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Sustaining Inequality: How Much Is Too Much?
 

Sustaining Inequality: How Much Is Too Much?

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A presentation by Sam Pizzigati, the editor of the online weekly Too Much, delivered as part of the UN Decade of Sustainability Speaker Series, Michigan State University, in East Lansing, Michigan, ...

A presentation by Sam Pizzigati, the editor of the online weekly Too Much, delivered as part of the UN Decade of Sustainability Speaker Series, Michigan State University, in East Lansing, Michigan, January 27, 2010

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  • This is a good antidote for the poison pens of 'Justices' Alito, Kennedy, Roberts, Scalia, and Thomas, whose decision to expand the power of corporations at the expense of ordinary citizens in our elections threatens to destroy what little remains of democracy in the USA.
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    Sustaining Inequality: How Much Is Too Much? Sustaining Inequality: How Much Is Too Much? Presentation Transcript

    • Sustaining Inequality How Much Is Too Much? Sam Pizzigati UN Decade of Sustainability Speaker Series Michigan State University, January 27, 2010
    • A Great Recession fantasy ‗Congratulations! ‗You‘re hired. ‗You start the day after graduation. ‗Your pay: $100,000 a year!‘ Wow! I’m gonna be rich!
    • Rich? You certainly would be . . . . . . richer than the average American. You‘d be making over twice the U.S. average. In 2009, that average: $19.45 per hour . . . . . . or $40,456 if you worked full-time all year.
    • You would certainly be . . . . . . richer than the average professional. Computer programmer: $73,470 Environmental engineer: $77,970 Microbiologist: $70,150 Probation officer: $49,520 Math teacher: $68,130 Veterinarian: $89,450 Administrative law judge: $80,870
    • In fact, at $100k, you would . . . . . . make more than 90 percent of U.S. taxpayers. Distribution of taxpayers, 2010 98.1% 99.8% 100% 91.7% 80% 75.5% 63.2% 60% 49.5% 40% 20% 0% Under Under Under Under Under Under $1 $40,000 $50,000 $75,000 $100,000 $200,000 million Source: Congressional Joint Committee on Taxation, January 13, 2010
    • But you wouldn‘t be rich, not even close At the top: 2010 incomes $3,164,725 $100,000 Your fantasy income Average income, taxpayers over $1 million Source: Congressional Joint Committee on Taxation, January 13, 2010
    • Is Andrew Liveris rich? CEO, Dow Chemical Total pay, last fiscal year: $8.53 million Source: Forbes
    • Compared to what? Inside the Top 1%: 2007 $35,042,705 $4,024,583 $486,395 $1,021,643 99 - 99.5% 99.5 - 99.9% 99.9 - 99.99% Top 0.01% Source: IRS, University of California economist Emmanuel Saez
    • At the tippy top: ‗The 400‘ Comparing one Top 400 income and 45,520 MSU students $348 $263.3 Ever since the late 19th century, ‗the 400‘ has connoted the ultimate in wealth. Top 400 average income, State appropriation, 2006, in millions MSU, 2006, in millions
    • Should any of this bother us? Taxpayer share, 49.7% Income share, Income share, 14.9% 12.7% Taxpayer share, 0.6% Under $40,000 Over $500,000 Source: Congressional Joint Committee on Taxation, January 2010
    • What‘s the big deal? • You’re just envious. Forget about the top. • Focus on helping the folks at the bottom. • Talking about the rich just distracts and divides us.
    • In the U.S. today, a common refrain. . . . from the right, even from some on the left. Dalton Conley, dean for the social sciences at New York University The American Prospect, Dec. 15, 2009 ‗Don‘t Blame the Billionaires‘ ‗Let's worry about making sure the circuitry of the American dream isn't shorted, rather than whether some folks draw more current from the grid.‘
    • A perfectly acceptable liberal POV Howard Dean, as a 2004 Presidential candidate ‗I think it‘s less productive to worry about how much rich people have than to worry about how much middle-class and working people have. The thing to do is concentrate on the 90 percent of people who don‘t have what they need and make sure they have it, and not worry about the people who make $500,000 a year. Of course, it‘s obscene, but so what?‘
    • ‗So what?‘ A century ago, no self-respecting progressive would have ever uttered ‗so what?‘ about grand concentrations of private wealth.
