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Monday, January 4, 2016

The Plutocrats Are Winning. Don’t Let Them!


BillMoyers.com


MONEY & POLITICS

The Plutocrats Are Winning. Don’t Let Them!

The vast inequality they are creating is a death sentence for government by consent of the people. This is the fight of our lives and how it ends is up to us.







In the fall of 2001, in the aftermath of 9/11, as families grieved and the nation mourned, Washington swarmed with locusts of the human kind: wartime opportunists, lobbyists, lawyers, ex-members of Congress, bagmen for big donors: all of them determined to grab what they could for their corporate clients and rich donors while no one was looking.
Across the land, the faces of Americans of every stripe were stained with tears. Here in New York, we still were attending memorial services for our firemen and police. But in the nation’s capital, within sight of a smoldering Pentagon that had been struck by one of the hijacked planes, the predator class was hard at work pursuing private plunder at public expense, gold-diggers in the ashes of tragedy exploiting our fear, sorrow, and loss.
What did they want? The usual: tax cuts for the wealthy and big breaks for corporations. They even made an effort to repeal the alternative minimum tax that for fifteen years had prevented companies from taking so many credits and deductions that they owed little if any taxes. And it wasn’t only repeal the mercenaries sought; they wanted those corporations to get back all the minimum tax they had ever been assessed.

They sought a special tax break for mighty General Electric, although you would never have heard about it if you were watching GE’s news divisions — NBC News, CNBC, or MSNBC, all made sure to look the other way.
They wanted to give coal producers more freedom to pollute, open the Alaskan wilderness to drilling, empower the president to keep trade favors for corporations a secret while enabling many of those same corporations to run roughshod over local communities trying the protect the environment and their citizens’ health.
It was a disgusting bipartisan spectacle. With words reminding us of Harry Truman’s description of the GOP as “guardians of privilege,” the Republican majority leader of the House dared to declare that “it wouldn’t be commensurate with the American spirit” to provide unemployment and other benefits to laid-off airline workers. As for post 9/11 Democrats, their national committee used the crisis to call for widening the soft-money loophole in our election laws.
America had just endured a sneak attack that killed thousands of our citizens, was about to go to war against terror, and would soon send an invading army to the Middle East. If ever there was a moment for shared sacrifice, for putting patriotism over profits, this was it. But that fall, operating deep within the shadows of Washington’s Beltway, American business and political mercenaries wrapped themselves in red, white and blue and went about ripping off a country in crisis. H.L. Mencken got it right: “Whenever you hear a man speak of his love for his country, it is a sign that he expects to be paid for it.”
Fourteen years later, we can see more clearly the implications. After three decades of engineering a winner-take-all economy, and buying the political power to consummate their hold on the wealth created by the system they had rigged in their favor, they were taking the final and irrevocable step of separating themselves permanently from the common course of American life. They would occupy a gated stratosphere far above the madding crowd while their political hirelings below look after their earthly interests.
The $1.15 trillion spending bill passed by Congress last Friday and quickly signed by President Obama is just the latest triumph in the plutocratic management of politics that has accelerated since 9/11. As Michael Winship and I described here last Thursday, the bill is a bonanza for the donor class – that powerful combine of corporate executives and superrich individuals whose money drives our electoral process. Within minutes of its passage, congressional leaders of both parties and the president rushed to the television cameras to praise each other for a bipartisan bill that they claimed signaled the end of dysfunction; proof that Washington can work. Mainstream media (including public television and radio), especially the networks and cable channels owned and operated by the conglomerates, didn’t stop to ask: “Yes, but work for whom?” Instead, the anchors acted as amplifiers for official spin — repeating the mantra-of-the-hour that while this is not “a perfect bill,” it does a lot of good things. “But for whom? At what price?” went unasked.

Now we’re learning. Like the drip-drip-drip of a faucet, over the weekend other provisions in the more than 2000-page bill began to leak. Many of the bad ones we mentioned on Thursday are there — those extended tax breaks for big business, more gratuities to the fossil fuel industry, the provision to forbid the Securities & Exchange Commission from requiring corporations to disclose their political spending, even to their own shareholders. That one’s a slap in the face even to Anthony Kennedy, the justice who wrote the Supreme Court’s majority opinion in Citizens United. He said: “With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions.”
Over our dead body, Congress declared last Friday, proclaiming instead: Secrecy today. Secrecy tomorrow. Secrecy forever. They are determined that we not know who owns them.

