inequality

Keeping the Rich Comfy: Your Job Future?

Sam Pizzigati — Sun, 28 Oct 2012 20:49:16 -0400

We've lost our manufacturing economy in the United States. Now we're losing our service economy. We're rapidly becoming, some observers fear, a 'servant economy.'

Fire fighter, basketball player, lion tamer, teacher, nurse: Ask little kids what they want to be when they grow up, and you'll get all sorts of answers. But you’ll never hear this one. You’ll never hear youngsters say they want to devote their careers to serving rich people.

Today’s youth might want to reconsider. They’re facing an American economy where serving rich people increasingly seems to offer the best future with real opportunity. Or, as the economist Jeff Faux puts it, we’re well on the way to becoming a full-fledged “servant economy.”

We’ve had “servant economies” in the world before. At times, people even rushed toward servant status. In the early industrial age, jobs in mines and factories would be dirty and dangerous and pay next to nothing. Domestic work for rich families could seem, by comparison, a relatively safe haven.

But that calculus changed as workers organized and won the right to bargain collectively for a greater share of the wealth they were creating. Over the first half of the 20th century, America's super rich lost their dominance, and fewer and fewer Americans worked as servants for them.

This state of affairs didn't last long. Since the late 1970s we’ve witnessed an assault on the building blocks of greater equality — strong unions, steeply graduated progressive taxes, regulatory limits on business behavior — that has hollowed out the American middle class.

Good manufacturing jobs have largely disappeared, outsourced away. Most Americans no longer make things. They provide services.

We could, of course, have a robust “service” economy, if we built that economy on providing quality services to all Americans. But providing these quality services, in everything from education to health to transportation, would take a significant public investment — and significant tax revenue from America’s rich.

A half-century ago, we did collect significant tax revenue from America’s wealthy. No longer. Tax cuts have minimized that revenue and left public services chronically underfunded. That leaves young people today, as economist Jeff Faux points out in his new book The Servant Economy: Where America's Elite is Sending the Middle Class, with a stark choice.

Young people can become engineers and programmers and spend their careers in “pitiless competition with people all over the world” just as smart and trained but “willing to work for much less.” Or they can join the servant economy and “service those few at the top who have successfully joined the global elite.”

In this new “servant economy,” we’re not talking just nannies and chauffeurs. We’re talking, as journalist Camilla Long notes, “pilots, publicists, art dealers, and bodyguards” — a “newer, brighter phalanx of personal helpers.”

Want to see the world? In the new servant economy, you can become a “jewelry curator” and voyage to foreign lands to pick up gems for wealthy clients.

Want to face daily challenges? You can become a concierge and hire an elephant for a wealthy patron's wedding reception one day, get your patron a chess match with a grand master the next.

Or, if you lean toward the traditional, you can always shell out $12,000 for a month-long course that will certify you as a manservant in good standing with the Guild of Professional English Butlers.

A top butler can pull in well over $100,000 a year. But serving the rich can be far more lucrative than that. Interior decorator Michael Smith pulled in an $800,000 fee for his work on a Wall Street CEO’s office. New York attorney David Boies has a plutocrat-friendly law practice — and a reported $1,220 hourly fee.

John Blackburn, an architect in Washington, D.C., specializes in designing horse barns for wealthy equestrians. The barns run up to $3 million each. His fee, the Washington Post reports, ranges from 8 to 10 percent of each barn’s cost.

But we have a basic problem here. We have a limited pool of super rich who can afford to commission horse barns and ask for elephants.

As of this past summer, calculates the Credit Suisse Research Institute, only 38,000 Americans had fortunes worth at least $50 million. The entire world has only about 3 million people worth at least $5 million.

Even if those 3 million gave gainful “servant economy” employment, directly and indirectly, to an average 100 people each, we would still have another 4 billion or so people on the outside of the “servant economy” looking in.

The “servant economy,” as economist Jeff Faux makes clear, can only be a dead end. We need to change course.

Veteran labor journalist Sam Pizzigati, an Institute for Policy Studies associate fellow, writes widely about inequality. His latest book, The Rich Don't Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, will appear this fall.

Joe the Plumber, We Miss You!

Sam Pizzigati — Sun, 21 Oct 2012 11:15:05 -0400

Americans haven't heard much at all from Joe the Plumber this election cycle. A shame. Without his rants against sharing the wealth, no one's bothering to debate how desperately America really needs to be sharing. And how desperate has our maldistribution of wealth become? Typical families in more equal nations -- like Japan -- now have over three times more wealth than typical families in the United States, says new data from Swiss banking giant Credit Suisse.

Four years ago, a plumber by the name of Joe Wurzelbacher injected a bit of a debate over inequality right into the heart of the 2008 Presidential race.

Just outside Toledo, in a chance campaign encounter, then-candidate Barack Obama explained to Wurzelbacher — soon to become the celebrated “Joe the Plumber” — that “when you spread the wealth around, it’s good for everybody.”

GOP Presidential candidate John McCain almost immediately jumped on Obama’s remark, as if his rival had committed some horrible gaffe, and wealth redistribution suddenly became one of the campaign’s hottest issues.

Now four years later Joe the Plumber has largely faded from view. He’s running a lackluster campaign for Congress, as a conservative Republican. And the issue that gave Joe the Plumber celebrity status — wealth redistribution — has more or less totally disappeared.

