Sam Pizzigati Archive

The obituaries for Paul Volcker, the former Federal Reserve chair who died last Sunday at age 92, have been consistently echoing a truly heroic narrative. Between 1979 and 1987, as one prominent obit pronounced, Volcker’s bold and sweeping interest rate hikes shocked “the U.S. economy out of a cycle of inflation and malaise and so set the stage for a generation of prosperity.”

But prosperity for who?

Economist Gabriel Zucman has just delivered the most telling answer yet.

In a special analysis prepared for the Washington Post’s Greg Sargent, the University of California at Berkeley scholar has compared current average American incomes — in six different income ranges — to average incomes at the start of every decade since 1970.

Zucman’s income figures take into account both the taxes Americans pay federal and state governments and the transfers — everything from Social Security checks to veteran assistance — that go from government to individual Americans. In other words, his new breakdown shows what Americans had left in their wallets after paying their taxes and pocketing their benefits.

Some Americans, the new numbers show, had much more left than others. Phenomenally more. For America’s richest, the past half-century could hardly have been more prosperous.

In 1970, the nation’s top 1 percent averaged $328,816, in today’s dollars. By 2018, that top 1 percent average had more than tripled, to $1,152,232.

But the most striking after-tax, after-transfer gains have gone to Americans even higher up in the economic pecking order. Average top 0.1 percent incomes have more than quintupled since 1970, from just over $1 million to over $5 million. Average top 0.01 incomes have jumped over six-fold, from $3.7 million in 1970 to $24.2 million in 2018.

In essence, America’s very richest — the top one-hundredth of our top 1 percent — have on average added about $427,000 to their incomes every year since 1970.

The bottom 50 percent of Americans have added to their incomes, too — all of an average $167 a year.

To read more, click here.

Why has the United States become so much more unequal over the last four decades? Any number of factors have been driving our increased inequality. But no single factor may have been more significant than the behavior of the modern American corporation.

Corporations are contributing to inequality on two fronts. On the one hand, they’re systematically depressing incomes for average Americans, via everything from outsourcing to pension cuts. On the other, they’re just as systematically stuffing the pockets of America’s executive class.

These two vile sets of behaviors are relentlessly reinforcing each other. Outrageously huge rewards give corporate executives an incentive to behave outrageously, to squeeze their workers at every opportunity.

So how can we fight these corporate pay outrages? We change the incentive structure. We start giving Corporate America reason to narrow income divides, not stretch them ever wider. New legislation just introduced in Congress does just that.

The legislation — the Tax Excessive CEO Pay Act — raises the corporate tax rate on companies that pay their top executives over 50 times more than what they pay their most typical workers. The wider the pay-gap multiple over 50 times, the higher the tax rate.

Not that long ago, no one could have possibly dreamed that this sort of tax penalty would be so necessary. In mid-20th century America, CEOs at major U.S. firms seldom made much more than 30 or 40 times average worker pay. Today, by contrast, the nation’s top CEOs average nearly 300 times more. In 2018, a new Institute for Policy Studies report details, 50 top execs grabbed over 1,000 times more.

The proposed Tax Excessive CEO Pay Act carries some heavyweight sponsors. In the Senate, Bernie Sanders (I-Vermont) introduced the legislation November 13, the same day that veteran lawmaker Barbara Lee (D-California) and outspoken first-termer Rashida Tlaib (D-Michigan) introduced the bill in the House. And, on the Senate side, Senator Elizabeth Warren (D-Massachusetts) is co-sponsoring the legislation.

Over two dozen national labor, religious, and policy organizations have already endorsed the new Tax Excessive CEO Pay Act. They range from the AFL-CIO and the National Council of Churches to the Coalition on Human Needs and Public Citizen.

What nation ranks as the world’s richest? A simple question to answer, right. Well, not so much, suggests the just-released tenth annual Global Wealth Report from the banking giant Credit Suisse. Everything turns out to depend on how we define “richest.”

If we mean by “richest” the nation with the most total wealth, we have a clear worldwide number one: the United States. The 245 million adults who call the United States home held, as of this past June, a combined net worth of $106 trillion. No other nation comes close to that total. China ranks a distant second, with a mere $64 trillion, Japan even farther back at $25 trillion.

But if we mean by richest the nation with the most wealth per person, top billing goes to Switzerland, not the United States. The average Swiss adult is sitting on a $565,000 personal nest-egg. Americans average $432,000, a figure only good enough for second place.

So does Switzerland merit the title of the world’s wealthiest nation? Not necessarily. The Swiss may sport the world’s highest average wealth, but that doesn’t automatically mean that their nation has the world’s richest average people.