    • ‗So what?‘ Whatever their political stripe, progressives a century ago believed that grand accumulations of private wealth endangered the democratic values they held dear.
    • A national leader sets the tone Theodore Roosevelt, President, 1901-09 ‗The prime object should be to put a constantly increasing burden on the inheritance of those swollen fortunes which it is certainly of no benefit to this country to perpetuate.‘ 16
    • A great publisher sounds the call Joseph Pulitzer, Post-Dispatch, 1907 ‗. . . always oppose privileged classes . . . never be afraid to attack wrong, whether by predatory plutocracy or predatory poverty.‘ 17
    • A voice thunders from the Midwest Gov. Robert LaFollette, Wisconsin, 1901 ‗The supreme issue, involving all of the others, is the encroachment of the powerful few upon the rights of the many.‘ 18
    • A great reformer sums it all up Louis Brandeis, Supreme Court,1916-39 ‗We can either have democracy in this country or we can have great wealth concentrated in the hands of few. But we can't have both.‘ 19
    • Brandeis was saying nothing new Our Founding Fathers believed as he did: Concentrated wealth endangers democracy. ‗The balance of power in a society accompanies the balance of property in land. The only possible way, then, of preserving the balance of power on the side of equal liberty and public virtue, is to make the acquisition of land easy to every member of society; to John Adams, 1776 make the division of the land into small quantities, so that the multitude may be possessed of landed estates.‘
    • The Founders knew their history Plutarch, ancient Greek historian ‗An imbalance between rich and poor is the oldest and most fatal ailment of all republics.‘
    • What the Founders didn‘t know . . . and what progressives like Louis Brandeis didn‘t know either . . . Extreme inequality – what we get when wealth concentrates – doesn‘t just endanger democracy. Extreme inequality endangers everything basic to social decency.
    • The more equal a society . . .  The more democratic  The more economically vibrant  The more environmentally sound  The more honest  The more trustful  The more compassionate  The more healthy
    • People in unequal societies . . . Enjoy less Have less leisure time economic security Vote less Have longer Work in more regularly commutes stressful jobs Live shorter, Pay more Worry more less healthy lives for housing about crime Face more Visit museums poverty Suffer more obesity less often Spend more time Confront looking for parking Contribute less to charities more corruption
    • How do we know all this? We‘ve seen an explosion of research on what happens when societies grow more equal — and when they don‘t. Economists Epidemiologists Psychologists Sociologists Political scientists Environmental scientists Demographers
    • Best exposition yet of this research By British epidemiologists Richard Wilkinson and Kate Pickett ‗ . . . what might be the most important book of the year.‘ Guardian, London, March 12, 2009 Published in the United States: December 22, 2009
    • What can epidemiologists teach us? Epidemiologists study the health of populations. About 25 years ago, epidemiological research began showing an amazing set of findings: The greater the gap between a society‘s top and bottom, the worse the society‘s health. Inequality has more of an impact on health than health care or individual health behaviors.
    • In equal societies, people live longer. Not just poor people, but all people. If you‘re middle income in relatively equal society, you‘re going to live longer than a middle-income person in an unequal society.
    • This same inequality dynamic shows up almost everywhere.
    • ‗If you want to know why one country does better or worse than another, the first thing to look at is the extent of inequality.‘ Richard Wilkinson and Kate Pickett, The Spirit Level
    • The same dynamic holds true for U.S. states.
    • In mature developed societies. . . . . . how much wealth a society generates matters little for our well-being. What matters much more: How a society distributes that wealth.
    • What makes inequality so debilitating? Sociological Biological dynamic dynamic
    • The sociological dynamic . . . the more . . . the less The more vibrant inequality . . . tattered our safety net . . . our public spaces
    • Why do safety nets always fray amid inequality? U.S. safety net programs only reduce poverty by 28 percent. In more equal nations, safety nets reduce poverty by over 70 percent. In equal societies, few of us have enough personal wealth to be totally secure, no matter what. We worry about what could happen to our loved ones should we lose a job. Or get sick. We join with others to push for safety net programs that insure us help when we need it. In an equal society, we enthusiastically support a strong safety net because, simply put, someday we may need it.
