 | June 25, 2012 |
| THIS WEEK | |
| Shrinking paychecks. Disappearing jobs. How are Americans, amid all this devastation, getting by? Researchers from the Census Bureau offered one answer last week. Americans are doubling up. They’re sharing households. The Census folks define as “shared” any household with an “additional adult,” someone 18 or older not in school and not a spouse or life partner to the person paying the bills. Between 2007 and 2010, America's “shared households” multiplied over ten times faster than the number of households overall. Nearly one out of every five U.S. households now counts as “shared.” Spare bedrooms must be getting scarce. But not everywhere. Luxury realtors the nation over are hawking residences with plenty of room for “additional adults.” In Southern California, for instance, Sotheby's now has up for sale a seaside manse that sports six bedrooms, ten bathrooms, and eleven cushy home theater recliners that could serve as beds in a pinch. Interested? Just $23 million for the whole package. Interested in creating a society that would rather share wealth than overcrowd households? This week’s Too Much has some ideas just for you. |
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| GREED AT A GLANCE | |
| The UK Conservative Party-led coalition government has just proposed legislation that will give shareholders at British companies the final say on executive pay packages. Current law in both the UK and the United States gives shareholders at publicly traded companies only an advisory “say on pay.” The new UK proposal released last week, expected to become law shortly, will make that say binding. The European Union, meanwhile, is looking at stronger action against executive excess. An EU commission wants shareholders to also have the right to decide the ratio between a company’s lowest- and highest-paid employee . . .  Help us, “Henry”! That plaintive plea has been echoing lately from American high-end retailers that range from Tiffany to Saks. But “Henry” — the retail shorthand for the “High Earner Not Rich Yet” consumer — isn’t cooperating. America’s Henrys make between $100,000 and $250,000, and these days they’re not spending. That has luxury retailers chasing even harder after America’s ultra rich, those consumers, notes MasterCard analyst Michael McNamara, who remain personally “insulated” from the depressed global economy. One sign of the times: South Florida’s Chariots of Palm Beach luxury auto dealership, Bloomberg News reports, has been setting sales records on $190,000 sports cars at the same time used Mercedes and Jaguars that run a quarter that price “aren’t selling.” |
Quote of the Week “This is the world's biggest banks stealing money that would otherwise have gone toward textbooks and medicine and housing for ordinary Americans, and turning the cash into sports cars and bonuses for the already rich. It's the equivalent of robbing a charity or a church fund to pay for lap dances.”
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| PETULANT PLUTOCRAT OF THE WEEK | |
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Stat of the Week Billionaire Sheldon Adelson is planning on dumping $100 million into this year's elections. But that sum equals just 0.4 percent of Adelson's total net worth. That's the equivalent of a typical American family — net worth $77,300 — making a $310 political contribution. |
| inequality by the numbers | |
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Take Action Sign the petition to remove JPMorgan Chase CEO Jamie Dimon from the board of directors of the Federal Reserve Bank of New York, the institution that's supposed to monitor the banking behavior of JPMorgan and the rest of America's banking giants. Help push the drive to fund a film version of The Spirit Level over the top — and get, with your contribution, a signed copy of this landmark book on inequality's impact.
