Decades ago shopping streets for the super rich were limited to a dozen locations such as Rodeo Drive in Beverly Hills, Madison Avenue in New York, and Worth Avenue in Palm Beach. Recently, equally upscale shopping areas are being replicated in one or more locations in major cities throughout North America. Even those households earning $250,000 a year and thus part of the top 2% cannot afford to do much more than peer through the windows and occasionally purchase a trinket.
Rather, their customers are largely drawn from the top one half of one percent, 370,000 USA families earnings millions of dollars each year. Moreover, their target clientele are the 11,000 households that average $24 million a year! (Outlet stores, shopping centers and malls serve the Middle Class whose earnings have remained stagnant in real terms for the past three decades.)
The following are excerpts from an interview by Maria Armoudian of Jacob Hacker and Paul Pierson, authors of “Winner Take All Politics: How Washington Made the Rich Richer and Turned its Back on the Middle Class”:
Hacker: “What we find is that the wealth is going not just to the top 10 percent of Americans, but really to the tiny slice at the very top, the top one tenth of one percent, even the top one hundredth of one percent. The Congressional Budget Office, using these income tax statistics, calculated that in 2005, the top 100th of one percent, the richest 11,000 households — had an after-tax income that averaged $24 million a year. That was up from a $4 million average for this group back in 1979. That’s a remarkable change. In contrast, the middle fifth, the middle 20 percent of Americans, saw their incomes over this 1979-2005 period go from $41,000 a year to $50,000 a year. The concentration of income at the top is remarkable and sustained, and over the last 30 or 40 years, it has resulted in relatively little trickle-down to those lower on the economic ladder.”
Pierson: “Although the United States isn’t the only country that has experienced rising globalization and increasing reliance on technology, it’s one of the few nations that has experienced a big increase in winner-take-all inequality in which the gains are going to the very top. Of the countries that have experienced similar trends, the US is most pronounced. That raises serious questions about the view that this is somehow linked to changes in our economy or society, because many of those [related] changes have occurred in other nations that haven’t experienced these kinds of runaway gains at the top.”
Armoudian: “…tension really arises between democracy, which is supposed to be equality for all, and capitalism which is property and ownership-based benefits, which tend to be unequal.”
Hacker: “…The turning point is 1978, which no one mentions. That was that year that business mobilized and started to flex their new organizational muscle around issues such as labor law reform, a proposed Consumer Protection Agency, environmental regulation, energy, and a whole host of other issues. On all these issues, the business position and the conservative position won. There was a dramatic showdown in 1978 over labor law reform that involved one of the first sustained filibusters outside the civil rights era, waged by Orrin Hatch. There was just a remarkable shift in the political climate that can’t be attributed to elections or to the balance of power in Congress and the White House – the Democrats had Congress and the White House. It was really linked to the changes in the organization of [big] business. Back in the 1960s and early 1970s, business was really quite [politically] disorganized. They were not active on most issues, and they didn’t have a very extensive lobbying presence. Now that [they] have 30 lobbyists per member of Congress, it’s easy to forget that the 1960s and early 1970s were not dominated by the powerful economic interest groups that are [currently] the major feature of our political climate. The1970s was the turning point that brings to power a new, much more muscular organized business community along with the very up-and-coming conservative movement that hitched its wagon to these new organizational realities….”
“Simultaneously, there was a big decline in middle-class organization. Labor unions were obviously the biggest player there, but they weren’t the only middle-class organizations to lose ground. Voluntary federations and fraternal organizations were also losing out to more professional, Washington-oriented and lobbyist-centered organizations.”
Pierson: “There are changes in financial industries, in tax policies that favor the wealthy, in the way in which corporate governance has evolved to favor the capacity of CEOs to come pretty close to writing their own paychecks. They have docile boards of directors that get a lot of perks from being on boards and are often appointed, one step removed from the CEOs, for whom they set salaries. As everyone knows, the CEO salaries have skyrocketed in ways that don’t bear much connection to the actual performance of the companies.”
Although abuses in Lancaster remain comparatively small time, we need not look much further for an example than Lancaster General Hospital, a Public Charity, gifting $1,200,000 to CEO Tom Beeman for when he is absent in the Navy for a year.
