The massive accumulation of wealth at the top hurts all of us.
Servant's quarters and vagrant's crash pad
November 19, 2013
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Here's something to read after you get done trying to figure out how
to make the mortgage or the rent or the car payment this month. It's a
little story about how the other half lives. Well, maybe not the other
half, exactly. More like the obscenely wealthy .01%.
What do you do when you just have too darn much money? Let’s say you already have
your mansion(s), your jet, your yacht, your cars, your $50,000 watches, and
you’ve still got too much money left over. (Yes, this really is a
problem some people have.) While many, many Americans are struggling to
get by, and a very few ultra-wealthy have too much money, here are five
signs that the rich are just
too rich.
1) You can
eat a $95,000 truffle. The restaurant
Nello,
a Wall Streeter hangout in New York, offers a truffle for $95,000. A
Russian billionaire named Vladimir Potanin recently ate one. Keep in
mind that $95,000 is to a billion as 95 cents is to $10,000. If $10,000
is an amount you find too much to fathom, it’s like 9.5 cents to $1000.
(PS, enjoy the
terrible reviews the place gets on Yelp.)
2) You can get a $5,000 hamburger for lunch. The Fleur de Lys restaurant in Las Vegas at Mandalay Bay
offers the "Fleurburger 5000" for
$5,000. The burger consists of a Kobe beef patty “topped with a rich
truffle sauce and served on a brioche truffle bun. And this burger comes
with its own beverage, a bottle of 1990 Chateau Petrus that is served
in Ichendorf Brunello stemware that you get to keep.”
3) You can get a
$500 milkshake to
go with your $5,000 hamburger. The Powder Room restaurant in Los
Angeles is selling a milkshake for $500. For your money you get “special
stuff: edible gold, Belgian chocolate, and a crystal ring.”
What Next?
A
lunch with a $95,000 truffle, a $5000 hamburger and a $500 milkshake
doesn’t even add up to pocket change. So how about a bottle of wine? Of
course, you can’t just swill down any bottle of wine—life is too short.
So let’s go for it.
4) A bottle of 1811 Chateau d’Yquem
sold at auction for $117,000. If you want a larger bottle of wine, the Le Clos wine shop in Dubai International Airport
is offering three 12-liter bottles of 2009 Château Margaux for $195,000 each.
What do you look at while you are eating and drinking your awesome, and awesomely expensive, luxury?
5) A piece by
Francis Bacon
sold for $142 million at an art auction. Three other pieces sold for
more than $50 million; 11 for more than $20 million; and 16 sold for
more than $10 million. An Andy Warhol piece sold for almost $60 million.
Too Much In The Hands Of Too Few
This really is all about too much money in the hands of too few people. Agustino Fontevecchia at Forbes writes in
"The Reason Why Francis Bacon's 'Lucian Freud' Is Worth $142 Million":
"As
the ultra-wealthy become even wealthier, the top-end of the art market,
along with real estate and other luxury sectors, have experienced an
incredible surge as cash is being channeled into alternative
investments."
Fontevecchia explains,
"The
final, and possibly most important factor is the rise of the mega-rich.
“Since the recession, the wealthy appear to be becoming even wealthier,
while middle-class wages are more stagnant,” said Galbraith, who notes
this is apparent in the art market where the high-end is experiencing
more activity. “The ultra high net worth and the newly wealthy are
looking to get into the art market,” said Markley, who notes
contemporary art is accessible and acts well as a status symbol. If the
Forbes 400 is any indication, the wealthy are getting wealthier, with
the 400 richest Americans now worth a cumulative $2 trillion, up $300
billion from a year ago and with an average net worth of a record $5
billion, an $800 million increase from a year ago."
So what if a
very few people have such enormous sums? These expensive excesses of
food, wine and art don’t really affect regular people like you and me.
But it turns out that the distortions caused by the excesses of the
ultra-wealthy affect all of us a lot.
Take the housing market. You may have noticed headlines like the following:
Hedge funds crowd first-time buyers out of housing market or
How Big Institutional Money Distorts Housing Prices.
