Economic inequality

  • May 4, 2012

    by Jeremy Leaming

    Slowly the economy continues to recover, with jobs being added over the past 26 months, but that progress is amazing in an atmosphere where one of the two major political parties is concerned only with advancing the outlandish interests of the nation’s super wealthy.

    The Great Recession, underway before the Obama administration was in existence, has shoved millions into poverty and the gap between the nation’s top 1 percent and everyone else is the widest since the 1920s. Last fall, the Census Bureau reported that the number of people in poverty is at its highest in more than 50 years. As noted earlier this week the super wealthy are increasingly out-of-touch, indeed one retired multimillionaire is pushing a book that calls for more economic inequality.

    But how did the country arrive at this point where the middle class is shrinking, the poor is growing and a tiny group of people are amassing most of the wealth? Because, according to some, the nation’s conservative party has been bought by the out-of-touch super wealthy.

    The mainstream media, in the name of objectivity, will continue to blame both parties for gridlock in Washington, but a growing number of economists, academics, lawyers, activists, and others concerned about the well-being of all people are pushing back against that tired line.

    Thomas E. Mann and Norman J. Ornstein, who have studied Congress for several decades, say the Republican Party is to blame for pushing fantastical policy and refusing to budge from it, therefore creating an atmosphere where progress or change is difficult to foster.

    “The GOP has become an insurgent outlier in American politics, Mann and Ornstein write for The Washington Post. “It is ideologically extreme; scornful of compromise; unmoved by conventional understanding of facts, evidence and science; and dismissive of the legitimacy of its political opposition.”

    One of the group’s to blame for the Republican Party’s unmovable concern about the nation’s super wealthy is Grover Norquist’s Americans for Tax Reform, which pushes conservative lawmakers to sign a pledge against raising any taxes. Norquist (pictured) is all about policy that starves the federal government of revenues, so policies to help the less fortunate dwindle, because those are not the people Norquist or the Republican Party are concerned with.

    In his May 4 column for The New York Times, economist Paul Krugman notes the work of Mann and Ornstein, writing, “Specifically money buys power, and the increasing wealth of a tiny minority has effectively bought the allegiance of one of our two major political parties, in the process destroying any prospect for cooperation.”

    “And the takeover of half our political spectrum by the 0.01 percent is, I’d argue, also responsible for the degradation of our economic discourse, which has made any sensible discussion of what we should doing impossible,” Krugman continued.

    In a piece last year for Rolling Stone Tim Dickinson, said the party of Ronald Reagan has “undergone a radical transformation, reorganizing itself around a grotesque proposition: that the wealthy should grow wealthier still, whatever the consequences for the rest of us.”

  • May 2, 2012

    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.

  • April 27, 2012
    Guest Post

    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. 

  • April 20, 2012

    by Jeremy Leaming

    Shareholders are ratcheting up pressure on corporate executives to reveal the extent of political expenditures, and, in at least one case, pushing back against over-the-top compensation packages for executives.

    Reporting for The Washington Post, Tom Hamburger notes that the massive health insurance company WellPoint is facing an “an increasingly aggressive campaign to force disclosure of corporate political and lobbying expenditures, including payments to the U.S. Chamber of Commerce ….”

    A coalition of institutional investors, Hamburger says, is calling for the resignation of board members for “allegedly failing to oversee ‘high risk political spending.’” In particular, the shareholder coalition is troubled by $86 million that a trade association, which WellPoint is a member, transferred to the U.S. Chamber of Commerce during its fight against the Obama administration’s health care reform work.

    The Post says that the coalition’s “effort to hold specific board members responsible represents a new militancy in the fight to require companies to reveal their political activities,” which has grown out of the aftermath of the high court’s 2010 opinion in Citizens United v. FEC, granting corporations unfettered ability to spend on political campaigns.

    Director of GMI Ratings Nell Minow told the newspaper that demanding action against specific shareholders “may be the only way you make any progress” on forcing corporate transparency of political spending.

    As The Post notes, political spending by corporations can be a risky endeavor. As noted on this blog, several public interest groups have demanded that corporations cut their ties to the right-wing group, ALEC, which has lobbied states to enact so-called “Stand Your Ground” laws, and onerous measures that hamper voters. ColorOfChange and the Center for Media and Democracy have successfully encouraged about a dozen corporations, such as Blue Cross Blue Shield and Coca-Cola to stop sponsoring ALEC.

    MarketWatch also reports that a growing number of shareholders are “agitating for corporations to disclose what they spend on political advocacy ….”

  • April 12, 2012

    by Jeremy Leaming

    The nation’s growing income inequality, among other issues concerning the economy, should play a significant role in the presidential election, but writing for The Nation, Ari Berman delves into why the Supreme Court should also be “a major issue in November.”

    The Supreme Court is simply not balanced. The court has been shoved far to the right. Berman cites Nate Silver’s reporting for The New York Times on a recent study that “finds that the current court is the most conservative since at least the 1930s.”

    The Martin-Quinn Scores, which Silver rendered in two charts, also “imply that, on the basis of its median justice, the current court is farther from the ideological center than any recent court. For instance, it is farther from the center than the liberal courts of the late 1960s that were under Chief Justice Earl Warren.”

    And beyond deciding whether health care reform will stand or fall, the Roberts Court is likely to consider a slew of major issues in the “not-so-distant future,” Berman writes. Some of these concerns include affirmative action policy, voting rights, marriage equality and reproductive rights. (As Berman notes, Republican state lawmakers have passed numerous onerous restrictions on reproductive rights over the last few years.)

    The right already gets it. Leaders of the conservative movement have obsessed over the make-up the federal courts and the high court in particular, for decades. And those leaders haven’t stopped obsessing. Berman notes that NRA leader Wayne LaPierre declared, in hyperbolic fashion, at this year’s Conservative Political Action Committee, “If Obama wins re-election, he will likely appoint one – and perhaps three – more Supreme Court justices. It’ll be the end of our freedom forever.”