We’re not playing word games here. We’re talking about the important distinction that statisticians draw between mean and median. To calculate a national wealth mean — a simple average — researchers just divide total wealth by number of people. The problem with this simple average? If some people have fantastically more wealth than other people, the resulting average will give a misleading picture about economic life as average people live it.

Medians can paint a more realistic picture. Statisticians calculate the median wealth of a nation by identifying the amount of wealth that represents the midpoint in the nation’s wealth distribution, that point at which half the nation’s population has more wealth and half less. Medians, in other words, can give us a nation’s most typical net worth, the wealth that a nation’s most ordinary people hold.

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Why do so many Americans deeply distrust government? One part of the reason, two top economists suggested to a key congressional committee this week, just might be the most basic — and familiar — of the economic statistics the federal government produces.

That stat — gross domestic product, or GDP — “measures the market value of the goods, services, and structures produced by the nation’s economy,” as calculated by the federal Bureau of Economic Analysis. The Bureau generates new GDP figures for every quarter of the year, and the release of these figures regularly makes headlines. Are we heading for a recession? Is the economy booming? Reporters and pundits scour the GDP stats for clues to our future, and presidents and lawmakers rush to hail a rising GDP as proof their policies are working.

But these journalists and pols are all ignoring the most basic of questions: Working for whom?

A half-century ago, in an America much more equal than the nation we have now, this distributional question seldom came up. Back then, average Americans shared in the nation’s economic growth. If the GDP figures had the national economy growing nicely, economist Heather Boushey told the congressional Joint Economic Committee yesterday, most Americans saw their personal incomes growing nicely as well.

In our strikingly unequal contemporary economy, notes Boushey, this linkage no longer holds. GDP growth has become “decoupled from the fortunes of most Americans.” Growth is benefiting “only those at the very top of the economic ladder.”

“Incomes for the working class and the middle class have grown slowly for decades,” explains Boushey, the co-founder of the Washington Center for Equitable Growth, “while incomes at the very top have exploded.”

Today’s GDP numbers don’t capture any of this reality. As an aggregate figure, GDP fudges the difference between our economy’s winners and losers. You can drown, the old quip puts it, in a lake with an average depth of six inches. By the same token, you and your neighbors can be taking it on the chin in an economy with a rapidly rising GDP.

And average Americans have been taking it on the chin. Our rising GDP numbers are masking the chronic economic insecurity that huge swatches of the American people have been living.

Free-marketeers have been trying to strangle Amtrak, America’s quasi-public passenger railroad, for years now, and the Trump White House has tightened the chokehold, partly by pushing changes that make Amtrak’s food service ever less appealing. The latest victims? Passengers on long hauls who can’t afford Amtrak’s premium tickets. Among other changes, these ordinary passengers can no longer sit in the railroad’s dining cars and buy cooked-to-order meals. Amtrak CEO Richard Anderson, meanwhile, is sugarcoating the railroad’s new economic segregation, describing the widely disliked squeezes as “enhanced services.” No one should be surprised. In his previous life, as the CEO at Delta, Anderson helped turn his airline into a high-profit Wall Street darling by putting the squeeze on frequent fliers. Delta’s SkyMiles program became, as one travel journalist put it, “offensively, aggressively awful,” with good seats for popular destinations more than doubling in mileage price. Anderson himself retired from Delta in 2016. On the way out the door, he collected $72 million in Delta stock awards.

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CEO compensation in the United States may have finally crossed the line — from outrageously unfair to intolerably obscene. In 2018, a new Institute for Policy Studies report details, 50 major U.S. corporations paid their top execs over 1,000 times the pay that went to their most typical workers.

What can we do about obscenity this raw? Plenty. We can start by placing consequences on the CEO-worker pay ratios that publicly traded U.S. corporations must now annually disclose.

In Oregon, the city of Portland already has. Since 2017, major companies that do business in Portland have had to pay the city’s business tax at a higher rate if they compensate their top execs at over 100 times what they pay their median — most typical — workers.

State lawmakers have introduced similar legislation in seven states, and, earlier this week, White House hopeful Bernie Sanders announced a plan to hike the U.S. corporate income tax rate on all large firms that pay their top execs over 50 times their worker pay. Some context: A half-century ago, few U.S. corporations paid their chief execs over 25 times what their workers earned.

The new Sanders plan has drawn predictable scorn from the usual suspects. One analyst from the right-wing Manhattan Institute, for instance, told the Washington Post that a pay-ratio tax “could dramatically affect industries such as fast food and retail that naturally pay lower wages.”

