|
| June 18, 2012 |
| THIS WEEK | |
| Newt Gingrich, America’s most over-the-top political self-promoter, thinks we may have a problem with our politics. Said Gingrich last week in a national TV interview: “I think the current system is rigged, frankly, in favor of the wealthy.” Gingrich, of course, should know. His campaign for the GOP Presidential nod rested on the shoulders of a single billionaire. Now that billionaire — casino king Sheldon Adelson — has switched horses. Last week, Adelson announced a $10 million contribution to a Mitt Romney super PAC and hinted at “limitless” contributions to come, as much as $100 million in all. Meanwhile, Politico is reporting that several other conservative billionaires are busy raising a $1 billion war chest for November. That billion would sit on top of the $800 billion that the official GOP campaign apparatus expects to spend. Some perspective: John McCain spent $370 million in 2008, Barack Obama $750 million. So have we reached a plutocratic tipping point — or passed it? In this week's Too Much, more information and inspiration to help you frame an answer. |
|
| GREED AT A GLANCE | |
| Old soldiers these days — or at least old admirals — don’t fade away. They do security for the world’s super rich. Retired U.S. Coast Guard vice admiral Brian Peterman’s “Command at Sea International” offers a super yacht security retrofit that typically runs around $4 million for a $50 million cruiser. One big problem with super yachts: They’ve grown so large that intruders can slip aboard at a hundred different places. The high-tech fix: footstep detectors. These essential devices sense intruders the moment a foot hits the yacht deck, alert shipboard security, and fix the ship’s cameras on the intruder’s location. Admiral Peterman has no trouble finding customers. Pirates hijacked four yachts in 2011 . . .
CEO pay at America’s seven largest banks averaged 100 times the median U.S. household income in 1989 — and over 500 times that median in 2007. European bankers have spent the last 20 years trying to catch up to that gravy train, and that catching up seems about to get much harder. The European Parliament, the Financial Times reports, appears poised to limit — later this summer — all bank annual bonuses and related “incentive” pay to a total that does not exceed an individual banker’s straight salary. Bonus pay today typically runs up to 10 times straight salary payouts. Belgian Green Party lawmaker Philippe Lamberts has led the push for the new banker pay cap, and the measure would apply both to bankers working at European Union-based banks anywhere in the world and to EU-based staff of American and Asian banks. |
Quote of the Week “Economic inequality feeds into inequalities of political power, leading to still more economic inequality.”
|
| PETULANT PLUTOCRAT OF THE WEEK | |
|
| Stat of the Week The highest combined state and local tax rate on a $1 million income? That would be the 12.7 percent rate on a couple's million-dollar income in New York City, Forbes reports. That couple will pay $103,280 in 2012 state and lobal income taxes, down from $123,960 in 2011.
|
| inequality by the numbers | |
 |
Take Action Help put the drive to fund a documentary film version of The Spirit Level over the top — and get a signed copy of this landmark book in the process. Urge the SEC to stop its regulatory foot dragging and require companies to report their CEO-to-worker pay ratios, as Congress mandated in 2010. |
| IN FOCUS | |
| Magic Act: Making the Super Rich Disappear The Federal Reserve has once again counted up America's personal wealth — and omitted the nation's 400 richest from the final tally. But the new figures, even with that omission, show a divide still deepening. In the middle of middle America — in a suburb just outside of Dayton, Ohio — funeral home owner Anne Dunbar has noticed a rather unnerving new trend. Families used to want the obituary notices that Dunbar writes up to include a pitch for donations to their dear departed’s favorite charity. Some families are now requesting notices that ask for donations toward their funeral expenses. You won’t find Anne Dunbar’s story — or any other anecdote about the collapse of America’s middle class — in the latest Changes in U.S. Family Finances study the Federal Reserve Board released last Monday. What you will find: the most exhaustive set of numbers yet on the devastation that the Great Recession and decades of rising inequality have wreaked on average American families. Most Americans, the new data help make plain, have essentially spent the last 20 years on a go-nowhere treadmill. They’re working longer and harder and have zero new wealth to show for their labor. In 2010, the net worth of the median, or most typical, American family stood at $77,300, about the same net worth, after taking inflation into account, that the typical American family held back in the early 1990s. Most U.S. families today have the bulk of their net worth sitting as equity in their homes. The pop of the housing bubble has zapped that equity. Between 2007 and 2010, notes the new Fed study, typical American families lost 40 percent of their total net worth. The housing crash accounted for three-quarters of that plummet. But home values, the Fed study reports, haven’t been the only aspect of middle class economic life to take a significant hit. Incomes have plunged as well. The take-home of the typical American family, after taking inflation into account, dropped 7.7 percent in the three years after 2007, down to $45,800. All these numbers come from the Federal Reserve’s Survey of Consumer Finances, an intense series of field interviews the Fed conducts every three years. The interviews usually run an hour and a half, but can last — for families with complicated financial situations — twice that long. Fed researchers completed just under 6,500 of these in-depth interviews for the 2010 Survey of Consumer Finances. The Fed selected 5,000 of these families through a random sampling of American households. But random samplings don't generate enough wealthy households to give a statistically rich enough sense of life at America’s economic summit. To help spotlight that summit, Fed researchers supplemented their