 | August 6, 2012 |
| THIS WEEK | |
Most Americans want to live in a much more equal country, Duke University's Dan Ariely quipped in the Atlantic last week. They just don’t realize it. Ariely should know. In a huge research project, Ariely and a colleague asked over 5,000 Americans how much of America’s wealth belongs to the richest and poorest fifths of U.S. households and each fifth in between. A “vast majority” gave responses that wildly underestimated how unequal America has become. The researchers then asked everyone in their sample to choose between two unidentified distributions of wealth, one representing the actual distribution in the United States today, the other the distribution in Sweden. Over 90 percent of both Democrats and Republicans preferred the much more equal Swedish distribution. Given this overwhelming preference for greater equality, how can the United States still be getting more unequal, not less? Good question. One answer: Our democracy has become a plutocracy. The rich rule. And these days, as we detail in this week’s Too Much, they don’t see any need to sugarcoat their dominance. | |
| GREED AT A GLANCE | |
Two things you don’t want to do this summer if your net worth runs over eight digits: try to sell your private jet or build a vacation home in Hawaii. Used-jet prices, new figures show, have sunk nearly 50 percent. Few deep pockets these days apparently feel like settling for anything less than a brand-new jet, and Gulfstream, the biggest name in private luxury aviation, can’t keep up with the demand, even with per-plane prices topping $62 million. Gulfstream's back-order list now stretches 200 planes long. What’s Hawaii’s problem? A new study of America’s best sites to build an “ultra high-end beach house” is reporting than you can build a palace on South Carolina’s Kiawah Island for less than half the $1,300 per-square-foot cost of putting up a head-turner in Hawaii. . . .  A milestone for China. The Asian economic giant now hosts over a million millionaires, says the just-released latest edition of the annual rich list from publisher Hurun Report and a Shanghai investment firm. The really rich in China — those with net worths that the Hurun Report puts at over $16 million — now total at least 63,000. Ninety percent of these super rich, says the new China rich list survey, are considering sending their kids overseas for school, most to the United States, and 44 percent are planning to emigrate. Their top choices in destination? Canada, with the United States and Singapore close behind. | Quote of the Week “What can be done to deal with growing income inequality and close the astronomical divide between the billionaires and millionaires and the rest of America? A maximum wage law. A maximum wage law would limit the amount of compensation an employer could receive to a specified multiple of the wage earned by his or her lowest paid employees.” |
| PETULANT PLUTOCRAT OF THE WEEK | |
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The typical American nearing retirement, after a lifetime of labor, has a net worth of about $180,000. That equals,notes economist Dean Baker, about one week’s pay for the CEOs behind Fix the Debt, a new pressure group top U.S. execs have formed to lobby for cuts to Social Security. |
| INEQUALITY BY THE NUMBERS | |
 | Take Action Learn more — from Americans for Tax Fairness — about what the extension of the Bush tax cuts would mean for your state. Then share that information in a local letter-to-the-editor. |
| IN FOCUS | |
In Plutocracy, Only Moguls Have Megaphones In today's anything-goes political fundraising world, the nation’s super rich and their favored politicos are no longer even going through the motions of maintaining 'separate and independent' campaigns. The U.S. Supreme Court's most notorious decisions have almost always rested on preposterous claims. The 1896 ruling that okayed segregation, for instance, held that imposed racial separation violated no constitutional rights since government had the capacity to keep public services and facilities “separate but equal.” But government officials during segregation made no effort to offer anything even remotely close to equal services — and no one ever expected they would. The 2010 Supreme Court ruling in Citizens United — the decision that has opened the door to letting rich people essentially spend whatever they want, whenever they want, on political campaigns — rests on another preposterous claim. All those millions the rich are injecting into politics won’t distort our democracy, the high court assures us, because we can keep these millions separate and independent from the campaigns that the candidates the rich favor are running. No one in politics, of course, believes for a minute that anyone can actually keep the super rich and their “independent expenditures” totally separate from any particular candidate’s campaign. But everyone involved in the political games rich people play has been playing along with this