Corporations pay “what the market demands,” added Adam Michel from the equally conservative Heritage Foundation, “and levying new taxes on high pay will just make U.S. businesses less able to compete globally, expand their workforces, or raise wages of rank and file workers.”

Why do many of the wealthiest people in America oppose a “wealth tax,” an annual levy on grand fortune? Could their distaste reflect a simple reluctance to pay their fair tax share? Oh no, JPMorganChase CEO Jamie Dimon recently told the Business Roundtable: “I know a lot of wealthy people who would be happy to pay more in taxes; they just think it’ll be wasted and be given to interest groups and stuff like that.” Could Dimon have in mind the interest group he knows best, Wall Street? In the 2008 financial crisis, federal bailouts kept the banking industry from imploding. JPMorgan alone, notes the ProPublica Bailout Tracker, collected $25 billion worth of federal largesse, an act of generosity that’s helped Dimon lock down a $1.5-billion personal fortune. Under the Elizabeth Warren wealth tax plan, Dimon would pay an annual 3 percent tax on that much net worth. Fortunes between $1 billion and $2.5 billion would face a 5 percent annual tax under the Bernie Sanders plan.

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Gigs! Disruption! Cubicle killers! Adam Neumann figured he could parlay trendy buzzwords into an office rental goliath that could make him rich. WeWork, the company he co-founded nine years ago, took out long-term office building leases and subleased space to start-ups and freelancers, a business model that soon flopped. In 2018, WeWork collected $1.8 billion in revenue and still ended the year $1.6 billion in the red. But Neumann himself has done quite well, in part by buying up buildings and renting the space back to WeWork. Neumann also tried trademarking — in his own name — the “We” in WeWork. Amid the resulting furor, he later returned the $5.9 million he charged WeWork for rights to the “We.” That furor only intensified this summer when Neumann sold off $700 million of his WeWork shares before a planned IPO, a clear case of trying to get out while the getting seemed good. That maneuver chopped two-thirds off WeWork’s $47 billion market value and had WeWork investors demanding Neumann’s head. They got it. Neumann last week stepped down as WeWork CEO. The good news for Neumann? He still has plenty of pillows to rest his head on. He owns five homes worth a combined $80 million.

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Reposted from Inequality.org

Wars end with treaties. In the middle of the 20th century, the “class war” that finished off America’s original plutocracy ended with the “Treaty of Detroit.”

Fortune, the business magazine, came up with that catchy turn of phrase back in 1950 to describe the landmark collective bargaining agreement that the United Auto Workers union had just reached with General Motors. What made the pact so historic? America’s most powerful corporation was essentially agreeing to “share the wealth.”

In exchange for labor peace, notes historian Nelson Lichtenstein, GM guaranteed auto workers what amounted to “a 20 percent increase in their standard of living” over five years, along with a new health care benefit and a standard $125 monthly pension, the equivalent of about $16,000 annually in today’s dollars.

This “Treaty of Detroit” would help energize a huge postwar shift in the distribution of U.S. income and wealth. In the quarter-century after 1945, the real incomes of average Americans would double, in the process manufacturing the first mass middle class the world ever seen.

Now UAW workers are once again making headlines, demanding just as they did decades ago that General Motors share the wealth with the workers who toil to create it. And GM is sitting on plenty of wealth. Since 2015, the company has posted $35 billion in North American profits alone. But GM workers today find themselves struggling in a far different — and more difficult — political and economic environment than their UAW forbears.

In 1950, the U.S. labor movement was beginning a third decade of sustained and significant growth. By the mid 1950s, over one out of every three workers in the nation carried a union card. Last year, by contrast, only 6.4 percent of American private-sector workers belonged to a union.

The executives who run General Motors are operating in a different environment, too. In the 1950s, the U.S. tax code subjected the nation’s rich to consistently steep tax rates. Individual income over $200,000 faced a 91 percent federal income tax throughout the decade. In 1950, GM’s top executive, Charlie Wilson, paid 73 percent of his $586,100 total income in taxes.

If a billionaire “invites” you somewhere, you’d better go. Or be prepared to suffer the consequences. This past May, hedge fund kingpin Carl Icahn announced in a letter to his New York-based staff of about 50 that he would be moving his business operations to Florida. But the 83-year-old Icahn assured his staffers they had no reason to worry: “My employees have always been very important to the company, so I’d like to invite you all to join me in Miami.” Those who go south, his letter added, would get a $50,000 relocation benefit “once you have established your permanent residence in Florida.” Those who stay put, the letter continued, can file for state unemployment benefits, a $450 weekly maximum that “you can receive for a total of 26 weeks.” What about severance from Icahn Enterprises? The New York Post reported last week that the two dozen employees who have chosen not to uproot their families and follow Icahn to Florida “will be let go without any severance” when the billionaire shutters his New York offices this coming March. Bloomberg currently puts Carl Icahn’s net worth at $20.5 billion.