    • Safety nets amid inequality In more unequal societies, significant numbers of people — wealthy people — don‘t have to worry about their basic economic security. These affluent have enough wealth to weather any storm. They require no public safety net. Feeling totally self-sufficient, the rich wonder why everyone else can‘t be self-sufficient, too. In an unequal society, the rich feel no vested self- interest in maintaining a strong and stable safety net. The more people without this vested self-interest, the less the support for safety net programs.
    • Why does the public commons crumble amid inequality? Our community institutions – our schools, our parks, our libraries – make up our ‗commons.‘ In an equal society, most everyone depends on this public commons. But where wealth concentrates, not everyone needs the commons. The wealthy don‘t send their kids to public schools. Or go to public libraries. Or take public transportation or visit public parks. The wealthy live in private worlds. The more unequal a society, the bigger these worlds. The bigger the private worlds, the more the rich grumble about paying taxes for services they never use.
    • The commons in crisis The wealthy don‘t just grumble about taxes for services they don't use. They lead campaigns to cut these taxes. In an unequal society, with significant numbers of really rich people, these campaigns start to succeed. The more tax cuts, the more public services deteriorate. Soon the modestly affluent feel better off going life alone, on their own nickel — better off in a private country club, with their kids in private school, in a private gated development. With fewer people who care about public services, more cutbacks become inevitable. Services deteriorate even further. Our public space no longer provides a place where we all come together. We go our separate ways. Our sense of community collapses.
    • The biology of inequality The cortisol molecule
    • Feeling threatened?
    • The short take The hormone cortisol floods our bodies when we feel threatened, helpless, or stressed. We get a quick energy burst : That‘s really great for fight or flight. But that‘s horrible if repeated over and over. Chronic stress wears down our immune system. Unequal societies generate chronic stress. People don‘t trust each other, don‘t support each other.
    • So what can we do about all this?
    • Some say we can do nothing Rich always getting richer, poor always getting poorer. That‘s the way of the world. Why waste time tilting against windmills? All Americans want to be rich. That‘s a character trait hard-wired into us. If we try to change America‘s distribution of income and wealth, we‘re doomed to frustration.
    • Inequality can‘t possibly be ‗hard-wired‘ into us. We have changed enormously over time.
    • Our 20th century equality story Average income of top 0.01 percent of U.S. families as a multiple of average income of bottom 90 percent of U.S. families 1000 900 800 700 600 500 400 300 200 100 0
    • 800 1000 600 200 400 0 1917 1919 1921 1923 1925 1927 1929 1931 1933 1935 1937 1939 1941 1943 1945 1947 1949 1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 of average income of bottom 90 percent of U.S. families 1981 1983 Average income of top 0.01 percent of U.S. families as a multiple 1985 1987 1989 1991 1993 1995 1997 1999 2001 The last 30 years: A grand reversal 2003 2005
    • Remember our look at top 400? $263.3 Average annual incomes, 400 highest-earning Americans (inflation adjusted to 2006) $13.7 1961 2006
    • Back to the future Gap between the average income of the top 0.01% and the average income of the bottom 90 976 times 892 times 179 times 176 times 1928 1955 1980 2006 66
    • The distribution of income and wealth can change. We changed it.
    • We need to change that distribution again. We have a new reason.
    • If Louis Brandeis were with us here today . . . “We can either have inequality or we can have a sustainable Earth. But we can't have both.‖ 70
    • Why should equality matter to people who care about our Earth?
    • Reason #1 why inequality matters to sustainability Greater equality reduces the cultural pressure to consume. In a more equal society, where most people can afford the same things, things don‘t matter so much. But where most people can‘t afford the same things, things become a powerful marker of social status. In a society growing more unequal, you either accumulate more and bigger things or find yourself labeled a failure.