convenient fiction. Until last week. The game-changer came at the luxurious five-star St. Regis Hotel in Colorado's Aspen, the favorite mountain getaway of America’s awesomely affluent. The occasion: a retreat hosted by the Republican Governors Association that brought together, Politico reports, “some of the biggest names in GOP politics,” including top advisers to the Romney campaign, and key “representatives of deep-pocketed political spenders” like the billionaire Koch brothers. Also on hand: some 200 big donors themselves and the political strategists — like Karl Rove — who run the “independent” campaign groups that are masterminding how best to spend their money. How can the rich and their hired guns spend a week rubbing shoulders with the top aides of the candidates they support and still claim they’re all operating independently? They can’t. Yet no one in federal campaign law officialdom seems to care. We have come to live in a political system where anything goes. Big money, as Mother Jones analyst Andy Kroll notes, is now “flooding the political system like never before.” But most Americans haven’t yet noticed. Only 25 percent of Americans say they’ve heard a lot about campaign spending so far this year, the Pew Research Center reported last week, and 39 percent say they’ve heard “nothing at all.” Two just-released public interest group reports are making a noble effort to pierce this current campaign funding fog. A new analysis from the Center for Responsive Politics is now estimating that total spending on the 2012 presidential and congressional elections — by presidential candidates, Senate and House candidates, political parties, and “independent” groups — will likely hit $5.8 billion, an all-time record. A hefty share of that near $6 billion, concludes a new study from Demos and the U.S. PIRG Education Fund, is coming from America’s ultra wealthy and the “small number of organizations that aggregate” their power and voices. One example: Of the $318 million so far raised this election cycle by super PACs — the political panels that can raise “unlimited sums from virtually any source” — over 60 percent has come from just 100 donors. These 100 averaged, calculatesthe Center for Responsive Politics, just under $2 million each in contributions. The public interest groups following this election’s money chase all readily acknowledge that their numbers undercount the real cash the rich are heaving into the political fray. Outside “independent” spending has become “a wild card that makes predictions tricky,” notes the Center for Responsive Politics. Nonprofits set up to harvest political campaign dollars from the super rich, watchdog groups explain, don’t have to report their donors, and they don’t even have to report how much they’re spending on any of their “issue ads” that run over 60 days before November's Election Day. The top execs who run America’s biggest for-profit enterprises, meanwhile, are doing their best to keep shareholders — and consumers — in the dark about how much they've been funneling into campaigns since Citizens United gave corporations a green light to bankroll candidates. Just a tiny fraction of this subterfuge has so far come to light. Only aninadvertent disclosure by Aetna, to give one example, has revealed that the insurance giant has plugged an over $7 million political outlay to conservative political nonprofits that don’t have to report out their donors. These political nonprofits are in essence operating as “megaphones for moguls and millionaires,” add Demos and U.S. PIRG in their report released last week. “The more money they pump in,” the report explains, “the louder they’re able to amplify their voices — until a relatively few wealthy individuals and interests are dominating our public square, drowning out the rest of us.” The new Demos and PIRG study includes a list of reforms that could reduce the megaphone volume. One of these, a constitutional amendment to overturnCitizens United, picked up some support last week on Capitol Hill when a group of House Democrats introduced a “Restoring Confidence in Our Democracy Act.” On the Senate side, an attempt to force wider campaign finance disclosure failedlast month. Now senator Sheldon Whitehouse, a Rhode Island Democrat, is callingon Americans to put corporations that play in the “dark money” universe under the same sort of pressure that the anti-apartheid movement of the 1980s put on corporations that did business with South Africa’s apartheid regime. A mass movement helped crush apartheid. We need a mass movement, stresses the new Demos and PIRG report, to blunt our latest plutocratic power grab. “We cannot maintain a democracy of equal citizens in the face of significant economic inequality,” sums up the study, “if we allow those who are successful (or lucky) in the economic sphere to translate wealth directly into political power.” | New Wisdom Wayne Swan, John Button lecture, August 1, 2012. Australia’s acting prime minister explains why “the