basic 2010 sample with a list of another 1,500 families, all affluent, identified through tax records. The resulting data from all these interviews paint the most statistically comprehensive portrait of personal wealth in America available anywhere. But this portrait has one gaping hole. For confidentiality reasons, the Federal Reserve excludes from the Survey of Consumer Finances interview process any family that appears on the annual Forbes 400 list of America’s richest. That exclusion means that the new Federal Reserve numbers for 2010 understate — by $1.37 trillion, the total wealth of that year’s Forbes 400 — America’s actual level of wealth concentration. The Federal Reserve Changes in U.S. Family Finances report released last week doesn’t much concentrate on that concentration. The report offers no specific wealth and income breakouts for America’s top 1 percent. Analyses at that level will have to wait until scholars get their hands on the micro data that the Fed’s 2010 Survey of Consumer Finances has generated. The new Fed study does give us income and wealth breakdowns for America's top 10 percent, those families that made over $142,000 in 2010. These families averaged $2.9 million in net worth, about 15 times the $199,000 average net worth of families in America’s middle 20 percent. Between 2001 and 2010, America’s top 10 percent gained net worth. Over that same span, all income brackets below the top 10 percent lost net worth. Major swatches of American families below the top 10 percent tier, the Fed numbers also show, remain deep in debt. In 2007, only 56.4 percent of the nation’s families found themselves able to do any saving. In 2010, even fewer families — just 52 percent of the total — saved any money. Those families struggling the hardest? The new Fed data give that unsought distinction to families headed by 35- to 44 year-olds. Just 47.8 percent of these families did any saving in 2010. Between 2007 and 2010, their net worth fell a stunning 54 percent, down to $42,100. Add together the net worth of over 80,000 of these families in 2010 and you’ll have a fortune that equals the net worth of a single average deep pocket on that 2010 Forbes list of America’s 400 richest. |
New Wisdom Mark Karlin, How the 1 Percent and Transnational Corporations Hijacked Our Political System and What to Do About It, TruthOut, June 12, 2012. An interview with Chuck Collins, author of 99 to 1. John Gapper, Excessive CEO pay rarely rewards investors, Financial Times, June 13, 2012. CEO pay as “an Escher drawing in which everyone ascends an unending staircase.” Niklas Pollard, Sweden, where CEOs come cheap and still deliver, Reuters, June 14, 2012. Sewdish CEO pay is rising, but still runs much less than CEO pay in the United States. Dave Zirin, Red State Hoops: The Oklahoma City Thunder and the value of Seattle's rage, Nation, June 15, 2012. The story behind the NBA finals: billionaires demanding a $300 million bounty in corporate welfare. Nathaniel Popper, CEO Pay Is Rising Despite the Din, New York Times, June 17, 2012. In 2011, for the first time ever, two chief execs at publicly traded companied walked off with nine-digit pay packages
|
| In Review | |
| Time to Ask: Who Didn't Let the Dogs Out?
All the world should now understand, thanks to the tragic mess in Greece, the incredible damage that massive tax evasion and avoidance by a society’s rich can do. The 900 wealthy families that run the Greek merchant shipping industry have, for instance, collected $175 billion in untaxed earnings over the past decade alone. Even a modest amount of tax revenue from that income could have made a serious dent on Greek’s national debt, now at $350 billion. Similar stories play out all over the world. Outright tax fraud and other financial crimes may total as much as 3.6 percent of total global economic product. Last week, at an conference in Rome, tax administrators and law enforcement personnel from nations in and outside the OECD, the developed world’s top economic agency, met to share strategies for attacking this massive crime wave. The OECD, to supplement the conference, also published this book-length report. The pages of the OECD's new report overflow with gobs of detailed, financial crime-fighting expertise and plenty of unfamiliar acronyms for bilateral pacts and tax treaties and “tax information exchange agreements.” But these pages also broadcast a simple message. The bureaucrats know how to catch the tax crooks. They come across, throughout this report, as bloodhounds eager to get off the leash and onto the chase. Their political “masters,” unfortunately, have yet to let them go. Criminologists have been following this dynamic for years. Common street criminals, as former bank regulator William Black noted last week, have no powerful lobbies working the halls of power on their behalf. But those power suits who commit crime in the suites do have “well-funded, powerful, and seemingly legitimate lobbyists” — and legions of lawyers they consult “before, during, and after they commit their crimes in order to try to minimize the risk of being sanctioned.” As a result, says Black, we've “deregulated, desupervised, and de facto decriminalized finance in the U.S. and Europe to an unprecedented extent in the last 30 years.” Indeed, none of our U.S. banking regulatory agencies have even yet conducted a serious investigation of 21st century financial crime. “When it comes to elite frauds,” says Black, “if you don’t look, you don’t find.” We need to start looking. Unleash the hounds. |
Inequality Links Common Security Clubs/Resilience Circles Patriotic Millionaires
|
Millions of Americans lost sizeable nest eggs when the dot-com stock bubble burst a dozen years ago. But that bursting made Frank Schilling, an “investor” now based in the Cayman Islands, a mega millionaire. Schilling bought up hundreds of thousands of domain names from failed Internet efforts and then sold enough of them, CNET reports, to 
We had a Wall Street alpha male sighting on Capitol Hill last week. Jamie Dimon, the CEO of America’s 
OECD, International Co-operation against Tax Crimes and Other Financial Crimes: A Catalogue of the Main Instruments, June 14, 2012, Paris. 272 pp.
No comments:
Post a Comment