TOO MUCH (Chronicles of Inequality, May 19, 2014)
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May 19, 2014 |
| THIS WEEK | |
| Back a century ago, in the heyday of America’s original plutocracy, some of inequality’s most eloquent critics turned out to be men of means outraged by the greed grabs of the affluents all around them. That history may be repeating.Consider world-class management guru Umair Haque. Last week, in the Harvard Business Review, Haque argued that modern societies “are making a series of mistakes” when they tolerate the presence of a super rich. With a super rich, Haque would go on to explain, we’re not just getting a threat to our democracy or an obstacle to our prosperity. We’re limiting what we can achieve. We’re eroding our “society’s human potential.”Most of today’s privileged, sadly, don’t share Haque’s fears and worries. Former President Bill Clinton even opined last week that we really can’t do much about spiraling top 1 percent fortunes unless we “start jailing people.” For our part, we do see a few more options. More on them in this week’s Too Much. |
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| GREED AT A GLANCE | |
The big news in Beverly Hills: America’s biggest Jimmy Choo boutique has finally reopened! The high-fashion house’s newly renovated digs have pink marble and mink velvets “harmonizing” with oyster stone and a mother-of-pearl oyster floor. Designer Sandra Choi says she aimed to create “a luxurious environment that would combine the refined detail of a haute couture salon with the intimacy of a fantasy closet.” To pack that closet, guests can pick up — for $750 and up — a pair of suede shoes with their initials goldstamped on the heels . . . Where would our world be without problem-solvers like Richard Pryor? This New Zealand go-getter went to work for a Saudi prince’s private jet fleet in 1999 and soon realized that the fleet’s on-board catering fell far short of the cuisine the prince and his pals enjoyed on terra firma. Pryor’s solution? Six years ago, he launched Private Flight, a global firm that connects private jet staff with chefs at five-star hotels and restaurants worldwide. Business has been good. A single private jet client, Pryor noted earlier this month, might spend $40,000 on food for a single flight. Deep pockets, he explains, “benchmark the small things.” They might not be able to assess how well a pilot is flying, “but they can compare the steak they had in Le Cirque in New York against the steak they are having on the plane.”The problem-solvers are solving away in Miami, too. City fathers there have just okayed a $600 million luxury development that will offer global billionaires about 50 angled berths for their super yachts. The problem the angled berths fix? Go try to parallel park a 150-foot yacht, the Miami Herald’s Fred Grimm suggested last week, and you’ll see soon enough. The newly approved yachting project, adds Grimm, dedicates what had been “valuable public-owned waterfront to the needs of the super rich.” Miami, he notes, now ranks seventh worldwide on the Knight Frank realty list of cities that best cater to “ultra high-net worth individuals.” Observes Grimm: “We’ve not only come to terms with the stark inequities of wealth distribution, we’ve made it into a growth industry.” |
Quote of the Week “It appears that it is now acceptable to talk about inequality in America as the central issue facing the country.” |
| PETULANT PLUTOCRAT OF THE WEEK | |
 Last week’s horrific mine tragedy in Turkey reminded us how deadly mining can be. Anglo American Platinum CEO Chris Griffith has just reminded us how demented that industry’s chief executives remain. Workers at Griffith’s South African mining giant have been striking to raise their $547 monthly entry wage to $1,200. But Griffith early last week groused that striking miners are “missing the point” when they point to his personal $141,000 monthly take-home. South Africa, he noted, is overflowing with “lower-skilled people,” and no one can reasonably compare his labor with theirs. Fumed Griffith: “Must I run this company and deal with all this nonsense for nothing?” Added the CEO: “I’m not demanding to be paid what I’m not worth.” By week’s end, after a media firestorm, Griffithwas apologizing for his “choice of words.” |
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| IMAGES OF INEQUALITY | |
