Too Much a commentary on excess and inequality

Too Much a commentary on excess and inequality

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April 2016

This Month

Back in 1995, in an America of surging inequality, the MIT economist Lester Thurow observed that “some very successful societies have existed for millenia with enormous inequalities of wealth and income.” But, he quickly added, none of these societies — ancient Egypt, imperial Rome, classical China, the Incas — “believed in equality in any sense.”

We do, Thurow noted, and that’s why rising inequality has American democracy in “uncharted waters.” We just don’t know how wide our economic divide can stretch, he mused, “before something snaps.”

Thurow won’t get to see how wide. He passed away last month, at age 77. Here at Too Much, we mourn his passing. In 1995, our very first year of publication, we highlighted his insightful reflections on inequality.

Too Much has gone through many permutations since then. We’ve switched from paper to bits and bytes. We’ve changed frequencies. Later this month, we’ll be changing again. Our inequality team at the Institute for Policy Studies will be folding together the monthly Too Much and the online presence to create a new weekly newsletter.

Please watch your email inbox for our new look. We think you’ll like it.

Sam Pizzigati, editor, Too Much


About Too Much

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Images of Inequality

yacht piano

Some really good news for The Donald’s Palm Beach pals! Last month’s 31st annual Palm Beach International Boat Show saw the debut of an incredibly exciting new high-seas entertainment option: a grand piano specifically designed for super yachts. The new Goldfinch Sygnet yacht model runs a mere $100,000 and comes with a “self-playing feature” that will thoughtfully tinkle the keys with a mere “swipe of an app.”


Greed at a Glance

The most luxurious hotel ever built, The 13, will open this summer in Macau, the Asian gambling hub. The per-room construction cost: $7 million. Thirty bright-red Rolls-Royce Phantoms will make up the hotel’s airport guest pick-up fleet.

More “trickle down” that helps make life marvelous for moguls: In the name of raising people out of poverty, the World Bank has invested over $1 billion into luxury hotels throughout the developing world. One of these properties, the Taj Exotica in the Maldives, has room rates that run up to $7,000 per night.


Inequality by the Numbers

April infographic

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Stats of the Month

The salary of Ohio State University football coaching legend Woody Hayes in 1978, in inflation-adjusted dollars: $152,615. The 2016 pay of current OSU coach Urban Meyer: $6.5 million.

Tax havens are enabling the world’s super rich to evade between $2 and $2.6 trillion a year in taxes, the equivalent of between 2.6 and 3.5 percent of global GDP, concludes new Banca d’Italia research.

Reverse Robin Hood: The tax plan of GOP White House hopeful Ted Cruz would cut federal taxes 25.3 percent — an average $435,854 — on the top 1 percent and increase taxes 21 percent on America’s poorest 20 percent, a new Citizens for Tax Justice analysis calculates.

A new study is bemoaning the rise in German income inequality. Germany’s top 20 percent took home five times the income of the bottom 20 percent in 2014, up from 3.5 times in 2000. The U.S. top 20-bottom 20 gap in 2014: 17 times.

The debt settlement that U.S. hedge funds have just forced upon Argentina will deliver billionaire Paul Singer a 370 percent return on his original investment.


The Too Much Interview

A Rougher Road for Redistribution

Progress in the struggle against inequality seems to have stalled in the deeply divided societies of Latin America. What next?

The nations that make up Latin America have historically displayed precious little of a commitment to equity. Latin America entered the 21st century as the world’s most economically unequal region.

Nora LustigLatin America’s rich today remain “world class,” by any measure. Only four individuals in the entire world, for instance, have amassed a greater fortune than Mexico’s Carlos Slim.

Nearly a quarter of Latin Americans, meanwhile, make less than $4 per day. Overall, according to World Bank figures, nearly two-thirds of Latin America’s population makes less than $10 daily.

What can Latin America’s governments do to address this stunning maldistribution of income and wealth? What are they doing? Tulane University economist Nora Lustig is working on the answers.

Lustig is currently directing Commitment to Equity, a joint effort of Tulane and the Inter-American Dialogue that’s helping governments, multilateral institutions, and nongovernmental organizations “build more equitable societies.” She shared some of her insights on Latin American inequality — and the struggle to overcome it — last month in an interview with Too Much editor Sam Pizzigati.

Too Much: Thanks to economists like Thomas Piketty and Joseph Stiglitz, many of us today have a fairly clear sense of the historic trajectory of inequality in the United States. Inequality decreased significantly between the start and the middle of the 20th century, we now understand, and has been increasing significantly ever since. Has inequality in Latin America followed a similar trajectory?

Societies where wealth concentrates poorly support high quality public goods.

