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February 18, 2008 |
| This Week | |
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Presidential candidates always have flattering things to say about the states they happen to be campaigning in. Sometimes those flattering words happen to be true. One of those times came last week, with Senator Barack Obama on the campaign trail in Wisconsin. “This is our time,” Obama declared, “and where better to affirm our ideals than Wisconsin, where a century ago the Progressive movement was born?” Progressive Americans do indeed owe an enormous debt to Wisconsin. In fact, progressives looking for political wisdom from the state might want to look beyond the results of this week's Wisconsin Presidential primary, to the struggles Wisconsin progressives waged a hundred years ago. In this week's Too Much, that's exactly what we do. |
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| Greed at a Glance: Pampered Cows | |
The world’s most aggressive corporate media empire, Rupert Murdoch’s News Corp., last year picked a 35-year-old junior executive to run the company’s Europe and America’s richest families have much more money, quite obviously, than middle-class families. They also, says a new Council on Contemporary Families report, have more children. The report’s author, University of Maryland sociologist Steven Martin, notes a “significant rise” in the number of three- and four-children families among the super-rich, a group defined as those families that collected, in 2004, over $400,000 in income. In that year, 41 percent of super-rich women aged 40 to 49 had three or more kids. Back in 1996, only 29 percent of forty-something super-rich women had families that large. The growing size of today’s super-rich families could reflect a demographic return to earlier unequal times. The super-rich, notes Martin, “have historically tended to have more children than the middle layers of society.” The heavily forested “Northeast Kingdom,” Vermont’s most rural corner, may soon belong to moose, bear, and deer — and mega millionaires. A Florida development company that specializes “in private golf courses and the million-dollar houses that surround them” is now pushing to build the Northeast Kingdom’s first luxury vacation home resort, the Burlington Free Press reports. The Ginn company’s $100-million project has already started local land prices zooming, and long-time residents, both natives and transplants “who came looking for quiet, rural beauty and small-town intimacy,” fear their town will soon lose its “egalitarian feel.” Laments Chick Gagnon, a 61-year-old heavy equipment operator who lives in a home he built himself: “We made this place and now we won't be able to afford to live here.” Ginn must still win local government planning board approval for the new resort . . . Restaurant industry observers last week predicted sluggish revenue growth over the next year, as escalating worries about a “weakening economy” have working families cutting back on eating out. But high-end restaurateurs, in the United States and elsewhere, still see bright skies ahead. In London, for instance, the “upmarket” Le Gavroche has jacked up the price for a pair of two-course meals to $336. Another London eatery, the Vivat Bacchus, last month inaugurated the UK’s first £1,000 — about $2,000 — fixed-price menu. The seven courses, notes the Daily Mail, include caviar, rock lobster linguini, and a steak from “cows so pampered they are individually massaged (before their masseurs kill them).” Stanford University’s newly created Center for the Study of Poverty and Inequality has just launched a free quarterly online and print magazine “committed to a truly open debate on issues of distribution that is constrained only by evidence and brute facts.” The first issue of this new Pathways journal features pieces by several top inequality scholars. The Center’s Web site, opened for business last fall, aims to investigate the “spectacular increase in economic inequality in many late-industrial countries.” Among the site’s offerings: annotated lists of academics worldwide, organized by their inequality specialties. |
Quote of the Week “America’s median hourly wage is barely higher than it was 35 years ago, adjusted for inflation. The income of a man in his 30s is now 12 percent below that of a man his age three decades ago. Most of what’s been earned in America since then has gone to the richest 5 percent.”
New Wisdom Robert Frank, The Pragmatic Case for Reducing Income Inequality, Pathways, winter 2008. A Cornell economist explores how the concentration of wealth at the top of the economic ladder has “prevented us from adopting efficient solutions to many problems that affect rich and poor alike.” Anne Alstott, Equal Opportunity and Inheritance Taxation, Harvard Law Review. A Yale tax expert makes the case that a fair playing field demands both “leveling down” through inheritance taxation and “leveling up” via “a public inheritance that helps give every individual
the financial means to start adult life from a position of equality.” |
| In Focus: The Real Lesson from Wisconsin | |
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How much do Americans today owe Wisconsin? Quite a bit. We can actually trace back to Wisconsin many of social decency's most basic building blocks. A short list: Wisconsin reformers pioneered “workmen’s compensation” to protect workers injured on the job and later enacted the nation’s first state law that extended benefits to unemployed workers. Wisconsin also outlawed legal discrimination against women before any other state. Progressives who cut their eye teeth in Wisconsin a century ago would go on to play, a generation later, key roles in the New Deal. One would author the original Social Security Act. But Wisconsin’s precedent-setting progressives don’t just deserve our admiration. They deserve our attention. These earnest activists still have much to teach us. They understood a political reality many progressives today simply do not get: In a deeply unequal society, progressives can only succeed when they struggle to cut the rich down to democratic size. “The supreme issue,” as Wisconsin’s “Fighting Bob” La Follette put it back in 1912, “is the encroachment of the powerful few upon the rights of the many.” La Follette took office as Wisconsin’s first progressive governor in 1901. At the time, Wisconsin’s richest 1 percent owned half the state's property. A mere 10 percent of the state's wealth, meanwhile, belonged to Wisconsin's bottom 80 percent. Wisconsin progressives would campaign to reverse that maldistribution from a variety of angles. They fought to curb corporate monopoly power. They pushed for inheritance taxes. And they battled for something then unknown in America: a progressive income tax. Wisconsin activists would win that battle. In 1911, their state became the nation's first with a graduated tax on income. By that time, La Follette had been elected to the U.S. Senate, where he was leading the charge for progressive tax rates at the federal level. His efforts