Tag Archives: Wealth Disparity

US income inequality continued to soar in 2014

By Andre Damon
July 2, 2015
World Socialist Web Site

 

Capitalism1Income inequality in the United States continued to grow in 2014, according to updated figures released last week by University of California, Berkeley economist Emmanuel Saez.

According to Saez’s report, the top one percent of income earners increased their share of total income from 20.1 percent in 2013 to 21.2 in 2014 percent.

The income shares of the highest-earning 10 percent, 1 percent, and 0.1 percent of income earners all grew in 2014. The top ten percent of earners received 49.9 percent of income in 2014, more than any other year besides 2012.

Saez noted that the top 1 percent of earners received 58 percent of income gains during the so-called economic “recovery” between 2009 and 2014. The incomes of the bottom 99 percent grew by just 4.3 percent during that period.

The figures for 2014 mark the first year that real incomes for the bottom 99 percent of earners increased by any significant amount since the 2008 financial crisis. Incomes for the bottom 99 percent grew at a rate of 3.8 percent last year.

Saez wrote that “the incomes of most American families are still far from having recovered from the losses of the Great Recession.” He added that by 2014, the bottom 99 percent of income earners had recovered less than 40 percent of the annual income they had lost during the 2007-2009 recession.

The modest growth in incomes for the bottom 99 percent was dwarfed by the increase in the incomes of the super-rich. The incomes for the top 1 percent of earners grew at a rate of 10.8 percent last year, more than three times faster than the average for the bottom 99 percent.

While the growth of social inequality has dramatically accelerated following the 2008 crash, this is a continuation of a decades-long process. The report notes, “Top 1 percent incomes grew by 80.0% from 1993 to 2014. This implies that top 1 percent incomes captured almost 60% of the overall economic growth of real incomes per family over the period 1993-2014.”

Saez warns that the growth of inequality is not likely to slow down, noting, “Based on the US historical record, falls in income concentration due to economic downturns are temporary unless drastic regulation and tax policy changes are implemented and prevent income concentration from bouncing back. Such policy changes took place after the Great Depression during the New Deal and permanently reduced income concentration until the 1970s.”

He notes, “The policy changes that took place coming out of the Great Recession… are modest relative to the policy changes that took place coming out of the Great Depression. Therefore, it seems unlikely that US income concentration will fall much in the coming years, absent more drastic policy changes.”

In fact, the US government’s response to the 2008 crash has been dedicated to inflating the wealth of the super-rich while driving down incomes for the vast majority of the population. The White House has protected Wall Street executives from legal prosecution, while the Federal Reserve has handed out trillions of dollars in cheap money through “quantitative easing” programs, leading share values to triple on major US exchanges.

Saez notes that a significant contributor to the growth of income inequality has been the growth of the salaries for top earners, particularly top executives. He observes, “The income composition pattern at the very top has changed considerably over the century. The share of wage and salary income has increased sharply from the 1920s to the present, and especially since the 1970s. Therefore, a significant fraction of the surge in top incomes since 1970 is due to an explosion of top wages and salaries.” He adds that, by some estimates, “the share of total wages and salaries earned by the top 1 percent wage income earners has jumped from 5.1 percent in 1970 to 12.4 percent in 2007.”

There are signs that this process is accelerating. The same day that Saez published his report, the Wall Street Journal published a separate survey of executive pay, which found that CEOs at major corporations it surveyed had their pay increase by 13.5 percent in 2014, hitting $13.6 million.

The soaring wealth of the financial elite, driven by surging stock prices and executive pay, is driving demand for luxury goods and housing in major financial centers. Manhattan real estate prices have reached an all time high, with the average home price hitting $1.87 million, according to reports cited by the New York Times Wednesday. The Times noted that real estate developers are scrambling to create enormous multi-million-dollar high-rise apartments, which are being snapped up by members of the financial elite.

Meanwhile, the housing situation for the great majority of the population has only worsened since 2008. Last week a study by Harvard University’s Joint Center For Housing Studies found that the share of the US population that owned a home hit the lowest level in two decades, with the homeownership rate for those aged 35-44 plunging to the lowest level since the 1960s. The report attributed the fall in home ownership to falling incomes for typical US households, noting that median household income in the US remained 8 percent below its level in 2007.

On Thursday, US President Barack Obama plans to unveil what he has called a major new policy initiative in a speech in La Crosse, Wisconsin. The proposal entails new federal rules that would make an additional 3 percent of the US population eligible for overtime pay. If adopted, the change would add a mere $1.3 billion to worker’s wages annually. This is a tiny fraction of the trillions of dollars that have been transferred to the financial elite since the 2008 financial crisis.

To put things in perspective; Obama’s program would transfer less income to working people each year than Facebook CEO Mark Zuckerberg made in a single day last year.

American CEOs paid 300 times more than workers

By David Brown
June 29, 2015
World Socialist Web Site

 

A new study by the Economic Policy Institute showed that while worker pay has stagnated since the economic crash of 2008, CEO pay has skyrocketed. While the average worker made the same in 2014 as they did in 2009, CEO compensation rose by 54.3 percent in the same period.

The average pay for CEOs at the largest US firms in 2014 was 303.4 times the pay of an average worker. CEOs averaged $16.3 million, up 3.9 percent from 2013, while the average worker in 2014 only made $53,200. In practical terms, that means a top CEO takes home more than a worker makes in a year after 8 hours on the job.

The standard justification for this obscene disparity is that CEOs are highly skilled individuals who significantly impact corporate productivity and ultimately “create” thousands and thousands of jobs. Then, so the myth goes, there is stiff competition among the largest companies to hire the best CEOs, which drives the exorbitant compensation packages.

The study examined compensation packages for CEOs at the top 350 US firms from 1965 to 2014. The authors then compared them with the average wages of workers, the wages of high-earning workers and stock market values. Researchers found that “CEO pay does not reflect greater productivity of executives but rather the power of CEOs to extract concessions.”

The report debunks the claim that growing CEO compensation is simply the result of a competitive market for skilled professionals, the argument advanced by the CATO institute and other think tanks. When compared to the top 0.1 percent of wage earners, CEOs make 5.84 times as much. Moreover, this gap is widening. Other measures of compensation relative to skill pale in comparison. College graduates, for instance, only earn 1.82 times as much as high school graduates.

Historically speaking, the rise in CEO compensation is tied to the global decline of American capitalism and the increasing financialization of the economy. In 1965 the ratio of CEO to worker pay was 20 to 1. By 1978 the ratio had only grown to 30 to 1. It was only in the 90s that CEO pay reached absurd heights, rising from 59 to 1 in 1989 to 376 to 1 in 2000.

By then CEO compensation was increasingly directly tied to stock prices, such that the dot-com crash in 2000 saw the ratio drop to 189 to 1. CEO pay then rebounded with the growing financial bubble to near record highs before crashing with the market in 2008. As a whole, between 1978 and 2014, CEO pay grew by 997 percent while worker pay grew by only 11 percent.

The current growth in CEO pay is directly tied to the quantitative easing program of the Federal Reserve, which has driven share buybacks and speculation, pushing markets to record highs while undermining the actual productive forces in the economy.

A report in the Wall Street Journal earlier this year showed that the companies in the S&P 500 index had “sharply increased their spending on dividends and buybacks to a median 36 percent of operating cash flow, from 18 percent in 2003.” This doubling in one decade was accompanied by a decline in investment in production.

A particularly sharp example of this occurred with the announcement by General Motors last March that they would buy back $5 billion worth of stock and increase dividend payouts by another $5 billion. GM stock shot up 4 percent immediately after the announcement.

While the maneuver netted massive profits for investors, senior autoworkers at GM have had their wages frozen since 2007 while the wages of new hires were cut in half as part of the 2009 bankruptcy and bailout. Rather than use any of their $25 billion cash hoard to invest in new production or raise workers’ wages, that money went to padding the portfolios of investors and corporate executives.

Mary Barra, the CEO of GM, was given $16.2 million in compensation in 2014. That includes a $1.6 million salary, $2.1 million in other incentives and $11.8 million in company stock.