Last week, the second Presidential debate of 2012 came and went without a single mention of the word “inequality” or America’s incredibly top-heavy distribution of income and wealth.

President Obama, to be sure, did talk about hiking taxes on the rich, back to Clinton-era levels. But those Clinton rates didn’t do much at all to stop the concentrating of America’s wealth. Our super rich saw their fortunes continue to soar during the 1990s, just as they had soared during the 1980s, before Clinton’s presidency, and just as they’ve soared since Clinton left office.

And where do we stand right now with this concentration of income and wealth at America’s economic summit? An up-to-date answer came last week from the global research arm of Credit Suisse, the Swiss banking giant.

America’s rich aren’t just pulling away from the rest of America, the Credit Suisse Research Institute’s just-released third annual Global Wealth Report details. They’re pulling away from the rest of the world’s rich.

Between the middle of 2011 and the middle of 2012, Credit Suisse calculates, overall global wealth dropped 5.2 percent, the first annual decline since the global financial meltdown in 2008. Over most of the globe, this dip even included million-dollar fortunes. In Europe, nearly 1.8 million affluents lost their millionaire status.

But American millionaires have actually expanded their ranks over the last 12 months, by 962,000. Americans now make up a stunning 39 percent of all the global households worth at least $1 million.

If you jump up a few wealth notches, to the level of “ultra high net worth individuals” worth at least $50 million, the U.S. global wealth dominance becomes even more pronounced. Of the 84,500 global super rich with over $50 million in net assets, 45 percent hail from the United States.

Joe the Plumber and other fans of great fortune don’t have much problem with this huge accumulation of wealth at America’s economic summit. What about the rest of us? Should we be concerned? Might our lives be more secure if we did more in the United States to share the wealth?

The researchers at Credit Suisse have helpfully crunched all the numbers we need to answer this most basic of questions. Three of today’s most important developed nations, the Credit Suisse data show, turn out to have almost identical quantities of wealth per adult.

If you add up the total household wealth in each of these three countries — the United States, France, and Japan — and then divide that overall wealth by adult population, you get virtually the same average wealth: $262,351 per adult in the United States, $265,463 in France, and $269,708 in Japan.

In real life, of course, we don’t divide wealth equally by population. Some of us have more wealth than others, much more wealth. But the degree of inequality, the new Global Wealth Report from Credit Suisse reminds us, varies enormously by nation. In the United States, the bulk of our wealth rests near the top. In France and particularly Japan, much more of the wealth rests around the middle.

How much of a difference — to the typical person in the United States, France, and Japan — do these differences in inequality levels make? A great deal. To be more specific: over $100,000 worth of difference per person.

In the grossly unequal United States, our most typical — or median — adult now holds just $38,786 worth of wealth. Half of American adults have more than this $38,786, half have less.

Japan’s most typical adults have a net worth of $141,410. In France, a nation with wealth much more equally distributed than in the United States but not as equally distributed as Japan, that typical adult holds $81,274 in wealth.

In other words, a typical Japanese household today sports more than triple the wealth of a typical U.S. household, and typical French households have twice as much wealth as their American counterparts.

Average Japanese and average French don’t work any harder than average people in the United States. They just live in societies that do a much better job of sharing the wealth that work creates.

Maybe one day Americans will live in a society that shares. Maybe one day our Presidential candidates will even talk about sharing.

Sam Pizzigati edits Too Much, the online Institute for Policy Studies weekly on excess and inequality. His latest book, The Rich Don't Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, will appear this fall.

Can We Get Tougher on Crime in the Suites?

Sam Pizzigati — Sun, 07 Oct 2012 11:58:38 -0400

Federal regulators have actually been cracking down somewhat lately on financial industry fraud. But the power-suited executives responsible for that fraud are still paying no personal price.

What should we, as a society, be doing about all those reckless financial industry executives who helped trigger the Great Recession? Should we be putting these execs behind bars? Or should we forgive and forget and let them collect hundreds of millions of dollars in new rewards?

These questions now stand answered. The Equilar executive pay data firm reported last week that the five highest-ranking execs at 18 top U.S. financial firms together pocketed — in the worst 12 months after Wall Street's 2008 meltdown — stock awards now worth nearly half a billion dollars.

Meanwhile, not one top financial exec has yet seen the inside of a jail cell, despite massive instances of fraud at the firms they've been running.

How widespread has this fraud been? The Securities and Exchange Commission, the federal watchdog over Wall Street, has so far “collected $2.2 billion in penalties, disgorgement, and other monetary relief from cases related to the crisis,” the New York Times reports.

And that total doesn’t count the $25 billion settlement with banks that the Justice Department announced last February — over fraudulent foreclosure practices — or any of the $536 million in refunds and penalties the new Consumer Financial Protection Bureau has won since July from three major credit card companies.

Not one cent of all these millions and billions has come directly out of the pockets of senior financial industry executives. Millions and billions have instead been pouring millions into the pockets of these executives.

Consider Capital One Bank, the “don't-leave-home-without-it” credit card giant. This past summer, Capital One agreed to pay $210 million in refunds and fines after federal regulators caught bank staff misleading customers on credit scores and falsely claiming that paid add-on services came at no charge.

