 • 2 • 3 • 4 • 5 • 6 • 7 Next
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.
April 17, 2012 · By Matias Ramos
The U.S. News and World Report's Debate Club focused on the so-called 'Buffet Rule' this week. The measure, which would apply a minimum tax of 30 percent to individuals making more than a million dollars a year, failed to clear the Senate cloture vote yesterday after a party-line vote. Prior to the Senate vote, the Debate Club laid out the main arguments for and against the measure. Collins' response, which highlighted the loan burden caused by the Bush tax cuts, has received the most positive votes up to this point. Here's his response:
Congress should pass the "Buffett rule" to restore fairness to the federal income tax system and raise urgently needed revenue. But lawmakers should go further to rebalance the tax code and eliminate many provisions that benefit only the wealthiest 1 percent and a couple of thousand transnational corporations.
It is a national disgrace that millionaires pay effective income tax rates substantially lower than middle class taxpayers do.
As super-investor Warren Buffett has pointed out, his effective tax rate has been declining for years. In 2010, Buffett disclosed he paid 17.4 percent of his income in federal taxes, while most of his office colleagues paid 33 to 41 percent of their incomes.
This is largely the result of the way our tax code privileges income from wealth and investments over income from work and wages. In 1986, income from wages and capital gains were both taxed at the same rate of 28 percent. Today, we tax higher incomes from wage earnings at 35 percent and income from capital gains and dividends at 15 percent, creating huge distortions.
The wider public widely supports increasing taxes on millionaires because they recognize the U.S. has developed a "two-tier" tax system. We have one set of rules for the vast majority of people and another set of advantaged rules for the super-wealthy. They understand how tax rules have been tilted in favor of the 1 percent at the expense of everyone else.
Instituting the Buffett rule will be a step in the right direction but inadequate to reverse several decades of regressive tax policies and meet our revenue needs.
Since 2001, we have borrowed over $1 trillion to pay for the 2001 and 2003 Bush tax cuts for the wealthy. We should reverse the Bush tax cuts and institute several additional revenue provisions. A financial speculation tax—a modest penny tax on every four dollars of financial transactions—would generate over $100 billion a year and dampen the kind of speculative trading activity that crashed the economy in 2008. Closing offshore tax havens that enable transnational corporations to game their taxes down to zero would also generate over $100 billion.
The Buffett rule moves us to greater fairness and trust in the tax system and ensures the rest of our nation's taxpayer that we are not chumps for paying our fair share on April 17.
For the rest of the responses, visit the U.S. News Debate Club.
March 6, 2012 · By Sam Pizzigati
The best book on inequality since the Great Recession began may soon become a major motion picture playing at a theater near you — if a new independent film fundraising campaign succeeds.
Three documentary film artists are now working to give The Spirit Level, the landmark 2010 book by British epidemiologists Richard Wilkinson and Kate Pickett, a fresh new visual dimension. The effort has the blessing of the Equality Trust, the UK organizing initiative The Spirit Level inspired.
The Spirit Level mixes text and graphs and makes an incredibly powerful case for the importance of achieving a significantly more equal world. The online “crowd-funding” campaign for the new Spirit Level documentary features a delightful short video that sums up the book’s central findings. Take a look and smile:
In this week’s Too Much, we’re offering up still another smile-inducer: the story of the major mainstream global pol who last week busted the consensus that has — for over 30 years — kept a lid on the taxes rich people pay. The details on this week's edition of Too Much.
February 15, 2012 · By Sarah Anderson
I had the opportunity to testify on inequality before the Senate Budget Committee last week. No one seems to recall the last time the committee devoted a whole hearing to this issue. So you can add this to the signs of the Occupy movement's impact on our political discourse.
Here's a link to my written testimony. My oral statement is below.
On the Democratic witness side, I was joined by two excellent economists: Jared Bernstein, who served as Vice President Biden's economic adviser and is now with the Center on Budget and Policy Priorities, and Heather Boushey from the Center for American Progress. Jared gave an incisive summary of recent inequality and mobility trends, while Heather focused on some of the most disturbing impacts of extreme wealth concentration on health care, education, and other key middle class indicators.
The Committee's Ranking Member, Senator Jeff Sessions, and Republican witnesses tried to raise doubts about the inequality data, questioning whether things were really as bad as they look. I didn't envy them the task of being an inequality denier in the face of overwhelming evidence to the contrary. See below for the video and script of my remarks:
Oral Testimony of Sarah Anderson Before the Senate Budget Committee, Feb. 9, 2012
Thank you very much for this opportunity. I believe inequality is the pressing issue of our time, and I applaud the committee for giving it this level of attention.
Let me begin by emphasizing the good news, which is that our nation has tackled this problem before. A century ago, we had extremely high levels of inequality comparable to those we are seeing today. But over several decades, policymakers managed to use fair taxation and effective social programs to build the world's strongest middle class. And there is much we can learn from that experience.
At the Institute for Policy Studies, we have particular expertise in one key driver of inequality that has not yet been mentioned -- and that is executive compensation.
For nearly 20 years, we've tracked the upward spiral in CEO pay. My written testimony includes several indicators. Let me just mention that the ratio between CEO and worker pay has risen from 42-to-1 in 1980 to 325-to-1 in 2010 and average S&P 500 CEO pay is about $11 million.
Beyond contributing to inequality, excessive compensation is a problem because the chance of hitting such massive jackpots gives executives incentives to behave in ways that may bump up short-term profits and their own paychecks, while undermining our nation's long-term economic health.
In our annual Executive Excess reports, we've looked at corporate behaviours such as tax dodging, mass layoffs, reckless financial activities, and offshoring jobs. All of these appear to boost CEO pay. But they have dealt one body blow after another to the American middle class.
Policymakers should also be concerned about executive pay because extreme inequality within firms is simply bad for business. It is now well-documented that when companies have massive gaps between their top and bottom earners it hurts employee morale and productivity and increase turnover rates.
Congress has taken some recent steps to rein in executive pay and I'd like to highlight two:
The first is the provision in the Dodd-Frank financial reform legislation that requires all U.S. corporations to report their CEO-worker pay ratios, which could encourage corporate boards to narrow these gaps. Unfortunately, there's been intense backlash from lobby groups representing CEOs, and the SEC has delayed this important transparency measure.
The second executive pay reform I'd like to highlight is a little-known provision in the TARP bailout bill that capped the tax deductibility of executive compensation at bailout firms at $500,000. A similar provision was included in the health care reform legislation for insurance companies. If such deductibility caps were extended to all U.S. corporations it would fix a loophole that encourages excessive pay. As it is now, the more they pay their CEO, the more they can deduct from their taxes.
Beyond the issue of executive pay, we clearly need a broader agenda to reverse extreme inequality. If you look back at the previous era, it's clear that one of their most important tools was progressive taxation.
In my written testimony, I have three charts that look back over the past century, showing that the decades of the highest top marginal tax rates were also the decades of the lowest levels of inequality and the highest GDP growth rates.
I end with seven tax reforms that could get us back to healthier levels of inequality. I'd like to highlight one that deserves more attention. This is the idea of placing a small levy on trades of stocks, derivatives, and other financial instruments. Such a financial transactions tax could both generate substantial revenue and discourage the short-term speculation that has driven up financial sector pay while contributing little to the real economy.
In conclusion, I want to acknowledge that reversing extreme inequality will be a long-term challenge. But we have transformed a highly divided nation into a more stable and equitable society before. And we can certainly do it again. Thank you.
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