By Sam Pizzigati

If you started last year on the payroll at Verizon or Alcoa or Boeing or IBM, you may have found yourself off the payroll by year’s end. All these American corporate giants — and dozens more — have slashed their payrolls by the thousands since the Great Recession first kicked into gear.

But if you started last year in the chief executive suite of any of these companies, you ended the year with more than your job. You ended the year with many more new millions in your pocket.

In fact, details a just-released new report from the Institute for Policy Studies, CEOs at the 50 U.S. firms that have fired the most workers since our current economic meltdown began “took home nearly $12 million each on average in 2009,” a windfall 42 percent higher than the year’s overall CEO pay average.

These layoff-happy CEOs, Executive Excess 2010 makes plain, didn’t just line their own pockets while they were throwing employees out the door. These CEOs, in effect, threw people out the door to line their own pockets.

The layoffs these CEOs engineered, the new Executive Excess explains, “in no way rate as an inevitable consequence of red corporate ink.” Nearly three quarters of the nation’s corporate layoff leaders — 72 percent — actually ended last year in the black. Together, the top 50 layoff firms “enjoyed a 44 percent average profit increase in 2009.”

These stunning numbers, Institute for Policy Studies researchers point out, reflect “a broader trend in Great Recession Corporate America: squeezing workers to boost profits and maintain high CEO pay.”

Absurdly high pay. In 2009, jobless workers fortunate enough to qualify for unemployment benefits all year long collected, on average, only $15,860. The top 50 CEO job-killers averaged $11,977,128 each, or 755 times the dollars going to jobless Americans able to collect unemployment benefits.

The larger universe of the CEOs at America’s top 500 companies last year averaged $8.4 million in total compensation, a figure that translates into 263 times the average 2009 pay of employed U.S. workers.

Executive pay, across the board, did drop last year from the year before. But Institute for Policy Studies analysts see this dip as a mere blip in a long-term trend that has seen U.S. top executive pay double since the 1990s, after taking inflation into account, and quadruple since the 1980s.

Unfortunately, the new Executive Excess notes, the CEO pay reforms enacted into law earlier this summer — as part of the financial reform package — aren’t likely to turn that long-term trend around.

“Congressional and White House reform efforts, by and large, have frozen into a seldom challenged conventional wisdom,” the report relates, “that may be promising more reform than these efforts can deliver.”

This year’s Executive Excess, the Institute’s 17th annual CEO pay study, features a comprehensive chart that tracks all the CEO pay reforms so far enacted into law — and lists a host of other reform measures either still pending before Congress or currently getting attention in other nations.

Executive Excess 2010 rates the executive pay-deflating viability of all these reforms, ranking each one on a yardstick that emphasizes the importance of encouraging narrower CEO-worker pay gaps and eliminating taxpayer subsidies for excessive executive compensation.

The most obvious next step to more effective CEO pay reform? That step, suggests Executive Excess, would be taking action — before the next economic crisis — to cap executive pay at firms that pocket government bailouts.

In 2009, one CEO at a bailed-out enterprise — James Rohr of PNC Financial — personally took home $14.8 million, after his powerhouse bank collected $7.58 billion in taxpayer dollars and slashed  5,800 jobs.

Restricting pay at bailed-out companies, Executive Excess observes, “could have an important preventive effect.”

“Given a clear warning about the consequences for their own paychecks,” concludes the report, “executives might think twice about taking actions that endanger their future — and ours.”

Sam Pizzigati edits Too Much, the online weekly on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Read the current issue or sign up to receive Too Much in your email inbox.

By Sam Pizzigati

At long last, we may be witnessing a fundamental paradigm shift in how we, as a society, talk about taxing the rich.

Until this summer, no national pundit — at least no pundit in good standing with the chattering class — would ever dare suggest a federal tax rate on America’s top income bracket higher than 39.6 percent, the level in place under Bill Clinton.

Now pundits and the policy wonks who hover around them are openly singing the praises of top tax rates calibrated at 50 or 60 or even 70 percent, a level that would double the current 35 percent rate on top-bracket income.

Who deserve the credit for this abrupt turnaround? That honor unquestionably belongs to James Surowiecki, the New Yorker magazine’s top economic analyst.

The New Yorker occupies a rather unique role in the modern America media echo chamber. The magazine’s high-brow readership and legendary reputation for rigorously fact-checked accuracy lend enormous credibility to any outside-the-mainstream point of view that gets expressed in the New Yorker’s pages.

In the August 16 New Yorker, analyst Surowiecki aggressively advanced just such an outside-the-mainstream point of view — on taxing the extraordinarily wealthy. Our current approach to taxing the awesomely affluent, he wrote in a piece entitled Soak the Very, Very Rich, “makes no sense.”

Under this current system, Surowiecki pointed out, a successful dentist who makes $200,000 a year pays taxes at about the same rates as someone who makes $200 million.

We have in America today, Surowiecki’s New Yorker analysis would go on to add, “a yawning chasm between the professional and the plutocratic classes, and the tax system should reflect that.”

That reflection could be easy. Lawmakers, noted Surowiecki, would merely need to create new tax brackets for higher amounts of income, starting with a new and higher tax rate on income over $1 million. But, as his New Yorker piece quickly observed, lawmakers would have “no reason to stop there.”

Last week, CNBC gave the influential Center for American Progress, the Washington think tank led by a former Bill Clinton White House chief of staff, an opportunity to suggest how much further lawmakers should go. The Center’s Michael Linden suggested added tax brackets for income over $1 million, $5 million, and $10 million.

