Category Archives: inequality

A family’s billions, artfully sheltered

The New York Times reports: As he stood in the opulent marble foyer of a Fifth Avenue mansion late last month, greeting the coterie of prominent guests arriving at his private art gallery, Ronald S. Lauder was doing more than just being a gracious host.

To celebrate the 10th anniversary of the Neue Galerie, Mr. Lauder’s museum of Austrian and German art, he exhibited many of the treasures of a personal collection valued at more than $1 billion, including works by Van Gogh, Cézanne and Matisse, and a Klimt portrait he bought five years ago for $135 million.

Yet for Mr. Lauder, an heir to the Estée Lauder fortune whose net worth is estimated at more than $3.1 billion, the evening went beyond social and cultural significance. As is often the case with his activities, just beneath the surface was a shrewd use of the United States tax code. By donating his art to his private foundation, Mr. Lauder has qualified for deductions worth tens of millions of dollars in federal income taxes over the years, savings that help defray the hundreds of millions he has spent creating one of New York City’s cultural gems.

The charitable deductions generated by Mr. Lauder — whose donations have aided causes as varied as hospitals and efforts to rebuild Jewish identity in Eastern Europe — are just one facet of a sophisticated tax strategy used to preserve a fortune that Forbes magazine says makes him the world’s 362nd wealthiest person. From offshore havens to a tax-sheltering stock deal so audacious that Congress later enacted a law forbidding the tactic, Mr. Lauder has for decades aggressively taken advantage of tax breaks that are useful only for the most affluent.

The debate over whether to reduce tax shelters and preferences for the rich is one of the most volatile in Washington and will move to the presidential campaign, now that repeated attempts in Congress to strike a grand bargain over spending cuts and an overhaul of the tax code have failed.

There’s an interesting backstory to this article. Charles Finch notes that since the Lauder group of companies are among the most lucrative of the New York Times‘ advertisers, “endangering this cosmetic revenue stream seems suicidal at best.” But Finch goes on to note the fiercely competitive relationship between the Lauder brothers, Ronald and Leonard (both collectors of Klimt), and writes:

[T]o ascertain, perhaps, what is really going on, one must go back to the book of Genesis, specifically to the tale of Cain and Abel. There has always been a presumptive sense of art-collecting museo-competition between the czar of MoMA, Ron, and the head of the inferior Whitney Museum, Leonard. Ron has always won this battle convincingly, in spite of the fact that he has been (as copiously detailed in the Times article) a dilettante, while older brother Leonard has run the family business.

Additionally, Leonard’s deceased bride Evelyn was a major hands-on executive and new product innovator in the Lauder cream stream. So let’s look deeper into the Times‘ expose. First, Ron’s position as CEO of Clinique is characterized as a sinecure and his business skills, relative to the company, as nonexistent.

Elements of Ron’s checkered career, especially his short and troubled stint as Ronald Reagan’s Ambassador to Vienna and his multimillion-dollar run for NYC mayor, are elucidated. And who do you think the Lauder relatives were who lent all their company stock to Ronald for tax avoidance purposes? The Leonard Lauder family.

To conclude, dear readers, who would be the only source kosher enough to green light the Times expose of Ronald Lauder’s tax strategies, while keeping the paper’s relationship with Estée Lauder safe and enjoying a little fraternal revenge under a cloud of personal grief? Leonard Lauder, of course!

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Money: A chart of almost all of it, where it is, and what it can do

Audrey Watters writes: Randall Monroe of xkcd has created an infographic titled “Money: A Chart of Almost All of It, Where It Is and What It Can Do.” It’s an incredible visualization representing trillions of dollars — what money is spent on (everything from iPads to charity to federal expenditures), and how money is earned (for individuals, corporations, charities, governments, etc.).

Click on either image below to study the full chart:

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How students landed on the front lines of class war

Juan Cole writes: The deliberate pepper-spraying by campus police of nonviolent protesters at UC Davis on Friday has provoked national outrage. But the horrific incident must not cloud the real question: What led comfortable, bright, middle-class students to join the Occupy protest movement against income inequality and big-money politics in the first place?

The University of California system raised tuition by more than 9 percent this year, and the California State University system upped tuition by 12 percent. The UC system is seriously contemplating a humongous 16 percent tuition increase for fall 2012. This year, for the first time, the amount families pay in UC tuition will exceed state contributions to the university system.

University students, who face tuition hikes and state cuts to public education, find themselves victimized by the same neoliberal agenda that has created the current economic crisis, and which profoundly endangers democratic values.