Capital One’s top five execs could pay a good chunk of that $210 million just from the pay they pocketed in the one year the new Equilar executive pay analysis has tracked. From mid 2008 to mid 2009, these five Capital One execs gobbled up stock and stock option awards then worth $19.9 million.

At the time of that award, Capital One shares were selling at bargain-basement prices. Since then, the entire stock market has rebounded, Capital One shares included. Equilar puts the current value of the $19.9 million in stock and options Cap One's execs received four years ago at $114 million.

The five execs, insists a flack for Capital One, deserve every bit of that reward. They “delivered,” the flack explains, “solid results in 2009.”

Solid as smoke and mirrors. The five execs ran a company that bamboozled consumers. They parlayed a huge stock market rebound — fueled by taxpayer-financed bank bailouts — into immense personal windfalls.

But let’s not dwell on just Capital One. American Express last week agreed to pay $112.5 million in refunds and fines. The company, regulators found, has been charging illegal fees and reneging on discounts promised to consumers.

At the stock market low point in 2009, notes Equilar, American Express generously stuffed the pockets of its top five execs with options then worth a measly $7.6 million. The current value of these options: $91.2 million.

All told, between July 1, 2008 and June 30, 2009, the 80 executives at the 18 U.S. financial firms that Equilar examined grabbed stock and options now worth a stunning $457 million.

Some of these execs, we now know, ran companies guilty of massive frauds. And why should we expect, asks consumer advocate Dennis Kelleher of Better Markets, anything but widespread fraud out of Wall Street's finest?

“If you are an executive,” he notes, “you know that the chances of getting caught are infinitely small, and the chances of getting caught and prosecuted are even smaller.”

On Wall Street and elsewhere in Corporate America, crime clearly pays. Back in the Great Depression, curiously enough, we took a different tack toward Wall Street crime. The nastiest of America’s super-rich wheeler-dealers went to jail.

In 1938, for instance, prosecutors sent New York Stock Exchange president Richard Whitney upriver to Sing Sing. Six thousand people gathered at New York’s Grand Central Station to watch armed guards shuffle Whitney onto the prison-bound train.

We don’t, of course, do prison trains anymore. But planes would do.

Sam Pizzigati edits Too Much, the online Institute for Policy Studiesweekly on excess and inequality. Read the current issue or sign up here to receive Too Much in your email inbox.

A Plutocrat Epiphany: All Votes Need Not Count

Sam Pizzigati — Sun, 30 Sep 2012 13:48:00 -0400

America's billionaires have realized they really don't have to bother convincing a majority of people to vote their way. They can put their cash instead into campaigns to keep the hard-to-convince from voting.

Our two major presidential candidates descended on Ohio last week, and legions of reporters followed closely behind. Those reporters filed tens of thousands of words on what they saw and heard on their quick in-and-out Ohio excursion.

But not one of those reporters filed a word about what may have been the most nationally significant news out of Ohio last week: the release of a new analysis on income inequality from the Federal Reserve Bank of Cleveland.

This new Cleveland Fed analysis examines both “labor” and “capital” income in America since 1980. Labor income includes everything we make from our jobs: wages and salaries, pensions and health insurance benefits.

Capital income comes from the ownership of assets. Interest, dividends, and the capital gains from buying and selling stocks, bonds, and other forms of property all count as capital income.

Labor income, the Cleveland Fed analysis shows, “has been declining as a share of total income earned in the United States for the past three decades.” The capital share, by stark contrast, has been increasing

In other words, Americans have been making less from work and more from wealth. But only a relative few Americans, the Cleveland Fed observes, have significant quantities of that wealth. The unsurprising result: We have witnessed a significant “spike in inequality” over the past generation.

In a vital democracy, the candidates who seek our votes would be agonizing over this new Cleveland Fed study. How could we possibly have evolved a society, they would orate, where wealth counts more than work? But we don't live in a vital democracy. We live in a plutocracy, a society where the rich rule.

Some Americans dismiss this “plutocracy” label. The rich can't possibly rule, the argument goes, because the rich often don't get their way. Look at the Mitt Romney candidacy. Romney clearly has most of America's wealthy on his side. Yet, according to the polls, he now appears headed to a thumping defeat.

All true enough. The polls certainly are predicting a hard slog for Romney. And the nation’s rich have, by and large, lined up Romney’s way. These Romney rich have mobilized on a grand scale. They're taking full advantage of the recent court rulings that have essentially thrown out all limits on how much money rich people — and the corporations they run — can spread around at election time.

But these super rich can also read public opinion polls. They’ve known for some time now that the majority of Americans support public policies — most notably, higher taxes on the rich — that the rich themselves deeply oppose.

All the ad campaigns our rich have bankrolled over the years haven’t made much of a dent on this public support for higher taxes on America's wealthy. In a real democracy, that would be the end of the story. The public policy positions the majority favors, in a truly democratic society, eventually wind their way into law,

But not in a plutocracy. In a society where wealth has concentrated at the top, the awesomely affluent don’t have to gamble on convincing skeptical voters. They can simply keep these skeptical voters, as America's contemporary super rich have now realized, from voting and having their votes counted.

In 2012 America, we have a phrase for this phenomenon, voter suppression, and no journalist over the past dozen years has done more to shine a light on this suppression than Greg Palast, the BBC reporter who first gained global attention with his coverage of the disputed 2000 U.S. presidential election.