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The weight of the wealth that sits at the top of America’s economic order isn’t just squeezing dollars out of the wallets of average Americans. That concentrated wealth is shearing years off of American lives.

The latest evidence for that squeeze on American wallets comes from the Census Bureau. Researchers there have just released results from their latest annual sampling of U.S. incomes. In 2018, the new Census stats show, incomes for typical American households saw a “marked slowdown.”

In effect, average Americans have spent this entire century on a treadmill getting nowhere fast. The nation’s median — most typical — households pocketed 2.3 percent fewer real dollars in 2018 than they earned in 2000.

The “vast majority” of American households, note Economic Policy Institute analysts Elise Gould and Julia Wolfe, “have still not fully recovered from the deep losses suffered in the Great Recession.”

America’s most affluent households have been having no such problem. Average top 5 percent incomes have increased 13 percent overall since 2000, to $416,520. The new Census Bureau figures, based on a sampling of U.S. households, tell us that top 5 percenters are now collecting 23.1 percent of the nation’s household income.

But these Census Bureau figures significantly understate just how much income America’s richest are annually grabbing, mainly because Census researchers “top code” high incomes to keep the identity of sampled deep pockets confidential. All incomes above fixed top-code levels get recorded at the top code. These levels have changed over the years, but the Census Bureau’s continuing reliance on top coding leaves us with figures that fudge the real extent of our inequality.

Analyses based on other data sources — like IRS tax return records — show that top 1 percenters alone are pulling down over 20 percent of America’s household income, essentially triple the top 1 percent income share of a half-century ago.

Last week didn’t go so well for the Mexican druglord Joaquín Guzmán Loera. A federal district court sentenced the notorious “El Chapo” to life in prison. The 62-year-old will almost certainly, notes the New York Times, be “spending the rest of his life behind bars.”

El Chapo certainly deserves his fate. The drug cartel he ruled, a jury determined this past February, dumped “hundreds of tons of drugs to the United States” and “caused the deaths of dozens of people to protect himself and his smuggling routes.”

John Hammergren dumped far more deathly damage. Over the years from 2006 through 2012 alone, we learned last week from the release of a previously secret federal drug database, the corporation that Hammergren ran as CEO inundated local communities in the United States with over 14.1 billion highly addictive opioid pills, nearly a fifth of the opioids distributed in those years.

No other corporation distributed more opioids in those years than Hammergren’s McKesson, the Washington Post reports. Overall, America’s corporate health care giants dropped 76 billion opioid pills on American localities in the time period the new stats cover, enough to supply 36 pills to every man, woman, and child in the United States.

Some 2,000 American cities, towns, and counties are now suing McKesson and the rest of the corporate drug distribution complex. They’re charging that these corporations “conspired to flood the nation with opioids.” The companies, the charge continues, didn’t just fail to report suspicious orders. They “filled those orders to maximize profits.”

The new stats the Washington Post has highlighted will undoubtedly heighten the pressure on McKesson and its fellow partners in crime to settle. But John Hammergren personally has little reason to worry. Unlike El Chapo, Hammergren knew when to fade way. He retired this past April, ending a CEO career that began in 2001. Over his first 16 years as CEO, notes Bloomberg, Hammergren pocketed $781 million. His final months in the McKesson chief executive suite brought that total near $800 million. Upon his retirement, he walked away with a pension package worth $138.6 million.

Opioids helped fuel all these rewards — and Hammergren had to know it. In 2007, the federal Drug Enforcement Administration accused McKesson of shipping “millions of doses” of the opioid hydrocodone to shady operators.

“By failing to report suspicious orders for controlled substances that it received from rogue Internet pharmacies,” the DEA charged at the time, “the McKesson Corporation fueled the explosive prescription drug abuse problem we have in this country.”

National Rifle Association chief Wayne LaPierre has had better weeks. First came the horrific early August slaughters in California, Texas, and Ohio that left dozens dead, murders that elevated public pressure on the NRA’s hardline against even the mildest of moves against gun violence. Then came revelations that LaPierre — whose labors on behalf of the nonprofit NRA have made him a millionaire many times over — last year planned to have his gun lobby group bankroll a 10,000-square-foot luxury manse near Dallas for his personal use. In response, LaPierre had his flacks charge that the NRA’s former ad agency had done the scheming to buy the mansion. The ad agency called that assertion “patently false” and related that LaPierre had sought the agency’s involvement in the scheme, a request the agency rejected. The mansion scandal, notes the Washington Post, comes as the NRA is already “contending with the fallout from allegations of lavish spending by top executives.”

