Last week, if you listened really closely to the dozens of speeches delivered at the Republican National Convention in St. Paul, you probably would have heard just about every word that makes up the prime-time vocabulary of contemporary American political discourse. Every word except one. Inequality.

Was that smart politics on the GOP's part? Two top political scientists have some fascinating new research that can help us answer that question. In this week's Too Much, we explore the encouraging data they've just started sharing.

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Larry Ellison, the fourth-richest American on the latest Forbes 400 list, has been enjoying a remarkably lucrative stretch of late. Over the last year Ellison has pocketed $84.6 million as the CEO at business software giant Oracle — and another $544 million selling shares from his personal stash of Oracle stock. But his sweetest windfall of all may have come when tax assessors in California’s San Mateo County lowered the property tax bill on Ellison’s 23-acre estate and ruled that the county owed him a $3 million tax refund. That decision has gouged a $300,000 hole in the revenues of the local Portola Valley School District, and the two-school system has already begun cutting back on staff. That same hole will be there next year, too. What to do? San Jose Mercury News columnist Chris O’Brien last week offered a suggestion: “As long as Ellison continues to treat Oracle as his personal piggybank, the least he can do is send $600,000 of his pocket change to help the Portola Valley schools.”

Some Californians aren’t waiting for deep-pockets like Larry Ellison to fork over his pocket change. They see a problem that goes far beyond local property tax bills, and they’re now organizing to fix it — with a campaign to place a wealth tax on the 2010 California statewide ballot. The proposed initiative would subject personal property over $20 million to a one-time 55 percent tax and also impose new tax levies on the state’s highest incomes. The measure’s two organizers, accountant Paul McCauley and local union leader Brad Rooker, now have four months to collect the 694,354 signatures necessary to get the wealth tax before voters. What’s driving them? Notes the initiative’s official text: “The concentration of private wealth in the hands of a few is inconsistent with the tenets of a democratic society.” California’s top 1 percent collected 24.9 percent of state income in 2006, almost double their 13.8 percent share in 1994 . . .

America’s great economic divide seems to be creating an equally great divide in reading. This past Saturday, billionaire Rupert Murdoch’s News Corporation, the company that now owns the Wall Street Journal, began circulating a brand-new luxury quarterly, the latest entrant into “an increasingly crowded field of magazines unabashedly celebrating wealth and consumption.” The unveiling of the new WSJ magazine came in New York’s Pierpont Morgan Library — a monument to Wall Street’s first grand financier — at a reception that served up heaps of caviar and raspberry parfait. Ads for luxury products are fueling the explosion of new magazines like WSJ. Publications with less luxury-inclined readerships, meanwhile, are reaping no such ad bonanza, and many are now slashing both staff and space for articles. About the only thing general-interest pubs aren’t slashing: CEO pay. The top 13 execs in the newspaper industry last year averaged $6 million in compensation . . .

What ought America be doing about CEOs who enrich themselves at everyone else’s expense? Lowell Klessig, a professor emeritus in environmental science at the University of Wisconsin-Stevens Point, thinks the time has come for a “maximum wage.” Last week, in a South Florida Sun-Sentinel op-ed, Klessig called for legislation that would cap CEO compensation at 10 to 20 times the pay of a company’s average employee. In tough times, notes Klessig, such a maximum wage would ensure that CEOs take a pay cut whenever workers have their paychecks sliced. In good times, a maximum wage law would help “reward good performance at every level.” In the process, adds the veteran environmentalist, a maximum wage law “would protect professional and skilled workers like the minimum wage law protects the lowest paid workers.”

The pearls of Anna Dodge — the ultimate symbol of America’s first age of plutocratic excess — are about to go on a global farewell tour. Over the next three months auctioneers at Bonhams will be displaying the five-row, 389-pearl necklace in Paris, San Francisco, Los Angeles, Dubai, and London. The final stop: New York, where the pearls will be auctioned off in December. Automobile magnate Harold Dodge purchased the pearls for his wife Anna back in 1920, at the then-staggering sum of $825,000, the equivalent of $8.5 million today. Anna reportedly wore the necklace only twice, the first time at her daughter Delphine’s wedding, a soirée that had 3,000 guests dancing to the melodies of the Detroit Symphony Orchestra. The pearls, notes Bonhams, may now fetch as little as $500,000 at auction. Fine pearls, once far more expensive than diamonds, have been steadily shrinking in value ever since oyster farms began mass-marketing cultured pearls in the 1920s.

