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August 4, 2008 |
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Inequality in Britain, the only developed nation in the world with an economic divide that rivals the gap in the United States, came under attack last week — from the country’s Conservative Party. Do UK conservatives now “get it” on inequality? Can we expect a similar seachange in U.S. politics? Interesting questions. We explore them in this week's Too Much. Also in this issue: an alarming update on income distribution, a heads-up on inequality and skin cancer, and a welcome addition for your summertime poolside vocabulary. So start scrolling and dive in! |
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How can you tell the difference between corporate execs who are producing “superior results” and those who aren’t? Corporate boards that purport to “pay for performance” typically use share prices to measure performance. But these days, as Boston University pay expert James Post told the Boston Business Journal earlier this month, “stock prices are going down and performance is becoming much more difficult as global growth slows, flattens, and maybe even declines.” How are corporate boards reacting? They’re changing how they measure performance, moving, notes Post, to nonfinancial measures like “market share.” The purpose of this shift: to find a yardstick that proves top execs still deserve “superior” pay. As Boston University’s Post puts it: “There’s no indication that CEOs are going to take less money.” Every luxury car needs luxury accessories. In the Middle East, these accessories now include license plates. Persian Gulf nations are now regularly auctioning off choice license plate numbers at bizarrely inflated prices. Last month, at an auction in Abu Dhabi, a license plate with the single digit “9” went for $4.2 million. The record so far, set earlier this year: $14 million for the number “1.” What’s making luxury plates so appealing? Abdullah Al-Mannaei, the city official who runs Abu Dhabi’s monthly license plate auction, has a ready answer: “It's not enough to just have a Ferrari anymore.” Worried whether that new mole on your neck might be a cancer? Better see a dermatologist. But be prepared to wait for an appointment. America’s skin doctors, researchers are beginning to report, are devoting a greater chunk of their practices to vanity medicine for the affluent — at the expense of patients with real skin problems. The reason? Doctors can collect $500 for a Botox injection treatment that takes 10 minutes. A full-body cancer check, also a 10-minute procedure, brings only $60 to $90. The growing preferential treatment of cosmetic patients has the guardians of the dermatological profession uneasy. Notes David Pariser, the American Academy of Dermatology president-elect: “The message is that the cosmetic patient is more important than the medical patient, and that’s not a good message.” This month’s hottest piece of East Coast real estate, a summer vacation home in Long Island’s East Hampton on sale for $40 million, has a lot going for it: 700-year-old imported European oak, a great hall with 30-foot ceilings, a |
Quote of the Week “This week Vanity Fair unveils its 69th annual International Best-Dressed list. Isn't giving gongs to rich people for having expensive clothes the same as applauding a puddle for being wet?”
New Wisdom Richard Morrill, Vision 2040 for Pugetopolis, Crosscut, July 29, 2008. An urban geographer contemplates inequality's impact on the Seattle area of tomorrow. John Rausch, Inequality of wealth is bad for your health, EnerPub, July 30, 2008. A Catholic priest explores the consequences — and morality — of our new Gilded Age. The Growing Middle Class Income Gap, a congressional hearing of the House Education and Labor Workforce Protections Subcommittee, July 31, 2008.
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In the UK, Conservatives Discover Inequality The “financial gap between the richest and the poorest” in Britain, a top UK Conservative Party leader charged last week in a nationally hyped speech, now stands “at its widest for generations,” with the gap between life expectancy for rich and poor “at its widest since the Victorian era.” “There could be,” the Conservative leader, Chris Grayling, would go on to add, “no clearer indicator of a society that is getting things wrong.” Such a declaration — from a top conservative — would be almost unimaginable in the United States, where right-wingers typically either deny the reality of inequality or minimize its impact. Indeed, this past spring, new federal research revealed a “large and growing” gap between the life expectancy of rich and poor Americans, and no top conservatives made any public fuss. So what's making top conservatives in the UK more inequality-sensitive than their American counterparts? Credit that “sensitivity” to the dynamics of partisan politics. In the UK, conservatives don't have to take the blame for recent surges in British inequality. Inequality has soared over the last decade with the Conservative Party’s top rival, the Labor Party, running the show. Tony Blair and his “New Labor” allies won parliamentary control in 1997. Right from the start, they distanced themselves from “old” Labor Party priorities — like discouraging the concentration of wealth. New Labor, noted Blairite powerbroker Peter Mandelson early on, would be “intensely relaxed about people getting filthy rich, as long as they pay their taxes.” New Labor would end up ““intensely relaxed” even when the rich didn’t pay any taxes. Under Blair, the world’s billionaires made London their favorite urban tax haven, and the Labor Party blew no whistle. By 2007, the wealth of Britain’s 1,000 wealthiest had nearly quadrupled in just a decade. The new British super rich, the Compass think tank observed last year, are “distorting society and recreating Victorian levels of class distinctions as conspicuous consumption, obscene financial rewards, and a new servant class are returning after an absence of over a century.” Britain’s poor, meanwhile, are enjoying no similar golden age. Blair had pledged to have child poverty poverty halved by 2010. Child poverty last year actually increased — by 100,000 kids. Tony Blair left office in 2007, but his spirit still guides the ruling Labor Party. Blairites remain unrepentant about their relaxed reaction to Britain’s ever grander private fortunes. “It would be a good thing for our country if there were more millionaires in Britain not fewer,” Labor Party Business Secretary John Hutton declared earlier this year. “Our overarching goal that no one should get left behind must not become translated into a stultifying sense that no one should be allowed to get too far ahead.” But letting a rich few