Now Palast has a new book out that chronicles how many of America’s super rich — the Koch brothers, hedge fund titan Paul Singer, Texan corporate raider Harold Simmons, among many others — have been patiently and prodigiously subsidizing campaigns not to “get out the vote,” but to keep it down.

“To win an election, you need votes,” Palast explains in Billionaires and Ballot Bandits: How to Steal an Election in 7 Easy Steps. “Or, just as good, you need to take away the votes of your opponent.”

This getting votes to disappear takes money. Notes Palast: “Purging and blocking voters on a grand scale — thousands and millions of registrations and ballots — isn’t checkers. It’s complex and very, very expensive.”

And this purging and blocking is working. In 2008, details Billionaires and Ballot Bandits, no fewer than 488,136 absentee ballots went uncounted, as did 767,023 provisionally cast ballots, and 1,451,116 ballots thrown out as “spoiled.”

Another 2,383,587 would-be voters, Palast points out, “had their registrations rejected,” and 491,952 more already registered voters had their registrations purged from the rolls. Finally, an estimated 320,000 other voters were turned away at the polls by poll workers who found their IDs insufficient.

Palast calls all these Americans the “Missing Six Million.” They come especially from minority voting groups that tend to vote against super-rich priorities.

“Elections aren’t stolen in the vote count,” as former U.S. Commission on Civil Rights chair Mary Francis Berry puts it, “they’re stolen in the no count.”

Santiago Juarez, a voting rights attorney with the League of United Latin American Citizens, places this plutocratic disenfranchisement in the context of the broader trends that the Cleveland Federal Reserve Bank has tracked so well.

“You take away people’s health insurance and you take away their right to union pay scale, and you take away their pensions,” notes Juarez. “Taking away their vote is just one more thing.”

Palast has organized a Web site that links to citizen efforts that aim to counter billionaires and their voter suppression. But the long-range answer to voter suppression, he stresses, demands an assault on inequality, a relentless struggle to keep wealth from concentrating at America's economic summit.

“You can’t stop billionaires from spending their billions,” his new book reminds us. “The only way to put an end to billionaires buying our elections is to put an end to billionaires.”

Until that end, income from work will continue to stagnate — and income from wealth will continue to soar.

Teacher Bashing: The Inequality Psychology

Sam Pizzigati — Sun, 16 Sep 2012 10:06:51 -0400

In any society where wealth and income concentrate overwhelmingly at the top, the affluent will almost always come to sneer at public services and the men and women who provide them. In Chicago, those men and women have pushed back.

Last year state lawmakers in Illinois did their best to make a Chicago teacher strike impossible. They passed a new law that required at least 75 percent of the city’s teachers to okay any walkout in advance.

How did Chicago teachers respond? In advance balloting early this June, 92 percent of the city’s teachers voted, and 98 percent of those teachers voted to strike if contract negotiations broke down.

This near-total teacher support for the walkout that began last week shows just how intensely frustrated the city's teachers have become. They've been teaching for years in schools woefully ill-equipped to serve the city’s students.

The vast majority of these students, 87 percent, rate as “low income.” Many have no books in their homes and no quiet place to study. Some — over 15,000 — have no homes at all.

Chicago political officials haven't done nearly enough to help teachers help these students learn. Over 160 Chicago schools have no library. To help homeless and other children in unstable family situations, the 350,000-student Chicago schools have only 370 social workers.

Teachers have consistently called for more resources. But school officials from Chicago mayor Rahm Emanuel on down have totally bought into a “reform” agenda that dismisses concerns about overcrowded classrooms and inadequate student support. Schools don’t need better resources. They need, Chicago’s self-styled reformers argue, better teachers.

This “reform” stance pushes endless standardized testing to identify “low-performing” schools and teachers who can’t seem to raise student test scores. For over a decade now, Chicago officials have been closing down schools they deem as “failing” and replacing them with privately run charter schools.

The Chicago school chief who initially led this charter surge now serves as the U.S. secretary of education, and his test-heavy, charter-leaning approach has become the conventional education reform wisdom within both Republican and Democratic Party elite policy circles — despite a clear absence of evidence that this conventional wisdom actually works for kids.

“If we really wanted to improve schools,” as analyst Melinda Henneberger quipped last week in the Washington Post, “we’d do what education powerhouse Finland does — fund schools equally, value teachers more, and administer standardized testing almost never.”

So why does the conventional education reform wisdom — “get tough” on teachers and the unions that protect them — have such broad support among America's political elites?

One reason: The conventional wisdom can be unconventionally profitable for the corporate execs who run the rapidly expanding chains of charter schools. At campaign time, these execs love to show their appreciation.

But support for the teacher-bashing conventional wisdom goes well beyond the ranks of those who stand to profit directly from public education’s privatization. In affluent cocktail party circles, as the New Yorker magazine noted last week, “a certain casual demonization of teachers has become sufficiently culturally prevalent that it passes for uncontroversial.”

The well-heeled today, adds the New Yorker analysis, talk about breaking teacher unions “with the same kind of social enthusiasm” usually reserved for recommending “a new Zumba class.”

This teacher bashing has been spreading for several decades now, ever since the United States first began growing much more unequal in the 1980s. This linkage should surprise no one. These two basic phenomena — a rich growing richer and a rich growing more hostile to public services and the people who provide them — have always gone hand in hand.