Quote of the Week

“The richest 1 percent of U.S. households now owns 34 percent of the nation's private wealth, more than the combined wealth of the bottom 90 percent of the population. All of us who are in that bottom 90 percent share an interest in having an economy that works for everyone. Rather than dividing ourselves by race, we should unite for an America that benefits the vast majority — regardless of the complexion of that majority.”
Sean Thomas-Breitfeld, Center for Community Change, Albany Times-Union, September 2, 2008.

New Wisdom
on Wealth

David Cay Johnston, Income Data and the Future of the Nation, Tax Notes, September 1, 2008.

Sam Pizzigati and Sarah Anderson, Workers need added clout to close the pay gap with CEOs, Newark Star-Ledger, September 1, 2008.

Larry Elliott, Whatever happened to Keynes' 15-hour working week? Guardian, September 1 2008. How the “desire to keep up with our richer peers” drives us to work ever longer.

Dalton Conley, Rich Man’s Burden, New York Times, September 2, 2008. Another look at how “rising inequality causes us to work more to keep up in an economy increasingly dominated by status goods.”

Peter Wilby, Inequality kills, New Statesman, September 4, 2008. Why maldistributions of income may matter more to health than fat, sugar, cigarettes, and alcohol.

Tom Ehrich, The love of money is the root of our nation's sorry situation, Indianapolis Star, September 6, 2008. An Episcopal priest urges clergy to speak out against wealth's concentration.

America's Silent Egalitarian Majority

Speakers at last week's Republican National Convention, predictably enough, didn't have much to say about today’s record gaps between America’s wealthy and everyone else. Actually, they had nothing to say about these record gaps.

But, then again, neither did the pundits who covered the confab. Not one major media outlet made a point of noting the convention’s total obliviousness to the top-heavy distribution of income and wealth that so defines — and distorts — America’s economy and politics.

Why this media indifference to the GOP’s inequality blindspot? Most pundits simply figure the public doesn’t particularly care about inequality. So why pound on the Republicans for ignoring it?

Ironically, the week before the GOP convention opened, thousands of experts on U.S. politics gathered in Boston at a convention that put inequality — in all its manifestations — front and center. This convention, the annual meeting of the American Political Science Association, drew virtually zilch national media attention.

That’s a shame. The pundits massed in St. Paul could have learned a thing or two from the goings-on in Boston. They would have learned, for instance, that Americans, contrary to the conventional wisdom of politicians and pundits alike, really do care about inequality — and want to see much less of it.

The evidence? Benjamin Page, a political scientist at Northwestern University, has oodles of it. Page and his University of Minnesota colleague, Lawrence Jacobs, have been analyzing decades of data on attitudes toward inequality, and last summer, with University of Connecticut support, they fielded their own “original national survey to explore these matters” in even greater depth.

In Boston, just two days before the GOP convention gaveled to order, Page presented the findings from all this research. His basic theme: “Americans tend to be pragmatic egalitarians.”

The “pragmatic” part: Most Americans see differences in pay rates as “at least ‘probably necessary’ to get people to work hard.” And they’re “skeptical about government in the abstract.”

But Americans, at the same time, feel committed toward equity.

In the survey Page and Jacobs had conducted last year, nearly three-quarters of Americans, 72 percent, agreed that “differences in income in America are too large.” By a wide margin, 59 to 40 percent, Americans disagreed with the claim that large differences in income are “necessary for America’s prosperity.”

By an even greater margin, 68 to 26 percent, Americans rejected any attempt to define the nation’s current distribution of money and wealth as “fair.”

Similar healthy majorities “favor a wide range of government programs that would greatly reduce economic inequality,” everything from initiatives to create decent jobs for everyone able to work to guarantees “that those who are left behind through no fault of their own are provided with food, clothing, and shelter.”

“These are not just fleeting results from a one-shot survey,” Page and Jacobs note in one recently published paper on their research. “Majorities of Americans have been saying the same thing for many years.”

How far does this egalitarian ethos go? Far enough to want to tax the rich enough to create a substantially more equal United States? Or do Americans, Page and Jacobs ask, “abhor this idea as ‘class warfare’?”

Some do, the research shows. But most don’t. A significant majority of Americans — 56 percent yes, only 40 percent no — want the government to “redistribute wealth by heavy taxes on the rich.”

Page and Jacobs find this broad support for taxing America’s wealthiest “particularly striking because the drastic-sounding phrase ‘heavy taxes’ might be expected to put people off.”

“Public support for high taxes on the rich,” they conclude, “appears to be real.”

And this support would likely be even stronger, Page and Jacobs suggest, if Americans had a more complete sense of how rich America’s richest have become.

