(Pictured below) Do you find this itty-bitty island off the coast of Connecticut cute? So did Christine Svenningsen, the mega-millionaire widow of a party-goods magnate. Starting in the late 1990s, she spent $36 million out of her quarter-billion-dollar fortune buying up nine of these little gems. But sometimes too much island-shopping must get stale, because Svenningsen recently put two of her “Thimble Islands” up for sale. This one, Jepson Island (at $2 million), comes with a century-old cottage that was built during the first Gilded Age.
The plutocrats today are more dangerous than the robber barons a century ago. The Rockefellers, Carnegies, and their ilk could certainly be vicious --- America’s original plutocrats a century ago wielded formidable power. The world had never seen fortunes as massive as theirs, and America’s deepest pockets seemed to enjoy nearly a lock-grip over the nation’s politics.
But these plutocrats during the first Gilded Age had to moderate their actions (at least to some degree) because they needed U.S. workers and consumers. Their plutocratic wealth sat largely rooted in America’s factories, mines, machinery, and transportation networks. Today’s wealthy have no such roots. With globalization, outsourcing, off-shore schemes and free trade agreements, today’s "masters of the universe" operate virtually beyond the reach of the even the most progressive of governments and powerful unions.
Polls now show that two-thirds of Americans believe that the nation’s enormous wealth ought to be “distributed more evenly.” But almost as many Americans—well over half—feel that protests against inequality will ultimately have “little impact.” The rich, millions of us believe, always get their way. Except they
didn't always.
A century ago, the United States hosted a super-rich group of Americans that
were just domineering as ours today. Yet fifty years later (around the
1950s-60s) that small segment of super rich people had almost entirely disappeared. Their majestic mansions and estates had become museums and college campuses, and America had become a vibrant, mass middle class nation, the first and finest the world had ever seen.
Americans today ought to be taking no small inspiration from this stunning change. After all, if our forbears successfully beat back grand fortune, why can’t we? But this transformation is inspiring virtually no one. Why? Because the story behind it has remained almost totally
unknown until the internet and the Great Recession.
Only 50 years ago, America once "soaked" the
ultra-rich with a 91 percent income tax. And guess what? America prospered! Not just the rich, but ordinary
families as well.
According to a newly released World Ultra Wealth Report, 65,505 Americans hold a combined wealth of more than $9 trillion. Another report shows that last year America’s really rich (in the top 0.01 percent) saw their incomes soar by over 32 percent last year.
One fix for our historically high inequality might be a wealth tax that's calibrated to fall on only the top 2 percent. According to the TASC and Nevin Economic Research Institute think tanks, an annual 0.6 percent levy on household wealth over 1 million dollars would raise revenue equal to at least 0.1 percent of GDP — and likely much more. If left unencumbered with myriad tax exemptions and loopholes, a new wealth tax could be an important element of social solidarity, particularly at a time of deteriorating living standards for a large section of the population.
The Census Bureau calculated that the median U.S. household collected $51,017 in income last year (most typically, by two wage earners earning $27,000 a year or less) --- which is less than what they earned in 1989 in today's dollars. The U.S. Department of Commerce says, to really live a “middle class” life-style today (a house, a car, a periodic vacation, decent health care, a retirement nest-egg, and savings for your kid's college years) currently requires over $81,000 in annual income.
One Solution for the Jobless Recovery: Build more and Bigger Yachts
As the number three billionaire on the latest Forbes 400, Oracle software CEO Larry Ellison was paid $78.4 million in stock and other compensation. What do Oracle shareholders get for all these millions? Something less than Ellison’s full attention.
Last Tuesday, the chief exec voluntarily declined to deliver the keynote address at the annual Oracle OpenWorld conference, a key annual event that draws over 50,000 tech professionals. Why couldn’t Ellison attend? He had to zip over to San Francisco Bay to watch his $100-million catamaran sail in the America’s Cup, yachting’s premiere global competition . . .
Larry Ellison’s fellow yachtsmen have been feeling a tad defensive of late. Seems that some folks today consider the $4.1 billion spent last year building 169 super yachts an outrage at a time of chronic economic crisis. But the luxury yachting industry, the Financial Times reports, is fighting back.
Shipyards and brokers are commissioning studies on the “economic value” yachting generates. Building one medium-sized super yacht, their story goes, creates 350 construction jobs! No other luxury sector, says the International Superyacht Society's Ken Hickling, can match yachting’s capacity to “redistribute wealth.”
Compared to fine art, jewels, and private jets, he insists, yachts clearly rank as the “most ethical” luxury. Adds Hickling: “Buying boats supports jobs. Buying big boats supports more jobs.” In other words, a solution for global hard times: bigger yachts.
Other Reading....
Jared Bernstein, The Path to Dysfunction, Economix, September 24, 2013. How concentrated wealth and lax campaign finance mean big money can buy the facts, not just the politics, it wants.
Rick Wartzman, The Long View: Why 'Maximizing Shareholder Value' Is on Its Way Out, Time, September 25, 2013. The director of the Drucker Institute explores the backlash against short-term corporate thinking.
Alyce Lomax, These Corporate Managers Aren't Sweating Over CEO-to-Worker Pay Disclosure, Motley Fool, September 26, 2013. Not all top execs are brazenly plundering.
Gus Lubin, Three Charts that Show How Income Inequality Is Hurting America, Business Insider, September 27, 2013. Our economic divides are limiting our lives: some compelling visual evidence.
Paul Krugman, Plutocrats Feeling Persecuted, New York Times, September 27, 2013. The rich already have the multiple big houses, the servants, the private jet. What they really want now: our adulation.
Sanjay Sanghoee, A solution to skyrocketing CEO pay, Fortune, September 27, 2013. Offer firms tax credits if they keep their CEO-worker pay ratio within modest bounds.
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