Behind Super-Sized Sodas, a Deeper Danger

	June 4, 2012
THIS WEEK
A fascinating new book — by MIT economist Daron Acemoglu and Harvard political scientist James Robinson — is arguing that nations start falling apart when their elites amass enough wealth and power to essentially “rig the game” on their own behalf. These rich attempt to bulldoze away anything and anybody that stands in their way. If they succeed, their societies eventually collapse. All this past month, in Joliet, Illinois, about 800 workers have been resisting that bulldozer, quite literally. The workers went out on strike May 1 after their employers at Caterpillar, the world’s largest earth-moving equipment maker, demanded a wage freeze, pension cuts, and a doubling of health care premiums. “A company that made $4.9 billion in profits last year,” local union leader Steve Jones noted last week, has “no good reason” for pushing this sort of shakedown. Caterpillar CEO Doug Oberhelman, on the other hand, does have a reason. He took home $17 million last year. Why should he risk accepting any less this one? Tomorrow, another bulldozer will be rolling — in Wisconsin. Billionaires have inundated the state with campaign cash for Scott Walker, the union-busting governor now facing a recall. They've fueled Walker’s bulldozer with ten times the cash his opponent has to spend. More on that bulldozing in this week’s Too Much.
GREED AT A GLANCE
The heat — on overcompensated corporate execs — is rising. In Sacramento last week, state senators passed legislation that requires California corporations to annually disclose what they currently do not: the actual pay that’s going to their five highest-paid retired executives. Over in France, newly elected president Francois Hollande's government is filing new regulations that will cap CEO pay — at enterprises where the government holds a controlling interest — at 20 times the pay of each enterprise’s lowest-paid worker. For Henri Proglio, the CEO at power giant EDF, that will mean a 68 percent pay cut down to $621,000. Hollande's government will also be pressing the cap at companies, like Renault, where French taxpayers hold a minority interest . . . No CEOs in the world today make more moola than America’s top execs, and no top execs in America have, over recent years, made more than top execs in high-tech. InfoWorld's new annual tally of high-tech’s 50 highest flyers shows 20 pay packages over $20 million. What are America’s consumers getting for all that money? Not much. The United States ranks only 13th globally in Internet connection speed. Boston, the U.S. market with the fastest Internet, ranks only 51st among global urban centers. Cisco, the U.S. firm that makes a hefty chunk of the Internet’s plumbing, last year handed its billionaire CEO, John Chambers, $12.9 million. Over the course of that year, Chambers axed over 12,000 jobs . . . The world's luxury retailers have new cause for celebration: What luxury analyst Ron Kurtz calls “frugal fatigue” has finally hit the super rich. Some of these rich, Kurtz explains, cut back on luxuries after the Great Recession hit. Spending lavishly just didn’t feel quite right. But having to maintain a frugal facade turns out to exact a heavy psychic toll. Today’s rich are bursting free from that burden, and savvy luxury retailers, CNBC reports, are now doubling down on exclusivity to exploit this new yearning to spend free. The retailers are “keeping prices high and availability low.” One example: Hermes has built up the waiting list for its signature handbags. The bags can currently go for $4,000 each.	Quote of the Week “Forgive me for noting that conservatives seem to believe that the rich will work harder if we give them more, and the poor will work harder if we give them less.” E. J. Dionne Jr., Can this campaign be constructive? Washington Post, June 4, 2012
PETULANT PLUTOCRAT OF THE WEEK
Back in January 2011, Wisconsin billionaire Diane Hendricks urged her state’s newly elected governor, Scott Walker, to go after “those unions.” Walker assured her he would — and he did, just weeks later unleashing an assault that would strip bargaining rights from state public workers. Now Hendricks has emerged as Walker’s biggest “sugar mommy.” In April, she gave the governor a jaw-dropping $500,000 for his campaign to survive this week’s gubernatorial recall election. Walker’s rich people-friendly tax agenda figures to save Hendricks plenty at tax time. But the billionaire sees her political cash in far loftier terms. She’s just trying to save us from becoming, as she puts it, “a socialistic ideological nation.” Besides, Hendricks is already doing just fine at tax time. She didn’t pay any state income taxes at all in 2010.	Stat of the Week The top exec at Medicare, America’s largest public-sector health insurer, took home $170,000 in 2010 salary, note analysts Gar Alperovitz and Thomas Hanna. Stephen Hemsley, the top exec at the private-sector giant UnitedHealth, that same year grabbed $103 million.
inequality by the numbers
	Take Action on Inequality Urge the national groups that count you as a member to endorse Americans for Tax Fairness, a new drive to end the Bush-era tax breaks on income over $250,000. Help fund the effort to make a documentary film of The Spirit Level, the landmark book that details how more equal societies work better for us all. Urge the SEC to require companies to report their CEO-to-worker pay ratios.