 The folks at Rolls-Royce will customize just about anything for you. This new Rolls came with a bespoke picnic basket, the Pursuitist notes, “complete with custom china, silver, and glassware based on the owners’ request.” Other custom requests stand out a bit more. Rolls recently delivered a new $300,000 Wraith model painted to match the color of the new owner’s pale pink leather gloves. |
Web Gem Global Rich List/ Aninteractive site that lets you see where your household ranks in the global distribution of income and wealth. |
| PROGRESS AND PROMISE | |
| In New York this week, the United Nations will be hosting a global gathering designed to develop a gameplan for financing the sustainable development the world needs to end poverty and save the planet. That gameplan, argue veteran economic justice activists Helen Dennis of Christian Aid and Nicholas Lusiani of the Center for Economic and Social Rights, ought to include a global tax on wealth. The annual “sustainable development solidarity capital tax” they seek would hit 2 percent on wealth over 5 million euros, or about $6.8 million. Mainstream commentators, Dennis and Lusani note, have called the French economist Thomas Piketty politically clueless for suggesting a similar levy. But commentators, they note, not long ago dismissed a financial transaction tax as impractical, and that tax now stands “poised to be implemented across Europe.” |
Take Action Tell Apple, the computer goliath, that worker safety matters more than executive bonuses. Apple’s latest excess: a $68 million signing bonus for new retail chief Angela Ahrendts. |
| INEQUALITY BY THE NUMBERS | |
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Stat of the Week In 25 top U.S. metro areas, DataQuick has just reported, sales of homes costing over $2 million are now running 33 percent above last year’s levels. The latest totals rank as the highest DataQuick has tallied since the stat service started keeping sales records in 1988. |
| IN FOCUS | |
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How Campus Chiefs Ace Out Pay Excess 101 The fiercer that major state universities squeeze faculty and students, a new study shows, the grander the rewards their presidents reap. These haven’t been the best of times for the young men and women attending America’s colleges and universities. Or for the faculty who teach them. Those students are graduating, if they can afford to get that far, with levels of debt that would have seemed unimaginable a few decades ago. In 2012, the nation’s total student debt hit $1.2 trillion — and topped, for the first time, the sum total of America’s household credit card debt. Faculty haven’t been faring particularly well either. Only a third of the nation’s faculty members currently hold regular full-time permanent positions. All the rest labor on a “contingency” basis. They either get paid by the course or have one- or two- year full-time appointments that carry no long-term job security. “Adjunct” faculty typically make just $2,700 for every course they teach. Overall, they annually take home a median $22,000 a year, an income that sits below the official federal poverty rate for a family of four. These paltry paychecks leave adjuncts forever scrambling to pack their weekly schedules with as many extra courses as they can arrange. And these ever-heavier teaching loads, in turn, leave adjuncts without adequate time for either preparing for their classes or mentoring students one-on-one. Amid all this financial squeezing, students lose out and faculty feel chronically frustrated. One recent study found a stunning 98 percent of adjuncts acknowledging they were “missing opportunities to better serve their students.” Not a pretty picture. So what should the trustees of America’s colleges and universities be doing to start painting a brighter future? Here’s one fix-it these trustees ought to studiously avoid: paying more to higher education’s highest executives. Over the past decade, a just-published Institute for Policy Studies report details, many of America’s most prestigious state universities have been going exactly this higher executive pay route — with alarmingly miserable results. The new IPS paper, The One Percent at State U: How University Presidents Profit from Rising Student Debt and Low-Wage Faculty Labor, crunches pay figures at the 25 public institutions of higher education with the highest-paid chiefs. From 2009 to 2012, average pay for these execs jumped from $727,000 to $974,000.