Someone making $500,000 a year, explained Linden, shouldn’t be paying “the exact same marginal tax rate on their last dollar of earnings as somebody making $10 million or $50 million.”

Time magazine’s Stephen Gandel, in his reaction to the New Yorker analysis, would stress the multiple benefits of soaking the rich. A “super tax rate for the super rich,” he noted, wouldn’t just “redistribute some of that wealth at the very high end of the income ladder to social programs that end up improving education or paying for healthcare reform or creating jobs.”

A super tax on super incomes, Gandel explained, would also help fix what ails our economy, by reducing “that global pool of money that sloshes around our financial markets and creates all types of bubbles.”

All “that money concentrated with the rich,” the Time analyst pointed out, “makes our economy prone to booms and busts, and less stable.”

The Washington Post, for its part, reacted to the wonky uproar that Surowiecki’s New Yorker column created by quizzing a cross section of tax experts and politicos on how high a super tax rate on super incomes should go.

The University of Michigan’s Joel Slemrod, in response, put the optimum top rate at “60 percent or higher.” Emmanuel Saez from the University of California, the nation’s top expert on high incomes, opted for 69 percent top federal rate. Dean Baker, from the Center for Economic and Policy Research in Washington, D.C., suggested “somewhere around 70 percent and possibly a bit higher.”

The Post also put the same question to conservative analysts. Even one of them, former Reagan adviser Bruce Bartlett, called for a rate — at 50 percent — substantially higher than the current 35 percent U.S. top rate.

Robert Reich, the former U.S. labor secretary, last week shoved history into this spirited new tax-the-rich debate. How about, Reich mused in a nationally circulated column, setting the top tax rate at 91 percent, the level where that rate stood back during the 1950s under Republican President Dwight D. Eisenhower?

That 91 percent rate applied to income over $400,000, the equivalent of about $3 million in today’s dollars. The rich, no surprise, loathed that rate. With that rate in effect, they felt their plutocratic power fading away fast.

“The United States Government makes the old ‘Robber Barons’ look like children,” multi-millionaire Richard Lounsbery, the heir to a mining fortune, fumed to the New York Times in 1959. “And there’s no difference between the Republicans and the Democrats, either. The Republicans are Socialists and the Democrats are Communists — that’s all.”

Middle class Americans, in the meantime, did just fine in a 91 percent top-tax-rate America. The mid 20th century would see the incomes of average Americans double, after taking inflation into account. “Soaking the rich” helped nurture a middle class Golden Age.

Apologists for America’s staggeringly unequal status quo, until this summer, had good reason to think that history forgotten. Now they have reason to worry. History remembered, after all, can become history repeated.

Sam Pizzigati edits Too Much, the online weekly on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Read the current issue or sign up to receive Too Much in your email inbox.

By Sam Pizzigati

The tall tales we’ve inherited from ages long gone we call myths. The tall tales that spook our contemporary everyday life we call “urban legends.” But we’ve yet to come up with a label for the tall tales that Corporate America showers down upon us.

These corporate tall tales, unlike urban legends, actually make a difference in our lives. Corporate tall tales don’t just drive the decisions that drive our economy. They drive these decisions in a reckless direction. And the most reckless of these drivers? That may be the tall tale of the “rare talent.”

We’ve heard this whopper quite a bit over recent decades. Running a major corporation, we’re told, takes enormous — and exceedingly rare — executive talent. To get this top talent, and keep it, firms have no choice but to pay top dollar and then some. If they don’t, they’ll never succeed in the fiercely competitive global marketplace, and we’ll all be doomed.

Five years ago, the corporate board at America’s premiere technology company, Hewlett-Packard, anointed Mark Hurd one of these rare talents and named him HP’s new CEO. Earlier this month, that same HP board shoved a disgraced Hurd out the door, the same door that Hurd’s rare and talented predecessor, Carly Fiorina, had been shoved out of early in 2005.

Out goes one “rare” talent, in goes another. This CEO revolving door has become Corporate America’s standard operating procedure. Major companies — high-tech giants like Yahoo, retailers like Home Depot, financial kingpins like Merrill Lynch — routinely shell out fortunes to sign wonderfully “special” talents they then proceed, a few years later, to ingloriously dump.

But none of these dumpings ever seem to dent the corporate demand for CEO superstar “talent.” Corporate boards simply dispatch their failed talents off into the sunset, with generous severance packages, and proudly announce their new corporate savior du jour — and that savior’s generous sign-on package.

In HP’s case, Carly Fiorina, the current GOP candidate for a California U.S. Senate seat, left the company with $42.4 million in severance and stock options, after entering HP’s executive suite with a four-year deal that ensured her $90 million. Mark Hurd followed Fiorina into HP’s chief executive suite with a contract that featured over $20 million in signing inducements.

Hurd would, all told, pocket $134.2 million from 2005 through 2009. He’s now exiting HP with a getaway package that may well hit $40 million.

HP’s engineer founders, William Hewlett and David Packard, would no doubt be aghast. The company they founded in 1939 celebrated and valued all employees, not just top executives. Their philosophy — the “HP way” — shunned hierarchy and shared rewards.

Sacrifices, too. During one 1970s economic downturn, the company avoided layoffs by cutting pay 10 percent across the entire board, executives included.

At the height of the HP way, as one reporter would marvel, Hewlett-Packard’s CEO worked from “a cubicle in the midst of a vast room instead of a corner office.” Mark Hurd, in the first speech as HP’s top exec, played to that spirit.