Australian reports on wealth and poverty: A tale of two countries

By Cheryl McDermid
June 9, 2015
World Socialist Web Site

 

Two reports published in Australia late last month starkly highlighted the growing polarisation between rich and poor. The first, the Australian Financial Review magazine’s 2015 BRW Rich 200 list outlined the rising fortunes of the country’s wealthiest 200 individuals and families. The second, the Salvation Army’s Economic and Social Impact Survey, for the fourth year running exposed the dire and deteriorating conditions endured by welfare recipients.

While the livelihoods of these vastly different layers of society are a world apart there is, in fact, a direct connection between them. The conditions of deprivation and poverty imposed on those at the bottom of society are dictated by the corporate boardrooms and company owners of the Rich 200 list, among others, who determine the austerity measures of both Liberal and Labor governments that benefit the wealthy at the expense of the poor.

This process has resulted in the poorest section of the Australian population eking out an existence on an impossible $43.45 per day, while the average daily income of the richest 200 is an obscene $2.7 million. The richest six individuals own more wealth—$55.9 billion—than the bottom 20 percent—1.73 million households.

The top six are Gina Rinehart with $14.018 billion, Anthony Pratt and family $10.759 billion, Harry Triguboff $10.228 billion, Frank Lowy $7.837 billion, Hui Wing Mau $6.890 billion, and Ivan Glasenberg $6.144 billion.

The Rich 200 list reports a record 49 billionaires, up from 39 last year, and reveals the unimaginable wealth of this tiny parasitic layer. Despite a decline of almost $6 billion in the wealth of Australian’s richest person, mining magnate Rinehart, due to the plunge in iron ore prices, the combined wealth of the country’s richest 200 individuals increased by 1.2 percent to $195.6 billion.

The wealth required for entry to the list was also a record $286 million, up from $250 million last year. The first Rich 200 report, published in 1983, required a mere $10 million to make the list, so there has been an almost 30-fold increase in the entry level. Sydney is the preferred city of residence for 18 of the 49 billionaires, with the surrounding state of New South Wales housing 61 of the 200 richest individuals, just beaten by Victoria on 63.

Only six of the top 200 derived their wealth from manufacturing, with Pratt and his family, who control Visy and the US-based Pratt Industries, coming in second on the list, increasing their wealth by a massive 29 percent in one year. According to the Australian Financial Review, Pratt’s “series of big bets on the comeback of the USA manufacturing sector have paid off.” This is, without doubt, attributable in large part to the protracted slashing of American wage levels under the Obama administration.

More than a quarter—53 of the richest 200—derived their wealth from property, with soaring housing prices driving the rapid increase in their stakes. Harry Triguboff, the owner of Meriton, Australia’s largest apartment developer, climbed from eighth in 2014 to third this year, almost doubling his wealth to $10.23 billion. The property price surge that has benefited Triguboff and others on the list so handsomely has resulted in the median house price in Sydney climbing to a staggering $752,000, followed by Melbourne on $567,000. This has effectively priced hundreds of thousands of families and young people out of the housing market.

There are 17 newcomers on the list, the calibre of which is highlighted by the prominence given to one, Tony Denny, who made his $320 million selling used cars in Russia and Eastern Europe following the collapse of the Soviet Union in 1991. Denny was one of the myriad capitalists who flooded into these countries to profit from the cheap labour and opportunities afforded by the Stalinist bureaucrats who oversaw the destruction of the remaining social gains from the Russian Revolution. The staggering decline in the conditions, living standards and life expectancy of the population in these countries was due to the exploitation and plundering carried out by such individuals.

While the top 10’s combined wealth dropped marginally from 2014, due to falling mining export prices, they still owned 37 percent of the total wealth of the richest 200, while the top 20 held 47 percent.

By contrast, the Salvation Army’s survey, conducted in February, was based on the responses of 2,406 families and individuals, whose dependents included 2,486 children, who accessed the charity’s emergency relief and support services. Of the respondents, 88 percent received income support payments, which means that their welfare benefits did not cover the basic necessities of life.

Three quarters of the respondents had been seeking employment for up to two years. These people “experienced more housing stress (75 percent), a higher level of deprivation (49 percent could not afford 11 or more essential items), and consequently lower satisfaction in life,” as measured by a personal wellbeing index.

Significantly 5 percent of the respondents had jobs, but were still forced to seek emergency relief. Of those surveyed, 75 percent were single-parent households, with 53 percent of those with children.

Due to the rising cost of rental accommodation, in which the majority of respondents lived, 59 percent of their total income was spent on housing costs, leaving only $125 per week or $17.86 per day for food, utility payments, medical expenses, transport and clothes.

The percentage of income paid for accommodation was twice the commonly-used benchmark of 30 percent that signifies housing stress. Some 78 percent of respondents suffered extreme housing stress. Three quarters of those surveyed said they had cut down on basic necessities, including meals and paying utility bills, because they could not afford them.

No less than 87 percent of the adults and 60 percent of the children reported severe deprivation, which is characterised as having to go without five or more essential items. Essential items included a substantial meal once a day, medical and dental treatment, having $500 savings in case of emergency and being able to afford a week’s holiday away from home. They reported that they had few options to improve their situation.

The Salvation Army report cited statistics from the 2014 OECD report, Society at a Glance, which stated that “relative poverty in Australia (14.4 percent of the population) is higher than the OECD average of (11.3 percent)” and “10 percent of Australians report they cannot afford to buy enough food.”

While the charity’s report focussed on the most oppressed and vulnerable sections of the working class, the situation is little better for households whose members have jobs. For the 1.8 million workers on the minimum wage of $656.90 per week, it is a matter of survival from week to week. The illness or injury of one or more in the family can mean the difference between making ends meet and not. The Fair Work Commission last week lifted the minimum wage by a miserable $16 per week, the lowest rise for years, while the Australian Chamber of Commerce and Industry demanded an increase of no more than $5.70.

The gulf between the tiny elite at the top of society and the poorest section of the population will only widen following the federal budget released last month. Treasurer Joe Hockey announced that a further $1.7 billion will be slashed from welfare payments over four years through the relentless persecution of pension and unemployment payment recipients, while providing $5 billion in tax cuts and concessions for small business.

The Labor opposition’s response to the budget was a call for bipartisan measures to impose the further attacks demanded by the corporate elite. This was a declaration that a Labor government would take up where it left off after losing the 2013 election and continue the assault on the working class.

There is no possibility of overcoming the unprecedented gulf between rich and poor through the re-election of a Labor government or the parliamentary system itself. What is required is the overthrow of the capitalist profit system that, as Marx explained, creates “the accumulation of wealth at one pole” and “at the same time accumulation of misery, agony of toil, slavery, ignorance, brutality, mental degradation, at the opposite pole.”

Ukrainians Dispossessed. Western Financial Elites Impose “Free Markets” and Mass Poverty

Americans are next

By Dr. Paul Craig Roberts
June 6, 2015
PaulCraigRoberts.org

 

drapeau-de-lukraineOver the last 15 months Ukrainians have paid for Washington’s overthrow of their elected government in deaths, dismemberment of their country, and broken economic and political relationships with Russia that cost Ukraine its subsidized energy. Now Ukrainians are losing their pensions and traditional support payments. The Ukrainian population is headed for the graveyard.

On June 1 the TASS news agency reported that Ukraine has stopped payments to pensioners, World War II veterans, people with disabilities, and victims of Chernobyl. According to the report, Kiev has also “eliminated transport, healthcare, utilities and financial benefits for former prisoners of Nazi concentration camps and recipients of some Soviet-era orders and titles. Compensations to families with children living in the areas contaminated by radiation from the Chernobyl accident will be no longer paid either. Ukraine’s parliamentary opposition believes that the Prosecutor General’s Office should launch an investigation against Prime Minister Arseniy Yatsenyuk who actively promoted the law on the abolition of privileges.”

Notice that this is a yank of the blanket from under the elderly in Ukraine. “Useless eaters,” they are assigned to the trash can. How do the deceived Maiden student protesters feel now that they are culpable in the destruction of their grandparents’ support systems? Do these gullible fools still believe in the Washington-orchestrated Maiden Revolution? The crimes in which these stupid students are complicit are horrific.