What could the trustees at these 25 universities possibly have been thinking? How could they have boosted presidential pay a quarter-million dollars per president at a time America was still struggling to recover from the Great Recession? All these trustees were likely just following America’s conventional boardroom wisdom. And why not? Many trustees at top universities serve in their day jobs as top execs at America’s largest corporations. These execs have internalized — and personally profited off — Corporate America’s basic boardroom logic. Want to get your enterprise to “perform” at a higher level? Our boardroom logic dictates that you give your CEOs ever greater financial “incentive” to perform. In American higher education, notes the new Institute for Policy Studies One Percent at State U report, this boardroom “wisdom” is clearly backfiring. At the 25 public universities with the highest executive pay, study authors Andrew Erwin and Marjorie Wood show, the prime problems that ail higher education are getting significantly worse, not better. At these 25 institutions, student debt levels are rising much faster than national averages, as are the ranks of contingent and part-time faculty. Erwin and Wood provide detailed chapter and verse for their charges. At Ohio State, for instance, the university president pocketed $5.9 million from the 2010 through 2012 fiscal years. Over that span, Ohio State student debt rose 23 percent faster than the national average, and the university hired 11 times more contingent and part-time faculty than permanent full-timers At the University of Washington in Seattle, permanent faculty ranks dropped 19 percent over the same span, with the number of part-timers leaping 239 percent. Also leaping: pay for the University of Washington president. This top exec pulled in $2.3 million for the three years. UW students, by contrast, saw their debt grow 26 percent faster than the national average for four-year public universities. We’ve essentially witnessed, Erwin and Wood document, a “top-heavy 1 percent” recovery at major state universities over recent years, “largely at the expense of students and faculty.” The two study co-authors offer a variety of reforms for wringing pay excess out of higher education. State lawmakers, they urge, should set statutory pay ratios that limit top university executive compensation to 10 times the full-time equivalent pay of their institution’s lowest-paid faculty member. Congress, Erwin and Wood add, should pass Senator Elizabeth Warren’s pending Bank on Students Loan Fairness Act, legislation that would nearly halve student loan interest rate payments and pay for this added student financial aid by hiking the tax rate on annual income over $1 million to a minimum 30 percent. Like this article? Sign up Instead of narrowing inequality in America, Cornell University political scientist Suzanne Mettlerpointed out earlier this year in a particularly astute analysis, “our system of higher education reinforces it.” High pay for higher education’s highest executive officers only serves to help lock that inequality in. That lock needs busting. |
New Wisdom Kathleen Geier, What Piketty’s Neoliberal Critics Get Wrong, Baffler, May 15, 2014. Our political elites now feel that they must at least pay lip service to fighting inequality. Robert Reich, Ten ways to close the inequality gap,Chicago Sun-Times, May 15, 2014. Our economic and political dysfunctions will not self-correct. We have to do the correcting. Sean McElwee, Life, liberty, and the pursuit of property, Aljazeera America, May 16, 2014. The solution to America’s growing inequality may lie in democratizing company ownership. Kevin Drum, The Super Rich Spend a Ton of Money on Politics These Days, Mother Jones, May 16, 2014. America’s top 0.01 percent now take 5 percent of the nation’s income and make over 40 percent of U.S. political contributions. Richard Wolff, Better than Redistributing Income,Truthout, May 17, 2014. Cooperatives could reduce the unequal distribution of income that hierarchical enterprises give us and help us avoid redistribution’s downsides. Frank Bruni, Class, Cost, and College, New York Times, May 18, 2014. America’s top colleges, like luxury cars, can take you far and fast, but only a lucky few ever get behind the wheel.
In 1917 organizations representing millions of Americans called for a 100 percent tax on income over $100,000. Too Much editor Sam Pizzigati has their story — and much more — in his new book on the triumph over America’s first plutocracy.The details. |
| NEW AND NOTABLE | |
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Mobility and Inequality: The Global Evidence Declan Gaffney and Ben Baumberg, Dismantling the Barriers to Social Mobility, Touchstone Extra, May 2014. Mobility has always really mattered — in debates over inequality. If all people have a reasonable shot at getting ahead, apologists for our unequal order have argued down through the years, then why raise a ruckus if some happen to get further ahead than everyone else?
Thanks to a torrent of recent research, we now know the answer, and two British analysts, policy consultant Declan Gaffney and sociologist Ben Baumberg, share it in this just-published British labor movementpamphlet. The new research, the pair explain, confirms a predictive model that economist Gary Solon advanced back in 2002: “that other things being equal, societies would tend to show less mobility the more unequal their distribution of income.” The two authors pay particular attention to Canada and Australia, two nations that defenders of our skewed economic order often cite as proof that inequality makes no impact on mobility. Both countries, the claim goes, sport high inequality and high mobility. But the two nations, Gaffney and Baumberg show, turn out to have considerably less inequality than the world’s most prominent top-heavy nations. The world, Gaffney and Baumberg hammer home, simply has “no developed countries” with British or American levels of inequality “that could be said to have high social mobility in international comparison.” |
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| ABOUT TOO MUCH | |
| Too Much, an online weekly publication of the Institute for Policy Studies | 1112 16th Street NW, Suite 600, Washington, DC 20036 | (202) 234-9382 | Editor: Sam Pizzigati. | E-mail: editor@toomuchonline.org | Unsubscribe. | |