“Building a great company isn’t all about a CEO,” he pronounced five years ago to cheers of delight from HP employees. “It’s a team sport.”

But Hurd quickly proved to be something less than a team player. Four months into his Hewlett-Packard reign, Hurd announced plans to cut over 14,000 jobs, a tenth of HP’s global workforce, and started shutting down the company’s traditional pension program.

Conspicuously exempt from this cost-cutting offensive: HP’s executive suites. Just days before the layoff announcement, HP introduced its new chief information officer, Randall Mott, a former executive at Wal-Mart. Mott started his CIO duties with a pay package worth $15.3 million.

Hurd’s early months as CEO would set the tone. William Hewlett and David Packard, years earlier, had built HP market share by valuing employees and investing in R&D. Hurd cut R&D and abrasively dissed employees at every opportunity. He would “grow” HP by “merging and purging” — taking out debt to buy up rivals, grab their customers, and fire their workers.

Hurd wheeled and dealed his takeovers at a frantic pace. In his first 46 months at HP, he orchestrated 31 mergers and, in the process, killed nearly 40,000 jobs.

Hurd treated consumers with no more respect than workers. At one point during his tenure, HP was upping prices on computer printer ink — the company’s cash cow — at over double the inflation rate, charging $30 for cartridges that cost HP a mere $3 to manufacture.

Hurd’s HP gave customer service equally short-shrift. In early 2009, after surveying 44,000 readers, PCWorld magazine rated HP dead-last — among top computer makers — on reliability and service for laptops, dead-last for printers, and next to dead-last for desktops.

On Wall Street, meanwhile, nobody noticed — or cared. Investors were too busy shouting Hurd’s praises. HP’s share price, after all, had doubled under his Hurd’s watch. In Corporate America’s eyes, Hurd had truly proven himself a rare and special talent. He had a paycheck to match. This past April, Forbes rated Hurd the top-paid executive in America’s technology hardware industry.

But what “rare” talent did Hurd actually demonstrate? Does slashing R&D demand an executive expertise in excruciatingly short global supply? Are CEOs who can wheel and deal their way to one job-killing merger after another few and far between? Does ripping off consumers require some gift that only the universe’s finest executives have been granted?

In reality, Hurd demonstrated no special talent. His basic merge-and-purge business plan at HP made sense only as a personal enrichment strategy.

“Boosting earnings via acquisitions and cost cutting,” as corporate analyst Eleanor Bloxham noted recently in Fortune, “is not a sustainable business model and wouldn’t have been one for the long term, with or without Hurd.”

Sustainable business models, of course, do have a drawback. They don’t make anybody super rich. So why bother, Corporate America and Wall Street have jointly concluded, putting one together?

The Hewlett-Packard board of directors certainly didn’t hold Hurd’s failure to think sustainably against him. They lavished upon him high praise and rewards right up until the moment earlier this month when the married 53-year-old Hurd became a public relations liability — by wining and dining a 50-year-old former erotic actress and fudging HP’s books to cover up his indiscretion.

HP’s next CEO will almost certainly pick up where Hurd left off, just as Hurd picked up where Carly Fiorina left off. The new CEO will wow Wall Street with still more cost cutting and wheeling and dealing.

None of that will take rare talent. Just greed.

Sam Pizzigati edits Too Much, the online weekly on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Read the current issue or sign up to receive Too Much in your email inbox.

By Sam Pizzigati

The ticker on billionaire Meg Whitman’s personal outlays for her California gubernatorial campaign has now hit $91 million. But Whitman, this election season, is hardly spending alone.

In Connecticut, entertainment impresario Linda McMahon appears likely to spend $50 million, from her family fortune, on a U.S. Senate seat bid. Down in Florida, former for-profit hospital CEO Rick Scott has invested almost $23 million out of pocket in another gubernatorial race. And a host of other awesomely wealthy candidates, from coast to coast, have dipped into their fortunes for millions more.

This year, in fact, will almost certainly set a record for campaign cash spent by self-financed wealthy candidates, and this impending record, predictably enough, is already sparking some sober reflection in America’s chattering class. Should we, the columnists are asking, be fearing this flood of personal fortune into our political system? Or are the super wealthy just wasting their money?

The National Institute on Money in State Politics can help us answer these queries. In June, this Montana-based Institute released a careful analysis of how wealthy, self-financed candidates have fared in state races since 2000.

These deep pockets, the Institute study concludes, have fared not particularly well. The study identifies 6,171 campaigns for state office where candidates received over half their campaign contributions from themselves or their immediate families. These candidates, from 2000 through last year, gave their campaigns $700.6 million of their own money. In the end, they won only 11 percent of their races.

So can we breathe a sigh of relief, secure in the knowledge that the rich can’t buy their way into political power? We might want to put a hold on that sigh. Money still matters.

Those candidates whose campaigns spend the most turn out to win the most, the National Institute study also found, by a wide margin. Candidates who collected and spent more campaign cash than their rivals, says the study, won 87 percent of their races.

And where do candidates — who aren’t super rich themselves — get the bulk of their campaign cash from? Not from average Americans. The donors of appreciable campaign cash come overwhelmingly from the ranks of the affluent. One classic study, from the Joyce Foundation, found that 81 percent of Americans who contribute over $200 to candidates sit in America’s most affluent 6 percent.

America’s growing concentration of income and wealth, an American Political Science Association task force in 2004 concluded, has increased rich people’s capacity “to narrow the pool of viable candidates for elected office.”

