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A weekly update on our grand divides
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August 8, 2016
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This Week
If current trends continue, the average black family in the United States will have to work another 228 years to accumulate the same level of household wealth the average white family already holds today. That’s just 17 years short of the length of time that African Americans labored in slavery!
The report, co-released with our allies at the Corporation for Enterprise Development, dives into the history of the racial wealth divide in the United States and offers common-sense solutions that can start reversing the ongoing maldistribution of America’s wealth.
We hope you find this new study stimulating, and we look forward to sharing press coverage on it later this month when we return after our summer break from weekly publication. Can’t bear the thought of missing out on our inequality updates? Be sure to check us out daily on Twitter and Facebook!
Chuck Collins, Director, Program on Inequality
and the Common Good, Institute for Policy Studies
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Inequality by the Numbers
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New This Week
on Inequality.org
Mary Anne Mercer and Stephen Bezruchka on inequality and the abysmal U.S. ranking in the “ Health Olympics.”
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The Inequality Nerd
wants you to know...
Lifting the six million U.S. children living in extreme poverty out of that poverty would cost about $22 billion, a sum that equals less than 1 percent of the wealth of the Forbes 400.
The Inequality Nerd Bob Lord practices tax law in Phoenix.
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Faces on the Frontlines
Eliminating Profit from Punishment
Who’s profiting from our broken criminal justice system? The Black Youth Project 100, better known as BYP100, is now raising that question nationwide.
We don’t just have in the United States a booming prison population, notes BYP100 activist Cedric Lawson. We have booming profits for corporations that service the criminal justice sector.
Many states no longer directly manage their jails and prisons. They pay corporations to do that managing. How brazen have top execs at these corporations become? They claim “financial loss” when state governments fail to fill the cells they manage with inmates — and then sue the states for their lost corporate income.
| The multi-billion dollar security industry is increasingly making money off mass incarceration. |
State governments, for their part, have been shifting the cost for mass incarceration directly onto those getting locked up. But pressure to end the massive payday for corporations that mass incarceration has become is growing.
At Columbia University, for example, a campaign led by students, including a BYP100 member, has successfully pressured the school to become the first institution of higher education to divest from the private prison corporation CCA and the private security company G4S.
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Take Action
on Inequality
The Black Youth Project 100 is affiliated with the larger Movement for Black Lives, which recently released a bold policy agenda on racial justice. The platform covers a wide range of proposals to tackle racial inequality and injustice, from proposals for fair taxation and breaking up the big banks to support for black-owned banks.
On the Movement for Black Lives website, you can read more on this platform and endorse the proposals, either as an individual or as an organization. |
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Must Reads
Mr. Spock Fixes America
In Five Easy Theses, Jim Stone traces out a program to address five areas of national bewilderment: fiscal balance, inequality, education, health care, and financial sector reform. The precision and logic of Stone’s writing and proposals inspired me to want to rename his book, Mr. Spock Fixes America.
Stone’s “theses” emerge from a lifelong journey of public service and private sector leadership. He currently serves as the CEO of an insurance company often rated as one of the best places to work in Massachusetts.
As a younger man, Stone worked as the Massachusetts insurance commissioner and then as chairman of the Commodity Futures Trading Commission under President Jimmy Carter. As early as 1979, Stone was challenging the practice of overly leveraged financial derivatives.
Stone considers efforts to raise the minimum wage important, but he fears that all workers will be losers if “the incremental wealth our nation’s great economic engine produces continues to flow to a smaller and smaller fraction of the public.”
His principal proposal: Let’s tax inheritances more effectively, especially the vast pools of unrealized capital appreciation.
“No tax,” Stone writes, “is truly fairer and more useful in a meritocracy than an inheritance tax.”
Even with the reforms he’s proposes, Stone acknowledges, massive amounts of wealth and advantage will still flow from generation to generation in wealthy families. He’d like us to see his reforms as “restoring sanity” rather than “radical leveling.”
Eliminating subsidies for massive fortunes, Stone sums up, will “advance the causes of democracy, meritocracy, and tax equity, as well as the economic prospects of your descendants.”
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Reports and Retorts
CVS Health, CBS, and Disney sport some of America’s largest gaps between CEO and worker pay, says a new study from PayScale and Equilar. The study covers only cash compensation.
The best data yet on how well the nations of the world are progressing — or not — toward equitable and sustainable economic development comes from a just-released compendiumput together by U.N. Sustainable Development Solutions Network and Bertelsmann Stiftung, a German social responsibility foundation. The United States ranks 25th in the world, just behind Hungary.
A new Tax Policy Center analysis by Frank Sammartino and Norton Francis finds that more states are reducing their top tax rate on the wealthy than raising it. |
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A commentary on excess and inequality by Sam Pizzigati
Extracting a Cold Hard Corporate Truth
For today’s top corporate executives, the contemporary corporation has become a personal ATM — with no limits on withdrawals.
The analysts who monitor our economy have a label for the companies that pump out oil and gas from the earth and dig out various other minerals and metals. Analysts have traditionally called these companies the “extractive industries.”
But drilling and mining may now need a more specific descriptor. These days, almost every corporate sector seems to be qualify as an “extractive industry.” The CEOs in these sectors aren’t all, of course, extracting resources out of the earth. They’re doing their extracting out of the enterprises they run.
Top corporate execs today are essentially running their companies as their own personal ATMs. They manage their enterprises to maximize their own take-home.
No corporate exec may be better at this maximizing than the billionaire Larry Ellison, the long-time CEO and now executive chair of the business software colossus Oracle — and the ninth richest man in the world.
| The real money for power suits comes from buying and selling companies. |
Ellison has been treating Oracle as his own personal money-making machine for decades. Over the course of those years, the Wall Street Journal reminds us, he “has often rated as the nation’s highest-paid CEO.” In 2012, for instance, Ellison pulled down $96.2 million.
The tens of millions in stock incentives Oracle has showered down upon Ellison have seldom made any earthly sense. Stock incentives purport to “align” the interests of executives with the interests of the enterprises they run. But Ellison has for years already owned a quarter of Oracle’s shares. How much more “aligned” could he be expected to get?
Apologists for our current executive pay order also like to argue that we need lush windfalls to reward outstanding executive performance. Ellison, the Silicon Valley Business Journal calculated two years ago, has been one of the least efficient CEOs ever. For every $1 million in compensation he has pocketed, the Oracle share price has risen all of one dime.
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This Week’s Last Glance at Greed
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Annals of Avarice
One of the poshest residential towers in San Francisco is sinking — and tilting, too.
The Millennium Tower opened in 2009, and condos in it now fetch up to $10 million. But the developers behind the $350-million luxury high-rise never drilled all the way down to bedrock. Engineers originally predicted the tower, without a bedrock base, would eventually sink six inches. But the 58-story building has already sunk 16 inches. It also now leans two inches.
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