The U.S. Capitol is shown at sunset October 15, 2013 in Washington, DC. (Photo by Win McNamee/Getty Images)
The U.S. Capitol is shown at sunset October 15, 2013 in Washington, DC. (Photo by Win McNamee/Getty Images)
The horrors mount. As Eric Lipton and Liz Moyer reported for The New York Times on Sunday, in the last days before the bill’s passage “lobbyists swooped in” to save, at least for now, a loophole worth more than $1 billion to Wall Street investors and the hotel, restaurant and gambling industries. Lobbyists even helped draft crucial language that the Senate Democratic leader Harry Reid furtively inserted into the bill. Lipton and Moyer wrote that, “The small changes, and the enormous windfall they generated, show the power of connected corporate lobbyists to alter a huge bill that is being put together with little time for lawmakers to consider. Throughout the legislation, there were thousands of other add-ons and hard to decipher tax changes.”
No surprise to read that “some executives at companies with the most at stake are also big campaign donors.” The Times reports that “the family of David Bonderman, a co-founder of TPG Capital, has donated $1.2 million since 2014 to the Senate Majority PAC, a campaign fund with close ties to Mr. Reid and other Senate Democrats.” Senator Reid, lest we forget, is from Nevada. As he approaches retirement at the end of 2016, perhaps he’s hedging his bets at taxpayer expense.
Consider just two other provisions: One, insisted upon by Republican Senator Thad Cochran, directs the Coast Guard to build a $640 million National Security Cutter in Cochran’s home state of Mississippi, a ship that the Coast Guard says it does not need. The other: A demand by Maine Republican Senator Susan Collins for an extra $1 billion for a Navy destroyer that probably will be built at her state’s Bath Iron Works – again, a vessel our military says is unnecessary.
So it goes: The selling off of the Republic, piece by piece. What was it Mark Twain said? “There is no distinctive native American criminal class except Congress.”
Can we at least face the truth? The plutocrats and oligarchs are winning. The vast inequality they are creating is a death sentence for government by consent of the people at large. Did any voter in any district or state in the last Congressional election vote to give that billion dollar loophole to a handful of billionaires? To allow corporations to hide their political contributions? To add $1.4 trillion to the national debt? Of course not. It is now the game: Candidates ask citizens for their votes, then go to Washington to do the bidding of their donors. And since one expectation is that they will cut the taxes of those donors, we now have a permanent class that is afforded representation without taxation.
A plutocracy, says my old friend, the historian Bernard Weisberger, “has a natural instinct to perpetuate and enlarge its own powers and by doing so slams the door of opportunity to challengers and reduces elections to theatrical duels between politicians who are marionettes worked by invisible strings.”
Where does it end?
By coincidence, this past weekend I watched the final episode of the British television series Secret State, a 2012 remake of an earlier version based on the popular novel A Very British Coup. This is white-knuckle political drama. Gabriel Byrne plays an accidental prime minister – thrust into office by the death of the incumbent, only to discover himself facing something he never imagined: a shadowy coalition of forces, some within his own government, working against him. With some of his own ministers secretly in the service of powerful corporations and bankers, his own party falling away from him, press lords daily maligning him, the opposition emboldened, and a public confused by misinformation, deceit, and vicious political rhetoric, the prime minister is told by Parliament to immediately invade Iran (on unproven, even false premises) or resign. In the climactic scene, he defies the “Secret State” that is manipulating all this and confronts Parliament with this challenge:
Let’s forget party allegiance, forget vested interests, forget votes of confidence. Let each and every one of us think only of this: Is this war justified? Is it what the people of this country want? Is it going to achieve what we want it to achieve? And if not, then what next?
Well, I tell you what I think we should do. We should represent the people of this country. Not the lobby companies that wine and dine us. Or the banks and the big businesses that tell us how the world goes ‘round. Or the trade unions that try and call the shots. Not the civil servants nor the war-mongering generals or the security chiefs. Not the press magnates and multibillion dollar donors… [We must return] democracy to this House and the country it represents.
Do they? The movie doesn’t tell us. We are left to imagine how the crisis — the struggle for democracy — will end.
As we are reminded by this season, there is more to life than politics. There are families, friends, music, worship, sports, the arts, reading, conversation, laughter, celebrations of love and fellowship and partridges in pear trees. But without healthy democratic politics serving a moral order, all these are imperiled by the ferocious appetites of private power and greed.
So enjoy the holidays, including Star Wars. Then come back after New Year’s and find a place for yourself, at whatever level, wherever you are, in the struggle for democracy. This is the fight of our lives and how it ends is up to us.