Most of that narrowing takes place before voters are paying any attention, in what political observers have come to call the “money primary,” the trolling for cash — from rich people — that determines which candidates get taken seriously.

This trolling never really ends. Once elected, candidates spend vast amounts of their time cultivating their affluent donors — and potential donors. Their goal: to amass enough money to scare off challengers.

The end result: Most all elected officials of national and state significance now spend their days and dinners surrounded by men and women of wealth. One direct consequence: Our political system has become, as the American Political Science Association suggests, “a great deal more responsive to the preferences of the rich than to the preferences of the poor.”

Reformers, of course, are struggling to level the political playing field, with a variety of proposals to better disclose — and limit — the cash deep pockets contribute to campaigns. But this reform work remains devilishly difficult. The rich, after all, don’t need to bankroll campaigns to make their presence felt.

That $91 million that ex-eBay CEO Meg Whitman has spent so far on her California gubernatorial bid does not, for instance, include the over $1 million Whitman invested two years ago in an obscure movie production house.

Whitman, the New York Times noted last month, had shown no prior investment interest in independent movie production. Why the sudden interest in this firm? The firm’s biggest player just happened to be “a very prominent and much-sought-after Republican strategist” who “had been flirting with working on the campaign of Ms. Whitman’s future rival in the Republican primary.”

That strategist never did sign up with Whitman’s rival. Whitman won the primary.

Money talks, as the old saw goes, in many ways — and the staggeringly unequal distribution of our nation’s money guarantees that the rich and powerful will do most of that talking. If we want to see real and lasting reform of our political system, we have but one choice. We have to go after that unequal distribution.

Sam Pizzigati edits Too Much, the online weekly on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Read the current issue or sign up to receive Too Much in your email inbox.

By Sam Pizzigati

Will the Great Recession, once the dust settles, leave the United States less unequal? A reasonable question. The last time the United States experienced economic times as painful as ours today, back in the Great Depression, the United States did become less unequal.

In 1928, the last full year before we sank into depression, America’s top 1 percent were taking home 23.9 percent of the nation’s income. A decade of depression later, that top 1 percent share had dropped to 15.8 percent.

Are we now headed in the same more equal direction? America’s most respected income tracker, University of California at Berkeley economist Emmanuel Saez, has just ventured an answer.

Every summer, deep in the dog days, Berkeley’s Saez crunches the latest annual IRS tax return data to pinpoint who’s getting a greater share of America’s income and who’s getting less. He presents his data by finely tuned income group. We see, in his numbers, the dollars filling the pockets of the richest of our rich, not just the top 1 percent, but the top 0.1 and 0.01 percent as well.

His latest numbers, released earlier this month, cover the 2008 tax year, the first full year of the Great Recession. And what conclusion can we draw, from these numbers, about the impact of this recession on inequality?

The Great Recession, Saez concludes, appears “unlikely to have a very large impact on top income shares and will certainly not undo much of the dramatic increase in top income shares that has taken place since the 1970s.”

At first glance, the 2008 Saez income numbers don’t seem to support that conclusion. In 2008, the top 1 percent saw their total incomes drop 19.7 percent from the year before, after taking inflation into account. That represented the biggest single-year dip since 1930.

The average income of America’s bottom 99 percent also dipped, but only by 6.9 percent. Overall, the bottom 99 percent of Americans increased their share of the nation’s income in 2008. The top 1 percent lost income share. They ended the year with 20.9 percent of the nation’s earnings, down from 23.5 percent in 2007.

But this dip deceives. The income dropoff at the top almost totally reflects the dismal stock market in 2008. The money the affluent made trading stocks and other securities, over the course of the year, essentially fell by half.

Meanwhile, on every other income front, the affluent more than held their own. In 2008, excluding income from stock trades and other capital gains, America’s top 10 percent actually slightly increased their share of the nation’s wealth.

That share, notes Saez, figures to rise substantially higher next summer when we have the final IRS data for 2009, partly because the stock market recovered significant lost ground in 2009 and partly because Wall Street bonuses and other income streams for the super rich skyrocketed in 2009.

This past spring, for instance, we learned that the combined income of the nation’s top 25 hedge fund managers more than doubled in 2009, to $25.3 billion, an all-time record high. In other words, the 2008 dip in the income share of America’s rich appears almost certain to be relatively shallow and short, just like the income dip at the top that followed the 2001 recession.

What explains our shallow dip in inequality today and the long and lasting dip we saw during the New Deal years? Quite simply, sheer political will.

The dropoffs in income concentration we see when severe hard times hit, as Saez notes, will default to “temporary unless drastic regulation and tax policy changes are implemented and prevent income concentration from bouncing back.”

We had these drastic policy changes during the New Deal, and these changes, Saez stresses, “permanently reduced income concentration until the 1970s.”

So far, here in the Great Recession, we have seen no such drastic changes. Today’s changes have been painfully modest.

Take financial reform. The reform legislation signed into law last week will have, observers agree, little impact on Wall Street bonus bonanzas. In 2010, as a New York Times analysis forecast last week, Wall Street bonuses will run “at about the same level as last year and similar to 2007,” before the 2008 crash.

Back in the New Deal era, by contrast, financial reform legislation actually reduced the revenue streams that were pouring dollars into banker pockets.

New Deal reforms also swept away obstacles to union organizing, and a thriving labor movement proceeded to give average Americans an effective political and economic counterweight to concentrated wealth and power. Attempts to help workers organize, in our current Great Recession, remain stalled in Congress.