Wealthy people, after all, don’t typically use much in the way of public services. They don’t partake of public parks or public education. They belong to private country clubs and send their kids to private schools, and they royally resent having to pay taxes to support public services they don’t use.

These well-to-do need rationalizations for this resentment, and teacher bashing makes for an ideal one. We don’t need to “throw money” at troubled schools, the argument goes. We just have to find and fire all those lousy teachers.

Interestingly, back in the much more equal United States of the 1950s, we did “throw money” at schools — and plenty of it.

In 1958, after the shock of the Soviet Sputnik launch, lawmakers didn’t bash teachers. They appropriated billions, through the National Defense Education Act, to strengthen schools. A half-dozen years later, the Elementary and Secondary Education Act vastly expanded funding for low-income students.

In today’s deeply unequal United States, by contrast, our political elites don't fund, they bash. That bashing, educationally, makes no sense. “Blaming teachers for the failure of schools,” as the New Yorker’s Rebecca Mead puts it, has to be about as absurd as “blaming doctors for the diseases they are seeking to treat.”

But bashing makes sense to the rich. And in a plutocracy, the rich drive the debate — until the rest of us rise up and change the conversation. In Chicago, teachers have now done just that.

Sam Pizzigati edits Too Much, the online weekly on excess and inequality published by the Institute for Policy Studies. Read the current issue or sign up here to receive Too Much in your email inbox.

Online Education's Lucrative Bottom Line

Sam Pizzigati — Sun, 09 Sep 2012 19:26:06 -0400

Corporate execs and billionaire ideologues are creating — at taxpayer expense — a network of schools where learning takes a back seat.

The sounds of September: school bells ringing, looseleaf binders snapping open, sneakers squeaking on gymnasium floors. Next to apple pie, what could be more American than sounds like these — and the local public schools where we hear them?

But times change. Blackboards and chalk no longer grace every classroom. We have whiteboards and classroom computers. We have the Internet, the capacity to share lessons across borders.

In this new Information Age, are local public schools now somewhat obsolete? Do we need a new model for educating our young? Some sort of educational revolution in teaching and learning?

Questions like these demand thoughtful and patient democratic deliberation. But we’re not getting that deliberation. In today's deeply unequal America, we’re rushing instead toward a national educational future that profits the awesomely affluent few at the expense of America's many.

The most striking manifestation of this rush: the near quarter-million students enrolled full-time in the “virtual schools” that now operate — at taxpayer expense — in 27 states. These schools have no physical classrooms, no playgrounds, and no in-person teachers.

In these online “academies,” young students sit in front of home computers. Their parents serve as “learning coaches,” following instructions they read on screen. Remotely located teachers monitor and grade the students. One of these remote teachers at the elementary level can have as many as 60 students.

The results from this “learning” process can be ugly. A New York Times investigation last December concluded that K12 Inc., one of the nation’s top two online school providers, “tries to squeeze profits from public school dollars by raising enrollment, increasing teacher workload, and lowering standards.”

In Tennessee, where a 2011 law let local school systems contract with for-profit online schools, about 1,800 K-8 students “attended” K12’s Tennessee Virtual Academy last year. Virtual Academy students, data from the state education department show, “performed in the bottom 11 percent of schools statewide.”

Other studies — out of Stanford and Western Michigan University — have shown similarly dismal academic results.

All these online schools owe their existence to our public tax dollars. How could local and state education officials allow public tax dollars to underwrite these virtual schools? Don’t we have rules and regulations designed to protect students from commercial exploitation?

We do. But in more and more states these rules don’t apply. What one analyst has described as a tight-knot network of “right-wing millionaires and billionaires, bankers, industrialists, lobby shops, and hardcore ideologues” is carving out an ever-growing space where “virtually” anything goes.

In Maine, for instance, the state’s right-wing governor has “formally embraced” a ten-point plan that sweeps away hard-won protections for students — and taxpayers.

The plan the governor backs axes “restrictions on online student-to-teacher ratios” and requires taxpayers to pay online providers by the same per-pupil funding formula that covers students in regular brick-and-mortar public schools.

The text for the Maine governor’s executive order earlier this year on behalf of online providers, the Portland Press Herald last week revealed, came directly from a Florida think tank funded by the online virtual school companies “that stand to make millions of dollars” as the governor’s new initiative goes forward.

These same corporations are spending a bundle more on lobbying and political contributions. And behind them lurk a host of super-rich conservative ideologues with a deep animus toward traditional public schools, facilities that they consider “islands of socialism in a free-market sea.”

Among these super rich: Dick and Betsey DeVos, heirs to the Amway fortune. They’re bankrolling the American Federation for Children and an assortment of other innocent-sounding groups that push public funding for private schools.

Meanwhile, regular public schools are facing massive budget shortfalls. In 35 states, the Center on Budget and Policy Priorities reports, state education funding for the current school year has dropped below 2008 finding levels.

School districts have had to eliminate over 328,000 jobs — at the same time the nation’s K-12 student population has increased by 535,000 students.

Schools today don’t just have more students to educate. In today’s depressed economy, they have more poor students. But corporate-friendly education “reformers” don’t like to talk about poverty.

For good reason. If you don’t talk about poverty, the absence of wealth, you don’t have to talk about wealth’s concentration — and the private power over public policy that this concentration inevitably forges.