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| IN FOCUS | |
| The Tiny Tax that Truly Terrifies Wall Street Robin Hood would not be happy if he happened upon our incredibly top-heavy modern world. But the new campaign to levy a tax on speculative trading would most likely have him breaking out in smiles. The most lavishly paid bank CEO in America, Jamie Dimon of JPMorgan Chase, sashayed back to Capitol Hill last Tuesday for still another congressional hearing on JPMorgan’s billions in speculative trading losses this past spring. Dimon didn’t have much trouble fending off the few tough questions that came his way from lawmakers on the House Financial Services Committee. But Dimon and his fellow Wall Streeters may have much more trouble handling a new campaign — for taxing financial speculation — that launched the same day Dimon testified.  This Robin Hood campaign for a financial transaction tax actually began two years ago in the UK and quickly spread to over a dozen other nations. The U.S. branch of the campaign that launched last week comes with some high-profile champions. Actor Mark Ruffalo — a star in the hit film The Avengers — introduced the campaign on Tuesday with a video now bouncing all around the online world. A follow-up came Thursday, when over 50 top financial industry professionals from around the world endorsed the financial transaction tax notion in a letter to the leaders of the world’s 20 top nations economically. The volume of global speculative trading, these financial industry experts pointed out, now exceeds — by 70 times — the size of the entire real global economy, the actual goods and services that people use everyday. This massive speculation endangers the entire world. But a tiny tax on every trade, the financial professional letter notes, could moderate that speculation. The Robin Hood campaign is calling for a 0.5 percent tax on stock trades — the equivalent of a 50 cent tax on every $100 of trading — and a smaller levy on Wall Street's heavier-volume, casino-style trading in derivatives, currency, and other speculative instruments. All told, this level of financial transaction taxing would raise over $300 billion a year from Wall Street, money, notes the Robin Hood campaign, that could “stop foreclosures, fund new jobs, and help repair the social safety net.” Those Wall Streeters who would bear the vast bulk of the Robin Hood tax burden, nurses union leader Rose Ann DeMoro pointed out last week, can certainly afford to pay a new tax. The pay pools at JPMorgan Chase and the nation’s six other largest banks totaled $156 billion in 2010. JPMorgan CEO Dimon alone last year pulled in $23.1 million, a sum that Adriana Vasquez, a 37-year-old janitor at the JPMorgan Chase tower in Houston, would have to work over 2,400 years to match. Vasquez and her union confronted Dimon in Washington last week after his congressional testimony. Vasquez took home $9,000 in 2011, and the contractor that manages JPMorgan janitorial work in Houston is currently offering only a 10 cent-an-hour raise over the next five years. In Europe, the Robin Hood campaign has already gained serious political momentum, even support from Angela Merkel, the conservative German chancellor. In the United States, two lawmakers — Rep. Peter DeFazio from Oregon and Senator Tom Harkin from Iowa — have a transaction tax bill pending. A tax on speculative trading, DeFazio said last week, would dampen Wall Street volatility and “drive some of these hedge fund speculators out of the market.” “These people are getting filthy rich by driving up the price of commodities,” added DeFazio. “They don’t care how they affect the real economy. They don’t care if they drive up the price of oil. They’re just there to trade something 1,000 times a minute with super-computers.” DeFazio’s financial transaction tax bill calls for just a 0.03 percent tax on speculative trades, a tax rate that runs 321 times smaller than the typical sales tax on a tube of toothpaste. Most all movers and shakers on Wall Street, not surprisingly, oppose any tax whatsoever on financial transactions, no matter how tiny. They contend that any such tax would cripple investment. But the United States has a long history of taxing financial transactions. The federal government started taxing stock trades and transfers in 1914 and had a financial transaction tax on the books until 1966. Getting the tax back on the books will take real effort. GOP leaders in Congress remain dead set against the notion, and the White House is offering no support either. The push will have to come from the grassroots, and that pushing began last week with rallies at JPMorgan Chase offices all across the nation. In San Francisco, pediatric nurse Martha Kuhl called on Wall Street's finest “to pay their share.” Added the activist: “If JPMorgan can squander billions in speculation, something is wrong.” In Washington, D.C., activists protesting JPMorgan CEO Dimon’s Capitol Hill appearance last Tuesday put the matter a bit more rhythmically. “Jamie Dimon, you’re no good,” the campaigners chanted. “The people need a Robin Hood.” |
New Wisdom Inequality in the United States: Understanding Inequality with Data, The Stanford Center on Poverty and Inequality. A new set of graphs that explore the basics of America's great divides. Joris Luyendijk, Executive coach: ‘Finance is an amoral world, bordering on the immoral,’ Guardian, June 18, 2012. Research by psychologists replicated at least a dozen times shows that criminals and CEOs turn out to be “remarkably similar.” George Monbiot, The Earth Cannot Be Saved by Hope and Billionaires, Common Dreams, June 19, 2012. World leaders seem more about protecting plutocrats than our environment. David Cay Johnston, America’s long slope down, Reuters, June 20, 2012. Had average U.S. incomes stayed at year 2000 levels, Americans through 2009 would have made $26,000 more per taxpayer. Tim Murphy. 3 Companies, 1 PO Box, and a $1 Million Super-PAC Gift, Mother Jones, June 20, 2012. How our plutocratic politics works: a Texas mega millionaire's story. Comparing Obama vs GOP Approaches to Extending Bush Tax Cuts, Citizens for Tax Justice, June 20, 2012. The congressional GOP tax plan would save the nation's richest 1 percent an average $70,790 in 2013. By keeping the Bush cuts on income under $250,000, the White House would save the top 1 percent an average $20,130. Joe Nocera, Burger King, the Cash Cow, New York Times, June 22, 2012. A pithy case study shows how private equity kingpins make fortunes off minimum-wage labor. Dan Little, How Much Inequality? Economist's View, June 23, 2012. How wide an economic divide can a decent society tolerate? A fine survey of possible benchmarks.