Yatsenyuk, or Yats as Victoria Nuland calls him, is the Washington stooge that the US State Department selected to run the puppet government established by Washington. Yats sounds like a right-wing Republican when he refers to pensions, compensations, and social services as “privileges.” This is the Republican view of Social Security and Medicare, programs paid for by the payroll tax over the working lives of Americans. The Republicans stole the payroll revenues and spent them on their wars that enrich Wall Street and the military/security complex, and now blame “welfare handouts” for America’s fiscal plight.

Is Monsanto’s right to turn Ukraine into GMO food production a privilege?

ls VP Biden’s son’s right to destroy Ukraine’s surface and underground water in fracking operations a privilege?

Are the external costs imposed on Ukrainians by these looting activities a privilege?

Of course not! These are not privileges.

This is the operation of free market economics creating the greatest good for the greatest number. (As many Americans will not realize that I am engaging in satire, I would like to affirm that I am.)

The news report does not say whether the abolished “privileges” are one part of a reform that will replace the terminated “privileges” with a new social support system. Possibly this is the case, but as the termination of pensions and payments was triggered by the coming into effect of Yat’s law to “stabilize the financial condition of Ukraine,” the purpose of the termination of Ukraine’s social welfare system might be to free up money to hand over to the IMF and Western banks. In Ukraine, as in Greece, the gullible and naive population that saw salvation in unity with the West will be driven into the ground.

Russia, of course, will be blamed. I can already write the New York Times and Washington Post editorials and the words that will come from Obama, CNN, and Fox “News.” In fact, so can my intelligent readers.

The same looting is underway in Great Britain, Italy, Spain, Portugal, and the United States. In Great Britain everything achieved by the Labour Party over many decades has been taken away, and not only by the Conservatives but by Labour leader Tony Blair himself.

Tony Blair sold out his constituents for money and is now among the One Percent. Bill Clinton did the same thing. Bill and Hillary were able to spend $3 million on their daughter’s wedding, almost a world record, dwarfing many Hollywood weddings. Obama is not even out of office and is already rich. America’s faithful vassals–Merkel, Hollande, and Cameron–can look forward to equal riches.

Karl Marx was correct when he said that money corrupts all. Everything becomes a commodity that is bought and sold for money.

When money becomes the measure of a person, people have become corrupted. And that is the plight of the Western world.

Where in the West is your wealth, small or large, safe? Nowhere. Washington has destroyed financial privacy everywhere in the West. Washington even forced Switzerland to violate its own laws in order to comply with Washington’s insistence on the absence of any financial privacy.

For decades Americans with foreign bank accounts have been required to report them on their income tax returns. Now if an American owns a gold coin in a vault overseas, this must be reported to Washington.

Once Washington knows the location of your assets, the assets can be confiscated at will. Washington only has to make some declaration or accusation or the other, and your wealth is gone.

As Washington has run the printing presses hard in order to serve a handful of banks that control the US Treasury and the Federal Reserve, unless China and Russia acquiesce to becoming Washington’s vassals, at some point the dollar’s value is going to slide downward. When that happens, the Federal Reserve cannot continue to create new money to meet Washington’s needs.

Where will the money come from? It will come from Americans’ pensions.

Pensions accumulate tax free, and this accumulation will be confiscated in whole or part to make up for the failure to tax, another “privilege.”

That confiscation works that year. But what happens the next year when the dollar is reeling on foreign exchange markets from over-supply?

The answer is that another chunk of American pensions, and I am speaking of private pensions, will be confiscated “in order to stabilize the financial system.” Social Security will be long gone by this time.

Alicia Munnel, who was my replacement as Assistant Secretary of the Treasury for Economic Policy in the Clinton regime, advocated many years ago a confiscation of private pensions, including your IRAs and 401Ks, in order to compensate the US government for their non-taxed status.

Alicia has a sinecure at an Eastern university where she continues to advocate against your pension. The joint attack by Clinton Democrats on private pensions and by Conservative Republicans on public pensions means that no American can look forward to having a pension. Americans are only one presidential election away from the loss of their pensions, and it doesn’t matter who they vote for.

Economic security is a thing of the past. Security was a product of the US being the only extant economy following World War II. In those days corporations believed, as did Washington, that companies had obligations not only to shareholders but to employees, customers, and the communities in which they were located.

This meant prosperity for all, not merely, as is the case today, for corporate management and shareholders.

Apologists for exploitation claim that the rich are richer because they are smarter. But the stupidity of the rich is everywhere visible. The greedy fools have destroyed their domestic US market. Really, how stupid can you be? How do Americans buy when they are forced by offshoring out of well paid manufacturing and software engineering jobs into being waitresses, bartenders, retail clerks and part-time Walmart workers in order that corporate bottom lines improve? Who buys the stuff that sustains the profits? Not Americans who no longer have the incomes to do so.

The belief spread by Wall Street and “shareholder advocates” that corporations only have responsibility to their owners and managers has destroyed the American economy.

By locating production offshore, corporations have destroyed the incomes that supported the American consumer market. For example, the incomes associated with the production of Apple computers, I-Pads, and I-Phones are in China. Apple’s American customers do not have the incomes associated with the production of the products that Apple markets to them.

Americans are already dispossessed of their livelihoods and careers and their pensions are next. Wherever we look, the fate of populations under Western influence are the same. The Ukrainians are exploited, the Greeks, the British, the Americans.

Wherever the West has an imprint, the populations are exploited. Exploitation of the many for the few is the Hallmark of the West, a decrepit, corrupt, and collapsing entity.

The Pathology of the Rich White Family

By Chris Hedges
June 3, 2015
Truth Dig, May 17, 2015

 

Portraits of former Presidents George W. Bush, left, and George H.W. Bush, his father, part of the show “The Art of Leadership: A President’s Diplomacy.” The exhibit of portraits of world leaders by the younger Bush are on display at the George W. Bush Presidential Library and Museum in Dallas and runs through June 3. (AP / Benny Snyder)

The pathology of the rich white family is the most dangerous pathology in America. The rich white family is cursed with too much money and privilege. It is devoid of empathy, the result of lifetimes of entitlement. It has little sense of loyalty and lacks the capacity for self-sacrifice. Its definition of friendship is reduced to “What can you do for me?” It is possessed by an insatiable lust to increase its fortunes and power. It believes that wealth and privilege confer to it a superior intelligence and virtue. It is infused with an unchecked hedonism and narcissism. And because of all this, it interprets reality through a lens of self-adulation and greed that renders it delusional. The rich white family is a menace. The pathologies of the poor, when set against the pathologies of rich white people, are like a candle set beside the sun.

There are no shortages of acolytes and propagandists for rich white families. They dominate our airwaves. They blame poverty, societal breakdown, urban violence, drug use, domestic abuse and crime on the pathology of poor black families—not that they know any. They argue that poor black families disintegrate because of some inherent defect—here you can read between the lines that white people are better than black people—a defect that these poor families need to fix.

Peddle this simplistic and racist garbage and you will be given a column at The New York Times. It always pays to suck up to rich white families. If you are black and parrot this line, rich white people are overcome with joy. They go to extreme lengths to give you a platform. You can become president or a Supreme Court justice. You can get a television talk show or tenure at a university. You can get money for your foundation. You can publish self-help books. Your films will be funded. You might even be hired to run a company.

Rich white families, their sycophants opine, have tried to help. Rich white families have given poor people numerous resources and government programs to lift them out of poverty. They have provided generous charity. But blacks, they say, along with other poor people of color, are defeated by self-destructive attitudes and behavior. Government programs are therefore wasted on these irresponsible people. Poor families, the sycophants tell us, will not be redeemed until they redeem themselves. We want to help, rich white people say, but poor black people need to pull up their pants, stay in school, get an education, find a job, say no to drugs and respect authority. If they don’t, they deserve what they get. And what the average black family ends up with in economic terms is a nickel for every dollar held by the average white family.

Starting at age 10 as a scholarship student at an elite New England boarding school, I was forced to make a study of the pathology of rich white families. It was not an experience I would recommend. Years later, by choice, I moved to Boston’s Roxbury neighborhood when I was a seminary student. I lived across the street from one of the poorest housing projects in the city, and I ran a small church in the inner city for nearly three years. I already had a deep distaste for rich white families, and that increased greatly after I saw what they did to the disenfranchised. Rich white people, I concluded after my childhood and Roxbury experiences, are sociopaths.