IN FOCUS
Behind Super-Sized Sodas, a Deeper Danger Sugary soft drinks, as Michael Bloomberg reminds us, do our nation no good. But if we really want to narrow our waistbands, we’re going to have to narrow the income gaps that divide us. The billionaire mayor of New York wants his city’s Board of Health to ban super-sized servings of sodas and other sugar-packed drinks. Some 58 percent of New Yorkers, explains mayor Michael Bloomberg, currently rate as either overweight or obese. Their excess pounds are driving up the city’s health care costs, he argues, and even putting lives at jeopardy. “Obesity,” the mayor told a national TV audience last week, “will kill more people than smoking in the next couple of years.” Maybe so, his critics counter, but no ban on super-sized sodas is going to fix that obesity. Any ban, the critics contend, would be unenforceable. And why pick on soda and not chocolate cake? Or any other “fattening food”? This back-and-forth on Bloomberg’s super soda ban will likely wax on and on deep into the summer. The story punches too many political and media hot buttons — think “big government” and “nanny state”  — to fade any time soon. But this entire focus on what we stuff down our throats misses the real story behind our obesity epidemic. If we want to get serious about fighting obesity, public health researchers would like us to understand, we need to look at the social dynamics that drive people to eat and drink more and more of what they shouldn’t be eating and drinking. And the most powerful driver of that unhealthy behavior? That would be inequality. “Wider income gaps,” as British social scientist Kate Pickett and her colleagues note in one comprehensive analysis of obesity across the world’s wealthiest nations, translate into “wider waistbands.” In the United States, we’ve have good national data on weight since the early 1960s, and the early numbers through the 1970s showed no sign of any obesity epidemic. In 1980, only 15 percent of U.S. adults counted as obese. But that rate soared to 23 percent in 1995 and then 35 percent in 2006. Commentators had all sorts of explanations for this stunning spike. Fattening fast food has become cheaper, relative to other foods. Restaurants are super-sizing. Corporate food giants have re-engineered food products to maximize their almost addictive fat, sugar, and salt. All these factors no doubt contribute to the growing incidence of obesity. But all these factors also operate on a national, even global, scale. They don’t explain why some states in the United States have more obesity than others or why many other developed nations show much less obesity than the United States. But inequality does explain these differences. The states within the United States, the nations within the developed world, that sport the lowest incidence of obesity just happen to be the nations that sport the least economic inequality. That spike in U.S. obesity that began in the 1980s? That spike matches up neatly with the spike in economic inequality we’ve experienced over the past 30 years. So what’s going on here? We can all easily understand how sugar water can add on the pounds. But how could inequality possibly make us fat? Epidemiologists — the scientists who study the health of populations — point to two closely intertwined phenomena: social status and stress. Levels of obesity in developed societies , the epidemiological studies show, rise as income and social status fall. On each rung of the economic ladder, people tend to be more overweight than the people on the rungs above them. Do “lower status” people simply “choose” to be overweight and unhealthy? That’s a charge you can hear all the time on talk radio. But researchers disagree. People typically practice unhealthy behaviors not because they want to be unhealthy, but because they need relief — from social stress. People typically respond to stress, investigators note, by increasing their intake of our society’s readily available relaxants, disinhibitors, and stimulants. They smoke. They do drugs. Or they eat more “comfort foods,” digestibles usually packed with sugar and fat. The more chronic the stress, the more likely a reliance on one or another of these comforting props. And stress becomes more chronic as societies become more unequal. Would our modern societies be healthier places if more people drank less soda? They certainly would. The health professionals striving so hard to educate people about the risks that excess pounds create are performing a vital public service. And Mayor Bloomberg, everyone can agree, does deserve kudos for jumpstarting a national conversation on what we get when we guzzle too much Mountain Dew. But Bloomberg would deserve far more credit — and produce a far greater impact on our national health  — if he jumpstarted a discussion about our nation’s staggeringly unequal distribution of income and wealth.	