Seventy-five years ago this March, major media outlets have been reminding us over recent weeks, Franklin D. Roosevelt’s New Deal had its American debut. But when exactly did the New Deal end? The American Journal of Public Health has just published a fascinating article that suggests a surprising answer.

FDR’s New Dealers, the evidence in this piece helps establish, may have scored their biggest victory over inequality after Roosevelt died in 1945. And this landmark victory didn’t even take place inside the United States. America’s New Dealers had their last — and most lasting — egalitarian hurrah in Japan.

We have more on Japan's New Deal heritage in this week’s Too Much. Also this week: a first look at the latest crunching of U.S. income inequality data from economists Thomas Piketty and Emmanuel Saez.

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You spend nine years and $200 million building a lavish Northern California residential estate — in the flamboyant style of a 16th century Japanese emperor. What do you deserve for your foolishness? A $3 million property tax refund, of course. San Mateo County’s assessment appeals board has just voted to award that specific sum to software billionaire Larry Ellison. Back in 2005, the county had assessed Ellison’s 23-acre local estate at $166.3 million. Ellison’s lawyers claimed that $64.7 million would make a more accurate appraisal, since the property suffers from “significant functional obsolescence.” That’s lawyer-speak for who in their right mind would shell out over $166 million for a samurai castle? The appeals board agreed. The giveback to Ellison, the 14th-richest man in the world, will cost San Mateo public schools $1.4 million . . .

Spring. Baseball opening day. The crack of the bat, the roar of the crowd. The $2,500 seats behind home plate. Yes, the National Pastime has gone deluxe. Well-heeled fans who stream into the new Yankee Stadium next April, a year from now, will find “cushioned seats with teak arms.” Best of all, they won’t have to rub shoulders with the riff-raff. Affluent rooters in the new ballpark will share a private entrance. To grab that privacy, New York’s finest will have to spring for at least three years worth of tickets at from $500 to $2,500 each. The Yankees have already sold out the new park’s 122 priciest seats. Meanwhile, fans who attend games this year, in the old ballpark, will be paying $250 for the same seats that sold for $25 in 1996. And Bronx public officials, notes Good Jobs New York, are still waiting for the $800,000 a year the Yankees promised to gain the right to use parkland for the new stadium site . . .

Who can afford $2,500 seats for a ballgame? The same swells who are filling up the dozen new luxury apartment towers — some 75 stories high — that have shot up in Manhattan over the past five years. Construction on a dozen more, each filled with apartments that run multiple millions, will start this year. These “preening, sometimes beautiful, sometimes obtrusive towers,” New York Times architectural critic Nicolai Ouroussoff noted earlier this month, come with surprisingly bland interior spaces. The explanation: Manhattan’s new luxury towers serve “a class of people” who seek “the same residential experience whether they are in Moscow, Paris, or New York.” These affluents see their apartment homes, the Times observes, “as personalized hotel rooms.” They're getting — in New York’s luxury towers — “the same kind of services you would find in a luxury hotel, from breakfast in bed to spa treatments to dog walkers.”

Racehorses, any deep pocket who has dabbled in the sport of kings will instantly agree, can break your heart. Maybe that’s why more and more mega millionaires are investing in fish. One fish in particular: the “super red” arowana, an endangered species whose “popularity amongst Asia’s richest,” reports Practical Fishkeeping magazine, “is ever increasing.” Individual arowana can fetch as much as $55,000. Earlier this year, at an arowana show in Jakarta, armed guards kept 50 fine specimen under 24-hour surveillance . . .

A top cleric of the Anglican Church, Bishop Michael Nazir-Ali, is calling on British hedge fund managers and corporate executives to “share wealth generously” and stop “‘cutting corners’ to make a quick buck.” The bishop's Easter-time plea came on the heels of news reports that British homeowners will be paying $2.6 billion extra on their loans because mortgage-related UK companies “have raised their profit margins fourfold over the past year, to cover themselves for losses incurred elsewhere.” Titans of finance who distance themselves from “mere accumulation of wealth,” Bishop Nazir-Ali advised, might just “go into the kingdom of heaven ahead of the chief priests and elders.”

Inequality
by the numbers

CEO pay:
the scorecard

Good reads
for your bookshelf

Quote of the Week

“When my father was young, he lived on the same street as the president of a public company. When the company was found to have defrauded shareholders, this guy lost his reputation and ended up nearly penniless. Now, ascending to the CEO position of a public company is a surefire way to wealth — even if the CEO turns out to be incompetent or dishonest.”
Bill Mann, advisor, Motley Fool Hidden Gems, Roundtable: The Boss Is Paid Way Too Much, March 28, 2008

New Wisdom
on Wealth

Unnatural Causes: Is Inequality Making Us Sick? The Web site for the outstanding new PBS TV series that links great divides in income and wealth to poor health outcomes.

Robert Peston, We lose in Greed Game, BBC News, March 28, 2008. The producer of a new documentary on global finance explains how executive pay plans have “encouraged those in charge of trillions of dollars of other people’s money to take much greater risks with that money than they would have done if their own money had been seriously at risk.”

Economists can’t tell us much about the future. But the best of them can tell us a great deal about the past. Over recent years, two of those best — Emmanuel Saez and Thomas Piketty — have been parsing annual data from the IRS to paint a picture of where America’s income dollars are going. They’ve just released their latest picture. It’s not pretty.

Dollars are now flowing into the pockets of America’s fabulously rich, the new Saez-Piketty data show, at their fastest rate in nearly 80 years.

In 2006, the most current year with IRS tax return totals available, the most affluent 1 percent of American households took in 20.3 percent of American income dollars.

