Eight years ago, just a day before retiring as one of the world’s most important economic officials, International Monetary Fund managing director Michel Camdessus surprised — and maybe even shocked — a global conference audience in Bangkok. A world that lets wealth concentrate, Camdessus declared, is asking for colossal trouble.

“The widening gaps between rich and poor within nations,” the departing IMF executive advised, “are morally outrageous, economically wasteful, and potentially socially explosive. It is not enough to increase the size of the cake. The way it is shared is deeply relevant.”

Ignore the obligation to share, Camdessus warned, and the world will surely witness “confrontation, violence, and civil disorder.”

That warning, we can now safely say, hasn’t exactly scared the world’s greediest straight. The latest Forbes billionaire list, newly released, reveals a global concentration of wealth that has reached truly staggering proportions. In this week's Too Much, the full story.

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Back in the sixth century, a Pope Gregory inserted “greed” on the inaugural list of the seven deadly sins that threaten souls with eternal damnation. Earlier this month, a top Vatican prelate told a clerical gathering in Rome that this list may need some serious updating. The church has traditionally considered sins an individual matter, Archbishop Gianfranco Girotti noted. But the “process of globalization,” he added, has given iniquity a “social resonance” that warrants a new take on the original mortal sins. The archbishop went on to suggest seven modern mortal evils. Among the transgressions on Archbishop Girotti’s list: “the excessive accumulation of wealth by a few.” The archbishop’s new list, says theologian Gerald O’Collins, will help priests become “more aware today of the social face of sin — the inequalities at the social level.”

The world’s bankers may or may not fear eternal damnation. But they certainly do fear, the Financial Times reports, the “growing political backlash” against the “excessive rewards for bankers whose risk-taking helped cause the credit crunch” now roiling global markets. And that fear explains why the world’s top banker group, the Institute of International Finance, spent its recent spring meeting in Rio de Janeiro taking “a very hard look at compensation.” The meeting, held at Rio’s plush Copacabana Palace, sought to forge consensus on a voluntary “best practices” code that would discourage over-the-top pay plans. But industry insiders doubt that Wall Street banks will ever “agree to any kind of uniform compensation rules.” Just coincidentally, on the day the Rio sessions ended, the biggest U.S. investment bank, Goldman Sachs, revealed final 2007 pay figures for the firm’s top five execs. Goldman’s two co-presidents each took home $185,000 per day for the year, $67.5 million in all. The Goldman chief financial officer and overseas investment manager trailed a bit behind, at $57.5 million and $44 million. The bank’s top paycheck, $68.5 million, went to CEO Lloyd Blankfein . . .

Why are Wall Street bankers so resolutely resisting the efforts of their global brethren to dampen executive suite compensation? One possible reason: Wall Street bankers feel underpaid. Last Wednesday, a week after the bankers at Goldman Sachs revealed their paychecks for 2007, the managers of America’s biggest private equity outfit, the Blackstone Group, revealed theirs. The top gun at Blackstone, Stephen Schwarzman, collected $350.2 million in cash from his company’s operations last year. Blackstone’s 81-year-old co-founder, Peter Peterson, took in $171.5 million in cash, or $3.3 million a week. The going weekly take-home for a typical full-time U.S. worker, as of December, stood at $700 . . .  

Wall Street was cheering a great deal more than paychecks last week. The “escort” scandal that drove New York Gov. Eliot Spitzer from office, the Wall Street Journal reports, had high-finance movers and shakers “crowing” with glee. Spitzer, as state attorney-general, had aggressively prosecuted much of Wall Street’s moving and shaking. But Spitzer, as governor, had actually been going easy on the state’s deepest pockets, and veteran politicos are predicting more progressive policies from Spitzer’s successor, David Patterson. Says state lawmaker Richard Brodsky: “The kind of things Eliot did, in terms of hundreds of nuisance taxes on the middle class but no taxes on the wealthy, I think that’s the kind of thing that David will instinctively want to change.” And some of Wall Street’s crowers, a Connecticut-based wealth-research firm suggests, may someday feel Spitzer’s pain. In a Prince & Associates survey of male affluents rich enough to own a private jet, 34 percent said they “had paid for sex.”

Last week’s loudest cheering from power suits actually emanated from the other side of the Atlantic, from London. The cause? A speech Tuesday night by John Hutton, the secretary for business in the current Labor Party government, that lauded the UK’s rapidly multiplying grand fortunes. Announced Hutton: “Rather than questioning whether high salaries are morally justified, we should celebrate the fact that people can be enormously successful in this country.” Outside the power-suit set, few seemed to appreciate Hutton’s remarks. Observed commentator Neal Lawson: “Huge salaries for some inevitably lead to the breakdown of the social fabric that knits an inclusive society together.” With Hutton’s speech, added union leader Brendan Barber, “the Department for Business is in danger of becoming a wholly-owned subsidiary of the ‘greed is good’ end of the business lobby.”