On taxes, the same story. The New Deal raised the top tax rates on income over $200,000 — about $2.5 million in today’s collars — to over 90 percent.

The current tax rate on oversized incomes sits at 35 percent, and the debate this summer in Congress will only consider whether or not we should let that 35 percent revert back to the 39.6 percent level in effect pre-George W. Bush.

No one knows for certain how this debate will play out. But we do know that the ultimate winner will be the wealthy. Their tax rates will, at summer’s end, sit at less than half their New Deal peak.

The retreat from these rates — and the rest of the New Deal reforms that helped create a more equal America — has concentrated, over recent decades, awesome quantities of wealth at America’s economic summit. If we don’t change course, and soon, that retreat could become a rout.

Sam Pizzigati edits Too Much, the online weekly on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Read the current issue or sign up to receive Too Much in your email inbox.

By Sam Pizzigati

Just over three decades ago, in 1979, an obscure research paper began a scientific revolution — on how we think about what makes us healthy.

Up until then, epidemiologists — scientists who study the health of populations — had seen a simple and straightforward relationship between wealth and health. The wealthier a society, they believed, the healthier that society would be.

But that 1979 paper introduced a new factor into this simple equation: wealth’s distribution.  People who live in more equal societies, the paper reported, appear to enjoy better health than people who live in more unequal societies.

In due course, hundreds of other epidemiological studies would test — and substantiate — this same phenomenon.

People, investigators would repeatedly find, do indeed live healthier as nations grow economically and create more wealth, but only up to a point. Among already developed nations, the best health outcomes don’t come in the richest societies. They come in societies that distribute riches the most equally.

Other investigators would find this same relationship on other benchmarks of social decency. They began showing that people don’t just live longer in more equal societies. They trust each other more. They bully each other less. In equal societies, infants die much less frequently and adults grow obese much less often.

All these findings generated considerable discussion — and excitement — in scientific research journals. But these perspectives remained largely off the general public radar screen until last year when two British epidemiologists, Richard Wilkinson and Kate Pickett, published a book that aimed to introduce this vast scientific literature on inequality to a wider audience.

Their book, The Spirit Level, quickly began succeeding at that aim. In the UK, The Spirit Level is recasting the political discourse over poverty and wealth. Pundits and national political leaders are increasingly making the case that we all benefit — not just the poor — when we narrow the great divide that separates the most affluent from everyone else.

In the United States, Wilkinson and Pickett conducted a successful national speaking tour earlier this year, and public policy organizations are picking up on their message. One veteran group, the Poverty and Race Research Action Council, last month gave Wilkinson and Pickett their publication cover.

“Violence, poor health or school failure are not problems that can be solved by economic growth,” the two wrote in that cover story. “Everyone getting richer without redistribution doesn’t help.”

Our conventional conservative wisdom has, of course, long insisted on the exact opposite. And now the propagators of that wisdom are striking back.

Right-wing foundations in the UK and Sweden have recently published attacks on The Spirit Level, and denunciations of the book’s thesis — and authors — have appeared in a string of newspaper columns on both sides of the Atlantic, including a Wall Street Journal piece earlier this month.

The Journal article accuses Wilkinson and Pickett of “excluding inconvenient data” and presenting a “misleading representation of scientific research.”

In a UK critique, published the day before the Wall Street Journal attack, an editor from the Policy Exchange, a right-wing British think tank, calls most of the statistical claims that appear in The Spirit Level “spurious or invalid.”

Another blast, from the same think tank, denies any “connection between inequality and life expectancy” — or between inequality and any of the other indicators, from jail rates to social mobility, that Wilkinson and Pickett examine.

Still another attack, published in a UK daily, would up the stridency level considerably. The theory behind The Spirit Level, conservative commentator Ed West charged on the same day the Wall Street Journal piece appeared, “has just one tiny flaw — it’s complete rubbish.”

Wilkinson, a professor emeritus of social epidemiology at the University of Nottingham Medical School, and Pickett, a University of York professor and a National Institute for Health Research career scientist, have begun the work of rebutting this finely tuned transatlantic blitz against their work.

At the Equality Trust, a comprehensive online site that details the evidence The Spirit Level presents, Wilkinson and Pickett have published an initial point-by-point refutation of the Policy Exchange case against their work.

And this Thursday, in London, the two epidemiologists will square off, face to face, against both the author of the Policy Exchange attack and the co-author of another denial paper, in a debate hosted by the Royal Society for Arts.  

That figures to be a fascinating exchange. But the drive to discredit The Spirit Level — and the 30 years of scientific research behind it — will continue, no matter what happens Thursday.

Apologists for our unequal social order simply cannot afford to let The Spirit Level rise or fall on its intellectual merits, in much the same way that ExxonMobil can’t afford to leave the debate over climate change to a give-and-take between independent scientific researchers.

Corporations like ExxonMobil are continuing to bankroll the climate change deniers. That right-wing think tanks, generously bankrolled by the holders of the world’s highest incomes, now feel compelled to deny any link between income distribution and the social ills that plague us should come as no surprise.

This new denial campaign may well turn out to be even fiercer than the onslaught against climate change science. The rich and powerful, after all, can outlast an end to our carbon-based economy. But a more equitable distribution of income and wealth? For our rich and powerful, that’s a threat existential.

Sam Pizzigati edits Too Much, the online weekly on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Read the current issue or sign up to receive Too Much in your email inbox.