As part of their research, the two political scientists asked Americans to estimate how much people in different lines of work are taking home. Most Americans turn out to have a quite accurate sense of how much people in everyday occupations make, but tend “to underestimate earnings at the top of the income scale, for heart surgeons and especially for corporate CEOs.”

The average Americans Page and Jacobs surveyed thought big-time national CEOs average about $500,000 in annual earnings. The CEOs of S&P 500 companies, the two analysts point out, are actually averaging over $14 million. Hedge fund managers, they add, are doing “far better still.”

“If this were widely understood,” Page and Jacobs observe, “Americans might be even more concerned about income inequality than they currently are.”

A New Twist on Taxing the Rich

Stewart Lansley, Do the Super-Rich Matter? Trades Union Congress Touchstone pamphlet series, London, September 2008.

Over the past three decades, the United States and Britain have marched in an eerie economic lockstep. In both nations, wealth started rapidly concentrating, in the early 1980s, after voters put in place outspoken “free market” ideologues — Margaret Thatcher in the UK, Ronald Reagan in the United States — steadfastly committed to enriching the rich by any means necessary.

Then in the 1990s, in both nations, voters gave the nod to opposition parties whose leaders — Tony Blair in the UK, Bill Clinton in the United States — would end up looking the other way as their respective rich became ever richer.

Is an Act Three of this transatlantic historical drama about to begin? The British labor movement certainly hopes so. UK labor’s central voice, the Trades Union Congress, is this week opening a major campaign to raise taxes significantly on Britain’s super-rich. This new pamphlet constitutes the first salvo in British labor’s new tax-the-rich offensive.

Author Stewart Lansley, one of the UK’s most noted analysts of contemporary inequality, takes a fresh new look at Britain's wealth concentration story in Do the Super-Rich Matter? He presents, for every decade since the 1850s, the inflation-adjusted wealth of the wealthiest Brit to die in that decade.

From the 1850s into the 1930s, Lansley’s calculations show, Britain’s grandest individual fortunes all topped at least £4 billion. But British society became considerably more equal in the mid 20th century. In the 1950s and 1960s, not one Brit went to meet his maker with a fortune worth a billion pounds.

And today? The UK’s current five richest all boast fortunes worth over £5.7 billion, about $10.1 billion in U.S. dollars.

The amassing of these immense fortunes, Lansley argues, is enfeebling the vitality of Britain’s business culture. Corporate leaders are no longer investing for the long-term health of their enterprises. Instead, they're emphasizing “short-term” wheeling and dealing “in search for the quickest return.”

Lansley contrasts this British zeal for “fast-buck” mergers and acquisitions with attitudes elsewhere in the global business world. At one point he offers a telling observation that a top British financial analyst shared with researchers from the Manchester Business School.

“When I talk to the corporate managers of large German and Japanese companies, they speak of products, quality, customers and costs,” the analyst noted. “They assume that if they produce innovative, attractive high quality products at a competitive cost, they will do well and be profitable.”

“With UK and US managers, the opposite applies,” the analyst continued. “Many of them seem to be a million miles away from the real business.”

Today’s biggest fortunes, Lansley observes, go to those who’ve exploited today’s “pro-rich culture to grab a larger slice of the cake by taking giant risks with other people’s money.”

The “extra demand at the top” these immense fortunes create, author Lansley notes, generates “inflationary pressures” that erode the living standards of average people. Such large concentrations of wealth nurture, he adds, “a high risk of social disintegration, from rising crime rates to poorer health.”

What can reverse the rise of the super-rich? Lansley offers a list of eminently sensible reforms, including the notion of establishing a set of “minimum tax” rates on Britain’s wealthy.

Under this approach, income over £200,000 — a bit over $350,000 — would be taxed at a minimum 40 percent rate. With such a minimum in effect, Britain’s wealthy would no longer be able to park their fortunes, relatively untaxed, behind tax loopholes and intricate tax avoidance strategies.

The Trades Union Congress is now spotlighting this minimums tax strategy.

“It's not fair that workers pay more tax on their earnings than people who earn 100 or even 1,000 times more," sums up TUC General Secretary Brendan Barber. “Now is the time for decisive action, not cringe-making praise for the wealthy.”

Stat of the Week

Last year, says a just-released Boston Consulting Group report, households with less than $100,000 to invest made up 100 times more of the world’s population than households with over $1 million in investible assets. But those millionaire households — just 0.8 percent of the world’s population — held nearly three times more wealth than the 82 percent of global households with less than $100,000 to invest.

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.