Who’s Really Winning the Smartphone Wars?

Sam Pizzigati — Mon, 03 Sep 2012 11:22:43 -0400

In our current economic and political environment, we're letting top corporate executives expropriate our public 'property' for private gain. The resulting rewards, for both corporations and their CEOs, can be immense, as the recent Apple patent triumph over Samsung so amazingly demonstrates.

Why do CEOs make so much? Do they just have more smarts than the rest of us? About 43 percent of Americans, pollsters at the Pew Research Center reported last week, apparently think so. These Americans rate CEOs and the rest of the nation's rich as more intelligent than the average person.

An even greater share of us, on the other hand, see avarice as the driving force behind grand personal fortunes. Over half of Americans, 55 percent, consider the rich “more likely” to be greedy than the typical person, according to Pew.

But if we really want to understand why so few have so much in the United States today, why the gap between CEO and worker pay has soared tenfold since 1980, speculating about smarts and greed isn’t really going to help us all that much.

We need to look instead at our overall political and economic environment, that complex array of laws, regulations, tax rates, and court rulings that determine what the rich can and cannot do — and get away with.

Back in the 1950s and 1960s, this environment tended to discourage the concentration of individual and corporate wealth and power. Stiff tax rates on high incomes, for instance, put a damper on executive pay. And judges looked skeptically on CEOs who claimed they deserved whatever they could grab.

In one case decided after the Korean War, a federal appeals court ruled that lavishly paid executives at an Indiana machine tool company couldn't deduct on their corporate tax returns, as a legitimate business expense, the full amount of their massive paychecks.

The executives, the court ruled, owed their fabulous compensation to the sudden demand the Korean War had created for industrial retooling, not to any business “sagacity” on the part of the executives.

Judges, lawmakers, and government officials today seldom display this level of skepticism toward corporate executive behavior. Our contemporary legal and political environment more often than not accepts corporate claims at face value.

Take our current patent and copyright system. CEOs and their corporations now routinely claim as their private “intellectual property” ideas and ways of doing things that have their roots in our common human heritage. One food company, Smucker’s, has even claimed a patent for a “method of making crustless peanut butter sandwiches.”

How much can companies reap playing patent games? Huge amounts. In a just-decided Silicon Valley federal district court case, Apple, the world’s most highly valued corporation, has won $1.05 billion in damages from Samsung, its biggest smartphone competitor.

Apple executives claimed that Samsung had done their company “irreparable harm” by copying its patented intellectual property. And what had Apple patented as its private intellectual property? Everything Apple executives could think of, even the iPhone’s rectangular shape and rounded edges.

Apple has dozens of other “patent infringement” cases pending, and one Seattle design firm creative director told the New York Times last week that the Samsung ruling could well have product designers “constantly second-guessing” whether they’re stepping on someone else’s patents.

By patenting most everything under the sun, adds Financial Times contributing editor Sebastian Mallaby, tech giants like Apple “prevent rivals from using yesterday’s inventions to create tomorrow’s improved ones.”

Samsung is appealing the Apple ruling. If the ruling holds, notes economist Dean Baker, Apple will be charging consumers more for its products over the next decade than the company otherwise would, hundreds of billions more.

Some of those dollars have already begun settling into the pockets of Apple CEO Timothy Cook. He started as Apple’s chief exec a year ago with a pay deal that awarded him 1 million shares of Apple stock. Those shares had a $376 million market value last August. Their current value: over $660 million.

A Bold New Labor Call for a 'Maximum Wage'

Sam Pizzigati — Sun, 26 Aug 2012 18:20:19 -0400

The national leader of one of America's feistiest unions is aiming to expand the economic fairness debate. He's proposing a cap on incomes at the top that rises only if incomes at the bottom rise first.

With Labor Day fast approaching, what better time to reflect about those Americans who earn the least for their labor? These Americans — workers paid the federal minimum wage — are now taking home just $7.25 an hour.

On paper, minimum wage workers are making exactly what they made in July 2009, the last time the minimum wage bumped up. In reality, minimum wage workers are making less today than they made last year — and the year before that — since inflation has eaten away at their incomes.

And if we go back a few decades, today’s raw deal on the minimum wage gets even rawer. Back in 1968, minimum wage workers took home $1.60 an hour. To make that much today, adjusting for inflation, a minimum wage worker would have to be earning $10.55 an hour.

In effect, minimum wage workers today are taking home almost $7,000 less over the course of a year than minimum-wage workers took home in 1968.

Figures like these don’t particularly discomfort our nation’s most powerful. We live in tough times, their argument goes. The small businesses that drive our economy, we’re informed, can’t possibly afford to pay their help any more than they already do.

But the vast majority of our nation’s minimum wage workers don’t labor for Main Street mom-and-pops. They labor for businesses that no average American would ever call small. Two-thirds of America’s low-wage workers, the National Employment Law Project documented last month, work for companies with over 100 employees on their payrolls.

The 50 largest of these low-wage employers are doing just fine, even with the Great Recession. Over the last five years, these 50 corporations — outfits that range from Wal-Mart to Office Depot — have together returned $175 billion to shareholders in dividends or share buybacks.

And the CEOs at these companies last year averaged $9.4 million in personal compensation. A minimum wage worker would have to labor 623 years bring in that kind of pay.

