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The “argument over wealth and inequality,” the New York Times predicts, will likely “play a big role” in the race for the White House that began last week in Iowa. Whether the wealthy merit “some blame for the economic anxiety felt by many middle-class families” has, the Times adds, “become a central issue.”

Here in Too Much, we’ll be covering this “central issue” all year long, sometimes from some odd angles. This week, we take a look at the first Romney to run for President of the United States, Mitt’s dad George. Why talk about George Romney? We think you’ll appreciate our reason.

This week’s issue, our first of 2008, also sports a slightly new design. Hope you like it. And if you do, please consider forwarding this issue on to a friend — with an invitation to subscribe. Thanks!

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Some things in Colorado never seem to dip. The Rockies always stand tall. And so apparently does the going rate for local luxury housing. This past November, hedge fund magnate Louis Moore Bacon shelled out $175 million for Colorado’s Trinchera Ranch, the highest sum ever paid for a U.S. residential property. Over in the Aspen area, the epicenter of Colorado luxury, real estate sales in 2007 barely missed setting a new annual record. Over the course of the year, the Aspen Daily News reports, three local single-family houses sold for over $20 million. What’s keeping prices high? About 40 billionaires now have Aspen area abodes, and, says appraiser Randy Gold, they have the cash to “get whatever they want.” If a mere millionaire were to spend a dollar a second, explains Gold, that millionaire’s fortune would be gone in 11 or so days. But a billionaire, spending a dollar a second, can keep going for 30 years . . .

Tracking CEO pay figures to be a bit easier in 2008. The Securities and Exchange Commission, the top federal corporate watchdog agency, has just unveiled a new “Executive Compensation Reader” that lets anyone with online access compute “how much a company pays its top executives.” The reader features data from the biggest 500 companies with shares that trade on Wall Street. CEO pay at these 500 companies, says a new study from the Corporate Library, rose 23 percent in the 12 months that ended this past October 25. Over that same period, shareholder value at the companies rose 14 percent. Another new report, from compensation experts at Equilar, notes that the typical top exec at a Fortune 500 company has now accumulated $48.2 million in pension benefits, deferred pay, unexercised stock options, other stock awards that haven’t yet vested, and “shares owned outright.”

The most atypical CEO in the Fortune 500? That may be Jim Sinegal, the 71-year-old chief exec at Costco, the big-box retailer. In 2007, Costco revealed last month, Sinegal collected $3.2 million in total pay, less than 40 percent of the big-time CEO average. Sinegal, for the seventh straight year, took no pay raise. In 2004, the last time Business Week compared big-box retailers, Costco was solidly outpacing Wal-Mart’s Sam’s Club in sales per store square foot, a key retail success measure. Yet Wal-Mart CEO Lee Scott was then making over 850 times the average Wal-Mart worker wage — while Sinegal was taking home just 111 times more than average Costco workers. The Costco board has no plans to hike CEO pay any time soon. Higher rewards, the board said last month, “would not change Mr. Sinegal's motivation and performance.”

The board of directors at Comcast, the cable TV giant, is taking a somewhat different approach to motivating executives. The board has just agreed to pay Comcast executive committee chairman Ralph Roberts, the 87-year-old father of the company’s current CEO, five years worth of salary after he dies. The billionaire Roberts collected $24.1 million in total compensation from Comcast in 2006. The company hasn’t yet revealed either his 2007 salary or total pay. The after-death payout, says Comcast, will go to whoever chairman Roberts names as his beneficiary . . .

With Democratic Party White House hopefuls and even one Republican — Mike Huckabee — now regularly decrying how top-heavy the U.S. economy has become, defenders of America’s unequal economic order have taken to the offensive. Over recent weeks, they’ve started lobbing op-ed grenades against the research that documents America’s steadily rising inequality. Late last month, for instance, a Washington Post op-ed by economist Stephen Rose labeled the squeeze on the U.S. middle class a “myth.” A week earlier, the Economist magazine saluted “those intrepid souls who make vast fortunes” for “turning out ever higher-quality goods at ever lower prices.” That piece, in turn, echoed a late fall Cato Institute attack on analyses that link luxury consumption by the super-rich to higher living costs for everyone else. Attacks like these, notes Princeton’s Paul Krugman, are attempting to revive the classic “dodges” of inequality denial. Among the best dissections of these dodges: a pair of astute essays from the Economic Policy Institute’s Larry Mishel and Cornell economist Robert Frank.

Inequality
by the numbers

CEO pay:
the scorecard

Good reads
for your bookshelf

Quote of the Week

“In 2008, the rich will strive to be more down to earth, even as they take off in their new G550 private jets.”
Robert Frank, The Wealth Report, Wall Street Journal, January 5, 2008

New Wisdom
on Wealth

Jorge Soberón, Economic inequality is key to immigration, Lawrence (Kansas) Journal-World, January 2, 2008. A scientist examines the maldistribution of income that's driving migration rates from Mexico.

Oliver James, Selfish capitalism is bad for our mental health, Guardian, January 3, 2008. A clinical psychologist argues that inequality and “affluenza” have left less equal developed nations like the United States with twice as much mental illness as more equal nations.

Want to really understand how dramatically the distribution of wealth in the United States has changed over the past half-century?

To gain that understanding, you could go poring through reams of research data. Or you could take a shorter route. You could simply consider the family financial history of Mitt Romney, Wall Street's favorite in the race for the 2008 GOP Presidential nomination.

