The Vatican released Pope Benedict XVI’s long-awaited new encyclical on the economy last week — and deeply disappointed conservatives in the process. Fans of our economic status quo expected the pontiff to back away from earlier encyclicals that had lauded those who struggle for a more equal world. He didn’t.

The Pope instead blasted the “scandal of glaring inequalities” and the “economic choices” that “cause disparities in wealth to increase in an excessive and morally unacceptable manner.”

In this week’s Too Much, we highlight some innovative economic choices that could narrow those “glaring inequalities.” We look at a new approach to battling environmental degradation that targets concentrated wealth. And we go to the movies for an endearing portrait of a South Asian society, as populous as California, where hardly anyone ever goes hungry or homeless.

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The rich are definitely cutting back on opulent consumption. Or maybe they’re not. Why so hard to tell? The luxury market keeps sending out remarkably mixed signals. High-end winemakers and restaurants, for instance, are reporting sinking sales for pricey bottles. The menus at Morton's the Steakhouse now feature wines down at $60 to $70. Diners, says Morton’s VP Tylor Field, no longer “want to pay for $200 or $300 wine.” On the other hand, over at Patek Philippe, everything’s business as usual. The luxury watchmaker is once again this year marketing the Sky Moon Tourbillon, a timepiece “so complicated that only two are produced each year.” The price: $1.3 million . . .

The CEO of Cigna, the private health insurer giant, has decided to pack it in. H. Edward Hanway, Cigna’s top gun since 2000, will be retiring effective the end of the year. For the 57-year-old Hanway, effuses Cigna spokesman Chris Curran, “it's time to take a well-deserved break.” You can say that again. Running an insurer that yanks coverage from small businesses when their workers run up big treatment bills can be really exhausting work. A former Cigna PR exec turned whistleblower, Wendell Potter, last month told a U.S. Senate committee that Cigna routinely “purges” small businesses with expensive claims by jacking up their renewal rates so high that they have “no choice but to drop insurance.” Cigna’s retiring Hanway pocketed $11.4 million last year . . .

Rhode Island senator Michael McCaffrey can't do much about overall health industry CEO pay. But McCaffrey thought he could do something about the pay of CEOs at Rhode Island hospitals that take in taxpayer dollars. Earlier this year the lawmaker introduced legislation to cap Rhode Island hospital pay at two and a half times the $117,817 annual salary of the state’s governor, or just under $300,000. In 2007, Rhode Island’s highest-paid hospital CEO cleared just under $3 million. McCaffrey, after meeting with hospital officials, later amended his bill to reset his bill’s cap — to 110 percent of the average hospital executive pay in the Northeast — and the Rhode Island Senate then proceeded to pass that compromise. But leaders in Rhode Island’s House of Representatives never let the Senate compromise out of committee. The explanation? Rhode Island hospitals, a House spokesman noted, “aren’t looking for a bailout.”   

Over 70 national nonprofits — from the Children’s Defense Fund to the YWCA — last week asked Congress to tax the rich. The revenues necessary to “to meet the nation’s challenges” in health care and elsewhere, the group joint statement noted, “must be raised in a fair and progressive manner” to “reduce inequality and return to shared prosperity.” Adds statement organizer Deborah Weinstein from the Coalition on Human Needs: Congress needs to start “holding the wealthiest households accountable.” One step in that direction: To help finance health care reform, House Democrats agreed Friday to place a 3 percent tax surcharge on households making over $1 million a year . . .

Back in 2006, no CEO in Atlanta took home a bigger paycheck than Ian McCarthy. The chief exec at developer Beazer Homes USA pocketed $29.6 million, seven times the local CEO average. But McCarthy had to cut his celebration short. In 2007, the Charlotte Observer revealed rampant fraud deep inside Beazer’s operations. The Beazer board responded by axing some lower-level execs — and giving CEO McCarthy a $600,000 bonus for “communicating” to employees “the importance of compliance” with the law. Earlier this month, federal prosecutors announced a deal with Beazer that lets CEO McCarthy keep his job and offers defrauded homeowners payback on just a fraction of their losses. The lesson of this tale? Notes New York Times analyst Floyd Norris: “If a boss can preserve his deniability about crimes committed by his company — perhaps by showing little curiosity about just how the profits are being earned when he is taking in millions from cashing in stock options — then he can escape being held accountable if the crimes are eventually uncovered.”