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South of the border, here in the United States, we Americans tend not to pay much attention to our northern neighbors. Entire election cycles can come and go without anyone running for national office saying anything significant about Canada.

But that all has changed of late. Canada now looms large in our politics, mainly because many more of us have realized that Canadians enjoy a health care system far superior to our own, by every meaningful yardstick of fairness and efficiency. Canada’s single-payer approach to health care has become — for progressives in the United States — a guiding inspiration. We want what the Canadians have. We need what the Canadians have.

And we need what Canadians have, an innovative new study suggests, on more than just health care. Average Canadians, this research relates, now enjoy higher incomes than their counterparts in the United States.

The new report — Household Incomes in Canada and the United States: Who is Better Off? — comes out of the Ottawa-based Canadian Centre for the Study of Living Standards and essentially challenges the conventional wisdom on economic well-being. That wisdom, report author Simon Lapointe notes, typically defines well-being as GDP per capita.

To calculate this GDP yardstick, economists take the sum total of the goods and services a nation produces, divide that total by the nation’s population, and tell us that the resulting number measures how well a nation’s people are doing economically.

By this standard measure, Americans are doing much better than Canadians. In 2016, the latest year with comparable stats available, GDP per capita in the United States ran over 20 percent higher than GDP in Canada, $57,798 to $47,294, in U.S. dollars adjusted for what economists call “purchasing power parity.”

But GDP per capita can obscure reality as most households live it, especially in a deeply unequal society like the United States. Lapointe acknowledges in his new Canadian Centre for the Study of Living Standards report that American households certainly do rate as richer than Canadian on average. But “much greater incomes at the top of the income distribution” in the United States, he points out, are driving the difference in the Canadian and U.S. averages.

Remember the college admissions scandal? Earlier this year we learned that awesomely affluent parents have been spending small fortunes on scams to get their undeserving teenage offspring into America’s most elite colleges and universities.

This admissions scandal crept back into the news cycle earlier this week when Vanity Fair reported that the wealthy parents of one California teen had plotted with a top admissions “consultant” to get their white — and distinctly non-athletic — daughter accepted by elite schools as a black tennis champ.

In this case, the rich parents overreached. Their scam failed. But plenty of other sports-related scams, we now know, worked quite well. Rich families paid to have their kids’ faces photoshopped onto the bodies of real high school athletes. They conspired with college tennis, soccer, and water polo coaches to get their kids admitted under false pretenses into schools like Yale and Georgetown.

All these kids had no outstanding athletic talent. But what if wealthy parents had the ability to give their kids that athletic talent? What if our nation’s rich could use emerging 21st-century “gene-enhancement technology” to make their kids physically bigger, stronger, or faster? What if they could even use that same technology to make their kids smarter? Would they?

The answer the college admissions scandal makes plain: Many of the richest among us will stop at nothing to perpetuate their privilege. Spend a fortune to make their kids genetically superior? Of course they would.

Should we be aghast at this prospect? Of course we should.

What used to be pure science fiction — the ability to edit our DNA — has now become science reality. A generation ago our hippest young programming hotshots were working in computer code. Now the high-tech hip are busy working to reprogram our genes.

Hedge fund investor Leon Cooperman is getting angry again. He seems to do that early on in every presidential election cycle. Back in 2015 Cooperman objected to the attacks on hedge fund tax breaks he was hearing in the Democratic primary race. Blasted back Cooperman in a CNN interview: “I don’t need anybody crapping all over what I do for a living.” Late last month, in a CNBC interview, the 76-year-old attacked the calls for taxing America’s rich he’s hearing from candidates like Bernie Sanders and Elizabeth Warren. Pronounced Cooperman: “All in all, I’m not in favor of raising taxes. Taxes are high enough. I think it’s counterproductive to look to the wealthy people across the board.” Adds the former Goldman Sachs exec: “We have the best economy in the world. Capitalism works.” Our economic order certainly works for Cooperman. His current net worth: $3 billion.

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What happens at America’s state level can sometimes reverse the political momentum of the entire nation. We experienced just such a reversal in 1978, when California conservatives pushed our country to the right. We may be poised to take a new direction, thanks to important victories in New York State for progressives.