This Romney family history encapsulates, over the span of a single generation, just about every dominant trend that has shaped our increasingly unequal times. The tilt to the top. The squeeze on the middle. The assault on honest labor.

Mitt Romney, for his part, appears to have precious little interest in telling this story — or discussing anything else about inequality.

“I don’t believe,” he opined at a recent campaign stop in New Hampshire, “in this baloney that there are two Americas.”

But we don’t need Mitt to narrate the story of his family’s evolving financial fortunes. The details are already sitting in the public record.

Our story starts in 1954, the year that Mitt’s dad George became the chief executive of American Motors, the newly created company that had just emerged from what qualified, at the time, as the largest corporate merger in U.S. business history.

George Romney’s new status, not surprisingly, quickly catapulted the Romney family into the nation’s economic elite, the most affluent 0.01 percent of U.S. income-earners. But here’s the surprising part. George Romney’s new status did not make him super-rich.

In fact, as the top exec at American Motors, George Romney never made more than $225,000 a year. His total annual income over these years — his auto industry take-home coupled with gains from his personal investments — only averaged $275,000.

That’s just $1.8 million in today’s dollars, points out New York Times reporter David Leonhardt, a sum not even close to the near $10 million that a corporate executive needed to make in 2005 to enter the ranks of America’s topmost 0.01.

And that’s also not the only difference between the wealthy in George Romney’s time and ours. Back in 1960, taxpayers who reported $275,000 in income paid on average, after exploiting every loophole they could find, just under 44 percent of that income in federal taxes.

By contrast, in 2005, the most recent year with IRS data available, taxpayers in America’s most affluent 0.01 percent — average income, $27.3 million — paid only 20.9 percent of that to Uncle Sam.

In other words, back in George Romney’s heyday, America’s most affluent one-hundredth of 1 percent paid over twice as much of their income in taxes as their counterparts do today. And they started out, after adjusting for inflation, with considerably less income!

What has made today’s United States so much more unequal? The quick answer: The twin pillars of growing economic equality back in George Romney’s time — a vital trade union presence throughout the economy and a steeply graduated progressive income tax — have both crumbled.

George Romney’s American Motors paid good union wages, as did, at the time, almost all major U.S. companies outside the South. Widespread collective bargaining — a third of private-sector workers carried union cards — helped make sure that companies shared the wealth their operations created.

The federal income tax, meanwhile, reinforced this sharing impulse. In 1960, the top tax rate on income over $400,000 stood at 91 percent. Corporate boards then, as now, could pay their top executives whatever they chose. But why bother — when so little above $400,000 would end up in executive pockets?

Mitt Romney, George Romney’s son, hasn’t had to worry about 91 percent top marginal tax rates — or unions either. He came of business executive age in the early 1980s. By that time, the Reagan “revolution” had already begun sharply shrinking both unions and tax rates on high incomes.

Thanks to these dynamics, Mitt now holds a fortune worth as much as $350 million. Out of that sum, he has already spent more on his own Presidential campaign — over $17 million — than his dad George earned in his entire business career.

Thomas F. Jackson, From Civil Rights to Human Rights: Martin Luther King, Jr., and the Struggle for Economic Justice. University of Pennsylvania Press. 459 pp .

Next week’s official observances of the Martin Luther King, Jr. holiday will focus, as in years past, almost exclusively on Dr. King’s struggles against segregation. Dr. King’s devotion to justice in the economic realm will go largely unnoted.

None of this surprises historian Thomas Jackson. The “culture of celebrity,” he writes in this thoughtful new bio, had “compressed King into a narrow civil rights frame even before his death.”

Jackson has set out to bust that frame, to show us a Dr. King who “challenged racial and class inequalities in the economy” as fervently as he “pursued civic equality and political citizenship.” And Jackson succeeds.

We see here a Dr. King who draws deeply from global egalitarian thought, both religious and secular, who finds in his reflections, as Jackson notes, “ample grounds for opposing the corruptions of wealth and the exploitation of the poor.”

Jackson dives into the dozen years, from 1956 to 1968, of King’s public ministry, showing time and again how the young preacher struggled to expand the freedom movement’s focus. But the book’s best pages cover King’s formative years.

Jackson, in these passages, quotes heavily from King’s academic papers and early sermons. The Dr. King he presents us comes across as incredibly relevant to our starkly unequal 21st century.

In 1952, for instance, King roots injustice in “the concentration of power and resources in the hands of a relatively small wealthy class.” A year earlier, he had told his new girlfriend, Coretta Scott, that a small elite should not "control all the wealth.”

“A society based on making all the money you can and ignoring people's needs,” he adds simply, “is wrong.”

King preaches, early on, for a world where “privilege and property [are] widely distributed, a world in which men will no longer take necessities from the masses to give luxuries to the classes.”

“Even in the 1950s,” Jackson sums up, “King was never simply a ‘civil rights’ leader unconcerned with the national political economy.”

Dr. King’s economic concerns, we can now hope, will no longer go ignored.

Stat of the Week

In 2008, the 100 best-paid Canadian CEOs will make more, on average, in their first nine hours at work than the typical Canadian full-time workers will make over the entire year. Top CEOs in Canada, adds a new Canadian Centre for Policy Alternatives report, take home 218 times more than Canadian workers. The current gap in the United States: 364 times.

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.