Inequality
by the numbers

CEO pay:
the scorecard

Good reads
for your bookshelf

Quote of the Week

“Permanent repeal of the estate tax would reduce revenues by almost $1 trillion between 2012 and 2021, the first ten-year period in which its costs would be fully felt. With the economy slowing and deficits returning — and with far larger deficits projected for future years — there is increasing recognition that estate tax repeal is unaffordable.”
Aviva Aron-Dine, Center for Budget and Policy Priorities, March 14, 2008

New Wisdom
on Wealth

Dean Foster and H. Peyton Young, Hedge Fund Wizards. Berkeley Electronic Press. A Wharton business school statistician and an Oxford economist explain, in lay language, how hedge fund managers pocket millions upon millions “making bets that put their investors at risk, while taking very little risk themselves.”

Stewart Acuff and Sheldon Friedman, To Reduce Economic Inequality, Protect Workers’ Rights, March 11, 2008. Two veteran AFL-CIO staffers explore what happens when “the wealthy buy ever more influence with their increasing opulence” — and offer a badly needed remedy.

Alison Fitzgerald and Matthew Benjamin, Obama Tax Plan Targets Equality, Clinton Eyes Conduct, Bloomberg News, March 13, 2008. A comparison of the tax proposals from the two remaining candidates for the Democratic Presidential nomination.

The number of billionaires now trodding upon the earth, Forbes has just reported in the business magazine's latest annual tally of world wealth, now totals a record 1,125, up 179 from last year. The total combined net worth of these financially fortunate: $4.4 trillion, up 26 percent from the total wealth of last year’s billionaires.

Trillions, of course, really don’t mean much in isolation. To truly understand the enormity of contemporary billionaire fortune, we need context. We need to know, for instance, how the wealth of the world’s 1,125 billionaires stacks up against the wealth of the rest of the world.

Our best available current estimate of world wealth comes from a December 2006 report published by the United Nations University’s World Institute for Development Economics Research.

That report estimated that the world’s 3.7 billion adults, as of 2000, held some $125.3 trillion worth of wealth. At that time, in 2000, the world’s billionaires — all 492 of them — held a combined $2.16 trillion in wealth, a sum that surpassed the collective wealth of the world’s poorest 1.5 billion adults.

Since then, the combined wealth of the world’s billionaires has skyrocketed 104 percent, more than doubling. Today’s 1,125 billionaires, extrapolating from the 2000 data, likely now hold more wealth than half of the world’s adult humankind.

And what are these billionaires doing with their fortunes? By and large, they’re doing what the mega rich always do. They’re flexing their political muscles — to amass still more wealth — and playing ego games that leave average citizens in the lurch.

In China, now home to nearly twice as many billion-dollar fortunes as Japan, newly minted billionaires are campaigning to undo a new labor law that protects workers. They're also pressing the government to slash the tax rate on income in China’s top tax bracket from 45 to 30 percent.

In India, a nasty feud between two estranged billionaire brothers, for control over the power company empire they inherited from their father, has “led to brown-outs, black-outs, and a general electricity crisis in the Indian capital New Delhi.”

Overall, Russia has roared to second place in the world billionaire sweepstakes, according to the new Forbes data, with China moving up the rankings almost just as rapidly.

Still, despite the explosive growth of Russian and Asian grand fortune, the United States remains far and away the most favored world billionaire hotspot. But maybe not for long. In 2006, Americans made up half the top 20 billionaires on the Forbes list. The latest Forbes top 20 sports just four Americans.

That fall-off, unfortunately, doesn’t signify any trend away from massive wealth concentration in the United States. The rest of the world is merely concentrating wealth ever faster.

Unnatural Causes . . . Is inequality making us sick? A four-hour PBS series produced by California Newsreel and Vital Pictures. Premieres Thursday evening, March 27, on U.S. public television stations.

The United States today spends over twice as much, per person, on health care than the average industrial nation. Yet 28 other countries outpace the United States in average life expectancy. Do Americans need a better health insurance system? Do Americans need to eat smarter, smoke less, and exercise more? Absolutely.

But Americans aren’t dying faster than people elsewhere because they eat poorly and can’t find decent health insurance. Americans are dying early, says this remarkable new public TV series, because social and economic forces “have made ours one of the most unequal — and unhealthy — nations in the industrialized world.”

Even more remarkably, this first-ever TV look at inequality and health doesn’t just pinpoint the links between how long we live and how we structure our societies. The producers are also actively organizing a “public engagement campaign” to “expand our debate over health to include underlying social and economic conditions.”

“Working towards equity,” the producers of Unnatural Causes sum up, “means better health and a better society for everyone.”

The first series hour, entitled In Sickness and in Wealth, debuts next week. The public engagement side of the series Web site opens this Thursday. The broadcast side opened last week. Click on over, check your local broadcast times, then watch.

More importantly, ask someone else to watch, too. Help your circle understand, as Unnatural Causes puts it, that “health is more than health care.”

Stat of the Week

Over the last 10 years, the number of U.S. households worth at least $5 million, not counting their primary residence, has more than quintupled, from 230,000 to 1.16 million. Households worth at least $1 million are increasing at a much slower rate. The United States sported 5.3 million such households in 1997, 9.2 million, fewer than twice as many, in 2007.

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.