Now that Mitt Romney has decided to take a pass on a third bite at the White House apple it may be possible to define Romney’s lasting impact on American politics. While it’s hard to ignore “binders full of women” or the wonderful story of his dog strapped to the top of the family station wagon, I’m betting Romney’s lasting contribution to our political culture will be his historic 47 percent comment.
You may recall Romney’s comments during the 2012 campaign that were caught on tape while he apparently thought he was speaking candidly to a friendly audience.
“There are 47 percent of the people who will vote for the president no matter what,” Romney said. “All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe that government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you name it. That that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what. And I mean, the president starts off with 48, 49, 48—he starts off with a huge number. These are people who pay no income tax. Forty-seven percent of Americans pay no income tax. So our message of low taxes doesn’t connect. And he’ll be out there talking about tax cuts for the rich. I mean that’s what they sell every four years. And so my job is not to worry about those people—I’ll never convince them that they should take personal responsibility and care for their lives.”
The “47 percent” remark in and of itself didn’t doom Romney’s campaign, but added to his otherwise awful overall performance as a candidate the comment did cement the notion that the richy rich former private equity multi-millionaire was out of touch and not only not worrying “about those people,” but not caring much about them either. Left out of Romney’s 47 percent calculation was any consideration of stagnate incomes, the crush of debt that accompanied the home-buying binge or the skyrocketing costs to send a kid to college. Romney seemed to be suggesting that if American’s just worked harder, took more personal responsibility and quit depending on government all would be well. If only it were so easy.
I think we can mark the beginning of the intensifying political focus on income inequality to Mitt and his 47 percent. The fact that candidates in both parties now weave concern about income distribution and the stilted middle class into their stump speeches means the issue has lasting power and may even dominate the next presidential campaign. It’s one issue that appeals to the Tea Party Right and the Elizabeth Warren Left. During Romney’s short-lived flirtation with another run for the White House even the guy with the car elevator felt a need to address income inequality. We’ll hear plenty more in the months ahead.
For some time now I’ve been collecting bits of data and pieces of evidence about this issue in order to attempt to place it in contemporary and historical context. I’ll explore those issues in due course.
For the moment, and as a jumping off point, consider the following, with apologies to Harper’s, The Johnson Income Inequality Index.
Eighty people are as rich as half of the world’s population.
A recent report from the global anti-poverty group Oxfam finds that since 2009, the wealth of the 80 richest people in the world “has doubled in nominal terms — while the wealth of the poorest 50 percent of the world’s population has fallen.” Some of the methodology of the Oxfam report has been criticized, but not the essential thrust – a tiny handful of extraordinarily wealthy people dominate the world’s wealth.
In 81% of America’s counties the median income is lower today than 15 years ago.
In Idaho, for example, the median income in Valley County peaked in 1979. In Power County the peak was 1969. The same can be said for Coos County, Oregon; Whitman County, Washington and Fergus County, Montana.
The really, really, really rich are get much richer.
The New York Times reports that “the jet market is splitting in two. Sales of the largest, most expensive private jets — including private jumbo jets — are soaring, with higher prices and long waiting lists. Smaller, cheaper jets, however, are piling up on the nation’s private-jet tarmacs with big discounts and few buyers.”
If the gap between the top 1 percent and the rest of the world is widening, then the really, really, really wealthy are separating from the merely rich. As the Times says, “the super rich are leaving the merely very rich behind. That has created two markets in the upper reaches of the economy: one for the haves and one for the have-mores.”
Not since the Great Depression has wealth inequality been so acute.
A recent academic study shows that in the United States the disparities in wealth – the top 1 percent enjoying more wealth than the bottom 90 percent – hasn’t been so stark since the Great Depression.
The Guardian says the study shows “The growing indebtedness of most Americans is the main reason behind the erosion of the wealth share of the bottom 90%.”
CEO’s make 354 times as much as workers.
Most Americans, according to the Harvard Business Review, think the ratio of CEO pay to worker pay is about 30-1 and would be more or less comfortable with that. In fact the ratio is 354-1.
HBR notes the late management guru Peter Drucker’s warning “that any CEO-to-worker ratio larger than 20:1 would ‘increase employee resentment and decrease morale.’ Twenty years ago the ratio had already hit 40 to 1, and it was around 400 to 1 at the time of [Drucker’s] death in 2005. But this new research makes clear that, one, it’s mindbogglingly difficult for ordinary people to even guess at the actual differences between the top and the bottom; and, two, most are in agreement on what that difference should be.”
Middle class wages have been stagnant for 15 years.
As the website run by the data guru Nate Silver says: “One common definition of the American dream is the belief that each generation will do better than the one before. By that measure, the dream is fading. Take the generation born in 1970. In early adulthood, these Americans out earned their parents, those born in 1950. But their gains stalled in the 2000s, when they were in their 30s. Now in their 40s, their earnings have fallen behind those of their parents at the same stage in their lives.”
City dwellers often have no financial cushion.
Nearly half of all households in major cities don’t have enough money saved to cover essential expenses in an emergency, according to a study from the Corporation for Enterprise Development and reported in the Times.
“For many Americans, living without any cushion can lead to financial disaster. This nerve-racking financial insecurity has come to characterize life in cities across the country.”
Born poor, stay poor.
Black children born into poor families tend to remain poor all their lives, according to the Brookings Institution.
“The stain of racism is a stark, depressing reminder of how far short of its founding ideals the nation still falls. Even with the legal scaffolding of American racism dismantled—and even with an African-American in the White House—black children live in the poorest neighborhoods and attend the worst schools; they have the lowest chance of graduating college, and the highest risk of incarceration.
“The race gap is only the most vivid sign that birth is all too often destiny in America. While Americans have always been historically more tolerant of income inequality than their European cousins, this was generally true either because the average standard of living was rising across the board (the “rising tide floats all boats” consolation), or because there was lots of movement up and down the income ladder (the “Horatio Alger” ideal), or both. But the U.S. now faces a threefold threat: stagnant growth in standard of living, a big gap between the rich and the rest, and low rates of upward mobility.”
Rolls Royce is doing fine, thanks.
A Forbes survey last year identified 1,645 billionaires in the world, 219 more billionaires than the year before. Perhaps it is not surprising that the luxury automaker Rolls Royce reported a 33 percent increase in sales in 2014.
“If you look at the number of ultra-high net worth individuals around the world, that number is clearly growing,” said company spokesman Andrew Ball. “The luxury market is growing at the high end and we are delighted to be part of that.”
Yahoo writes: “The phenomenon helps to explain the strong sales of mega-yachts, rare jewelry and complicated, handmade Swiss watches. There are more people with more money looking for ways to stand out from the crowd — and in this context, a Rolls becomes a very noticeable statement.
“Ball said 70 percent of Rolls buyers are new to the brand, and roughly half choose to customize their cars by adding expensive personal touches. The cost of making a Rolls ‘bespoke’ — the British term for custom-made suits — rather than ‘off the rack’ can dwarf many household budgets.
“It can be simple, like having your initials stitched into the headrest or the veneer,” said Ball. “Customers enjoy this. It’s an emotional process.”
By the way the basic Rolls, without your initials stitched into the headrest, starts at $263,000. There is a waiting list.
Next time: The Political Response to Income Inequality.