New Wisdom on Wealth Sandy Baum and Michael McPherson, Let’s Talk About Economic Inequality, Chronicle of Higher Education, May 29, 2012. Why so little higher ed discussion on antidotes to income concentration? One reason: It’s easier to say everyone should get a fair shot at the brass ring than to explain why the ring needs to be less shiny. Robert Frank, The Mass Migration of the Super-Rich, CNBC, May 29, 2012. The world's wealthy now feel “they’re no longer bound to a certain country.” Adam Davidson, How the Art Market Thrives on Inequality, New York Times, May 30, 2012. Art signals wealth better than virtually any other luxury good. Kendra Bischoff and Sean Reardon, No Middle Ground: America’s Growing Income Segregation, Boston Review, May/June 2012. Our affluent live increasingly segregated lives. Why that should give us pause. John Stoehr, Is income inequality stalling the US economy? Aljazeera, May 31, 2012. Evidence suggests investments in infrastructure would boost the economy, notes this Yale political scientist, but the rich don't need infrastructure. Michael Winship and Bill Moyers, Pity the Poor Billionaires, Truthout, June 1, 2012. Since 1979, 377 members of the Forbes 400 have given almost half a billion dollars to candidates of both parties, most of it since 2000. Seah Chiang Nee, Bridging the rich-poor gap, The Star, June 2, 2012. A former high-ranking economic adviser in Singapore is calling for low-level worker pay to be hiked 50 percent over three years and pay at the top to be frozen.
In Review
New York, New York, A Most Unequal Town Income Inequality In New York City. A New York City Comptroller’s Office report. May 2012. New York Mayor Michael Bloomberg’s proposed ban on super-sized sodas drew a tidal wave of national media attention last week. An official city government report on New York's super-sized incomes issued the week before, by contrast, drew virtually no national attention at all. Mayor Bloomberg isn’t complaining. The scrum over soda helps Bloomberg position himself as a visionary boldly breaking new ground for the public good. The new report from the New York City comptroller’s office, Income Inequality In New York, positions Bloomberg as something far less flattering: a mayor on whose watch New York's wealthy have prospered as never before. New York, quite simply, has become the most unequal major city of the world’s most unequal major nation. New York City has proportionately more people sitting in the lowest-income brackets than the United States as a whole, fewer people in the middle brackets, and more people at the top. Many more. Nationwide, just 0.16 percent of federal income tax filers reported incomes of at least $1 million in 2009. New York, at 0.43 percent, had almost triple that millionaire-income density. At the national level, millionaire tax filers claimed 9.5 percent of America’s 2009 personal income, essentially about one dollar of every ten. Million-dollar earners in New York claimed 26.7 percent of the city’s personal income in 2009, more than one dollar of every four. In 2007, the last full year before Wall Street's meltdown, New York's rich did even better than that. The city’s top 1 percent — tax filers who that year made over $660,532 — pulled in 44 percent of the city’s income. In 2009, after the meltdown, that top 1 percent share dropped to 32.5 percent, still almost twice the top 1 percent's 16.9 percent national share. The new comptroller’s office report only takes the New York income story through 2009, the latest year with full official data available. Wall Street incomes, we know from other sources, rebounded quite nicely in 2010. In other words, New York’s income distribution today most likely has become even more top-heavy. And the problem with all this inequality? At the national level, the new city comptroller’s report notes, “excessive income inequality” drags down economic growth, invites financial crises, and even saps our democratic vitality. At the municipal level, the report adds, “growing income disparities” can be equally destabilizing. They can intensify class and racial segregation and “undermine the social cohesion that makes urban neighborhoods interesting and comfortable places to live and work.” Are you listening, Michael Bloomberg?	Inequality Links Inequality.org Common Security Clubs/Resilience Circles 99% Power United for a Fair Economy Wealth for the Common Good OccupyWallStreet Occupy the Board Room The Other 98% US Uncut The Equality Trust New Economy Working Group Class Action Mind the Gap Tax Justice Network The Robin Hood Tax Us Against Greed Make Wall Street Pay Patriotic Millionaires for Fiscal Strength We Are the 99 Percent