The misery and collapse of community and family in Roxbury were not caused by an inherent pathology within the black family. Rich people who treated the poor like human refuse caused the problems. Layers of institutionalized racism—the courts, the schools, the police, the probation officers, the banks, the easy access to drugs, the endemic unemployment and underemployment, the collapsing infrastructures and the prison system—effectively conspired to make sure the poor remained poor. Drug use, crime and disintegrating families are the result of poverty, not race. Poor whites replicate this behavior. Take away opportunity, infuse lives with despair and hopelessness, and this is what you get. But that is something rich white families do not want people to know. If it were known, the rich would have to take the blame.

Michael Kraus, Paul Piff and Dacher Keltner, social scientists at the University of California, did research that led them to conclude that the poor have more empathy than the rich. The poor, they argued, do not have the ability to dominate their environments. They must build relationships with others to survive. This requires that they be able to read the emotions of those around them and respond. It demands that they look after each other. And this makes them more empathetic. The rich, who can control their environments, do not need to bother with the concerns or emotions of others. They are in charge. What they want gets done. And the longer they live at the center of their own universe, the more callous, insensitive and cruel they become.

The rich white family has an unrivaled aptitude for crime. Members of rich white families run corporations into the ground (think Lehman Brothers), defraud stockholders and investors, sell toxic mortgages as gold-plated investments to pension funds, communities and schools, and then loot the U.S. Treasury when the whole thing implodes. They steal hundreds of millions of dollars on Wall Street through fraud and theft, pay little or no taxes, almost never go to jail, write laws and regulations that legalize their crimes and then are asked to become trustees at elite universities and sit on corporate boards. They set up foundations and are admired as philanthropists. And if they get into legal trouble, they have high-priced lawyers and connections among the political elites to get them out.

You have to hand it to rich white families. They steal with greater finesse than anyone else. If you are a poor black teenager and sprint out of a CVS with a few looted bottles of shampoo, you are likely to be shot in the back or sent to jail for years. If there were an Olympiad for crime, rich white families would sweep up all the medals; blacks would be lucky to come within a mile of the first elimination trial. I don’t know why black people even try to compete in this area. They are, by comparison, utter failures as criminals. The monarchs of crime are rich white people, who wallow in their pilfered wealth while locking away in prisons a huge percentage of poor men of color.

Rich white families are also the most efficient killers on the planet. This has been true for five centuries, starting with the conquest of the Americas and the genocide against Native Americans, and continuing through today’s wars in the Middle East. Rich white families themselves don’t actually kill. They are not about to risk their necks on city streets or in Iraq. They hire people, often poor, to kill for them. Rich white families wanted the petroleum of Iraq and, by waving the flag and spewing patriotic slogans, got a lot of poor kids to join the military and take the oil fields for them. Rich white people wanted endless war for the benefit of their arms industry and got it by calling for a war on terror. Rich white people wanted police to use lethal force against the poor with impunity and to arrest them, swelling U.S. prisons with 25 percent of the world’s prison population, so they set up a system of drug laws and militarized police departments to make it happen.

The beauty of making others kill on your behalf is you get to appear “reasonable” and “nice.” You get to chastise poor people and Muslims for being angry fanatics. You get to spread the message of tolerance with a cherubic smile—which means tolerating the crimes and violence of rich white people. Compare a drive-by shooting in Watts with the saturation bombing of Vietnam. Compare a gangland killing in Chicago with militarized police shooting a person of color almost every day. No one else knows how to churn out corpses like rich white people. One million dead in Iraq alone. And the rich and powerful kill staggering numbers of people and never go to prison. They can retire to a ranch in Crawford, Texas, and paint amateurish portraits of world leaders copied from Google Image Search.

There is no decadence like the decadence of rich white people. I knew a billionaire who in retirement spent his time on a yacht smoking weed and being catered to by a string of high-priced prostitutes. The children of rich white families—surrounded by servants and coddled in private schools, never having to fly on commercial airlines or take public transportation—develop a lassitude, sometimes accompanied by a drug habit, that often leads them to idle away their lives as social parasites. Mothers never have to be mothers. Fathers never have to be fathers. The help does the parenting. The rich live encased in little kingdoms, one guarded by their own private security, where the real world does not intrude. They are cultural philistines preoccupied with acquiring more wealth and more possessions. “Material success,” as C. Wright Mills wrote, “is their sole basis of authority.” They meld into the world of celebrity. And the organs of mass media, which they control, turn them into idols to be worshiped solely because they are rich. Public-relations specialists manufacture their public personas. Teams of lawyers harass and silence their critics. Acolytes affirm their sagacity. They soon believe their own fiction.

Daniel Patrick Moynihan in 1965 wrote what is known as the Moynihan Report, or “The Negro Family: The Case for National Action.” The report concluded that “at the heart of the deterioration of the fabric of Negro society is the deterioration of the Negro family.” The oppressed were to blame for their oppression. Social programs alone could not save the poor. The report offers a classic example of a neoliberal economic model repacked as an ideology.

The pathologies of the rich will soon drive us over an economic and ecological cliff. And as we go down, the rich, lacking empathy and understanding, determined to maintain their privilege and their wealth, will use their Praetorian Guard, their mass media, their corporate power, their political puppets and their security and surveillance apparatus to keep us submissive. “The secret of a great success for which you are at a loss to account is a crime that has never been discovered, because it was properly executed,” Honoré de Balzac wrote of the rich in his novel “Le Père Goriot.”

The rich executed a coup d’état that transformed the three branches of the U.S. government and nearly all institutions, including the mass media, into wholly owned subsidiaries of the corporate state. This coup gives the rich the license and the power to amass unimaginable wealth at our expense. It permits the rich to inflict grinding poverty on growing circles of the population. Poverty is the worst of crimes—as George Bernard Shaw wrote, “all the other crimes are virtues beside it.” And the ability of a rapacious power elite to let children go hungry, to let men and women suffer a loss of dignity and self-worth because there are no jobs, to abandon cities to decay and squalor, to toss the mentally ill and the homeless onto the streets, to slash the meager services that give some hope and succor to those who suffer, to lock hundreds of thousands of poor people in cages for years, to wage endless war, to burden students with crushing debt, to unleash state terror and to extinguish hope among the least fortunate exposes our wealthy oligarchs as the most dangerous and destructive force in America.

 

Quebec criminalizing working-class struggle

By Keith Jones
May 25, 2015
World Socialist Web Site

 

Quebec’s Liberal government is intensifying its assault on worker rights and its drive to criminalize popular resistance to its austerity program.

Municipal Affairs Minister Pierre Moreau pledged Friday that Quebec will give the province’s municipal governments new powers to impose cuts in real wages and other concessions on municipal workers.

“You’ve asked for new tools,” Moreau told the annual meeting of the Union of Quebec Municipalities (UQM), “and we’re going to give them to you.” Changes to the “labour relations framework at the municipal level” would be discussed, he said, when the province and municipalities begin negotiations on a new fiscal pact this August.

Quebec City Mayor Régis Labeaume has long been urging the provincial government to give municipalities the power to lock out their employees. But he and Montreal Mayor Dennis Coderre have recently gone further, calling for the effective end to collective bargaining at the municipal level. The mayors of Quebec’s two largest cities are demanding municipal governments be empowered to impose contracts on their employees by decree, when “negotiations” reach an impasse.

According to Labeaume and Coderre, it is “unfair” that the provincial government can adopt “emergency” legislation to impose contracts on provincial public sector works, and indeed all workers in the provincially-regulated sector of the economy, but the municipalities can’t and must instead appeal to the Quebec government to intervene. Municipalities shouldn’t be “at the mercy of another government,” complained Coderre Friday.

The provincial Liberal government, Moreau told Quebec’s mayors, is willing to consider granting municipalities the power to impose contracts by fiat and lock out their workers. However, he added, there are other alternatives, including binding arbitration. “There are serval possibilities,” said Moreau, “many more than just lockouts. … Labour relations will be part of the discussions, but I won’t tell you today where we’ll land because then there would be no discussion.”