By Sam Pizzigati

The ranks of the hurting — in Great Recession America — may be far broader than almost any of us have up until now supposed.

News reports and mainstream commentators have, by and large, been defining the hurting by one simple stat, the number of Americans who get counted every month as officially unemployed, a figure now hovering around 10 percent.

But the Great Recession, notes a new study from the Pew Research Center, may be hurting five times more American families than that 10 percent suggests. Over half of America’s working-age adults — 55 percent — have either gone jobless or lost wages and full-time hours since the recession started.

Meanwhile, at America’s economic summit, life in Corporate America’s executive suites continues to slide smoothly along. Power suits are coming and going and stuffing — their pockets.

We can see this lucrative to-and-fro even at distinctly second-tier corporations. The latest case in point: the hiring of a new CEO at Armstrong World Industries, the floor and ceiling tile maker based in Lancaster, Pennsylvania.

Back in February, a recession-battered Armstrong announced plans to lay off 440 workers. A few weeks later, Armstrong’s then CEO announced he would be stepping down. Last month, Armstrong unveiled the company’s new chief exec, Matthew Espe, a former General Electric hot body.

Armstrong may or may not prosper under Espe. Espe will most definitely prosper at Armstrong. His signing deal hands the 51-year-old a $4.55 million “replacement grant” — to offset incentives Espe stood to collect from his former employer — and a $3.5 million “inducement grant” to sweeten the pot, all on top of regular salary and assorted other bonuses.

If Espe maxes out, he’ll take home $19.4 million over the next three years — for running a company that currently ranks as the nation’s 677th largest.

The munificent care and feeding of executives has become, of course, standard operating procedure within Corporate America. This generous care and feeding, two perceptive economic analysts reminded us last week, also helps explain why good jobs for working Americans remain so scarce.

Over recent years, note global financial advisor Rob Parenteau and former Wall Street operative Yves Smith, U.S. corporations “have become obsessed” with the quarterly earnings that determine, in the short term, how share prices move.

To pump up these earnings, Parenteau and Smith observe, corporate executives routinely “avoid investing in future growth,” in the research and product development that create jobs. Instead of making these long-term commitments, they take the steps that can quickly inflate their share price. They lay off workers. They hand out special dividends. They plot mergers and acquisitions.

These sorts of short-term moves, Parenteau and Smith go on to relate, rather speedily translate into “exorbitant bonuses” for the executives who make them. We have, in effect, an economy that is richly rewarding its most powerful players “for myopia and speculation.”

Exorbitant bonuses for executives don’t, in fact, just reward this myopia. They invite it. To end our Great Recession — and prevent another — we need to start fading out these executive pay excesses. And fast.

Sam Pizzigati edits Too Much, the online newsletter on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Too Much appears weekly. Read the current issue or sign up to receive Too Much in your email inbox.

By Sam Pizzigati

Years ago, in the mid 20th century, no one in the United States spent much time talking about rising income inequality, for the simple reason that inequality wasn’t rising. But that all began to change in the 1970s, and, by the mid 1980s, independent economists were sounding a rising income inequality alarm.

Conservative analysts, almost ever since, have been advising us to pay that alarm no attention. Anyone who takes the time to take into account all the government benefits that poorer households receive, these analysts have argued, would see we have no inequality problem worth worrying about.

Researchers at the Congressional Budget Office, over recent years, have actually been doing exactly what apologists for our unequal economic order have advised. In their ongoing income calculations, these researchers have been taking government benefits into account, everything from Medicaid to food stamps.

The CBO researchers, to understand how much income U.S. households have at their disposal, have also been factoring into their data a variety of other income intake and outgo streams — the value of employer-provided health insurance, for instance, and the dollars households pay in federal taxes.

The CBO researchers now have comprehensive annual income data sets that go back to 1979. Last month, they updated their data with figures from 2007. The main take-away from the new numbers: We most definitely do have an inequality problem worth worrying about.

Since 1979, the latest CBO stats show, America’s most affluent 1 percent of households have more than doubled their share of the nation’s after-tax income, to 17.1 percent. The actual average after-tax incomes of the top 1 percent have, over that same span, nearly quadrupled after taking inflation into account, from $346,600 in 1979 to $1,319,700 in 2007.

The new CBO’s data most remarkable contrast of all: In 1979, America’s statistical middle class — that is, the 20 percent of households in the exact middle of the nation’s income distribution — took home well over twice as much income, after taxes, as the households in the top 1 percent.

In 2007, our top 1 percent took home after taxes, as a new Center on Budget and Policy Priorities analysis notes, more than the entire statistical middle class.

IRS stats, as crunched by economist Emmanuel Saez, let us track the U.S. income distribution picture back even further in time, to the World War I era. These numbers put the new CBO stats in an even more striking perspective.

In 2007, the data indicate, America’s top 1 percent took in their highest share of the nation’s income since 1928, the year before the epic 1929 Wall Street crash sent the nation spinning into Great Depression.

The year after 2007, we might want to keep in mind, saw a Wall Street crash that sent the nation spinning into Great Recession.

Notice any pattern here?

In 1928, we have a ridiculously high concentration of wealth at the nation’s economic summit. One year later, economic meltdown. In 2007, another ridiculously high concentration of wealth. One year later, another meltdown.

Coincidence? Or direct cause and effect? Or, to put the matter more broadly, does intense income inequality trigger economic calamity?

High-profile economists and journalists are starting to ask that question. Last week brought intriguing attempts at an answer from Nobel Prize-winning economist Paul Krugman and the Washington Post economic analyst Ezra Klein.