Saturday, November 28, 2015

America Has Changed From Democracy to Plutocracy




America Has Changed From Democracy to Plutocracy


frontcov


A plutocracy is government run by the rich, for the rich. In Citizens United v. Federal Election Commission, the U.S. Supreme Court allowed the corporate role in politics to be expanded, wiping away 100 years of law protecting citizens from the large corporate check books. The Supreme Court’s McCutcheon v. Federal Election Commission ruling pushed these boundaries back even further and now there is no limit to funds corporations or billionaires can give to unfairly influence elections.
Back in 2010, Senator John McCain (R-Ariz.) said he was “disappointed by the decision of the Supreme Court and the lifting of the limits on corporate and union contributions.”
Senator John Kerry (D-Mass.), speaking on how to fix this injustice, said “I think we need a constitutional amendment to make it clear, once and for all, that corporations do not have the same free-speech rights as individuals.”
Their concerns are fully justified, as these same large corporations have no loyalty to the U.S. They want “free trade” at all costs—not to export American made goods, but to outsource American jobs. Our jobs are moving to countries with no labor laws or environmental standards. Products once made here are now made at $2 per hour in other countries, then shipped into America with no tariffs or restrictions.
Here, citizens may earn $20 per hour, but with fewer and fewer jobs—as employers move overseas or go out of business—there will be no one left to buy their foreign-made products. Tariffs, which were instrumental in allowing us to become the world’s greatest productive economy, would defend our companies from the predatory practices putting them out of business, but these tariffs are opposed by “free traders” in Washington, who are financially backed by rich multinationalists.
As Senator Bernie Sanders said, “Freedom of speech, in my view, does not mean the freedom to buy the United States government.”
Soon our whole country will be unemployed, as the current recession turns into a depression worse than what our nation experienced in the 1930’s. At least we still had our manufacturing then. By putting protections in place we were able to make a strong comeback. If we don’t act now and bring back fair trade with protective clauses instead of unrestricted, destructive “free trade”, we may never recover.