Labeaume, Coderre, and UQM President Suzanne Roy all welcomed Moreau’s announcement. “We’ll begin,” said Roy, “by really sitting down to work on this dossier and see exactly how we can have good tools to enable us to intervene in respect to (worker) remuneration.”

Last December, the Liberal government rammed through a municipal pension “reform” (Bill 3) that forces municipal workers, including firefighters and municipal transit workers, to pay thousands more dollars annually in pension contributions, while slashing pension benefits. In addition to suspending inflation-indexing for current retirees, Bill 3 puts in place a mechanism for permanent pension cuts.

The municipal pension cuts were only a first volley in a frontal assault on public and social services and the jobs, wages and working conditions of the workers who administer them.

Claiming that Quebec must fundamentally restructure public services to avoid a Greece-type situation, the Liberals are implementing billions in social spending cuts, while raising electricity rates, daycare fees and various regressive taxes and user-charges.

Faced with widespread and mounting popular opposition, the government, with the full support of big business and the corporate media, is resorting to repression and police violence.

It is an open secret that Premier Philippe Couillard and his Liberals are preparing to criminalize any major job action on the part of 550,000 provincial public sector workers—hospital workers, nurses, civil servants, teachers, CEGEP instructors and school board employees—from whom they are demanding massive concessions. These include a two-year wage freeze, an increase in the retirement age, a reduction in pension benefits, and work-load increases. For public school teachers, this will mean a hike in class-sizes and a reduction in support for “special needs students.”

While the union bureaucrats plead with Couillard “for good faith negotiations,” the government is not letting any opportunity slip to demonstrate that it intends to suppress worker opposition.

The government obtained a ruling from the provincial labour board that an “anti-austerity” walkout by 10,000 CEGEP (pre-university and technical college) instructors on May Day would constitute an “illegal strike.” It is now prevailing on the administrations of the ten CEGEPs where the one-day walkout went ahead, contrary to the instructions of the leaders of the Confederation of National Trade Unions and the Centrale des syndicats du Québec (CSQ), to take disciplinary action.

CEGEP Rosemont in east-end Montreal has, for example, suspended six teachers.

At the government’s urging, hospitals and health care facilities are seeking to stamp out workplace agitation. They are forbidding things like leafleting and wearing union-supplied t-shirts with a political message that have been standard practice in every contract negotiation for half-a-century.

According to a recent article in La Presse at one Montreal health care facility, CIUSSS de l’Est-de-l’Île, ten workers have been disciplined for wearing anti-austerity t-shirts, with one even being suspended.

“Since the election of the Liberal government, we’re facing unprecedented repression,” Marc Cuconati, the president of the union local that represents orderlies at Montreal’s Maisonneuve-Rosemont Hospital, told La Presse. “Every protest action is smothered and gagged.”

As the WSWS has previously explained, the government was determined to stamp out this spring’s “anti-austerity” student strike, taking a hardline stance that from the outset matched the repression it unleashed against striking students in 2012. Education Minister François Blais repeatedly asserted that there is no democratic right of students to strike and said his goal was to end the decades-long “acceptability” of this practice in Quebec. For weeks police were declaring protests illegal on virtually a daily basis. When students at Université du Québec à Montréal (UQAM) staged an occupation to protest the aggressive deployment of security guards and police on their campus, Premier Couillard personally instructed the university’s rector to have the occupation violently broken up.

Motivating this turn toward state repression and violence is the fear of the government and big business of mass popular opposition, above all the mobilization of the working class.

But while it uses the police and courts to intimidate workers and youth, the ruling elite relies on the unions to contain and politically suppress working class opposition, reprising the role that the pro-capitalist unions have played for decades.

In May 2012, when hundreds of thousands of workers came into the streets to oppose Bill 78, the draconian anti-student strike law, the unions quickly intervened to prevent the emergence of a broader challenge to the then Charest Liberal government’s austerity agenda. The unions announced that they would obey Bill 78, which stipulated that they had to instruct their members who worked at universities and CEGEPs to help break the strike, and redoubled their efforts to channel the opposition movement behind the election of the big business Parti Québécois (PQ). With the unions’ support, the PQ came to power in September 2012 and promptly implemented austerity measures that went far beyond those of Charest.

When students launched their anti-austerity strike this spring, the unions rushed to announce they would have no part of it.

The unions are seeking to straitjacket the public sector workers, whose contract expired March 31, in a collective bargaining system designed to enforce the dictates of big business and its government. The union leaders are adamant that the public sector workers can take no significant action till a lengthy mediation process is completed and “essential services” are negotiated. Moreover, if a strike is ever called it must follow to the letter the anti-worker laws passed by various Liberal and PQ governments.

A walkout in defiance of these laws or a future back-to-work bill would be an “atomic bomb,” exclaimed CNTU Vice-President Francine Lévesque last month.

Underscoring their real attitude to the fight against big business’s austerity drive, the union bureaucrats have responded to the PQ’s selection of the multi-millionaire press and telecommunications baron Pierre-Karl Péladeau–a notorious rightwinger—as its new leader by reaffirming their support for the PQ. Quebec Federation of Labour President Daniel Boyer had claimed to oppose Péladeau, but no sooner was he crowned PQ leader than Boyer declared he is ready to give him a “chance.” When Péladeau called for a “national” economic summit in his maiden speech in the National Assembly as PQ leader, Boyer rushed to endorse the proposal.

In their struggle against austerity, Quebec workers face a political struggle and not just against the Couillard Liberal government, but the entire Quebec and Canadian ruling elite and their apparatus of repression, including the police and the courts.

However, they have even more powerful allies—workers across Canada, the US, and around the world.

To mobilize their class strength, workers must break politically and organizationally from the nationalist, pro-capitalist unions. In the first instance this means building rank-and-file committees, independent of and in opposition to the union apparatuses, so as to prepare a political general strike to bring down the Couillard government and mobilize workers in Canada and the US in a united struggle against austerity and for the bringing to power of workers’ governments.

US CEO pay hits record high

By Nick Barrickman
May 25, 2015
World Socialist Web Site

 

money-greedy1A new study released by executive pay research firm Equilar and published earlier this month by the New York Times shows that compensation for chief executive officers for the largest US companies hit a new record in 2014.

The top 200 highest-paid US CEOs each made an average of $22.6 million in compensation, including salaries as well as stocks, options, bonuses and other forms of pay.

This represented a significant increase over 2013’s average of $20.7 million. This figure was more than double that recorded by the firm in 2006, when it first began publishing numbers on executive compensation.

Together, the top 15 highest-paid chief executives took home over $1.1 billion in pay last year. Ranking highest on the list is David M. Zaslav of Discovery Communications, which the Times refers to as “the cable group behind Shark Week and shows like ‘Cake Boss.’” Last year saw Zaslav’s pay shoot up 368 percent to over $156,000,000, making him the highest-paid CEO on Equilar’s list since Tim Cook of Apple was awarded a package of over $378 million in 2011.

Nicholas Woodman, chief executive officer and founder of camera maker GoPro, saw his compensation package shoot up more than 4,000 percent in a single year, to over $77,400,000 after his company’s initial public offering last year, making him the fifth-highest-paid CEO.

Satya Nadella of Microsoft, who declared earlier this year that he would carry out a broad “restructuring plan” resulting in the layoff of 18,000 people—14 percent of its total workforce—raked in over $84,300,000 in 2014, making him the fourth highest-paid CEO.

Margaret C. Whitman of Hewlett-Packard saw her income climb by 11 percent to $19,612,164 last year after announcing over 50,000 job cuts since taking over as CEO. Similarly, Virginia M. Rometty of IBM saw a growth in pay of 28 percent to $17,942,400, even as her company carried out thousands of layoffs over the course of 2014.

Last year, the typical top-200 CEO pay package was roughly 339 times greater than the $51,939 median household income of a family in the United States. By comparison, the ratio in pay between a CEO and a worker in 1978 stood at about 30-to-1. According to the Economic Policy Institute (EPI), the growth in CEO pay outstripped even the growth of the stock market throughout this period.

As lavish as the pay for the top CEOs was, their total compensation paled in comparison to hedge fund chiefs. According to another study released earlier this month by Institutional Investor’s Alpha magazine, the top 25 highest-paid hedge fund managers made nearly $11.62 billion for themselves in the past year, amounting to roughly $500 million apiece.