Quote of the Week

“Through the systemic increase of social inequality, both within a single country and between the populations of different countries, not only does social cohesion suffer, thereby placing democracy at risk, but so too does the economy, through the progressive erosion of 'social capital': the network of relationships of trust, dependability, and respect for rules, all of which are indispensable for any form of civil coexistence.”
Pope Benedict XVI, Charity in Truth, the new papal encyclical on the economy, July 7, 2009

New Wisdom
on Wealth

Sam Pizzigati, The Corporate Pay Gap: Do We Need a Maximum Wage? Perspectives on Work, the journal of the Labor and Employment Relations Association, Summer, 2009.

David Greenwald, Report Finds Poor Leave California at Much Higher Rate than Rich, California Progress Report, July 2009. More evidence that raising taxes on the wealthy doesn’t automatically generate an exodus by the rich.

Among Equals, July 2009. The first quarterly campaign update from the London-based Equality Trust, the effort leading the charge for a more equal UK.

Beyond Kyoto: Time to Switch Targets?

The world’s most influential nations had their experts on climate change in Italy last week. Their goal: to get a head start on figuring out what to do after 2012, the year the current global greenhouse gas emission limits in the Kyoto Protocol expire.

That head start will have to wait. Last week's talks made little progress. Environmentally, the world still stands starkly divided — between the “rich” nations of the developed world and the “poor” nations still developing.

The basic conundrum: The rich nations have historically dumped far more greenhouse gases into the atmosphere than the world’s poor nations. But the poor nations, as they develop, are catching up. If they continue to develop — along current lines — the Earth will soon start frying even if the rich nations do significantly cut back on what they’re dumping.

So the rich nations want the poor to start limiting their emissions, something they haven't been expected to do up to now. The poor nations don't see such limits as appropriate. Why should people in poor nations, they ask, have to accept a lower standard of life than people in rich nations?

Negotiators have so far found no “fair” solution to this standoff, and they won’t find any workable solution — suggests a just-released study from the National Academy of Sciences — unless they stop talking about rich and poor nations and start focusing on rich and poor people.

Rich and poor, the new study points out, live in every nation, and the rich — wherever they live — pound a much greater carbon footprint than the poor.

“Rich people's lives tend to give off more greenhouse gases,” as Reuters climate change correspondent Deborah Zabarenko explained last week, “because they drive more fossil-fueled vehicles, travel frequently by air, and live in big houses that take more fuel to heat and cool.”

And the richest of the rich, adds Zabarenko, leave the biggest footprint of all: “Yachts do it. Limousines do it. Even air-conditioned mansions by the sea do it. The trappings of wealth tend to emit lots of climate-warming carbon dioxide.”

The seven scientists behind the new study — from the United States, Italy, and the Netherlands — want the next climate change protocol to base national emission targets on the number of each nation’s resident rich. The protocol would set these targets by calculating “the excess emissions of all ‘high emitter’ individuals in a country,” with “high emitters’’ defined as “those whose emissions exceed a universal individual emission cap.”

“Our approach,” the scientists note, “is designed to blend parsimony, fairness, and pragmatism — treat equally those with the same emissions.”

That approach would give developing nations a powerful incentive to develop more equal economies. The more inequality they tolerate, the more they let income and wealth concentrate, the more emission restrictions they would face.

By contrast, the more equal that developing nations become, the more they encourage wealth — and power — to accumulate in the pockets of average people, the better the odds that their governments will make the investments that can raise living standards without stomping a heavy carbon footprint.

Those governments might endeavor, for instance, to make available for people of modest means “well-built apartment buildings equipped with efficient appliances and served by efficient mass transit systems.”