worst thing we can do as economic managers is create a society in which there are just a few at the top and teeming millions at the bottom, with hardly anyone in-between.” Mandi Woodruff, Extreme Income Segregation In U.S. Cities, Business Insider, August 1, 2012, New data show that the rich are living ever more separate from the rest of society. Ezra Klein, Nine takeaways on Romney’s tax plan,Washington Post, August 2, 2012. Analysts are exposing the enormously regressive impact of the Mitt Romney tax plan. Matt Taibbi, When Did Sandy Weill Change His Mind About Too Big To Fail? And Why? Rolling Stone, August 3, 2012. The retired Citi CEO is talking banking reform, now that the $792 million value of the Citi shares he held when he left the bank has shrunk to $43 million. |
| IN REVIEW | |
An Anti-Poverty Authority Changes His Mind
Peter Edelman has been battling against poverty for nearly half a century, first as an aide to senator Robert Kennedy, later as a state and federal official, and currently as a key figure at a top law and public policy center in Washington. Over his years in and out of government, Edelman has probably earned as much respect as anyone in the public policy community, not just for his obvious smarts and experience, but for his conscience and courage. Back in 1996, Edelman did what few high-ranking government officials ever do. Then an assistant secretary in the U.S. Department of Health and Human Services, he resigned that position when President Bill Clinton signed into law legislation Edelman considered an unconscionable attack on the nation’s poor. The “welfare reform” that Clinton signed into law, Edelman publicly warned, would leave millions of America’s most vulnerable children unprotected. He turned out to be right. The number of children living in deep poverty — in families making under half the official poverty threshold — rose 70 percent from 1995 to 2005 and another 30 percent the next five years. America’s elected leaders didn’t listen to Edelman in 1996. Now they have another chance. Edelman, currently a co-director at the Georgetown University Law Center, has just released a new book, So Rich, So Poor, that aims “to look anew at why it is so hard to end American poverty.” You get the feeling from these pages that Edelman would be astonished if our elected leaders actually paid attention to the poverty-fighting prescriptions he lays out in So Rich, So Poor. He seems to be aiming at a different audience, the millions of decent Americans from across the political spectrum who share his outrage over our continuing horrific poverty in the world’s richest nation. These Americans have a special reason for paying close attention to Edelman's new book. The author, one of the nation’s most committed and thoughtful anti-poverty thinkers, has changed his mind — not about poverty and the poor, but about wealth and the rich. “I used to believe,” Edelman writes candidly, “that the debate over wealth distribution should be conducted separately from the poverty debate, in order to minimize the attacks on antipoverty advocates for engaging in ‘class warfare.’ But now we literally cannot afford to separate the two issues.” Why? The “economic and political power of those at the top,” Edelman explains, is “making it virtually impossible to find the resources to do more at the bottom.” Figuring out how we can achieve a more equal distribution of income and wealth has become, writes Edelman, “the 64-gazillion-dollar question.” “The only way we will improve the lot of the poor, stabilize the middle class, and protect our democracy,” he notes, “is by requiring the rich to pay more of the cost of governing the country that enables their huge accretion of wealth.” What about those anti-poverty activists and analysts who still yearn to keep poverty — the absence of wealth — separate from wealth’s concentration, those who argue that the rich as a group have no vested interest in opposing efforts to help end poverty? So Rich, So Poor addresses these Americans directly. Some “might ask why the rich and powerful would oppose measures to help lower-income people — what difference does it make it to them?” Edelman’s answer? “More than anything else,” he notes, the wealthy “want low taxes,” and they know maintaining those low taxes will become ever more difficult “if government is going to spend money to help people who do need it.” At America’s economic summit, “selfishness trumps selflessness.” “The wealth and income of the top 1 percent grows at the expense of everyone else,” Edelman goes on to observe. “Money breeds power, and power breeds more money. It is a truly vicious cycle.” Only average Americans, Edelman believes, have the wherewithal to end this cycle. Average- and low-income Americans need to join in common cause. If they don’t, he notes bluntly, “we are cooked.” | Inequality Links |
DANCING NEBULA
When the gods dance...
Monday, August 6, 2012
Megaphones for Moguls
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