The growth in CEO pay comes as companies sit atop the largest cash hoard in history, with US corporations alone holding $1.4 trillion on their balance sheets. Instead of using this money to invest, hire workers or raise wages, companies are using it to buy back shares, increase dividends and engage in an orgy of mergers and acquisitions. US corporations recently spent over $500 billion buying back their own stock, according to a report in the Financial Times.

The growth of CEO pay has continued despite claims by Democratic politicians and federal regulators that they have taken measures to restrain massive payouts for executives. The New York Times noted in a piece earlier this month (“For the Highest-Paid C.E.O.s, the Party Goes On”) that the Dodd-Frank bill of 2010, the main “financial reform” passed in the wake of the 2007-2008 economic crisis, was underpinned by “a belief that more transparency would lead to some much needed belt-tightening” in terms of CEO pay. The Times bluntly declares that “it hasn’t worked.”

“It’s a common story. Chummy boardrooms, easily achieved performance targets and large discretionary bonuses—these are the hallmarks of executive compensation today,” the Times concludes that “there is little chance that the feeding frenzy will end anytime soon.”

While the financial elite continues to rake in obscene amounts of wealth, conditions of poverty and social inequality prevail for the vast majority of the population. A report released on Thursday by the Organization for Economic Co-operation and Development (OECD), found that levels of international social inequality were the highest on record since the organization began recording statistics. Significantly, in the United States, the total wealth of the bottom fifth of the population fell by 26 percent between the years 2007-2013.

Far from being the outcome of impersonal economic forces, the enormous enrichment of the corporate/financial elite has been the product of conscious efforts by both Democratic and Republican administrations to enact a massive transfer of wealth from the bottom to the top of society, facilitated through the pumping of trillions of dollars into the financial system by the Federal Reserve and other central banks. Rather than leading to productive investment and job creation, the influx of cash has largely been pocketed by the corporate and financial elite in the form of executive pay, increased dividends, and soaring stock prices.

UAW ready to sanction new subclass of low-paid US auto workers

By Jerry White
May 13, 2015
World Socialist Web Site

 

With labor agreements for 139,000 GM, Ford and Fiat-Chrysler workers in the US expiring in four months, the United Auto Workers union has signaled its support for the creation of a new subclass of factory workers who will earn as little as $10 an hour. This is roughly a third of what senior workers are currently paid.

The plan, which is actively being discussed between the executives who run the auto industry and the UAW, would set a precedent for further slashing manufacturing wages not only in the United States but around the world.

In exchange, the UAW, which has lost more than one million members since 1979 due to its pro-company policies, would receive a fresh infusion of dues income from thousands of new, poverty stricken “union members.” Among the concerns of the union is that the new “right to work” law in Michigan will go into effect with the new contract, leading to an exodus of workers from the union.

The ultimate goal is to mark a new stage in the transformation of auto workers—once the highest paid industrial workers in the US if not the world—into a highly exploited cheap labor force. Once again the UAW is working closely with the Obama administration, which oversaw the 2009 restructuring of GM and Chrysler that wiped out tens of thousands of jobs, halved the wages of new hires, unloaded pensions and health care costs onto the backs of workers and abolished the eight-hour day.

After reducing labor costs by more than a third since 2009, the Detroit-based automakers have made $53 billion in profits over the last four years alone and nearly another $2 billion in the first quarter of 2015. Flush with an immense cash hoard, the companies have spent lavishly on stock buybacks and dividend payments for their biggest shareholders, which in addition to major financiers includes the UAW.

The high-level discussions to further cut wages were revealed by the Wall Street Journal in its May 10 article, “UAW, Car Makers Weigh New Class of Hires.” The main business newspaper in the US writes, “United Auto Workers officials are considering a plan to encourage the Detroit Three auto makers to add thousands of jobs traditionally belonging to auto-parts suppliers, hoping to fuel the union’s recent string of modest membership increases.

“The catch? The wages wouldn’t be great.”

After noting that UAW president Dennis Williams is “under pressure” from workers to recoup lost income now that the “auto industry is awash in profit,” the newspaper echoes Williams’ public claims that “he wants to close the compensation gap between entry-level assembly-line employees making $19 an hour and veteran workers earning $28 an hour.”

At the same time, the Journal writes, “Mr. Williams is expected to discuss allowing the auto makers to hire new blue-collar employees at an even lower rate—between $10 an hour and $15 an hour, according to people familiar with the matter. These new workers would handle low-skilled jobs such as organizing auto parts in bins, and wouldn’t assemble vehicles. ‘It’s a mutual area of interest,’ UAW secretary-treasurer Gary Casteel said in a recent interview. ‘It has been for some time.’”

The article continues: “Auto makers say privately they are intrigued by the idea. In the near-term, GM, with an hourly US workforce of about 50,000, could be the biggest beneficiary, according to people involved in the coming negotiations. Bringing more work in house by hiring thousands of new and inexpensive workers could allow it to better control the manufacturing process, shaving tens of millions of dollars off logistics costs and boosting vehicle quality by catching potential problems earlier.”

Nothing could more clearly demonstrate the fundamental antagonism between the interests of the business executives and aspiring capitalists who run UAW, Inc., and the rank-and-file auto workers that the UAW claims to represent.

Workers informed by the World Socialist Web Site about the plans to create a new third tier reacted with shock and anger.

“They should eliminate the second tier. Another tier means we are giving more labor for less money,” said Tiffany, a second-tier worker with three years at Fiat-Chrysler’s Jefferson North Assembly in Detroit. “We all work hard on the line. To force workers to come in for less money is demeaning.”

Speaking about the upcoming negotiations, she said, “We don’t know what to expect. We are nervous. I don’t think they will get rid of the two-tier system because it is comfortable for them.

“Workers feel the UAW is in bed with management. When my father worked in the auto plant you wouldn’t catch the UAW going to the golf course or to clubs with management. Now they do it all the time, and it’s not a problem. Anything management says, they do.”

Another second-tier worker at Chrysler’s Warren Truck assembly plant in suburban Detroit said, “Why do they want to keep cutting our pay? They are making the rich richer and the poor poorer. Chrysler is not bankrupt any more. Why can’t everyone get the same money they were making before? The companies are doing well now, but they don’t want to give anything back.

“Union dues went up too. They make much more money than we do, and what do they do? The UAW doesn’t care, it seems like they are working for Chrysler.”

In the 1980s and the 1990s, the UAW betrayed a series of bitter strikes in independent supplier plants in order to lower the costs of parts for the US-based carmakers and boost their international competitiveness. In 1980, an auto parts worker earned 15 percent lower wages than a worker at a Big Three assembly plant. By 2000, the differential had risen to 31 percent.

This paved the way for GM and Ford to spin off their parts making operations—Delphi and Visteon—in the late 1990s and early 2000s, and then savagely slash wages and pensions during bankruptcy restructuring. At the same time, the auto companies outsourced parts production to Mexico, China, India and other low-wage countries.

In 1960, 50 percent of all auto workers in the US were employed by the Big Three. Today, 72 percent of all auto workers—384,000 in total—are employed by so-called independent parts manufacturers, where the median wage is $15 an hour, with many making far less through employment in temporary staffing firms.

Real wages for auto parts workers fell by nearly 14 percent from 2003 to 2013—three times faster than for manufacturing as a whole, and nine times faster than the decline for all occupations, according to the National Employment Law Project.

In effect, the UAW is proposing to bring some of these workers back into the framework of the Big Three, where they will be paid even lower wages than when the parts companies were spun off. The union—following the lead of the United Steelworkers in the steel industry 2000s—is seeking to help restructure the auto parts industry, in order to further cut costs and institutionalize the role of the UAW as the enforcer of wage cutting, speed up and labor discipline.

The central “growth strategy” of the UAW is to slash wages so low as to convince the automakers to “in-source” production back to the United States. Global parts companies have also shifted production to the US to take advantage of low wages and the proximity to the major auto manufacturers. The head of Indian-based parts maker Sakthi, which supplies GM and Ford, is carrying out a $32 million expansion in Detroit.