would, during World War I, bear some significant fruit. By the war’s end, Congress had upped the top tax rate on income over $1 million to 77 percent. “So long as there is an income to be found in the country so large that it yields to its possessor a surplus over and above what he needs for the comfort or even luxuries of life for himself and his family,” La Follette thundered in the debate over war finance, “I am in favor of taking such portion of that surplus income by taxation as the government needs for war purposes, and if it needs it all, I am in favor of taking it all before we take one penny from the slender income of the man who receives only enough to provide himself and family with the bare necessaries of life.” We don’t hear that sort of thunder in the Senate today, or anywhere else in the upper echelons of American politics. Here in the early 21st century, the political leaders who seek progressive votes have much more modest agendas. One measure of that modesty: All the candidates who entered 2008 campaigning for the Democratic Presidential nomination agreed that the nation needs to roll back the George W. Bush tax cuts for the wealthy enacted in 2001 and 2003. But none of the Presidential candidates dared go any further. In the 2008 primaries, all the Democratic candidates have been willing to swallow, as an acceptable tax-the-rich standard, the 39.6 top tax rate on high incomes in effect when George W. took office. That 39.6 percent top rate equals just over half the rate that progressives like Bob La Follette won back during World War I. Wisconsin voters, for their part, loved Bob La Follette for his unrelenting opposition to grand accumulations of private wealth. They regularly re-elected him by record margins. “Citizens from all walks of life,” writes historian Nancy Unger, “were convinced that La Follette was sincerely dedicated to making their homes and workplaces safer and to providing a more equitable and just distribution of wealth and power.” “La Follette's battle to more equitably redistribute the nation's power and wealth,” adds Unger in her 2000 biography of this progressive giant, “continues to be waged.” Alas, not nearly well enough. Over the past 30 years, we have returned to the deep inequality that confronted our progressive forbears a century ago. They knew what to do. Will we? |
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| In Review: Our Patrons of the Arts | |
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Don Thompson, The $12 Million Stuffed Shark. Arum Press, 290 pp.
“The arts have always depended,” as a Financial Times commentator mused last week, “on the benefaction of the super-rich. There would be no Sistine Chapel without the super-rich papacy; no Mozart operas without the super-rich Viennese court.” And what of high culture today? Do our modern super-rich deserve kudos for keeping our society’s cultural flame burning bright? In 2006, economist Don Thompson set out on a “year-long journey of discovery” to find the answer. Deep into the New York and London art world he went, to quiz art dealers and auction house executives, to talk shop with art collectors and artists themselves. In the end, Thompson would find precious little culture, but plenty of raw, naked, greedy, silly commerce. He discovered “a competitive high-stakes game, fueled by great amounts of money and ego” where the “value of one work of art compared to another is in no way related to the time or skill that went into producing it.” Thompson’s title refers to the 15-foot tiger shark that superstar British artist Damien Hurst had mounted as an artwork in 1991. Fourteen years later, a New York hedge fund major domo bought Hurst’s shark for $12 million, at the time “more money than had ever been paid for a work by a living artist.” The 43-year-old Hurst has become a living symbol of the vast rewards now available at the art world’s summit. His personal fortune passed the £100 million mark, about $200 million, three years ago. Times have changed. In 1992, Britain's most honored modern artist, the 82-year-old Francis Bacon, died with £11 million to his name. What accounts for Hurst’s good fortune? Our global economy, Thompson notes, is simply generating more super-rich. The number of wealthy art collectors has, since the early 1990s, multiplied 20 times over — and so have artwork prices. In 2006, four paintings sold for over $100 million each. Should we be bothered by any of this? We certainly should — if we value the role art can and should play in a truly cultured society. The tilt of the world’s wealth toward the top is distorting and damaging the art world every bit as much as the rest of modern life. With so many super-rich collectors chasing so few art masterworks, Thompson explains, “both museums and private collectors face a ‘last chance’ situation every time a major work comes up for sale.” “Fearing they may never have another opportunity to add a certain artist or period to their collection,” he continues, “they purchase without consideration of past prices.” The resulting super-high price-tags have consequences. Museums, once free and easily accessible to all, have become costly destinations off-limits to average families. And Thompson estimates that some 30,000 young people with art talent are now wasting years off their lives walking the streets of New York and London, desperately searching for art galleries willing to sing their praises, with that number increasing each year “as publicity given to the high prices paid by contemporary art attracts more young artists to the profession.” In a society that truly valued art and culture, all these young talents wouldn’t be pounding the pavement. Many might be making a real creative contribution, by, for instance, teaching art in public schools. Instead, in school districts across the United States, art has become a disposable frill in tight-budget times. Super-rich who shell out millions for stuffed sharks. Schools that can’t afford to teach art. Not a pretty picture. But an inevitable one. In art as in life, we only ask for trouble when we let intense concentrations of wealth call our society’s shots. |
Stat of the Week CEOs at the 50 biggest corporations in the United States take home over two-and-a-half times more pay than CEOs at Europe’s 50 biggest corporations, a new Hay Group study concludes. The median pay for the U.S. execs: $17.4 million. The European median: just $6.7 million. The study covers the latest available corporate fiscal years for the 50 companies. |
| About Too Much | |
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Too Much is published by the Council on International and Public Affairs, a nonprofit research and education group founded in 1954. Office: Suite 3C, 777 United Nations Plaza, New York, NY 10017. E-mail: editor@toomuchonline.org. |
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Asia operations. That exec stands to make $20 million this year, the company 
Apologists for inequality have, over the years, loved to trot out fine art as a justification for the existence of grand private fortunes.