The Richest of the Rich, Proud of a New Gilded Age

New York Times: By LOUIS UCHITELLE

Only twice before over the last century has 5 percent of the national income gone to families in the upper one-one-hundredth of a percent of the income distribution — currently, the almost 15,000 families with incomes of $9.5 million or more a year...

Other very wealthy men in the new Gilded Age talk of themselves as having a flair for business not unlike Derek Jeter’s “unique talent” for baseball, as Leo J. Hindery Jr. put it. “I think there are people, including myself at certain times in my career,” Mr. Hindery said, “who because of their uniqueness warrant whatever the market will bear.” ...

A handful of critics among the new elite, or close to it, are scornful of such self-appraisal. “I don’t see a relationship between the extremes of income now and the performance of the economy,” Paul A. Volcker, a former Federal Reserve Board chairman, said in an interview, challenging the contentions of the very rich that they are, more than others, the driving force of a robust economy....

James D. Sinegal, chief executive of Costco, the discount retailer, echoes that sentiment. “Obscene salaries send the wrong message through a company,” he said. “The message is that all brilliance emanates from the top; that the worker on the floor of the store or the factory is insignificant.” ...

The new tycoons oppose raising taxes on their fortunes. Unlike Mr. Crandall, neither Mr. Weill nor Mr. Griffin nor most of the dozen others who were interviewed favor tax rates higher than they are today, although a few would go along with a return to the levels of the Clinton administration. The marginal tax on income then was 39.6 percent, and on capital gains, 20 percent. That was still far below the 70 percent and 39 percent in the late 1970s. Those top rates, in the Bush years, are now 35 percent and 15 percent, respectively.

“The income distribution has to stand,” Mr. Griffin said, adding that by trying to alter it with a more progressive income tax, “you end up in problematic circumstances. In the current world, there will be people who will move from one tax area to another. I am proud to be an American. But if the tax became too high, as a matter of principle I would not be working this hard.” ...

“In every organization there are a relatively small number of really critical people,” Mr. Pozen said. “You have to start with that premise, and I made a big difference.”...

“I think that most of the people running companies today are motivated and pay is a small portion of the motivation,” Mr. Sinegal said. So why so much pressure for ever higher pay?

“Because everyone else is getting it,” he said. “It is as simple as that. If somehow a proclamation were made that C.E.O.’s could only make a maximum of $300,000 a year, you would not have any shortage of very qualified men and women seeking the jobs.”...

“Carnegie made it abundantly clear that the centerpiece of his gospel of wealth philosophy was that individuals do not create wealth by themselves,” said David Nasaw, a historian at City University of New York and the author of “Andrew Carnegie” (Penguin Press). “The creator of wealth in his view was the community, and individuals like himself were trustees of that wealth.”

Repaying the community did not mean for Carnegie raising the wages of his steelworkers. Quite the contrary, he sometimes cut wages and, in doing so, presided over violent antiunion actions.

Carnegie did not concern himself with income inequality. His whole focus was philanthropy. He favored a confiscatory estate tax for those who failed to arrange to return, before their deaths, the fortunes the community had made possible. And today dozens of libraries, cultural centers, museums and foundations bear Carnegie’s name.

If you don't have enough to eat, chew on these statistics

Media Matters - Altercation by Eric Alterman:

When I turned to Sunday's Times, however, I learned from Larry Summers, whom I doubt even Will could paint as a Commie, that his favorite statistic these days is this: '[S]ince 1979, the share of pretax income going to the top 1 percent of American households has risen by 7 percentage points, to 16 percent. Over the same span, the share of income going to the bottom 80 percent has fallen by 7 percentage points. It's as if every household in that bottom 80 percent is writing a check for $7,000 every year and sending it to the top 1 percent.' What's more, 'In 2004, according to the Congressional Budget Office's latest official analysis, households in the lowest quintile of the country were making only 2 percent more (adjusted for inflation) than they were in 1979. Those in the next quintile managed only an 11 percent rise. And the middle group was up 15 percent. Do you sense a pattern? The income of families in the fourth quintile -- upper-middle-class folks with an average yearly income of $82,000 -- rose by 23 percent. Only when you get to the top quintile were the gains truly big -- 63 percent.' That one's here.

Here's my 'favorite' statistic: Over the last quarter century, the portion of the national income accruing to the richest one percent of Americans has doubled. The share going to the richest one-tenth of one percent has tripled, and the share going to the richest one-hundredth of one percent has quadrupled. For working people, wages and salaries now make up the lowest share of the nation's gross domestic product since the process of collecting this data began more than 60 years ago. For the poor, just in the years since 2000, the number of Americans living below the poverty line has increased by nearly a third. Meanwhile, the average CEO of a Standard & Poor's 500 company took home $13.51 million in total compensation in 2005, a year in which the top one percent of Americans earned nearly twenty-two percent of all income. Believe it or not, by 11:02 a.m. of the first work day of work on the first day of the year, one of these average CEOs will "earn" more money than the minimum-wage workers in his company will make for the entire year.* To those who would argue that this is just the way the world works, one would have to ask, why is this not the case in Europe or Japan? In fact, among major world economies, the United States in recent years has had the third-greatest disparity in incomes between the very top and everyone else; only Mexico and Russia are worse.