Krugman began his discussion by acknowledging that, before 2008, he saw no “clear reason why high inequality should lead to macroeconomic crisis.” Now he sees plenty of potential links.

One might be political. The same political tilt to the right that ends up slashing taxes on the rich — and concentrating income at the top — also minimizes government regulation of the financial sector and ends up leaving economies vulnerable to sudden breakdowns.

But the link may also be more classically economic. In an increasingly unequal society, with more and more wealth amassing in the pockets of a precious few rich, average consumers simply don’t have the means to make the purchases that can keep an economy humming. Economic collapse becomes inevitable.

Other economists, notes Krugman, see inequality’s reflection less in this underconsumption and more in overconsumption. Their argument: In an increasingly unequal society, the rich spend more because they have more. This rising spending by the rich raises a society’s consumption bar.

With this bar rising, middle class families feel themselves under pressure to spend more, too — or else come across as unsuccessful. To do that spending, these average families find themselves saving less and borrowing more. A credit bubble builds and eventually pops. Crisis ensues.

The Washington Post’s Ezra Klein adds still another causal agent into the mix. In a deeply unequal society, he notes, rich people certainly do spend more. But even after spending more, they still have huge piles of cash that need investing.

And the more piles out there, Klein adds, the higher the demand for high-yield investment vehicles — and the higher the potential rewards “for people who can invent new investment vehicles with high yields.”

The result? Amid severe income inequality, says Klein, societies get “explosive innovations in weird financial instruments that look good for a while because the risk is underpriced but end up making the system more fragile when their risks come clear and everyone flees.”

So how, in the end, does inequality send economies crashing? Take your pick from these varied explanations. Or take them all. They all drive home the same basic message. We play with fire when we let income concentrate. Eventually, people who live in staggeringly unequal societies will always get burned.

Sam Pizzigati edits Too Much, the online newsletter on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Too Much appears weekly. Read the current issue or sign up to receive Too Much in your email inbox.

By Sam Pizzigati

Back a hundred summers ago in 1910, former President Theodore Roosevelt — a Republican — called for “a graduated inheritance tax on big fortunes,” a new tax levy that would increase “rapidly in amount with the size of the estate.”

Last week, four U.S. senators — three Democrats and an independent — introduced legislation that would subject big fortunes, before heirs can grab them, to an estate tax levy that would rapidly rise with the size of the estate.

Teddy Roosevelt would most certainly approve. Will a majority in today’s United States Senate?

By all logic — and cold-blooded political calculation — the newly introduced Responsible Estate Tax Act ought to fly through the Senate. Seldom, if ever, has a piece of progressive tax legislation had so much going for it.

Start with the budget math. Great Recession America is now going through the worst public services budget squeeze since the Great Depression. Teachers, cops, and firefighters are losing jobs. Libraries and parks are closing. Roads and bridges are crumbling.

States and local governments — and millions of jobless Americans — need federal help. The new Responsible Estate Tax Act, introduced by Bernie Sanders of Vermont and co-sponsored by Tom Harkin  of Iowa, Sheldon Whitehouse of Rhode Island, and Sherrod Brown  of Ohio, would help provide it.

Under the bill, all estates over $3.5 million, or $7 million for couples, would face a federal estate tax, just as they did under the federal estate tax in effect last year. But this estate tax, unlike last year’s, would be steeply “graduated,” with the tax rate rising as an estate’s value increases.

The tax rate on estates worth between $3.5 and $10 million would be 45 percent, the same as the 2009 rate for all estates subject to estate tax. The rate would increase to 50 percent on estate value between $10 and $50 million and jump to 55 percent on all value over that $50 million.

Billionaire couples would face, on top of that, a 10 percent surtax on estate value over $1 billion, a move that would bring the overall estate tax rate on bequests over a billion to 65 percent.

The total package would raise, over the next ten years, at least $264 billion — and likely much, much more down the road. America’s 400 biggest fortunes alone, according to Forbes, now add up to a combined $1.3 trillion.

But billionaires, even with a 65 percent top estate tax rate in effect, would still be getting something of a bargain. From 1935 through 1981, the top federal estate tax rate never dipped below 70 percent. For most of that period, from 1941 through 1976, America’s richest faced a 77 percent top rate.

America’s richest, right now, face no federal estate tax at all. The Bush tax cut enacted in 2001 has eliminated the estate tax entirely for 2010. So this year, for the first time since 1916, wealthy heirs are pocketing tax-free fortunes.

These wealthy heirs include the three dogs of Gail Posner, the 67-year-old widow of a leveraged buyout king. Posner passed away in March. Her will leaves her pooches $11.3 million. Not a dime of that will flow to the federal treasury.

But four-legged heirs like Conchita, Gail Posner’s prized Chihuahua, and the two-leggeds now in line to inherit the $9 billion fortune of Houston pipeline mogul Dan Duncan, who also died this past March, could prove to be one-year wonders.

The 2001 Bush tax cut legislation, under current law, sunsets at the end of this year. The tax code next year will essentially revert back to the pre-Bush status quo, a step that would subject estate value over $2 million for couples to a straight 55 percent tax rate.

This current law reality creates an entirely unique — and favorable — political environment for progressive estate taxation. Senate Democratic leaders, notes Chuck Collins of Wealth for the Common Good, are holding all the cards.

If the Senate’s friends of the financially favored refuse to engage reasonably on the future of the estate tax, Senate leaders could simply let current law play out.