Sunday, November 1, 2015

5 billionaires who are making life miserable for ordinary Americans


SALON



5 billionaires who are making life miserable for ordinary Americans

Nothing like using your immense fortune to stick it to the little guy VIDEO



TOPICS: VIDEO, ALTERNET, TOM PERKINS, BILLIONAIRES, 1 PERCENT, 
5 billionaires who are making life miserable for ordinary AmericansTom Perkins (Credit: Bloomberg TV)
This article originally appeared on AlterNet.
AlterNetHere is how it works these days: You start hearing about a big, national problem and then it becomes a drumbeat. First there are a few articles and columns mentioning that such-and-such is a problem. Then a number of articles appear, then a “study” from a “think tank” confirms the problem and sounds the alarm about how terrible it is, and then just as the issue seems to be the only thing you are hearing about a solution is presented. Of course, the solution always involves taking something away from you and giving it to some company or industry standing in front of a billionaire or three. The right question to start asking when you hear about these “problems” is which billionaire is driving this.
Here are five-plus examples of billionaires who use their money to try to get us to think what they want us to think in order to enact a right-wing economic agenda.
1) Pete Peterson’s deficit/debt scare campaign and his ongoing effort to gut Social Security and other entitlements. Leading every list of billionaires pushing an issue is billionaire Pete Peterson and his forever war on government doing things to make our lives better, especially Social Security. Peterson leads the list because of reports of his pledge to spend $1 billion on his pet issue.
Have you ever heard anywhere that the budget deficit and national debt are a problem? You can’t pick up a newspaper or magazine, turn on the radio or TV, or listen to any politician from the so-called “center” to the far right without hearing that, and the reason is Pete Peterson and his money.
Peterson and his money are a big part of the backing for the Concord Coalition, Fix the Debt, The Can Kicks Back, the Comeback America Initiative, the Committee for a Responsible Federal Budget, the Moment of Truth Project, the Committee for Economic Development, America Speaks plus contributions to many other groups. As Michael Hiltzik worded it in Unmasking the most influential billionaire in U.S. politics at the LA Times, “The shame of Washington… comes from the fact that almost every organization promoting the grand fiscal bargain in which those programs will be on the table has accepted, somewhere and somehow, money from Pete Peterson.”
Sourcewatch’s Fix the Debt portal contains much more information on this big-money influence campaign, including this graphic: 
Last week one of Peterson’s deficit-scare groups was in the news. The Can Kicks Back is an organization named after the narrative that not cutting Social Security is just kicking the debt can down the road. They claim this is because there is a generational war where older people are living high on the hog and younger people will have to pay for this. The group tries to make legislators think younger people want them to cut Social Security, etc. using astroturf videos, Twitter posts, etc.
Well, the Peterson spigot seems to have dried up. The anti-debt group is… wait for it… in debt. All of that astroturf hype about younger people demanding Social Security cuts? When the Peterson money ran out, the urgency went away.
Here’s the thing about this massively funded deficit-debt scare the country has been put through. Getting people whipped up about budget shortfalls (when raising taxes on the rich or cutting the bloated military budget are off the table) necessarily leads to certain conclusions that benefit a wealthy few. It leads people to believe that our government should cut back on the things it does to make our lives better—also called “government spending.”
Meanwhile the country’s real deficit problem is our trade deficit, especially with China. The trade deficit is the measure of jobs and factories moving out of the country. Fixing this deficit just happens to create jobs, lift wages and repair our economy.
If you are hearing about how terrible the budget deficit is and how it is so important that we all make sacrifices in order to bring that deficit down, it’s Pete Peterson ‘s money talking. Too bad there is no billionaire pushing us to fix the trade deficit.
2) Billionaire John D. Arnold’s attack on public-employee pensions. Have you heard that the biggest problem facing our states, counties and cities is the bloated, lavish, insane level of money that goes to public-employee pensions? Of course you have, and that’s partly thanks to billionaire John Arnold. Arnold got his start at Enron trading natural gas derivatives. After Enron he used his Enron money to form an energy-trading hedge fund. Now he is using his fortune to fund various philanthropic causes, including helping to keep Head Start running when Republicans recently shut down the government. Unfortunately he has also dedicated part of his fortune to gutting public-employee pensions.
In a September report for the Institute for America’s Future, the Plot Against Pensions (which has excerpts posted on Salon), David Sirota showed how the Pew Charitable Trusts was working in partnership with (and funded by) Arnold. The findings in Sirota’s report include:
  • Conservative activists are manufacturing the perception of a public pension crisis in order to both slash modest retiree benefits and preserve expensive corporate subsidies and tax breaks.
  • The Pew Charitable Trusts and the Laura and John Arnold Foundation are working together in states across the country to focus the debate over pensions primarily on slashing retiree benefits rather than on raising public revenues.
Then last week, in The Wolf of Sesame Street: Revealing the secret corruption inside PBS’s news division at PandoDaily, Sirota revealed how PBS’ WNET had solicited Arnold to fund a two-year series of “news” shows named “The Pension Peril” that would promote cutting the pensions of public employees. In this story, Sirota wrote:
“In recent years, Arnold has been using massive contributions to  politiciansSuper PACsballot initiative effortsthink tanks and local front groups to finance a nationwide political campaign aimed at slashing public employees’ retirement benefits. His foundation which backs his efforts  employs top Republican political operativesincluding the former chief of staff to GOP House Majority Leader Dick Armey (TX). According to its own promotional materials, the Arnold Foundation is pushinglawmakers in states across the country “to stop promising a (retirement) benefit” to public employees.”
WNET severed the relationship. According to the New York Times, “WNET, the New York City public television broadcaster, said on Friday that it would return a $3.5 million grant it received to sponsor an ambitious project on public pensions in the face of charges that it solicited inappropriate underwriting for the series.”
To its credit the Times’ story gave full credit to Sirota’s reporting,