Nora Lustig: The data we have prior to the 1980s are too scant to make any sweeping statement about trends in Latin America. But we can say that, broadly speaking, inequality rose in the 1980s and 1990s and then has declined since the start of the millennium. Some indicators show that, since 2012, the decline in inequality has not continued. 

Too Much: Over recent years, several major Latin American nations have launched efforts to “level up” the poor with government transfers of various sorts. What factors have been driving this more progressive tilt in public spending?

Read the rest of the full Too Much interview . . .



“People are poor not because they don’t have the skills to move up the economic ladder. They are poor because the billionaire class uses all its economic muscle to financially strip-mine the economy by reducing wages and benefits and shipping jobs abroad. It’s not about equal opportunity. It’s about power and money.”
Les Leopold, Huffington Post, March 1, 2016 

“The only time most wealthy people want much to do with the rest of us is when they must. And during the election season, they must.”
Donna Smith, Common Dreams, March 8, 2016

“The answer to proto-fascism is better democracy. The answer to economic fear and insecurity is actual redistribution of wealth.”
Bill de Blasio, New York mayor, March 12, 2016

“The über wealthy already control the politicians who run Washington. Electing Trump, the poster boy for income inequality in America to the White House, would do nothing more than cut out the middle man.”
Mike Thompson, Detroit Free Press, March 12, 2016

“A popular conception of the Supreme Court is that it is designed to protect vulnerable minorities from majoritarian rule. Instead, the court of recent memory has enhanced a powerful minority at the expense of the majority. I believe we currently have a court for the one percent.”
Michele Gilman, University of Baltimore law prof, The Conversation, March 30, 2016

Petulant Plutocrat of the Month

Debra ReedSempra Energy CEO Debra Reed moonlights. Like so many of her fellow corporate chiefs, she sits on the board of directors of other corporations. That sitting, she likes to tell skeptics, may be more valuable “than an MBA.” More valuable certainly for Reed. Sempra’s own board of directors has three veteran corporate CEOs on its compensation committee. Those CEOs have done their best to make Reed’s life sweet. In 2015, we learned last month, Reed collected $16.1 million for her labors, including $3.2 million in bonus cash. Not bad for a year that saw a Sembra subsidiary create the “the biggest natural gas leak in U.S. history.” The “penalty” on Reed for that leak? Sembra docked her pay all of $130,000. Reed grabbed over quadruple that sum last year from the fees she collected for sitting on the corporate boards of Caterpillar and Halliburton.


 RDAW cover

Can Americans beat the billionaire class? They already have once! Read howin Too Much editor Sam Pizzigati’s lively history of the triumph over America’s initial plutocracy.

Antidotes to Inequality

A Landmark Precedent for Pay Ratios

The Knesset, Israel’s parliament, has just passed legislation that caps financial industry CEO pay at 35 times the gross income of that CEO’s lowest-paid employees. Banks that pay over that 35-times cap won’t be able deduct the excess off their taxes as a business expense.

Top financial industry execs in Israel currently make up to 140 times more than their workers. The new Knesset legislation essentially caps top pay — for tax purposes — at $510,000.

The roots of this new legislation go back about a decade. In 2007, lawmakers in the Knesset introduced two variations on the “maximum wage” theme. The Labor Party’s Shelly Yachimovich called for denying corporations a tax deduction on any executive pay that runs over 50 times the compensation of a company’s lowest-paid workers.

Israeli lawmakers have just defined as excessive any CEO pay over 35 times worker pay.

A related proposal, introduced by lawmaker Dani Yatom, would have capped actual executive pay in government-owned enterprises at 10 times the Israeli minimum wage.

Yachimovich’s legislation appeared ready to pass in 2010, until Israeli prime minister Binyamin Netanyahu had it blocked. But advocates for pay caps kept plugging away. Their work finally paid off last month. Their newest pay-cap legislation passed by a 56-0 margin.

Last month’s Knesset action covers only financial industry firms. But the action’s backers are planning to extend their pay cap’s reach to all publicly traded corporations.

Could that reach also extend beyond Israel’s borders? Legislation to link the deductibility threshold of executive pay to a multiple of worker pay has been pending in the U.S. Congress since the early 1990s.

More antidotes: Progressive lawmakers in New York have opened a new front in the battle against the “carried interest” loophole, the federal tax code provision that slices the tax rate on the bulk of hedge fund billionaire income from 39.6 to 23.8 percent. They’re pushing for a bill that raises state income taxes on resident hedge fund kingpins . . .

Activists with Patriotic Millionaires, the group leading the New York carried interest charge, have also publicly released a letter — signed by 51 wealthy New Yorkers — that urges governor Andrew Cuomo to up the state tax rate on income over $100 million from 8.82 to 9.99 percent . . .