“If nothing happens,” as Collins explains, “we get a strong estate tax law.”

With leverage like this, Senate majority leaders could be aggressively pressing for a tough-on-billionaires approach — like the new Sanders bill. Instead, says Collins, those leaders have let senators Blanche Lincoln of Arkansas and Jon Kyl of Arizona set the tone for Senate estate tax debate with a “compromise” proposal that would sink the estate tax rate on billionaires down to 35 percent.

In effect, says Collins, Democratic leaders are sitting with three aces and getting “ready to fold.” And they will fold, unless public pressure forces the Senate to give the new Sanders estate tax proposal, S.3533, some serious consideration.

Wealth for the Common Good and a host of other national groups, including long-time estate tax champion United for a Fair Economy, have begun mobilizing that needed public pressure online. The first step: gaining more Senate co-sponsors for the Sanders legislation.

Under this legislation, 99.7 percent of estates in the United States would face no estate tax in 2011. And the heirs of the 0.3 percent subject to estate tax would still walk away, after taxes, with much more than enough moola to keep their Chihuahuas forever in clover.

In a democracy, numbers like these would make the passage of something like the Sanders Responsible Estate Tax Act proposal an absolute slam-dunk. Unfortunately, we live in a plutocracy. Getting a responsible estate bill through Congress is going to take hard work.

Sam Pizzigati edits Too Much, the online newsletter on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Too Much appears weekly. Read the current issue or sign up to receive Too Much in your email inbox.

By Sam Pizzigati

The pollsters at Gallup have never asked Americans to name the world’s most technologically advanced nation. Neither, apparently, have any other pollsters. But we don’t need a pollster to know how Americans would answer that question.

Most Americans, without a moment’s hesitation, would almost certainly name the United States as the global techno tops. No other nation, after all, can lay claim to the iPhone or Microsoft or Google. We must be number one.

Only in our dreams. The latest stats show the United States lagging far behind on the high-tech benchmarks that matter most in our daily lives. On broadband speed, for instance, the United States ranks 15th globally in one international comparison, 29th in another.

Indeed, earlier this month, Bloomberg News noted that the federal government’s current “national broadband plan,” if successfully completed, would give most American homes a decade from now “the same connection speeds available today in Portugal and Japan.” 

Singapore, news reports last week indicated, will have by 2013 a broadband infrastructure fast enough to let the nation’s every home download a DVD in just a few seconds, at speeds hundreds of times faster than the current U.S. average.

Other nations are also jumping to the global high-tech forefront. Belgium leads the way in smart IDs, the Netherlands in health tech, South Korea in the “telematic” application of info technology to transportation.

The United States has become, in effect, a technological also-ran in one area after another. How could we not know that? What explains the breathtakingly wide gap between technological reality and how Americans perceive it?

Our gullibility may be the culprit. Our rich have spent the last 30 years promising us the best of all possible worlds — if in them we put our trust — and we put our faith in that promise.

We let our lawmakers lavish tax breaks and other incentives on rich people because we believed the rich when they told us these incentives would encourage badly needed investments in innovation.

We let corporate CEOs rake in unspeakable fortunes because we believed these execs when they told us they needed rewards bountiful enough to get their entrepreneurial juices flowing. 

In the end, our movers and shakers guaranteed, everyone would benefit from all these incentives and rewards. Investors and executives would become richer, and the rest of us would enjoy the privilege of life in a sublimely innovative economic powerhouse that delivers endless prosperity and great gadgets.

We average Americans, over the past three decades, have done our best to move this storyline along. And things have worked out fairly well — for investors and executives. They have most definitely prospered — and continue to prosper, even in troubled times.

The latest evidence: the just-released executive pay data from Silicon Valley. Eight execs from Northern California’s high-tech heartland took home over $10 million last year. Silicon Valley’s top 155 CEOs, the San Jose Mercury News reported last week, together pulled in $579 million.

The rest of Silicon Valley ought to be doing quite well, too, at least according to our still reigning rich people-first ideology. But helping rich people become richer hasn’t exactly turned Silicon Valley into an Information Age paradise. The past decade, observes Mercury News columnist Mike Cassidy, “has been unkind to those of us who answer to those in the corporate suite, rather than sit in it.”

Just under a quarter-million Silicon Valley jobs have disappeared over the last 10 years. Between 2000 and 2008, the typical Valley household income dropped 6 percent. The Valley’s per capita income dropped another 3.5 percent last year.

Housing in Silicon Valley, even after a burst housing bubble, remains ridiculously expensive. In 2009, just under half the families looking to buy their first house couldn’t afford the price of a typical Silicon Valley family home.

The ostensible good news? Analysts have found a “steep decline” in Silicon Valley’s rate of child abuse. The not-so-good-news behind this heartening stat: Reported cases of child abuse are declining, notes the Silicon Valley Network, because social worker layoffs have meant that “fewer reports of child abuse and neglect are investigated and more abused children are left without help.”

Amid this carnage, two former Silicon Valley CEOs, eBay’s Meg Whitman and Hewlett-Packard’s Carly Fiorina, will be sitting on California’s statewide ballot this November, as the GOP candidates for governor and U.S. Senate.

Both candidates are touting their can-do, high-tech CEO experience as ample reason they deserve high office. Americans, Whitman and Fiorina must figure, have been trusting in rich people for three decades. To win this November, they only need that trust to continue for five more months.

Sam Pizzigati edits Too Much, the online newsletter on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Too Much appears weekly. Read the current issue or sign up to receive Too Much in your email inbox.