Back then, on a calm June day, conservatives engineered a California earthquake. They won nearly two-to-one voter support for a ballot initiative that wrote a cap on local property taxes into the state constitution. This “Prop 13” initiative would in short order crater funding for California’s world-class public services.

For business interests, meanwhile, Prop 13 would prove to be a gift that keeps on giving. Before 1978, corporate property owners footed two-thirds of the state’s property tax bill, homeowners one-third. After 1978, that ratio flipped, leaving the homeowner share at two-thirds.

But Prop 13’s most lasting impact would be political. Prop 13 gave America’s cheerleaders for grand private fortune a simple winning formula for electoral success: Make elections about cutting taxes. Always.

Conservative pols would follow that formula. In the immediate wake of Prop 13, over a dozen other states enacted similar tax caps. In the 1980 presidential election, Ronald Reagan would then ride this tax-cut wave into the White House. Once in office, his administration quickly set about rewriting America’s economic rules — to privilege the rich and the corporations that make them richer.

Today, four decades later, we’re still living amid the extreme inequality Prop 13 did so much to create. But now, in a state a continent away from California, the surprise outcome of another titanic political battle may well signal the dawning of a new and far more egalitarian epoch.

New York has just enacted — over fierce billionaire opposition — legislation that takes a giant step toward defining decent, secure housing as a basic human right.

Hundreds of advocates for a more equitable economy will be gathering in Washington, D.C. this coming Tuesday for an all-day conference on “Taxing the (Very) Rich.” Hundreds more will be streaming online and watching as conference speakers explore a variety of bold new proposals, everything from an annual tax on wealth to tax penalties on corporations that pay their top execs unconscionably more than their workers.

Many of these same proposals will then soon likely surface again almost immediately, at next week’s first set of national debates for the Democratic Party’s White House hopefuls. Most of the 20 debaters figure to endorse one — or more — of the ideas that get Tuesday’s “Taxing the (Very) Rich” spotlight.

In other words, we’re shaping up to have a really good week for tax justice. We haven’t had a political climate this open to new initiatives for taxing the super rich since FDR sat in the White House.

All this political momentum, not surprisingly, has America’s flacks for grand fortune more than a little bit worried. They thought they had us convinced that upping taxes on the rich would wreck the economy and penalize “success.” But Americans aren’t buying what the flacks are selling. Our richest owe their “success,” many more of us now understand, to an economy they’ve spent the last four decades rigging.

Serenades to the “successful” are clearly not winning over a deeply skeptical — and cynical — American public. So the flacks are switching gears. They’re doubling down on the cynicism all around us. They’re arguing that taxing the super rich will always be a fool’s errand — because the rich and their armies of lawyers and accountants will always be able to stay a step ahead of Uncle Sam.

So why bother trying to tax the rich, the argument goes, when these deepest of pockets can simply evade whatever taxes Congress imposes? Just accept reality, the flacks implore us. The rich will always stay rich.

That happens not to be true. History shows we can make real progress against grand concentrations of private wealth. We did just that in the mid-20th century, a time when Americans making more than $400,000 a year faced top income tax rates over 90 percent and heirs to grand fortunes had to watch estate tax rates as high as 77 percent carve multiple millions off their inheritances.

Ask hedge fund mogul Bernard Selz why he’s bankrolling the anti-vaccine movement and you won’t get much of an answer. The Washington Post tried, calling Selz at his Manhattan home. The answer offered up by the woman who answered and refused to identify herself: “There’s nothing to say.” Actually, the 79-year-old Selz ought to have a lot to say about why he’s invested over $3 million over the last few years into groups claiming that federal health officials are covering up the dangers from the measles vaccine. Before 1963, the year current measles vaccinations began, 400 to 500 Americans a year died from the disease.

We have a great deal of statistical data, in America today, about the economic circumstances of Americans who live in poverty. We know far less, by contrast, about Americans who live amid great wealth. And much of what we do know, suggests a revealing new study, turns out to be wrong.

America’s wealthiest, this new study details, almost certainly hold substantially greater personal fortunes than our standard analyses of the nation’s distribution of wealth indicate.

What are these conventional analyses not taking into account? A simple reality of our deeply unequal age: Extravagantly wealthy people cheat on their taxes. Regularly. Extravagantly, too. Our super rich are stashing vast chunks of their personal fortunes in offshore tax havens, generating billions annually in new income that — to their governments — goes unseen and untaxed.

