Economic, Workplace and Environment Regulation

by Jeremy Leaming

If one really needs another example of how out of touch or clueless some of the nation’s super wealthy are, Adam Davidson’s piece on a retired multimillionaire for The New York Times Magazine provides it.

As Davidson notes the retired former partner of Bain Capital, the outfit that excelled in tearing down other businesses for a profit, is plumping a forthcoming book that extols alleged virtues of the filthy rich. Davidson writes that the “spectacularly wealthy guy” believes the “wealth concentrated at the top should be twice as large,” to spur slackers or “art-history majors” into pursuing outlandish wealth.

Economist Paul Krugman, in his Times’ blog, says the former Bain Capital partner’s argument “might have some plausibility if the era when America didn’t have such overweening plutocracy – the 50s and 60s, when the top 0.01% received only about a fifth the share of income that it commands today – were a time of economic stagnation and low innovation. In fact, the postwar generation experienced the best economic growth – and the fastest productivity growth – of any era in the past century.”  

Since discussion of the nation’s growing economic inequality, right-wing pundits have attacked or belittled studies showing that the middle class is dwindling, while a tiny few continue to become wealthier. In a widely cited article for Vanity Fair, Columbia University Business School Professor Joseph E. Stiglitz noted that the “upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent.”

While the former Bain Capital multimillionaire, Edward Conard, is no innovator, he’s not invented anything that has enriched the lives of Americans; he has invested in a company that uses less aluminum for soda cans. “It saves a fraction of a penny on every can,” he told The Times. “There are a lot of soda cans in the world. That means the economy can produce more cans with the same amount of resources. It makes every American who buys a soda can a little richer because their paycheck buys more.”

This is the gibberish that passes for an argument that investors should be celebrated and indeed helped by economic policies?

Dean Baker, of the Center for Economic and Policy Research, is unlikely to be persuaded. Last fall Baker scored economic policies that have catered to the super wealthy for far too long, and noted that those policies do redistribute the wealth – to the super wealthy.

By Leslie Proll, Director of the NAACP Legal Defense & Educational Fund’s Washington Office

The current foreclosure crisis constitutes a monumental civil rights issue. Communities of color were targeted for risky mortgage loans, have experienced disproportionately high foreclosure rates, and have been stripped of vast amounts of wealth because of discriminatory lending practices. From 2005 to 2009, median wealth fell by 66 percent among Latino households and 53 percent among African-American households, compared with just 16 percent among white households, largely due to declining home values. From 2009 through 2012, African Americans are projected to lose an estimated $194 billion in housing equity, and Latinos are expected to lose $177 billion.

Unfortunately, there is reason to believe that the destructive effects of the foreclosure crisis on communities of color have yet to be fully realized. They face another devastating blow caused by further discriminatory treatment towards homes and neighborhoods by the very lenders who initiated the foreclosures. 

The civil rights problems that permeate the foreclosure crisis are unfolding in stages. First, lenders targeted communities of color with subprime and other risky loan products that led to foreclosure. Last year, the U.S. Department of Justice (DOJ) announced the largest residential fair lending settlement in history, in which Bank of America agreed to pay $335 million to settle allegations that Countrywide Financial discriminated against African-American and Latino borrowers during the housing boom. DOJ found that Countrywide loan officers and brokers charged higher fees and interest rates to 200,000 African-American and Latino borrowers than to white borrowers who posed the same credit risk. Countrywide also steered borrowers of color into costly subprime mortgages when white borrowers with similar credit profiles received prime loans. Countrywide was not an isolated example. Other research has found that African-American and Latino borrowers were much more likely to receive subprime loans than white borrowers, even after controlling for income level or credit risk.