If you live in certain areas of the country, like the San Francisco Bay
Area, rents are soaring and it is unimaginable that you might ever
purchase a place to live. The ultra-wealthy are purchasing houses by the
hundreds to be rented out.
Then, of course, comes the usual next
step when the ultra-wealthy are involved: they use their wealth and
power to get things the rest of us can’t. One frequent example is
demands for tax cuts. In cash-strapped Dayton, Ohio, this story:
Hedge Fund Turned Property Owner Seeks Large Tax Cuts:
“Magnetar
Capital LLC, investigated by the Securities and Exchange Commission for
its housing bets leading up to the property crash, acquired a rental
business in January with about 1,900 properties from Charles H. Huber’s
widow. In April, its management company applied for the largest cut to
property tax assessments in the county’s history. The move could curb
funding for public schools, the police and fire departments and services
to the disabled, said Montgomery County Auditor Karl Keith.”
A
terrible, wealth-worshiping philosophy has taken hold among many of our
conservative policymakers. A couple of months ago a piece in Forbes,
Give Back? Yes, It's Time For The 99% To Give Back To The 1%, spelled out this conservative philosophy:
“The
community” never gave anyone anything. The “community,” the “society,”
the “nation” is just a number of interacting individuals, not a mystical
entity floating in a cloud above them. And when some individual
person—a parent, a teacher, a customer–”gives” something to someone
else, it is not an act of charity, but a trade for value received in
return.
[. . .] Here’s a modest
proposal. Anyone who earns a million dollars or more should be exempt
from all income taxes. Yes, it’s too little. And the real issue is not
financial, but moral. So to augment the tax-exemption, in an annual
public ceremony, the year’s top earner should be awarded the
Congressional Medal of Honor."
The Forbes piece says that
profit—no matter how attained—is the true measure of value in society.
According to one example used by the author, Goldman Sachs has "done
infinitely more for mankind" than people like Mother Teresa. The author
knows this is true because of Goldman Sachs' "billions in profits."
You may remember reading that Goldman Sachs was accused of working with a hedge fund
to sell "designed-to-fail" investments to
customers like pension funds, so the hedge fund could profit from
betting that the investments would fail. According to this conservative
philosophy, Goldman Sachs' profits are a measure of the "value created"
by the "mental effort" that Goldman and the hedge fund put into
developing this scheme.
The ultra-wealth of a few may be directly
related to the way many people find themselves trying to figure out how
to make their mortgage/rent, car payments, etc. Four hundred Americans
have more wealth than half of all Americans combined, and just the six
Walton heirs have more wealth than a third of all Americans combined.
Yet companies like Walmart pays its employees so little that many of
them have to
turn to the taxpayers for assistance like food stamps just to get by.
This
worship of the ultra-wealthy is manifested in policies that give
privileges to the rich the rest of us don’t receive. The principle of
one-person-one-vote gives way to power and our society eventually
becomes ruled by the principle of one-dollar-one-vote.
Examples of
our abandonment of the principles of democracy in favor of
more-for-the-wealthier include the change from “high-occupancy
lanes” where cars with two or three people can bypass traffic jams to
toll lanes, where drivers who have more money can purchase the right to
bypass traffic jams. We also experience this when we see first-class
passengers allowed to bypass the long security lines at airports.
In a recent
NY Times op-ed,
The Extra Legroom Society,
Frank Bruni writes about how people of greater wealth can purchase the
right to board a plane earlier, even the right to bypass lines or make
others wait while they go around again for rides at amusement parks.
While these are examples of businesses, not our government, introducing
tiers for the wealthier, they show how Americans have come to accept
that people with more money should be allowed to bypass them.
Bruni
writes, “But lately, the places and ways in which Americans are
economically segregated and stratified have multiplied, with
microclimates of exclusivity popping up everywhere. The plane mirrors
the sports arena, the theater, the gym. Is it any wonder that class
tensions simmer?”
These are a few examples of the excesses the
super-wealthy indulge in, along with examples of ways their super-wealth
harms the rest of us. There are far more examples in evidence these
days. Our democracy—the ability of We the People to make our own
decisions about how we should be governed—is what is really at stake as
more and more wealth accumulates among fewer and fewer people.
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