Just how enormous has this tax evasion by the super rich become? University of California-Berkeley economist Gabriel Zucman and his Scandinavian colleagues Annette Alstadsæter and Niels Johannesen calculate — in a just-published American Economic Review paper — that offshore tax havens are enabling our world’s richest 0.01 percent to evade 25 percent of the income taxes they ought to be paying.

The holdings of this wealthiest one-hundredth of 1 percent, the three researchers relate, make up about 50 percent of the overall assets parked in tax havens. The super rich are using these havens, add Zucman and his colleagues, to conceal about 40 percent of their total personal fortunes.

The most recent Federal Reserve Board figures on U.S. inequality, released this past March, put the top 1 percent’s share of American personal wealth at 32 percent, up from 23 percent in 1989. Other estimates place the top 1 percent share closer to 40 percent. But with the new calculations from Zucman and his colleagues, the Institute on Taxation and Economic Policy’s Matthew Gardner reflects, even this 40 percent estimate could well be a distinctly “low-ball number.”

But can we trust the numbers from the Zucman team? After all, how could a mere trio of researchers unearth hidden fortunes that the super rich spend big bucks to keep hidden? These three particular researchers had some unconventional assistance.

Over recent years, whistleblowers at some of the private banks and legal firms that cater to wealthy tax evaders — remember the “Panama Papers”? — have exposed vast stores of financial records that document the daily nitty-gritty of tax-evading transactions. The Zucman team tapped these records.

In our daily lives, as anyone who keeps a household budget can attest, the unexpected happens all the time. A refrigerator motor fails. Some part on your car you never realized existed breaks down. A loved one passes away and you have to — you want to — be at the funeral a thousand miles away.

“Unexpected” expenses like these will, sooner or later, hit all of us. But all of us, says new research out of the Federal Reserve, can’t afford them.

In fact, just under 40 percent of Americans, says the Fed’s sixth annual household economics survey, “would have difficulty handling an emergency expense as small as $400.”

A fifth of American adults, the new Fed study adds, had major unexpected medical bills last year. An even larger share of Americans — one quarter — “skipped necessary medical care in 2018 because they were unable to afford the cost.”

Meanwhile, 17 percent of American adults can’t afford to pay all their monthly bills, even if they don’t experience an unexpected expense.

The new Fed report offers no anecdotal color, just waves of carefully collected statistical data. For a sense of what these stats mean in human terms, we need only look around where we live, particularly if we live in one of the many metro areas where inequality is squeezing millions of Americans who once considered themselves solidly “middle class.” Places like the Bay Area in California.

San Francisco, recent research shows, now has more billionaires per capita than any other city in the world. By one reckoning, San Francisco also has the highest cost of living in the world, as all those billionaires — and the rest of the city’s ultra rich — bid up prices on the most desirable local real estate.

But the Bay Area squeeze goes beyond the confines of San Francisco. Nearby Oakland and Berkeley are facing enormous affordable housing shortages as well. The Bay Area as a whole now has more than 30,000 homeless.

Millions of American families are still reeling from the aftershocks of the financial crash a dozen years ago. But a key architect of that debacle, Countrywide Financial CEO Angelo Mozilo, is feeling no pain — and no remorse either. In the decade before the crash, Mozilo took $650 million out of Countrywide, a hefty chunk of that just before the subprime mortgage scam Countrywide exploited started to implode. Earlier this month, Angelo described Countrywide as a “great company” at a conference appearance and declared subprimes as “not the cause at all” of the nation’s 2007-2008 financial wreckage. Added Mozilo: “Somehow — for some unknown reason — I got blamed.” The former CEO is acknowledging that all the blame did at one point bother him. And now? The famously always tanned Mozilo notes simply: “I don’t care.” 

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America’s elites have for decades now enjoyed — and exploited — a mainstream political consensus.  America is doing just fine, this consensus has held, but just not for everybody. We have some poor, unfortunate souls in our midst, the consensus continues, and decency demands more “opportunity” for them.

Aspiring politicians have always loved this opportunity message. They can spout it and sound compassionate and caring to the voting public. The message’s more important attraction: Pols can spout it and not in any way come across as threatening to the deep pockets they count on for campaign cash.

The rich, after all, simply adore the mainstream “opportunity” gospel. Talking about increasing opportunity distracts attention from how rich people — and the corporations they run — behave, how what the rich do to become and stay rich keeps poor people poor and most of the rest of us struggling.

But this mainstream political consensus has over recent years collapsed. Precious few analysts are still claiming that the nation is doing “just fine.” The United States these days is essentially working well only for the rich, and appreciable numbers of Americans no longer just wonder why. They’re demanding checks on grand private fortunes and the behaviors that pump these fortunes up.