So what can we do to bring some semblance of fairness back into our workplaces? For starters, we obviously need to raise the minimum wage. But some close observers of America’s economic landscape believe we need to do more. A great deal more.

Count Larry Hanley among these more ambitious change agents. Hanley, the president of the Amalgamated Transit Union, sits on the AFL-CIO executive council, the American labor movement’s top decision-making body. Earlier this month, Hanley called for a “maximum wage,” a cap on the compensation that goes to the corporate execs who profit so hugely off low-wage labor.

This maximum, if Hanley had his way, would be defined as a multiple of the pay that goes to a company’s lowest-paid worker. If we had a “maximum wage” set at 100 times that lowest wage, the CEO at a company that paid workers as little as $15,080 — the annual take-home for a minimum wage worker — could waltz off with annual pay no higher than just over $1.5 million.

During World War II, Amalgamated Transit Union president Hanley points out, President Franklin D. Roosevelt called for what amounted to a maximum wage. FDR urged Congress to place a 100 percent tax on income over $25,000 a year, a sum now equal, after inflation, to just over $350,000.

Congress didn’t go along. But FDR did end up winning a 94 percent top tax rate on income over $200,000, a move that would help usher in the greatest years of middle-class prosperity the United States has ever known.

Throughout World War II, FDR enjoyed broad support from within the labor movement — and the general public — for his pay cap notion. Now’s the time, Hanley believes, to put that notion back on the political table. We need, he says, “to start a national discussion about creating a maximum wage law.”

Hanley may just have started that discussion, just in time for Labor Day.

For Billionaires, a Heaven on Earth Beckons

Sam Pizzigati — Sun, 12 Aug 2012 17:16:54 -0400

The United States already sports an exceedingly rich people-friendly tax structure. But America's rich seem to have far more friendly tax models in mind. Like Singapore.

Why do the mega rich in the United States feel so put upon? Their incomes are rising, after all, and the taxes they pay have never been lower since the 1920s.

In fact, even if lawmakers in Congress passed 100 percent of President Obama’s tax plan, America’s rich would still be paying taxes at less than half the top rate that America’s richest faced back in the 1950s.

America’s wealthiest, given this ever so friendly political lay of the land, ought to be kicking back and living care-free. But that’s not happening. This election cycle appears to have America’s super rich in a feverish frenzy. They’re pouring money into the 2012 elections at all-time record rates.

What’s behind this deluge of campaign cash? A few frenzied super-rich political donors have apparently gulped the Kool-Aid of America’s delusional right wing. President Obama, these crazed deep pockets almost seem to believe, has tumbrils waiting to cart them off to the guillotines once he wins a second term.

But most of our super rich remain eminently reality-based. They know full well that the rich in other major developed nations face political challenges far more unnerving than anything that confronts deep pockets in the United States.

In France, for instance, the lawmakers elected this past spring will be taking action this September to raise the tax rate on income over 1 million euros, the equivalent of $1.24 million, from 44 to 75 percent.

The tax plan President Obama has announced, by contrast, will only hike the top-bracket U.S. rate from 35 to 39.6 percent — and no one in Congress has anything remotely close to a majority for going beyond what the President is proposing.

So why do America’s super rich feel compelled to plow so many billions into politics? They already live in the most rich people-friendly developed nation in the world. What else could they possibly want? Well, they could want Singapore.

To be more precise: Many of America’s richest see no reason why they shouldn't be able to live in a nation that treats the “successful” and their fortunes with as much respectful deference that locales like Singapore so openly display.

And just how much deference does Singapore extend to its resident rich? Last week, in a vividly detailed new paper on Singapore's tax system, three analysts from the Deloitte global financial consulting network described how extraordinarily rich people-friendly a modern economy can be.

In Singapore, the Deloitte analysts relate, residents pay no more than 20 percent of any income dollar over $250,000 in taxes. And many income dollars over $250,000 face no tax carve-out at all — since Singapore levies no tax on capital gains, the profits from buying and selling stocks and other assets.

Singapore also doesn’t bother taxing any income that its richest residents grab from abroad, even if these residents have that income remitted into Singapore. Residents instead only face taxes on their “Singapore-source income.”

The rich who reside in Singapore don’t even have “to report their foreign bank accounts or other foreign financial assets” to Singapore’s version of the IRS.

Nor do Singapore's wealthy have to worry about their grand fortunes shrinking once they pass on to the hereafter. Singapore hasn’t had an estate tax on the books since early in 2008.

Some Americans seem to find this total tax package that Singapore offers absolutely irresistible. In 2009, the U.S. embassy in Singapore reports, 58 Americans renounced their citizenship and set up residence in Singapore. In 2010, that total apparently hit close to 100.

Singapore certainly has its charms, but most tax break-hungry Americans of means don't seem particularly eager to take up residence for at least 183 days a year. Their alternate endgame: bring Singapore stateside. In places like Singapore, these Americans see a vision of what the United States could become.

A vision too far-fetched? Not at all. GOP White House hopeful Mitt Romney has already pronounced his support for dropping the federal tax rate on top-bracket income down to 28 percent, a point nearly halfway from the current 35 percent top rate in the United States to Singapore's 20 percent.

And Romney's newly announced running mate, House Budget Committee chairman Paul Ryan, has already proposed eliminating taxes on capital gains.