“It was always a given that it was just better and cheaper to outsource, but that is not the case anymore,” Ron Harbour, a manufacturing consultant at Oliver Wyman told the Wall Street Journal. “This is an opportunity for the Big Three and the UAW to agree on something where they could both gain.”

The Journal cited the gushing remarks of UAW Local 652 president Mike Green in Lansing, Michigan. Pointing to a number of buildings owned by five independent part suppliers outside GM’s Cadillac assembly plant, he said, “GM is paying those independent parts suppliers to manage the work they can do. Why not take that work, bring it back under the GM umbrella and save millions of dollars? Look, at each building; there is an American flag, a UAW flag and a [supplier’s] corporate flag. All GM has to do is get rid of the company and put up the GM flag.”

These revelations confirm the warnings the WSWS made after the March 24-25 UAW Special Bargaining Convention in Detroit. “For all the public denials designed to fool auto workers,” the WSWS wrote, “the UAW is fully prepared to discuss a third tier.”

This underscores the fact that rank-and-file workers face a struggle not only against the auto bosses and the Obama administration but also their hirelings in the UAW and the profit system they all defend.

World’s Richest 80 People Own Same Amount as World’s Bottom 50%

By Eric Zuesse
May 9, 2015
Washington’s Blog

 

money-greedy1Oxfam’s recent report, “WEALTH: HAVING IT ALL AND WANTING MORE” contains shocking figures that the press haven’t sufficiently publicized; so, the findings and the reliability of their sources will be discussed here. The results will then be related to the central political debate now going on in the U.S. Presidential contests for 2016, which is about equality and inequality.

First, the findings:

1. The richest 80 individuals own as much as do all of the poorest half of humanity.

2. During 2009-2014, the wealth of the 80 richest people doubled, yet the wealth of the bottom 50% declined slightly.

Now, the sources:

These data are calculated from Forbes magazine, regarding the world’s richest individuals, and from the Credit Suisse Global Wealth Databook 2014, regarding the global wealth-distribution.

The source on the richest 80:

The Forbes list is one of two such lists, the other being Bloomberg. The two are generally in rather close agreement, but sometimes disagree enormously. For example, as of 8 May 2015, Bloomberg shows Sweden’s Ingvar Kamprad, the owner of Ikea, as #8 owning $43.1B, but Forbes shows him as #497 owning $3.5B.

Furthermore, Newsweek on March 2nd headlined “Why Putin Isn’t on ‘Forbes’ Billionaires List,” and reported that, “Forbes excludes members of royal families and ‘dictators who derive their fortunes entirely as a result of their position of power.’ Although it details this caveat, the magazine offered limited insight into the exact reason Putin was left off. When asked about Putin, a spokeswoman for Forbes told Newsweek: ‘Vladimir Putin is not on the list because we have not been able to verify his ownership of assets worth $1 billion or more’ and cited the methodology. The spokeswoman and [Assistant Managing Editor Kerry] Dolan did not comment directly as to whether the magazine considered Putin a dictator, and thus exempted him from the list by this classification. A reporter who worked on the list did not reply to a request for comment.” So: royals, and “dictators,” are both left off the list. Also: Dolan said that the magazine attempts to obtain the cooperation of listees but that “some cooperate; others don’t.”

Forbes itself says that, “We do not include royal family members or dictators who derive their fortunes entirely as a result of their position of power, nor do we include royalty who, often with large families, control the riches in trust for their nation. This means the wealthy royal families of the United Arab Emirates, Saudi Arabia and other Gulf countries are not eligible for our global wealth ranking. (These monarchs, like Khalifa bin Zayed Al-Nahyan and Saudi King Abdullah bin Abdul Aziz Al Saud, land on our list of The World’s Most Powerful People.)”

Consequently, the Forbes ranking is quite unreliable; and, on top of that, it is methodologically opaque. Leaving royalty off of their list is automatically excluding the royalty in England, Saudi Arabia, and other countries, where those people might well be the richest ones in their nation, if not the richest people in the entire world.

The Forbes ranking is thus untrustworthy, because it automatically excludes entire groups of people which might include many who are wealthier than any who are on their list. However, all that this means is that many people might exist who are even wealthier than the ones that show up as being among the top 80 on the Forbes list. Consequently, the Forbes list systematically under-states the wealth of the people who are actually the world’s 80 richest. The richest 80 could conceivably even be an entirely different list. Therefore, perhaps the richest 80 own far more than do the poor half of Mankind. But they almost certainly don’t own less than do the poor half of Mankind. In any case, they own at least as much as do the lower half.

The source on the global wealth-distribution:

The source that’s used to calculate the amount of personal wealth in the entire world and its nation-by-nation distribution, Credit Suisse, is overwhelmingly regarded as the most thorough that exists on this subject. Its research-team was selected by Anthony Shorrocks, who had long headed the UN’s World Institute for Development Economic Research, which is the leading research institute on global wealth-distribution.

However, yet again, the available data exclude a lot at the very top. For example, since the Saudi and other royals and dictators are disappeared from even the pretense of being calculated for possible inclusion into world’s-richest lists, the wealth-distributions for many Arabic and other totalitarian countries — and for constitutional monarchies such as in Norway, Netherlands, UK, Morocco, and Jordan — are necessarily based on much guesswork. Consequently, global wealth-inequality is being systematically underestimated, even in the best available source. Yet, even so, what can be publicly determined about global wealth-inequality is staggering:

The Credit Suisse Global Wealth Databook 2014 presents on its page 98, a global wealth pyramid, which indicates that the world’s richest 0.7% (35 million people) own $115.9 trillion, while the poorest 99.3% (4,665 million people) own $147.3 trillion. It also shows that the richest 8.6% own $224.5T (trillion), while the poorest 91.4% own only $38.7T. (Or, in other words: the richest 8.6% own 5.8 times as much as do the poorest 91.4%.)

Consequently, if the transfer of wealth from the many to the few is to continue, then the main way for that to happen will need to be by the super-rich receiving their added wealth from the lesser-rich, because the percentage of wealth that exists amongst the non-rich — the lower 91.4% — is only 17% of the globe’s total wealth, which isn’t much; and, even if all of that were to go to the richest 8.6%, it still would increase their current $224.5T to $263.2T, a 17% rise. However, from 2009 to now, the wealth of the richest 80 humans has actually more than doubled; so, even a 17% rise would be far less than the 80 richest are accustomed to — especially over such a multi-year time-period as was 2009-2014. Those 80 people would then be feeling shortchanged.

This is why the richest 80 people will need to be getting their increases, in the future, mainly from the richest 8.6%. Wall Street and other major financial centers are perhaps in the best position to achieve that.

The Credit Suisse Global Wealth Databook 2014 presents, on page 124, its categorization of countries according to equality-inequality, and they apply for this purpose a methodology that minimizes the distortive influences such as have been mentioned here. Here is their resultant listing:

Screen Shot 2015-05-08 at 11.07.48 AM

As is clear there, the United States is listed in the highest-inequality category; and, so, no reasonable question exists that inequality is even more extreme here than it is in most of the world’s countries.

The way that U.S. President Barack Obama and his economic advisors have dealt with this is to say that what needs fixing in the U.S. isn’t economic inequality itself but instead inequality of economic opportunity — as if the latter doesn’t depend upon the former. It’s impossible to increase equality of economic opportunity unless economic equality is increased. America’s politicians lie through their teeth, because they’re financed — in both Parties — by the super-rich. The only difference between the two Parties is that the Republicans lie by saying that America’s extreme economic inequality is okay and that government action to reduce it merely increases inequality of economic opportunity — something that presupposes what it pretends to be concluding, which is that government has no constructive role to play in this matter. They’re all hoaxters. But the American public senses this, even if only vaguely. They sense that the problem is real, but they don’t know that the Democratic Party’s approach to the problem since the time when Bill Clinton became President in 1993 is itself fraudulent and a sell-out to the super-rich.