“Earlier, after a critical report on Wednesday by David Sirota on the website PandoDaily, WNET officials said they were comfortable with the foundation’s funding. Mr. Sirota sharply criticized WNET for accepting the Arnold Foundation money because John Arnold, a former hedge fund manager, has financially backed efforts to persuade municipalities to cut public employee pension benefits.”
Note that Arnold allies are pushing a ballot initiative in California to gut public-employee pensions.
P.S. A while back I also took a look at the campaign to turn the public against public employees. In Discover The Network Out To Crush Our Public Workers I looked at some of the names behind the network of “institutes” and “policy centers” and what I called “cookie-cutter think tanks” that were issuing “reports” that basically claimed that the world would end if we didn’t “reform” (gut) the pensions and other compensation of public employees and stop them from being allowed to organize unions. Tracing through the directors of the various “institutes” and “pulling the threads” of partner organizations they listed, I found that many or most of the strings lead back to Wall Street. I wrote then:
“These corporate/conservative organizations are very good at manipulating the media and public opinion — it is their purpose. Their “experts” are well paid and always available to talk to reporters, appear on TV and radio shows and write articles and opinion pieces for newspapers, blogs and for their network of similar organizations. Their “reports’ and “studies” reach the conclusions that fit the strategy, and are crafted to sound just right. And there are so many of them! The result is development of “conventional wisdom” about what is going on in our society. This is why that conventional wisdom more and more reflects the corporate/conservative line.”
Of course, getting these things enacted often runs up against a troublesome problem: democracy. There are still places where voters have enough of a say to block some of the things the billionaires are demanding. But never fear, there are a few billionaires working on fixing that pesky democracy problem, too.
3) Charles Munger Jr. (near-billionaire and son of a billionaire) bankrolled California’s Proposition 20 in 2010 to create a “citizens redistricting committee” that took the process of drawing political districts out of the hands of California’s politicians. Munger and many Republicans believed this would immediately turn the state over to the Republicans because the districts were “ gerrymandered”—rigged—to have a majority of “safe” Democratic-voting districts.
Prop. 20 passed, but it didn’t work out the way Munger and Republicans had hoped, not by a long shot. The earlier Democratic gerrymandering process had been “too clever by half.” To make sure Democrats would have a guaranteed majority in the legislature they drew up districts in a way that moved Republican voters into a minority of “safe” Republican districts. The problem with this is that it takes a two-thirds vote in the legislature to pass a budget, and Democrats had rigged the system in a way that left Republicans with just over one-third control. So year after year Republicans blocked everything, demanding big tax breaks for corporations as a ransom for passing anything that helped any actual people. (Why does that sound familiar?)
It turns out that fair redistricting is a gift to citizen control and democracy. After the citizens commission got rid of the gerrymander, voters kicked out enough Republicans to give Democrats two-thirds contro. Prop 30  increased taxes on the wealthy, while also bumping up the sales tax . Now the state has a budget surplus, schools are starting to get re-funded, infrastructure is starting to get repaired and things are getting done again.
Other Munger-financed propositions include Proposition 32, a failed attempt to keep unions from being involved in politics and Proposition 14, which passed and gave California an “open primary” which keeps political parties from being able to choose their own candidates—instead the top two vote-getters in the primary go into the general election regardless of party.
4) Billionaire Tom Perkins laid out his own solution to the democracy problem the other day in an interview at the Commonwealth Club INFORUM in San Francisco, saying, “The Tom Perkins system is: You don’t get to vote unless you pay a dollar of taxes,” Perkins said. “But what I really think is, it should be like a corporation. You pay a million dollars in taxes, you get a million votes. How’s that?”
There you go: one-dollar-one-vote plutocracy vs one-person-one-vote democracy is now openly part of the public discussion. Think Progress’ Igor Volsky explained how Perkins’ idea is “already in the works.”
“The nation’s growing gap between the rich and poor has become a full-blown crisis, with the top 1 percent of families experienced a 278 percent increase in their real after-tax income from 1979 to 2007, while families in the middle 60 percent saw an increase of less than 40 percent. A large body of research suggests that high inequality leads to lower levels of representative democracy and a higher probability of revolution, as poorer citizens become convinced that the government is only serving and representing the interests of the rich.
Wealthy people’s disproportionate impact on democracy also has the effect of perpetuating income inequality. During the 2012 elections, “the top 0.01 percent of campaign donors — one percent of the one percent — contributed more than 40 percent of all the money spent in the 2012 elections,” compared to 15 percent in 1980. Harvard economics professor Edward L. Glaeser argues that as the rich become richer and secure more political influence, they support policies that make them wealthier at the expense of everyone else.”
But wait, there’s more. Conservatives really are advocating migrating to a plutocracy. The conservative National Review’s Kevin D. Williamson argues that progressive taxation in which the wealthy are asked to pay more than others sets a precedent that should apply to votes. He writes, “If our political liabilities — taxes — should be as a matter of justice proportional to our income, then why shouldn’t our political input be likewise proportionate? Why should proportionality be the rule in one context and not the other? The leap from ‘No taxation without representation’ to ‘proportional taxation with proportional representation’ is not a very dramatic one.”
5+) Silicon Valley billionaires Steve Jobs, Eric Schmidt and others pushing low wages for people who work for them.
Speaking of Silicon Valley billionaires…did you think billionaires were in favor of “free markets” and such? Well, it turns out not so much. In one (more) example of billionaires rigging the free market for their own gain, a lawsuit alleges that the top executives of Apple, Google, Intel, LucasFilm, Pixar, Adobe and others conspired to set up a scheme to drive down the pay of executives, engineers and others. The class-action lawsuit was filed on behalf of more than 100,000 employees and claims that around $9 billion was stolen from these employees in the 2000s. eBay and Intuit are involved in a similar suit. See Pando’s The Techtopus: How Silicon Valley’s most celebrated CEOs conspired to drive down 100,000 tech engineers’ wages.