A plurality of Germans, new polling shows, want to see a legal maximum wage for corporate executives. Some 44 percent of Germans support a corporate pay cap. Only just over a quarter oppose the idea.


Take Action
on Inequality

How much does America’s richest 1 percent owe you?

A new interactive website is vividly showing just how much income and wealth individual Americans would have today had we not seen — over the past four decades — a meteoric rise in economic inequality.  

Learn more about this new site — and spread the word!

Now featured on

Sarah Anderson on Denmark as the world’s happiest place

Marc Priester on how the affluent are reacting to election 2016

Scott Klinger on CEO pension madness

Josh Hoxie on income segregation and cross-class empathy

Chuck Collins on remembering Martin Sabo,
a CEO pay reform pioneer




A look at major new inequality-related research efforts

Knight Frank wealth report 2016The World Wealth Report
Andrew Shirley, editor.
Knight Frank, March 2016

What do the ultra rich have against fine furniture? The value of investment-grade furniture has dropped 28 percent the past 10 years. Every other asset class in the new Knight Frank Luxury Investment Index, from wine and art to jewelry and classic cars, has increased over that span, with many more than doubling.

You’ll find plenty more juicy tidbits in this latest rundown of global fortunes and the global fortunate. One stand-out stat: Over 80 percent of the world's high-wealth set now fear they may see new taxes on their wealth.

Also released last month: We now have another reason to raise Social Security benefits in the United States. New research out of Rutgers University is showing a rising income and wealth gap between America's richest and poorest seniors . . . 

Poor students who grow up in areas with high income inequality turn out to be more likely to drop out of school than poor students in less unequal areas, says new research from economists Melissa Kearney at the University of Maryland and Phillip Levine at Wellesley College . . .

Respect for human rights thrives in societies that tip toward greater equality.

A new Oxfam analysis that explores the extent of UK inequality, Ending the Era of Tax Havens: Why the UK government must lead the way, is urging that the world’s tax havens be required to reveal all the beneficiaries of the shell companies they host . . . 

In two new studies written up in the journal Appetite, researchers from Scotland’s University of St. Andrew are offering the first experimental evidence that poverty and inequality can cause obesity. The social anxiety that inequality generates, notes lead researcher Boyka Bratanova, “pushes people to consume larger amounts of food high in sugar and fat as a way to soothe their emotions.”

A just-published report to the UN Human Rights Council concludes that economic inequality undermines human rights. Human rights law, notes report author Juan Pablo Bohoslavsky, “does not necessarily imply a perfectly equal distribution of income and wealth.” But human rights law “does require conditions in which rights can be fully exercised.” And that requires “a certain level of redistribution,” the report adds, “to guarantee individuals an equal enjoyment of the realization of their basic rights.”

New research from Washington University in St. Louis is shining a light on “the dark side” of CEO incentive-based pay. Top execs, a team of business school profs have found, are regularly shortchanging R&D and making other moves that pump up short-term corporate profits at the expense of long-term shareholder value. The new study crunches CEO incentive pay data over a 14-year period that ends in 2012. 


New Wisdom
on Wealth

Jena McGregor, A radical idea for CEO pay: Just give them a fixed salary, Washington Post, March 4, 2016. Simple and sweet.

Elias Isquith, Les Leopold explains how the 1 percent killed the middle class, Salon, March 5, 2016. On financial strip mining.

Alexander Stille, Donald Trump, America’s Own Silvio Berlusconi, The Intercept, March 7, 2016. On why we have billionaire circuses.

Annelise Orleck, The New War on Poverty, Moyers & Company, March 11, 2016. By focusing on the 1 percent, activists have reset the discourse on why so many have so little.

Ben Lett, Comparing the 1950s and Today: Economics and Taxation, Economics Without Greed, March 11, 2016. CEOs then, CEOs now, and more.

Branko Milanovic, Why Global Inequality Matters, and Emmanuel Saez, Why Should We Care About Inequality? Social Europe,  March 17-18, 2016. Two top scholars explain.

Alexander Chaitoff, The Neglected Importance of Relative Inequality in Fighting For Better Health, In Training, March 20, 2016. Doctors should learn how inequality impacts health.

Asher Schechter, The United States Has Lost the Will and Ability to Prosecute Top Corporate Executives, Pro-Market, March 22, 2016. How rising inequality distorts how prosecutors behave.

Ben Moore, Time We Introduced a Maximum Wage, Huffington Post UK, March 31, 2016. Our culture suffers when money rates as the ultimate prize.


Handy rejoinders to the apologists for our top-heavy status quo

Mobility and Homogeneity: A Deeper Look

The claim: To make sure our societies welcome social mobility, we must resign ourselves to living amid economic inequality.