    • The inequality mantra: More, bigger The growing size of the median American home 2,500 1,500 Square feet: 1970 Square feet: 2006 Number of people Number of people in typical household: in typical household: 3.14 2.57
    • Reason #2 why inequality matters to sustainability The super rich stomp out a huge carbon footprint. The private jet: the badge of ultra high net worth status
    • Flying Hummers on steroids Lbs. CO2 per passenger Number of private jets 8,892 in active service 10,000 1,546 1,000 Commercial jet Private jet 1970 2006
    • Reason #3 why inequality matters to sustainability Sustainability demands public spiritedness.
    • Given the reality of massive inequality, is our ecological goose cooked?
    • The good news Richard Wilkinson and Kate Pickett ―It is fortunate that just when the human species discovers that the environment cannot absorb further increases in emissions, we also learn that further economic growth in the developed world no longer improves health, happiness, or measures of well-being.‖ 79
    • We don‘t need to make more to improve our standard of living. We need to share more.
    • How can we best share? We already have a minimum wage. How about a maximum? An absolutely off-the-wall notion? Not to President Franklin Roosevelt.
    • Maximum wage idea predates FDR Felix Adler, founder of Ethical Culture Society, first proposes a 100 percent top tax rate in 1880. During World War I, New York attorney Amos Pinchot, brother of Pennsylvania Governor Gifford Pinchot, calls for a 100 percent top In 1917, publisher E. W. Scripps tax rate on income calls for a 100 percent tax on all over $100,000. income over $50,000.
    • What might a maximum wage approach look like for 21st century? Not a set cap. A set ratio between top and bottom.
    • Ratios at the bargaining table Unions could make a 40-to-1 ratio between executives and workers central to their negotiating strategies. Manning Marable, Columbia University ―Suppose trade unions fought for and won contracts that linked the salaries and overall compensation of top executives to the wage levels of the fullest, full-time employees. An executive who wanted a financial package of salary, stock options, interest and other compensation of $2 million, for example, could only obtain that figure if the corporation‘s lowest paid, full-time employee earned at least $50,000 annually.‖
    • Ratios in the tax law Under current law, the more corporations overpay executives, the more they can deduct off their taxes. Rep. Barbara Lee (D-Calif.) The pending Income Equity Act (HR 1594), introduced by Rep. Lee, would deny all corporations tax deductions on any executive pay that runs over $500,000 or 25 times the pay of a company‘s lowest-wage worker.
    • The first legislated ratio The Bankruptcy Act of 2005, as amended by Senator Edward Kennedy, features the first-ever federal ratio limit on executive pay. No company in bankruptcy can lavish on its executives any ‗retention‘ bonus or severance pay that runs over 10 times the average bonus or severance awarded to regular employees in the previous year.
    • A bolder ratio approach From Executive Excess 2009, the latest annual report on CEO pay from the Institute for Policy Studies: Link a ratio limit to the expenditure of our tax dollars. Deny all government contracts to companies that pay their top executives over 25 times what their lowest-paid workers receive.
    • Leveraging the public purse Every major business These many billions Our equality choice owes its success, in no in contracts and • We as a society have small measure, to giveaways do come decided that we will not taxpayer dollars. with strings. subsidize, with our tax dollars, companies that • Government has • Our public bodies do increase racial and become America‘s not award contracts to gender inequality. largest consumer of companies that business products and discriminate by race or • Why should we services. gender. subsidize companies that increase economic • Federal procurement • If you discriminate in inequality? officials alone let to your employment private businesses over practices, you do not get $350 billion a year in to do business with contracts. Uncle Sam. • Billions more flow to businesses as subsidies and tax breaks.
    • Think of the dynamic these ratios could create. If we tied the top to the bottom, the top could only advance if the bottom advanced first. Our richest and most powerful would have a vested personal interest in helping our poorest and weakest.
    • A quarter-century from now, what sort of America do we want to see? The top 1% share of national income 27% in the United States, 1913 - 203 23.94% 21.83% 8% 0000000000000 000000000000 91
    • Become informed For background For staying in touch An email newsletter available at . . . www.toomuchonline.org An intro to understanding and overcoming the inequality that limits our lives. Available to read online . . . www.greedandgood.org