Monday, June 22, 2015

Forget the 1%: It is the 0.01% who are really getting ahead in America







Free exchange

Forget the 1%

It is the 0.01% who are really getting ahead in America



AMONG the most controversial of Thomas Piketty’s arguments in his bestselling analysis of inequality, “Capital in the Twenty-First Century”, is that wealth is increasingly concentrated in the hands of the very rich. Rising wealth inequality could presage the return of an 18th century inheritance society, in which marrying an heir is a surer route to riches than starting a company. Critics question the premise: Chris Giles, the economics editor of the Financial Times, argued earlier this year that Mr Piketty’s data were both thin and faulty. Yet a new paper suggests that, in America at least, inequality in wealth is approaching record levels.*

Earlier studies of American wealth have tended to show only small increases in inequality in recent decades. A 2004 study of estate-tax data by Wojciech Kopczuk of Columbia University and Emmanuel Saez of the University of California, Berkeley, found an almost imperceptible rise in the share of wealth held by the top 1% of families, from about 19% in 1976 to 21% in 2000. A more recent investigation of the Federal Reserve’s data on consumer finances, by Edward Wolff of New York University showed a continued but gentle increase in inequality into the 2000s. Mr Piketty’s book, which drew on this previous work, showed similarly modest rises in wealth inequality in America.


A new paper by Mr Saez and Gabriel Zucman of the London School of Economics reckons past estimates badly underestimated the share of wealth belonging to the very rich. It uses a richer variety of sources than prior studies, including detailed data on personal income taxes (which the authors mine for figures on capital income) and property tax, which they check against Fed data on aggregate wealth. The authors note that not every potential source of error can be accounted for; tax avoidance strategies, for instance, could cause either an overestimation of the wealth share of the rich (if they classify labour income as capital income in order to take advantage of lower rates) or an underestimation (if they intentionally seek out lower yielding investments for their tax advantages). Yet they believe their estimates represent an improvement over past attempts.

The results are enough to make Mr Piketty blush. The authors examine the share of total wealth held by the bottom 90% of families relative to those at the very top. Because the bottom half of all families almost always has no net wealth, the share of wealth held by the bottom 90% is an effective measure of “middle class” wealth, or that held by those from the 50th to the 90th percentile. In the late 1920s the bottom 90% held just 16% of America’s wealth—considerably less than that held by the top 0.1%, which controlled a quarter of total wealth just before the crash of 1929. From the beginning of the Depression until the end of the second world war, the middle class’s share of total wealth rose steadily, thanks largely to collapsing wealth among richer households. Thereafter the middle class’s share grew along with national wealth thanks to broader equity ownership, middle-class income growth and rising rates of home-ownership. The expansion of tax breaks for retirement savings also helped. By the early 1980s the share of household wealth held by the middle class rose to 36%—roughly four times the share controlled by the top 0.1%.


Track wealth distribution decade-by-decade with our interactive inequality "swing-o-meter"
 
From the early 1980s, however, these trends have reversed. The ratio of household wealth to national income has risen back toward the level of the 1920s, but the share in the hands of middle-class families has tumbled (see chart). Tepid growth in middle-class incomes is partly to blame; real incomes for the top 1% of families grew 3.4% a year from 1986-2012 while those for the bottom 90% grew 0.7%. But Messrs Saez and Zucman reckon the main cause of falling middle-class net worth is soaring debt. Rising home values did little to raise middle-class wealth since mortgage debt also soared. The recession battered home prices but left the debt untouched, further squeezing middle-class wealth.

The really, really rich get much, much richer

On the other side of the spectrum, the fortunes of the wealthy have grown, especially at the very top. The 16,000 families making up the richest 0.01%, with an average net worth of $371m, now control 11.2% of total wealth—back to the 1916 share, which is the highest on record. Those down the distribution have not done quite so well: the top 0.1% (consisting of 160,000 families worth $73m on average) hold 22% of America’s wealth, just shy of the 1929 peak—and exactly the same share as the bottom 90% of the population. Meanwhile the share of wealth held by families from the 90th to the 99th percentile has actually fallen over the last decade, though not by as much as the net worth of the bottom 90%.
The outsize fortunes of the few would not be too worrying were they largely the product of entrepreneurial activity: riches amassed by hardworking billionaires who are as likely as not to give their bounty away through philanthropy. Messrs Saez and Zucman find some evidence for this dynamic. Wealthy families are younger than they were a generation or two ago, and they earn a larger share of the country’s income from labour: 3.1% in 2012 versus less than 0.5% prior to 1970.