The resultant political debate in the U.S.:

On May 4th, Gallup headlined “Americans Continue to Say U.S. Wealth Distribution Is Unfair,” and reported that, in response to the question, “Do you feel that the distribution of money and wealth in this country today is fair?” 63% say no, and in 1985 it was 60% saying no to that question. The highest percentage saying no was 68% right before the 2008 crash, and the lowest was 58% immediately after that crash. By 56% to 34%, Republicans right now are saying that the wealth-distribution is fair. By 86% to 12%, Democrats say that it’s not. (Among the overall population, 63% say it’s unfair, and 31% say it’s fair. That’s a two-to-one margin.) The poorer a person was in Gallup’s study, the likelier he or she was to say it’s “unfair.” The richer he was, the likelier to say “fair.” In other words: only at the very financial top is the belief commonly held that the existing wealth-distribution is “fair.” However, Republicans, of any amount of wealth, think that it’s “fair”: virtually all Republicans agree with the very rich about the fairness of the wealth-distribution, and virtually all non-Republicans don’t agree with that. (The only problem for non-Republicans is how to solve it.)

The only U.S. Presidential candidate who focuses, and stands clearly, on the side of this issue that says it’s “unfair” (which, as was just pointed out, Gallup finds to be by two-to-one, the norm) is Bernie Sanders, who is running in the Democratic Party. Unlike Obama and the Clintons, he acknowledges that it’s the basic problem, and that shunting it off onto “equality of economic opportunity” is essentially fraudulent. All of the other candidates are raising their campaign-funds from the top 1% of America’s wealth-pyramid, who are the very people the likeliest to believe that the present wealth-distribution is fair. Those candidates are raising their campaign-funds from the few people who own almost everything that there is to own, and these are also the people who have the most to lose. Senator Sanders is raising his campaign-funds from the many people who own almost nothing. While other candidates need to serve the rich, Sanders needs to run an authentically grass-roots campaign, which can defeat far-better-financed opponents, or he otherwise stands no real chance of winning.

This situation is called ‘democracy’ in the United States, but other terms are used for it in other countries. The only scientific study that has been done of the question of whether the U.S. is a democracy has found that it definitely is not. In order to make it one, profound change would be required. However, America’s richest need to convince America’s public that the nation already is a democracy, because, otherwise, America’s public won’t continue to accept rule by the super-rich — the people who finance almost all major politicians and who benefit from the current dictatorship. And that would cause the public to vote against any candidate who is receiving most of his financial support from the super-rich, which is almost all candidates. So: the only possible way to overcome any such tendency of the public to vote against the interests of the rich is to distract the public from that entire issue, onto personalities and other such distractions.

Consequently, it is to be expected that, in the 2016 contests, the best-financed candidates will be promoted by advertisements and issues that distract and deceive, instead of inform or educate, the public. That will be a contest between well-financed lies, and poorly financed truths. Perhaps by Election Day, the poorly financed truths will have been totally drowned-out. That way would lead to hellish future for the United States.

The 2016 contests will be of major historical importance: if the movement into democracy doesn’t win in 2016, then its likelihood of succeeding in the future will be virtually nil (since the current direction is toward increased dictatorship by the super-rich). The 2016 elections will be do-or-die for future democracy in the U.S. If for no other reason than this, the 2016 Presidential contests will be hugely important. If the poor come out in record numbers in the Democratic primaries and then, if Sanders wins the nomination, in the final election, then economic inequality in the U.S. will be reduced and equality of economic opportunity in the U.S. will increase, and so the future for the United States will be improvement. Otherwise, America’s future will be grim, no matter how well America’s top 0.1% will be living.

America has a huge problem; and, if it’s ignored in 2016, as it has been ignored ever since Ronald Reagan won the White House in 1980, then America will, virtually certainly, spiral down into hell.

The problem is real; it has to be grappled-with, now, or else. It’s now, or it’s never. That’s the 2016 choice, for Americans — and, then, perhaps, for the rest of the world, and for all of the human future. That’s what is at stake, in the 2016 U.S. elections. The data make this clear.

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Investigative historian Eric Zuesse is the author, most recently, of  They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of CHRIST’S VENTRILOQUISTS: The Event that Created Christianity, and of Feudalism, Fascism, Libertarianism and Economics.

Massive payout for US hedge fund chiefs in 2014

By Andre Damon
May 6, 2015
World Socialist Web Site

 

On Tuesday, Institutional Investor’s Alpha magazine revealed that the top-earning 25 hedge fund managers in the United States secured another massive payout last year, totaling $11.62 billion.

The hedge fund managers earned an average of $400 million apiece. This meant that they received some $200,000 per hour, assuming that they worked 40 hours per week. On average, they made more than 10,000 times the median household income in the United States.

In Detroit, the city administration is preparing to shut off water service to 28,000 residents in order to force the collection of $42 million in delinquent water bills. A typical member of the top-earning hedge fund managers could have paid this entire amount nine times over from their income this year.

The highest-earning hedge fund manager was Kenneth Griffin, head of Chicago-based Citadel LLC, who got $1.3 billion last year, bringing his net worth to $6.6 billion. Citadel operates through a combination of speculation in stocks, high-speed computerized trading and the operation of so-called “dark pools”: secretive securities exchanges that function outside of all government regulation.

Securities and Exchange Commission (SEC) records indicate that much of Citadel’s earnings come from old-fashioned securities fraud. The hedge fund has been fined or sanctioned for misconduct 26 times.

Griffin does not skimp on spending the money he procures through financial speculation. A recent divorce filing by Griffin’s wife alleges that his family regularly spends more than $1 million a month, including $300,000 a month for private-jet travel and $160,000 a month for vacation rentals. The family’s staff of servants, assistants, and security personnel is so large that Griffin has founded a company exclusively to employ them, calling it “Griffin Family Services.”

The second highest earner on the list, James Simons of Renaissance Technologies, raked in $1.2 billion last year, bringing his net worth to $14 billion. Next was Raymond Dalio of Bridgewater Associates, who made $1.1 billion.

In 2004 Dalio, whose net worth is now $15.4 billion, infamously summed up the parasitic character of the social layer of which he is part: “The money that’s made from manufacturing stuff is a pittance in comparison to the amount of money made from shuffling money around,” he said.

Hedge funds are largely unregulated financial institutions that pool funds from large investors, charging massive fees: normally 2 percent for assets under management, plus 20 percent of any profits accrued.

They employ a variety of strategies, from old-fashioned speculation and capitalizing on financial bubbles created by central banks, to actively intervening in companies they invest in, forcing them to carry out layoffs and cost cutting. To cite one example, Dow Chemical this week announced that it would lay off nearly 2,000 workers, citing pressure from the hedge fund Third Point.

In other cases, hedge funds simply operate as massive criminal enterprises. In 2013, the Hedge Fund SAC Capital pled guilty to what the SEC called wire and securities fraud “on a scale without known precedent,” resulting in “hundreds of millions” of dollars in gains for the firm. Notably, the hedge fund’s owner, Steven A. Cohen, was not charged and was allowed to keep the more than $9.4 billion he made through the firm’s activities.

The payouts for hedge fund managers are part of a massive enrichment of the financial oligarchy as a whole. The wealth of the Forbes 400 billionaires, which has doubled since 2008, has hit a total of $2.9 trillion.

The billions of dollars diverted into the coffers of hedge fund managers come not through productive activity, but through speculation, backed by a relentless assault on the jobs and living conditions of the working class.

As a result of the massive upward redistribution of wealth over the past decade, the US poverty rate increased from 12.6 percent of the population in 2007 to 14.5 percent in 2013. According to the Census Bureau’s Supplemental Poverty Measure (SPM), 47 percent of Americans have incomes below 200 percent of the official poverty level, making half of the country either poor or near poor.

Social inequality is the defining element of social, economic and political life in America. The vast sums of money available to these Wall Street kingpins makes it possible for them to purchase both politicians and financial regulators. It is noteworthy that Kenneth Griffin, the highest-earning hedge fund manager, was the largest donor to the campaign of Chicago Mayor and former Obama Chief of Staff Rahm Emanuel, to whom he gave over $1 million.

Last month Citadel hired former Federal Reserve Chief Ben Bernanke as a senior adviser, paying him handsomely for the services rendered by the Federal Reserve to Wall Street and the financial oligarchy. During his time as head of the Federal Reserve, Bernanke funneled trillions of dollars in government funds to Wall Street.

The upcoming US presidential elections a year and a half away will be the most expensive in history by far, much of it financed by contributions from hedge fund managers, and beside them the various corporate executives and traders that constitute the American ruling class.