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| In Review | |
| Do We Have a Less Wealthy Global Rich?
“The rich got poorer in 2011.” So read headlines all across the world last week after the release of the 16th annual World Wealth Report from Capgemini, a French financial consultancy, and the Toronto-based RBC Wealth Management That headline did have some data behind it. The world’s “dollar millionaires” — those affluents who hold at least $1 million in assets above and beyond the value of their primary residence, collectibles, and consumer durables — did end 2011 with about $700 million less net worth than they held the year before, a 1.7 percent loss. But these numbers distort the real world wealth story. Last year amounts to a blip on the world wealth radar screen. Since 2008, the year the Great Recession went full blast, the world’s rich have substantially increased their total net worth. The wealth of the world’s wealthiest, the figures from the new World Wealth Report show, increased a whopping 18.9 percent in 2009 and another 9.7 percent in 2010. Even with the 2011 dip, the world’s millionaires have upped their assets by over $9 trillion the last three years. These global millionaires now total some 11 million individuals. They hold a combined $42 trillion in wealth. Most of that $42 trillion sits in the vaults of the world’s super rich, those individuals with at least $30 million in investible assets. These ultra wealthy saw their net worths drop 4.9 percent in 2011. But the ultras had little trouble weathering that drop-off. Their net worths had ballooned by over twice that decline, 11.5 percent, the year before. Capgemini has been tracing global wealth concentration for the past 16 years, in a partnership with Merrill Lynch Wealth Management. For this year’s wealth census, Capgemini teamed up with RBC Wealth Management, a Royal Bank of Canada unit. The new Capgemini-RBC 2012 World Wealth Report — the wealth management industry’s “leading benchmark for High Net Worth market information” — covers 71 countries that together account for 98 percent of the world’s income. Capgemini and RBC openly acknowledge that their dollar figures most likely understate the wealth of the wealthy. Their methodology, they note, “theoretically” accounts for the offshore investments that the global super rich make, “but only insofar as countries are able to make accurate estimates of relative flows of property and investment in and out of their jurisdictions.” Many nations, in real life, have less than a fervent interest in making these “accurate estimates.” They value far more their status as tax havens. Capgemini and RBC also do not make any comparisons between the wealth of the world’s wealthy and the rest of the world’s people. For the latest available research on that score, we have to go to the Credit Suisse Research Institute. Last October, Credit Suisse researchers reported that the world’s 4.4 billion adults together hold $194.5 trillion in wealth, enough — if shared evenly — to guarantee every adult on earth a $43,800 net worth. But our starkly unequal distribution of global wealth puts that $43,800 per-adult total well beyond the reach of the vast bulk of the world’s men and women. Half the people aged 20 and over in the world today hold under $4,000 in net worth. This half the world’s population, the Credit Suisse Research Institute notes, holds under 2 percent of world wealth. The world’s richest 1 percent — adults worth at least $588,000 — hold 43 percent. |
Inequality Links |
DANCING NEBULA
When the gods dance...
Monday, June 25, 2012
An All-Smiles Robin Hood
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