SUPER-WEALTHY SUPERSEDED BY ‘SUPER-WEALTHIER’

“Some of it [income inequality], says Salim Furth, an economist with the conservative-leaning Heritage Foundation, is unavoidable in a global, higher-tech economy – and it may not be such a bad thing. When people talk about ‘income inequality,’ he says, they’re really talking about poverty, which is and always has been a problem. Poor people have lower health outcomes and other issues, Furth notes, whereas there’s not much difference once you consider families making more than about $50,000 a year. What appears to be a widening of the wealth gap is ‘the people who were super-wealthy have been superseded by people who are even super-wealthier,’ he says. Years ago, someone might have become a millionaire by selling a lot of refrigerators in the U.S. Now, he notes, someone can become a billionaire by developing a new smartphone.”

Susan Milligan, “The New Economic Issue, With the Economy Improving, Candidates Across the Political Spectrum Are Focusing on Income Inequality,” U.S. News & World Report, May 1, 2015.

MIDDLE CLASS IS KEY PART OF ELECTORATE

“Not only are middle-class Americans a key part of the electorate, but they also play a big role in the economy as a whole. Some 70 percent of the U.S. economy is consumer-driven, and it’s the middle class that tends to buy things like appliances and cars that keep the system humming (investments by the wealthy also create jobs, conservatives note, by establishing new businesses and expanding existing ones).”

Susan Milligan, “The New Economic Issue, With the Economy Improving, Candidates Across the Political Spectrum Are Focusing on Income Inequality,” U.S. News & World Report, May 1, 2015.

INCOME INEQUALITY GREW IN ECONOMIC EXPANSIONS

“To a liberal audience, the culprits [income inequality] are the GOP congressmen and governors who refuse to fund social safety net programs, raise state and federal minimum wages, and give tax breaks to the wealthy. But a quick look at history shows that the stratification of wealth grew enormously under former President Bill Clinton. During the economic expansion of 1993-2000, real income growth among the top one percent of earners almost doubled; for the lower 99 percent on the economic totem pole, real income grew by 20 percent, according to an analysis prepared by Emmanuel Saez, an economics professor at UC Berkeley. That meant that 45 percent of the economic growth during that period was captured by the small, one-percent sliver of Americans. The reason no one seemed to notice -- or at least, care – was that virtually all economic boats were lifted by the rising tide, with average income in real terms growing by nearly a third for the population as a whole. During the 2002-07 economic expansion during the George W. Bush years, the super-wealthy did even better, percentage-wise, capturing 65 percent of the income growth.”

Susan Milligan, “The New Economic Issue, With the Economy Improving, Candidates Across the Political Spectrum Are Focusing on Income Inequality,” U.S. News & World Report, May 1, 2015

‘IS THE AMERICAN DREAM DEAD?’

“The question [income inequality] has entered into legislative debates in both Congress and the states, on issues ranging from tax cuts to raising the minimum wage, imposing conditions on government assistance dollars, or giving the president fast-track authority to negotiate an international trade pact. And struggling Americans are looking at the top earners and wondering: is the American Dream dead?”

Susan Milligan, “The New Economic Issue, With the Economy Improving, Candidates Across the Political Spectrum Are Focusing on Income Inequality,” U.S. News & World Report, May 1, 2015

WHY DO PEOPLE AT THE TOP MAKE SO MUCH MONEY?

“Now that the rubble has been cleared from the Great Recession, Americans have stopped bonding over the shared experience of the economic near-disaster and its aftermath. And people on the low-and-middle segment of the income spectrum have started to demand answers to a deeper and longer-in-development problem: why are the people at the top making so much money, while others work full time and must still rely on federal assistance to buy food and afford housing?”

Susan Milligan, “The New Economic Issue, With the Economy Improving, Candidates Across the Political Spectrum Are Focusing on Income Inequality," U.S. News & World Report, May 1, 2015

VALEANT: ‘SUPER-AGGRESSIVE HEDGE FUND’

“For years, [the drugmaker] Valeant has been less like a drug company than like a super-aggressive hedge fund that just happened to specialize in pharmaceuticals. It made money not by providing economic value to customers but by financial engineering and by gaming the system. It exemplified a corporate era in which financialization too often eclipsed production. And, in the process, it forgot an important truth about markets; namely, that there are few free lunches.”

James Surowiecki, “The Roll-Up Racket,” in the New Yorker, April 4, 2016, page 31.

TAX SHELTERS AND BENEFICIAL FOREIGN TAX MERGERS

“The company [Valeant] . . .  pulled every trick in the financial-engineering handbook. In 2010, it merged with a Canadian company, in order to bring down its tax rate, and it sheltered its intellectual property in tax havens like Luxembourg. It used opaque accounting methods that made it hard for investors to judge how well acquired companies were doing. To ward off competition from generic drugs, Valeant entered into a complicated relationship with a mail-order pharmacy called Philidor. Meanwhile, it paid its executives exceedingly well, and tied their compensation to shareholder returns, thus encouraging a single-minded focus on stock price. Valeant embodied practically everything that people hate about business today.”

James Surowiecki, “The Roll-Up Racket,” in the New Yorker, April 4, 2016, page 31.