get too far ahead, New Labor's critics counter, stretches the social fabric. A fabric stretched too far eventually tears. Society loses all social cohesion. “The rise of the super-rich, and their capacity to outbid others in the competition for houses, schools, space and possessions, has produced a new definition of success,” Guardian commentator Jenni Russell observed earlier this year, that leaves middle class people “increasingly conscious of living in a harsh world” where everyone always seems to be on their own. In this environment, inequality “eats away” at community. Middle class parents feel they can’t risk their “children falling to the bottom.” They find themselves hoarding what they have “rather than contributing more to the common pot.” All this is convincing many British advocates for the poor that the UK, to move ahead as a healthy society, needs to start actively discouraging the concentration of their nation's wealth. Conservative Party leaders, for their part, may be talking about an intolerable gap between rich and poor, but their program to foster “community cohesion,” as spelled out last week by spokesman Chris Grayling, zeroes in on the bottom, not the top. Grayling's inequality-busting gameplan features “a crackdown to get young people into work and training,” especially in “gang-crime areas.” The conservatives, in other words, seem willing to give the rich the same free pass that New Labor has been extending, all in the name of concentrating energies on helping those at society’s bottom. But that’s not enough, notes the Guardian’s Jenni Russell, because we’re “all social beings, and we assess our worth by looking at those around us.” Britain’s lawmakers, Russell stresses, need to be bold enough to really tax the wealthy. The UK simply cannot afford, she concludes, to let the fortunes of the rich be “the standard against which the rest of us are measured.” That wisdom just might hold true on both sides of the Atlantic. |
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Is Just Demography Destiny? Mark Levitan and Susan Wieler, Poverty in New York City, 1969-99: The Influence of Demographic Change, Income Growth and Income Inequality. The Federal Reserve Bank of New York, July 29, 2008. The poor don’t always get poorer. Poverty rates among American households, in the middle of the 20th century, actually fell substantially. But that progress stalled in the early 1970s and never really restarted. Today, a generation later, policy makers are still asking why. Many blame demographic trends. We have too many single-parent families, the argument goes, or too many immigrants or too few college graduates. The Federal Reserve Bank of New York last week published a research paper that advances a quite different explanation. We have a “stubbornly high poverty rate,” note researchers Mark Levitan and Susan Wieler, because our economy has become more unequal. People higher on the economic ladder have been taking more of the nation’s income, people lower less. Levitan and Wieler base their findings on an analysis of Census data from New York City. But they note that their “results echo findings in research for the nation at large.” In New York, poverty rose sharply in the 1970s, a decade that saw the city’s economy wheeze big-time, but then didn’t improve at all over the next 20 years, despite considerable economic growth. New York, in fact, ended the 1990s with a larger share of the city's families in poverty than in 1979. Changes in the number of single-parent households don’t explain that increase. Nor does the city’s rising immigrant population. Foreign-born households in New York turn out to have lower poverty rates than native-born households. What about education? In New York, the 1980s and 1990s saw impressive increases in “educational attainment,” not decreases. In 2000, half the heads of city households had some college. In 1970, only one in five did. Demographic trends, the new Fed Reserve of New York research concludes, certainly do affect poverty rates. But rising income inequality — “driven by a widening disparity in wage rates” — has dwarfed demography's impact. Any real solution, Levitan and Wieler contend, needs to address that inequality. They propose, as one specific step, indexing the minimum wage to inflation. But what we really need may be a different sort of indexing. We need linkages that somehow tie the top of America’s income ladder to the bottom. Wages have sunk at the bottom of the economic ladder, after all, because windfalls at the top have soared. To grab these windfalls, Corporate America’s movers and shakers routinely make decisions that crush down on people at the bottom. They downsize, they outsource, they slash wages and benefits. Would these rich and powerful behave so cavalierly if their own personal bottom line depended on the well-being of minimum-wage workers? Brian McLaren, a nationally prominent pastor and author, raises that question in his recent book, Everything Must Change. McLaren favorably discusses the work of economists who call for a “maximum wage,” a limit on income set as a multiple of the minimum wage, with income over that limit taxed at 100 percent. “Within a framing story that provides no moral context, this kind of ceiling may sound ridiculous,” McLaren notes, “but within a framing story that takes bonds of community seriously, the lack of ceiling sounds even worse.” |
Stat of the Week The most unequal state in the United States? In 2006, just-released data from the IRS Statistics of Income office show, New York deserved that dishonor. The top 1 percent of New York taxpayers — folks making at least $517,780 — collected 28.7 percent of the state's income. Nationally, the top 1 percent income share stood at 21.1 percent. |
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Too Much is published by the Council on International and Public Affairs, a nonprofit research and education group founded in 1954. Office: Suite 3C, 777 United Nations Plaza, New York, NY 10017. E-mail: editor@toomuchonline.org. |
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Who makes the most money in the Washington, D.C. metro area? Don’t look in the White House for the winner in the capital’s annual pay sweepstakes. Don’t look in Congress either. Peer instead into the nearby world headquarters of Lockheed Martin, the defense contractor now raking in “War on Terror” contracts and cash by the taxpayer bucketful. In 2007, the Washington Post 
$65,000 stove, a library lined in black walnut. But the manse's biggest selling point may just be its spectacular “infinity pool.” Need some help on this one? Infinity pools have been growing in popularity since the 1990s. Luxury hotels and private homeowners with deep pockets have them custom-built, with spillways and catch basins, to 