Developed nations already have an environmental incentive to limit top-heavy concentrations of income and wealth, notes the Equality Trust, a campaign led by British epidemiologist Richard Wilkinson. Greater equality, the research data show, can pay immediate environmental benefits.

One example: More equal developed nations recycle a much greater share of their wastes than their more unequal counterparts.

Greater equality, in the end, would likely have an even broader impact on efforts to slow global warming. To gain public support, lifestyle changes that have the potential to reduce global warming need to be seen as fair. But the general public will be slow to lend that support, to change daily consumption patterns, so long as the rich consume so much more of everything.

Preventing “runaway global warming,” as the Equality Trust warns, simply won’t be possible “without a sense of shared participation in a common cause.” If we did a better job sharing income and wealth, that shared sense of common cause just might start evolving.

Be Gone Greed, Gluttony, Waste!

Why Kerala, Grampa? A film by Tom Chamberlin. 87 minutes. Online premiere at Movies for Progressives. $2.99.

California and the state of Kerala in India have a good bit in common. They each have about the same number of people, and people in both California and Kerala live about the same number of years. The two states have similar literacy rates. They even sit, geographically, in the same place: on their nation’s southwest coast.

But that’s where the similarities seem to end. In Kerala, few people ever go to bed hungry — or without a roof over their head. Students can attend college in Kerala for free. Voter turnouts run higher in Kerala and birth rates lower. Every person in Kerala has affordable health care.

One more difference: California’s economy generates 70 times more wealth than Kerala’s.

About a decade ago, statistics like these caught the attention of Tom Chamberlin, a veteran independent filmmaker based in Portland, Oregon.   

“How is it possible for Kerala to provide for the needs of all its citizens with so little money?” he wondered. “I was curious.”

And now we are enlightened. Over recent years, journalists and academics have written a great deal about the “Kerala model.” But Chamberlin’s new documentary gives us a much more vivid sense of what the people of Kerala have achieved — and how — than any article or book.

Why Kerala, Grampa? takes us on a month-long tour through countryside and cities with a street theater group that comes out of Kerala’s biggest grassroots community organizing initiative. Along the way, we pick up all the Kerala basics.

We learn about the land reform that broke up Kerala’s huge private estates in the 1960s, about the state’s broad network of worker-owned cooperatives and small businesses, about the “revenue sharing” that returns dollars to local villages where citizens, planning together, decide how those dollars get spent.

Most of all, we see what can happen when a society really does spread the wealth. Once spread, we see, even a tiny pile of wealth — like Kerala’s — can work wonders.

Chamberlin bookends his film with his granddaughter. We meet her as a toddler before he first set foot in Kerala and then again as a nine-year-old, at the end of the film’s production process.

“Though not perfect by any means,” Chamberlin as narrator counsels his grandchild, Kerala offers “a hint of what your life could be like.”

Chamberlin does all the film’s narration, and a fine narrator he is. His gentle tone and soft-spoken wisdom brings to mind Daniel Pinkwater, the National Public Radio commentator. No heavy lecturing here, just an eagerness to help us understand the remarkable things that average people can achieve, on their own, in a society that shares.

To watch this film on the Web, you’ll have to share, too. About three dollars. Chamberlin has truly taken Kerala to heart. In Kerala, he learned, the biggest citizen’s advocacy group doesn’t take any foundation grants. The group, to stay independent and build sustainability, raises its own funds.

Chamberlin doesn’t believe in sugar daddies either. He’s counting on his audience to sustain him. He’s worth sustaining.

Stat of the Week

Congress could raise $500 million for health care reform over the next decade, Citizens for Tax Justice detailed last week, simply by subjecting investor income — from capital gains, dividends, and interest — to the same 1.45 percent Medicare tax that currently applies only to wages and salary, with that rate hiked to 2.5 percent for households that make over $200,000 a year. If enacted by the 2011 fiscal year, these two moves would hike the average tax bill of America’s top 1 percent — households that average $1,443,946 — by $18,109. The annual tax bill of households in the bottom 60 percent — households that average $26,587 — would on average only rise by $23.

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.