Yet one should not yet rule out the return of Mr Piketty’s “patrimonial capitalism”. The club of young rich includes not only Mark Zuckerbergs, the authors argue, but also Paris Hiltons: young heirs to previously accumulated fortunes. What’s more, the share of labour income earned by the top 0.1% appears to have peaked in 2000. In recent years the proportion of the wealth of the very rich held in the form of shares has levelled off, while that held in bonds has risen. Since the fortunes of most entrepreneurs are tied up in the stock of the firms that they found, these shifts hint that America’s biggest fortunes may be starting to have less to do with building businesses, just as Mr Piketty warned.

*Studies cited in this article

"Top wealth shares in the United States, 1916-2000: Evidence from estate tax returns", by Wojciech Kopczuk and Emmanuel Saez, National Tax Journal, June 2004.

"Recent trends in household wealth in the United States: Rising debt and the middle-class squeeze—an update to 2007", by Edward Wolff, Levy Economics Institute Working Paper, March 2010.

"Wealth inequality in the United States since 1913: Evidence from capitalized income tax data", by Emmanuel Saez and Gabriel Zucman, National Bureau of Economics Research Working Paper, October 2014.

How the Stinking Rich Ate the Economy



The Atlantic


Business



How the Stinking Rich Ate the Economy


Income inequality is accelerating fastest at the top. Who are the 0.1%?


"If a $100,000-a-year household thinks itself to be middle class," the neoconservative writer Irving Kristol once wrote, "then it is middle class." This sentiment is widely held, but it makes no mathematical sense. Any family whose income exceeds that of 90 percent of all other families cannot sensibly be called anything but rich. To believe otherwise would oblige you to judge your child mediocre when his teacher gives him an A.

But within the top decile distinctions are nonetheless worth making.

-- The Rich, defined as the top 10 percent, which today means everyone making $109,000 or more, increased their share of national income during the Great Divergence from about one third (34 percent) to nearly one half (48 percent).

-- The top 5 percent (Basically, Undeniably, Really, and Stinking Rich; today, everybody making at least $153,000) increased their share from 23 to 37 percent.

-- The top 1 percent (Undeniably, Really, and Stinking Rich; today, everybody making at least $368,000) more than doubled their share of the national income from 10 to 21 percent.

-- The top 0.1 percent (Really and Stinking Rich; today, everybody making at least $1.7 million) tripled their share of the national income to 10 percent.
-- The top 0.01 percent (the Stinking Rich; today, everybody making at least $9.1 million) nearly quadrupled their share of income during the Great Divergence, from 1.4 to 5 percent.

Notice a pattern? The richer you are, the faster you expand your slice of your country's income. Or as Emmanuel Saez put it to me, "The [inequality] phenomenon is more extreme the further you go up in the distribution," and it's "very strong once you pass that threshold of the top 1 percent."

WHO ARE THE STINKING RICH?

The Great Divergence is a dramatic departure from the status quo that prevailed in the United States from the end of World War II through the early 1980s.
Although top income shares are rising in many developed countries, nowhere are they rising as fast as in the United States. Also, nowhere (except Argentina) have top income shares reached the same high level as in the United States. Indeed, if you update income share for America's one-percenters to 2008, the United States pulls slightly ahead of Argentina--not that this is a competition any sensible country would want to win.

Who is it exactly who got rich?

A 2010 study by Jon Bakija, Adam Cole, and Bradley Heim, economists at Williams College, the U.S. Treasury, and Indiana University, respectively, found that among the Really and Stinking Rich -- the top 0.1 percent, who currently make at least $1.7 million -- 43 percent were executives, managers, and supervisors at nonfinancial firms, and 18 percent were financiers. Together they accounted for the majority. The professions next in line were law (7 percent), medicine (6 percent), and real estate (4 percent).

American chief executives typically get paid two to three times what their European counterparts earn. Such pay levels were not the norm during most of the twentieth century. Pay for top executives declined steeply during World War II, increased gradually from the mid-1940s to the mid-1970s, and then took off like a rocket during the 1980s and 1990s. In 1973, a survey of large companies in the United States found that chief executives were paid twenty-seven times more than the average worker. By 2005 that had risen to 262 times.

The 43 percent of the Really and Stinking Rich who run America's nonfinancial corporations were very significant players in the Great Divergence. No other occupational group had a larger membership among the top 0.1 percent. But, incredibly, the quadrupling of chief executives' pay during the 1990s wasn't enough to increase this group's presence among the Really and Stinking Rich once the run-up in top income shares began. Proportionally, its membership actually diminished slightly, from 48 percent in 1979 to percent to 43 percent in 2005.