“Not since 1928, just before the Great Depression,” observes an analysis of the Saez-Piketty data by the Center for Budget and Public Policy’s Aviva Aron-Dine, “has the top 1 percent held such a large share of the nation’s income.”

Between 2005 and 2006, the new Saez-Piketty data indicate, the average income of the top 1 percent of U.S. households increased $73,000, after inflation. The bottom 90 percent of U.S. households, over that same span, saw their incomes jump by $20, not enough to offset the cost of a parking ticket.

The picture the Saez-Piketty numbers paint gets significantly uglier when we zero in on the wealthiest of the wealthy — and look closely at how prodigiously their incomes have ballooned since the mid 20th century.

In 1956, households in America's top tenth of 1 percent reported incomes that averaged just under $1.1 million. That’s in inflation-adjusted 2006 dollars.

In 2006, this top 0.1 percent averaged $6.3 million. In other words, the real incomes of these affluents have multiplied nearly six-fold over the past half-century, a 476 percent increase.

Over the same 50-year period, the real average incomes of America’s bottom 90 percent increased just 32 percent, from $23,068 to $30,374.

But this 32 percent figure actually distorts the historical trend line. Over recent decades, the average incomes of the bottom 90 percent of American households have actually dropped. These incomes increased steadily from the 1950s into the early 1970s, hitting $34,065 in 1973. Since then, the average incomes of America’s bottom 90 percent have dipped 11 percent.

Could this income concentration picture get any uglier? Sure could. Just consider the incomes of America’s top hundredth of 1 percent. These incomes — again, after factoring in inflation — jumped from an average $3.7 million in 1956 to $29.6 million in 2006, an amazing increase of 693 percent.

Stephen Bezruchka, Tsukasa Namekata, and Maria Gilson Sistrom, Improving Economic Equality and Health: The Case of Postwar Japan. American Journal of Public Health, April 2008.

In 1945, right after the surrender that ended World War II, public policy veterans of the New Deal started streaming into Japan. They came as staffers for the American occupation run by General Douglas MacArthur, and they found not just a war-weary nation, but a deeply unequal one.

By 1952, the year the occupation ended, that gross inequality was fast disappearing. Japan would soon become one of the world’s most equal — and prosperous — nations. By the late 1980s, World Bank statistics document, Japan would sport the world’s smallest internal gaps in income distribution.

Stephen Bezruchka and Tsukasa Namekata of the University of Washington School of Public Health and the Oregon Health & Science University's Maria Gilson Sistrom tell the tale of this remarkable transformation in the current issue of the American Journal of Public Health.

What's an article about an economic story over half a century old doing in a professional health journal? The simple answer: Japan didn’t just become more equal after World War II. Japan became incredibly more healthy.

In the half-century before World War II, a time when huge business conglomerates had come to concentrate Japan’s growing industrial wealth within a narrow privileged elite, average Japanese men lived just 42.8 years. By 1960, male life expectancy had registered a remarkable rise to 60.8 years, and Japanese women had seen their lifespans increase from 51.1 years to 64.8.

Japan's lifespan gains would continue. By 1979, no people in the entire world lived any longer than the Japanese. The world’s most equal and most healthy nations, in effect, had become one and the same.

A coincidence? Health analysts like Bezruchka, Namekata, and Sistrom don’t think so — and they strengthen their case for a link between inequality and health by exploring other possible explanations for Japan's post-World War II gains in life expectancy.

The Japanese, the three authors show, didn’t become healthier because the Japanese health care system suddenly became world-class. It didn’t. And Japan didn’t jump to the top of the world lifespan rankings because Japanese families eat a wholesome Asian cuisine. Japanese eating habits have actually become more Westernized — and less healthy — since World War II.

Nor do individuals in Japan avoid unhealthy personal habits. Men in Japan smoke, for instance, at among the highest rates in the developed world.

So what's behind Japan's fabulously good health outcomes? Japan’s phenomenal health success reflects the importance of what analysts now call the “social determinants of health.”

“Policies that produce more egalitarian societies,” as the Bezruchka team puts it, “may explain profound health improvements.”

These improvements most likely work their medical magic by reducing debilitating chronic stress. And this stress reduction owes far more to “political changes” than to “specific public health programs.”

What “political changes”? The American occupiers of Japan came in committed to a set of priorities that would eventually be dubbed the “3 Ds”: the demilitarization of Japanese society, the democratization of the nation’s political process, and the decentralization of Japan’s wealth and power.

To ensure that decentralization, the occupation broke up Japan's business empires, encouraged labor unions, implemented land reform, and even legislated a maximum wage. The American occupiers linked these policies to the cooperative spirit of Japan’s Confucian past and “unlocked,” in the process, indigenous social forces that continued to drive Japan in a more egalitarian direction long after the occupation ended.

“Japan’s good health status today is not primarily the result of individual health behaviors or the country’s health care system,” Bezruchka, Namekata, and Sistrom sum up. “Rather, it is the result of the continuing economic equality that is the legacy of dismantling the prewar hierarchy.”

In the United States, meanwhile, the New Deal drive to greater equality shifted into reverse in the 1970s and has been speeding backwards ever since. Americans have paid for that reversal. In 2004, according to UN data, the United States ranked 30th in global life expectancy. Japan ranked first.

Stat of the Week

American Axle & Manufacturing, the Detroit-based auto supplier currently demanding worker wage and benefit cuts of over 50 percent, last year upped total pay for CEO Richard Dauch to $10.2 million, a 9 percent increase over 2006, a company filing revealed last week. Over 3,500 American Axle workers have been on strike since late February.

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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.