Defenders of our unequal status quo regularly argue that if we want to encourage people to develop their talents to the fullest, we have to accept the inequality that will inevitably result. Income inequality, this line continues, merely reflects the dynamics of a socially mobile society.

But a new look at the link between inequality and mobility, conducted by researchers at the OECD, shows absolutely no redeeming social value for inequality. Social mobility does not run at higher levels in more unequal societies, concludes the research, the first-ever that tracks inequality and mobility “across a large number of advanced economies.”

The claim: Egalitarian policies need homogenous populations to thrive.

Defenders of inequality also took a hit last month from a Scandinavian now living in the United States. In a moving Atlantic article, Anu Partanen notes that Americans are always telling her that Nordic-style egalitarian policies “might sound nice, but they’d never work” in her new country.

So much for homogeneity: Sweden has a large foreign-
born share of its population.

The reason? Nordic nations, these Americans tell Partanen, are small and homogenous. People seem like family to each other and, as a result, will willingly “sacrifice their own interests to help their neighbors.”

In fact, Partanen relates, “this vision of homogenous, altruistic Nordic lands” rates “mostly a fantasy.” Sweden, in fact, has a bigger foreign-born share of the population than the United States.

Scandinavians tax themselves — the rich included — at higher levels than Americans, Partanen relates, because those taxes support universal benefits, everything from free health care to free college, that benefit them personally as individuals.

“What America needs right now, desperately, isn’t to keep fighting the socialist bogeymen of the past,” she sums up, “but to see the future.”


Plutocrats at Play

Why merely pop the cork on a bottle of champagne when you can machine-gun out your bubbly? A Miami night club supply company is now hawking a water gun designed for magnum bottles of champagne. These “party weapons” come in three colors and cost $458 each.

Parking downtown can be such a drag when you’re just trying to have a relaxing evening out. That may be why developers have incorporated a private night club into a new luxury home they’re building in Beverly Hills. The club will come complete with DJ booth and, of course, full bar. The overall price for the seven-bedroom and two-bowling-lane manse: $100 million.


From Alaska to a More Egalitarian Future

Sharing EconomyA Sharing Economy: How social wealth funds can reduce inequality and help balance the books
Stewart Lansley, Policy Press, 150 pp.

In an essay some 70 years ago, George Orwell famously decried how the political manipulation of language can corrupt how we think. That manipulation continues today.

Our most outrageous contemporary example? That may be “the sharing economy,” the new label for the “peer-to-peer” economy birthed by the likes of Uber, a company that has drivers sharing their cars with strangers — and billionaires magically emerging from this “sharing” exchange.

In a real “sharing economy,” of course, we wouldn’t have billionaires. We would have a much more equal distribution of income and wealth than we do now. But how to get there?

This latest work from the British egalitarian writer Stewart Lansley offers a particularly promising idea. We need to look much more seriously, Lansley posits, at the phenomenon of social wealth funds.

Social wealth funds could help us see that more wealth should be held in common.

These funds exist today, in various configurations, all around the world. They typically take dollars generated by a publicly held resource, invest those dollars for the long-term, and distribute benefits to the public.

The original idea goes all the way back to Texas of all places. In 1854 the state established a “Permanent School Fund” to support education.

In the years since, the Texas fund has received proceeds from the sale of state land and the rental of mineral rights for oil and natural gas and distributed earnings on those dollars to state schools and colleges.

Alaska’s 40-year-old “Permanent Fund” operates on a similar basis. The distributions here — as much as $13,000 annually for a family of four — go straight to state residents. Alaska, not so coincidentally, just happens to be America’s most equal state.

Most existing social wealth funds — especially the national “sovereign wealth funds” that have multiplied of late — don’t make any real contribution to a more equal future. These funds operate with little transparency or democracy. But they don’t have to operate that way.

Social wealth funds, Lansley argues, could “challenge the idea that an ever-higher proportion of economic activity should be built around private ownership, embracing instead the idea that more of a country’s wealth should be held in common, with the benefits widely shared.”

A real narrowing of our economic divides, he writes, “requires a strategy that raises the floor and lowers the ceiling and ensures a fairer spread of economic opportunities and social outcomes.”

That strategy, these pages convincingly lay out, ought to include a key role for social wealth funds.


What to Watch

New from the think tank Demos: We Must Talk About Race to Fix Economic Inequality, a four-minute video exposing the narrative of racial resentment.

About Too Much

ISP logoToo Much, an Institute for Policy Studies monthly publication | Institute for Policy Studies, 1112 16th Street NW, Suite 600, Washington, DC 20036 | 202-234-9382

Editor: Sam Pizzigati | | Archive | Unsubscribe




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