The group to watch -- the group that expanded its share of the top earners' pie -- was the nation's financiers. Back in 1979, the financial sector represented only 11 percent of the Really and Stinking Rich. By 2005, financiers represented 18 percent. In their 2010 book 13 Bankers, Simon Johnson, an economist at MIT's Sloan School of Management, and James Kwak, a former consultant at McKinsey and Company, describe the financial sector's astonishing growth over three decades through mergers and expansions into new businesses.
Between 1980 and 2000, the assets held by commercial banks, securities firms, and the securitizations they created grew from [the equivalent of] 55 percent of GDP to [the equivalent of] 95 percent ... The growth was faster still for the largest banks. Between 1990 and 1999, the ten largest bank holding companies' share of all bank assets grew from 26 percent to 45 percent, and their share of all deposits doubled from 17 percent to 34 percent.
In effect, Wall Street ate the economy.

Excerpted from The Great Divergence by Timothy Noah, published by Bloomsbury Press, 2012.

Meet the 0.01 Percent: War Profiteers



Huffpost Politics




Meet the 0.01 Percent: War Profiteers

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There's the top 1% of wealthy Americans (bankers, oil tycoons, hedge fund managers) and there's the top 0.01% of wealthy Americans: the military contractor CEOs.

If you've been following the War Costs campaign, you already know that these corporations are bad bosses, bad job creators and bad stewards of taxpayer dollars. What you may not know is that the huge amount of money these companies' CEOs make off of war and your tax dollars places them squarely at the top of the gang of corrupt superrich choking our democracy. These CEOs want you to believe the massive war budget is about security -- it's not. The lobbying they're doing to keep the war budget intact at the expense of the social safety net is purely about their greed.

In many areas, including yearly CEO salary and in dollars spent corrupting Congress, these companies are far greater offenders than even the big banks like JP Morgan Chase or Bank of America.


Egregious Military Contractor CEO pay

The top 0.01% of earners make at least $9.14 million per year, a rarefied strata of income that includes defense company CEOs and Wall Street bank chieftains alike. But a deeper dive demonstrates how defense companies outpace the big banks' knack for enriching themselves at the expense of everyone else.

Military Contractor CEO Pay in 2010
Just to put that in context, consider how these annual payoffs compare to the people we're used to thinking of as poster children for the top 1 percent:

Financial Sector CEO Pay in 2010
Considering how they stack up to financial sector heads, war industry CEOs aren't just members of the 1%; they're the super-elite among them, the one-hundredth of a percent.

Lobbying Domination

Disgusted by the overwhelming corporate influence in Congress? Look no further than the big military contractor companies, whose flagship companies spend enough on lobbying to dwarf even financial sector titans.

War Industry Lobbying Expenditures for 2010
  • Lockheed Martin: $12.7 million.
  • Northrop Grumman: $15.7 million.
  • Boeing: $17.89 million.

  • Again, just to provide some context, here are the same lobbying totals for some of the most recognized names in the financial sector.

    Financial Sector Lobbying in 2010

    The war industry gets away with blowing our money on job-killing spending because it can bend Congress to its whim. In the process, the industry is like a vacuum sucking up brain power and engineering resources that could and would establish and grow entirely new wholesome industries. It's no surprise that Americans confront a 9.1% unemployment rate and an under-employment rate flirting with 20 percent this year.

    Want to know where all the money went that could be putting people back to work or keeping U.S. manufacturing industries competitive? The war industry CEOs dumped lobbying cash on Congress and diverted all that wealth to their private bank accounts.

    Striking a blow for democracy

    The war contractors' iron grip on the wealth and politics of our country has caught the attention of our friends at Occupy Wall Street, who are targeting war profiteers in its draft list of demands with a call to bring home "all military personnel at all non-essential bases" and to end the "Military Industrial Complex's goal of perpetual war for profit."

    We're allies of the Occupy movement, which swells from the 99%'s disgust and dysfunction with our system. A democracy for and of the people that favors the 0.01% at the expense of the 99.99% of us is no democracy at all.
    We here at Brave New Foundation and the War Costs campaign have been inspired by the incredible work of the Occupy movement, so we created our latest video to help push this critical piece of their message: war for profit has to end. We're asking viewers to share our video with their local Occupy groups and organize a guerrilla screening at an Occupy protest in your city.

    The Occupy protests have a lot to teach us, and the leaderless movement is at minimum an indictment of our political system. They've stopped whispering, and we've all started shouting.

    Occupy your city and show this video to your community.