America’s rich have come a long way over the past half-century. Why couldn’t they go further, to full-fledged Singapore-style status? The more important question: Will we let them?

In a Plutocracy, Only Moguls Have Megaphones

Sam Pizzigati — Sun, 05 Aug 2012 19:37:45 -0400

In today's anything-goes political fundraising world, the nation’s super rich and their favored politicos are no longer even going through the motions of maintaining 'separate and independent' campaigns.

The U.S. Supreme Court's most notorious decisions have almost always rested on preposterous claims. The 1896 ruling that okayed segregation, for instance, held that imposed racial separation violated no constitutional rights since government had the capacity to keep public services and facilities “separate but equal.”

But government officials during segregation made no effort to offer anything even remotely close to equal services — and no one ever expected they would.

The 2010 Supreme Court ruling in Citizens United — the decision that has opened the door to letting rich people essentially spend whatever they want, whenever they want, on political campaigns — rests on another preposterous claim.

All those millions the rich are injecting into politics won’t distort our democracy, the high court assures us, because we can keep these millions separate and independent from the campaigns that the candidates the rich favor are running.

No one in politics, of course, believes for a minute that anyone can actually keep the super rich and their “independent expenditures” totally separate from any particular candidate’s campaign. But everyone involved in the political games rich people play has been playing along with this convenient fiction. Until last week.

The game-changer came at the luxurious five-star St. Regis Hotel in Colorado's Aspen, the favorite mountain getaway of America’s awesomely affluent.

The occasion: a retreat hosted by the Republican Governors Association that brought together, Politico reports, “some of the biggest names in GOP politics,” including top advisers to the Romney campaign, and key “representatives of deep-pocketed political spenders” like the billionaire Koch brothers.

Also on hand: some 200 big donors themselves and the political strategists — like Karl Rove — who run the “independent” campaign groups that are masterminding how best to spend their money.

How can the rich and their hired guns spend a week rubbing shoulders with the top aides of the candidates they support and still claim they’re all operating independently? They can’t. Yet no one in federal campaign law officialdom seems to care. We have come to live in a political system where anything goes.

Big money, as Mother Jones analyst Andy Kroll notes, is now “flooding the political system like never before.”

But most Americans haven’t yet noticed. Only 25 percent of Americans say they’ve heard a lot about campaign spending so far this year, the Pew Research Center reported last week, and 39 percent say they’ve heard “nothing at all.”

Two just-released public interest group reports are making a noble effort to pierce this current campaign funding fog.

A new analysis from the Center for Responsive Politics is now estimating that total spending on the 2012 presidential and congressional elections — by presidential candidates, Senate and House candidates, political parties, and “independent” groups — will likely hit $5.8 billion, an all-time record.

A hefty share of that near $6 billion, concludes a new study from Demos and the U.S. PIRG Education Fund, is coming from America’s ultra wealthy and the “small number of organizations that aggregate” their power and voices.

One example: Of the $318 million so far raised this election cycle by super PACs — the political panels that can raise “unlimited sums from virtually any source” — over 60 percent has come from just 100 donors. These 100 averaged, calculates the Center for Responsive Politics, just under $2 million each in contributions.

The public interest groups following this election’s money chase all readily acknowledge that their numbers undercount the real cash the rich are heaving into the political fray. Outside “independent” spending has become “a wild card that makes predictions tricky,” notes the Center for Responsive Politics.

Nonprofits set up to harvest political campaign dollars from the super rich, watchdog groups explain, don’t have to report their donors, and they don’t even have to report how much they’re spending on any of their “issue ads” that run over 60 days before November's Election Day.

The top execs who run America’s biggest for-profit enterprises, meanwhile, are doing their best to keep shareholders — and consumers — in the dark about how much they've been funneling into campaigns since Citizens United gave corporations a green light to bankroll candidates.

Just a tiny fraction of this subterfuge has so far come to light. Only an inadvertent disclosure by Aetna, to give one example, has revealed that the insurance giant has plugged an over $7 million political outlay to conservative political nonprofits that don’t have to report out their donors.

These political nonprofits are in essence operating as “megaphones for moguls and millionaires,” add Demos and U.S. PIRG in their report released last week.

“The more money they pump in,” the report explains, “the louder they’re able to amplify their voices — until a relatively few wealthy individuals and interests are dominating our public square, drowning out the rest of us.”

The new Demos and PIRG study includes a list of reforms that could reduce the megaphone volume. One of these, a constitutional amendment to overturn Citizens United, picked up some support last week on Capitol Hill when a group of House Democrats introduced a “Restoring Confidence in Our Democracy Act.”

On the Senate side, an attempt to force wider campaign finance disclosure failed last month. Now senator Sheldon Whitehouse, a Rhode Island Democrat, is calling on Americans to put corporations that play in the “dark money” universe under the same sort of pressure that the anti-apartheid movement of the 1980s put on corporations that did business with South Africa’s apartheid regime.

A mass movement helped crush apartheid. We need a mass movement, stresses the new Demos and PIRG report, to blunt our latest plutocratic power grab.

“We cannot maintain a democracy of equal citizens in the face of significant economic inequality,” sums up the study, “if we allow those who are successful (or lucky) in the economic sphere to translate wealth directly into political power.”