All this has today’s rich worrying. Really worrying. Recent headlines tell the story. From the Financial Times: “Why American CEOs are worried about capitalism.” The Guardian: “The kings of capitalism are finally worried about the growing gap between rich and poor.” The Washington Post: “U.S. billionaires worry about the survival of the system that made them rich.”

We typically think urban neighborhoods when we think gentrification. We think places where modest-income families have thrived for generations suddenly becoming no-go zones for all but the affluent.

The waters around us have always seemed a place of escape from all this displacement, a more democratic space where the rich can stake no claim. The wealthy, after all, can’t displace someone fishing on a lake or sailing off the coast. Or can they? People who work and play around our waters are starting to worry.

Local boat dealers and bass fishing aficionados alike, reports one leading marine industry trade journal, are all now “expressing concern about the growing income disparity in the United States.” That journal, Soundings Trade Only, is even highlighting stats that show America’s top 1 percent holding more wealth than “the bottom 90 percent of the population combined.”

What has boat dealers so concerned? The middle-class families they’ve counted on for decades are feeling too squeezed to buy their boats — or even continue boating.

“Boating has now priced out the middle-class buyer,” one retailer opined to a Soundings Trade Only survey. “Only the near rich/very rich can boat.”

Mark Jeffreys, a high school finance teacher who hosts a popular bass fishing webcast, sees a bubble close to bursting. His pastime is getting too pricey, and he wonderswhen bass anglers are “going to get to the point where they’re not going to pay $9 for crankbait.”

Not everyone around water is worrying. The companies that build boats, Jeffreys notes, seem to “have been able to do very well.” They’re making fewer boats but clearing “a tremendous amount” on the boats they do make.

***

We all know how democracies are supposed to work: People come together, identify their common problems, then debate and decide solutions. But this elegant give-and-take can break down. What breaks it? Inequality. Democratic deliberations start going haywire whenever wealth starts furiously concentrating at a society’s summit.

In societies growing significantly more unequal, people simply share ever fewer common problems. And some people, thanks to their increasing wealth, have the political power to make their problems the problems their society addresses.

And what happens to the problems of people without grand private fortune? Their problems go ignored. Democracy becomes plutocracy.

In our contemporary United States, we see this plutocratic dynamic play out all the time. Oxfam, the activist global charity, has just offered up a particularly vivid example: the crisis around prescription drugs.

For Americans of modest means, prescription drugs have emerged as a top-tier problem on any number of fronts. Start with cost. The drugs doctors prescribe have become so expensive that millions of Americans can’t afford to buy all the pills their doctors want them to take.

Meanwhile, drug companies have become drug pushers, overselling the benefits and shortchanging the hazards of profitable painkilling medications, in the process creating an opioid epidemic that has devastated millions of American households — and communities.

Big Pharma’s relentless chase after profits drives and distorts medical research agendas, too. On cancer, for instance, drug companies will only conduct costly clinical trials on substances that can be patented and pay off in big earnings. Promising but unpatentable natural substances can’t deliver big profits. So they don’t get tested. They remain on the medical fringes, their curative potential untapped.

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Serious societal change typically only takes place when the pressure for change hits “critical mass.” At one level, we’ve had critical mass for years now on seriously taxing America’s rich. Polls regularly show broad public support for having our wealthiest pay quite a bit more at tax time.

But we haven’t had critical mass on taxing the rich within our political class. That finally may be changing. High-profile pols old and new have of late been one-upping each other with sober proposals for trimming the super rich down to a much more manageable democratic size.

The latest significant player to add to this growing political class critical mass: U.S. Senator Ron Wyden from Oregon. He’s just announced his intention to push a bold new tax on capital gains.

Most Americans know precious little about capital gains income because most Americans get precious little income from capital gains. On average, capital gains income — profits from the sale of stocks, bonds, and other assets — makes up just 6.1 percent of the dollars Americans report on their tax returns.

But this average wildly overstates how much income everyday households collect from capital gains. In 2016, the latest year with IRS stats, capital gains made up a miniscule 0.7 percent of the income for households earning less than $100,000. Households making over $10 million, by contrast, counted on capital gains for nearly half, 46.4 percent, of their income.

The richest of our rich, our top 0.001 percent, grab an even higher income share, 55.1 percent, from capital games.

These fabulously rich don’t just grab the overwhelming bulk of the nation’s capital gain dollars. Our tax code gives them and their capital gains preferential treatment. A dollar of income from salary and wages can currently face a tax rate of up to 37 percent. A dollar of capital gains income never faces a tax slice more than 23.8 percent.