The ideal that California embraced in its 1960 master plan for higher education, that it should be inexpensive and open to all Californians, is being jettisoned without much debate. The master plan exemplified the thinking on education and democracy typical of Founding Fathers such as Thomas Jefferson. In 1786, Jefferson wrote from Europe to a friend:

Preach, my dear Sir, a crusade against ignorance; establish and improve the law for educating the common people. Let our countrymen know that the people alone can protect us against these evils [of tyranny], and that the tax which will be paid for this purpose is not more than the thousandth part of what will be paid to kings, priests and nobles who will rise up among us if we leave the people in ignorance. …

That is, Jefferson believed that the alternative to publicly funded education was the rise of an oppressive oligarchy that would manipulate the ignorant majority.

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Most American children lack economic security

Motoko Rich reports: With the Census Bureau fine-tuning its definition of poverty, a group of “near poor” has emerged — those who are not officially poor but are perilously close to it.

Another way of putting that is to look at “economic security,” the amount of income necessary to cover basic expenses without relying on public subsidies.

A new report from Wider Opportunities for Women, a nonprofit group that previously produced an index of what it takes to do more than survive while working, shows that 45 percent of United States residents live without economic security. That means they are not earning enough income to cover basic expenses, plan for important life events like college or save for emergencies like unexpected health bills.

“What does it take for households in this country to get by and be able to plan for their own futures based on the work that they do?” said Donna Addkison, president and chief executive of Wider Opportunities for Women. “We’re really looking at not just the lowest of the lowest income households but that slice of households that live somewhere above the poverty line but are constantly in danger of being thrown into financial catastrophe, and that’s a much larger slice of the American public than we are currently talking about.”

Although the study uses median incomes on a national basis, Wider Opportunities and its research partners are working on tables that define what economic security would mean on a state-by-state basis. Obviously, the income needed to cover basic expenses would be higher in New York City than in Omaha.

The report showed that 55 percent of children live in households where families do not earn enough to achieve economic security. Even among those households with two full-time workers, 22 percent of those families with children earn less than is necessary to guarantee economic security.

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Socialism for the rich, capitalism for the poor

George Monbiot writes: In the documentary series which finished on Friday evening, the heiress Tamara Ecclestone set out to prove that she isn’t “a pointless, quite spoilt, really stupid, vacuous, empty human being”. This endeavour was not wholly successful. Channel 5 showed her supervising the refurbishment of her £45m home in London, in which she commissioned a £1m bathtub carved from Mexican crystal, an underground swimming pool complex, her own nightclub, a lift for her Ferrari, a bowling alley with crystal-studded balls and a spa and massage parlour for her five dogs, to save her the trouble of taking them to Harrods to have their hair sprayed and their nails painted. But there was something the series didn’t tell us: how much of this you helped to pay for.

In court a fortnight ago, her father, the Formula One boss Bernie Ecclestone, revealed that the fact his family’s offshore trust, Bambino Holdings, was controlled by his ex-wife rather than himself could have saved him “in excess of £2bn” in tax. The name suggests that the trust could have something to do with supporting his daughter’s attempt to follow the teachings of St Francis of Assisi.

Ecclestone has also been adept at making use of the corporate welfare state: the transfer by the government of wealth and power from the rest of us to the 1%. After the mogul made a donation to Labour’s election fund, Tony Blair demanded that F1 be exempted from the European Union’s ban on tobacco sponsorship. The government built a new dual carriageway to the F1 racetrack at Silverstone.

In other countries his business has received massive state subsidies. Russia, for example, has recently agreed to build a circuit for Ecclestone to race his cars, and then charge itself $280m for the privilege of letting him use it. Working in India in 2004, I came across the leaked minutes of a cabinet meeting in which the consultancy McKinsey insisted that the desperately poor state of Andhra Pradesh – where millions die of preventable diseases – cough up between £50m and £75m a year to support F1. The minutes also revealed that the state’s chief minister had lobbied the prime minister of India to exempt Ecclestone’s business from the national ban on tobacco advertising.

Socialism for the rich, capitalism for the poor: that is how our economies work. Those at the bottom are subject to the rigours of the free market. Those at the top are as pampered and protected as Tamara Ecclestone’s dogs.

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More than 20% U.S. children live in poverty, Census says

Reuters reports: The number of children in the United States considered poor rose by 1 million in 2010, the U.S. Census said Thursday, with more than one in five of the youngest Americans now living in poverty.

“Children who live in poverty, especially young children, are more likely than their peers to have cognitive and behavioral difficulties, to complete fewer years of education, and, as they grow up, to experience more years of unemployment,” the Census said.

In 2010, when the Census survey was conducted, 21.6 percent of children across the country were poor, compared to 20 percent in 2009.

That was mainly due to a rise in the number of children living below the federal poverty threshold, defined as an annual income of $22,314 for a family of four, to 15.7 million from 14.7 million in 2009.

The figures reflect the overall state of the economy. The national poverty rate stands at 15.3 percent and the unemployment rate is at 9 percent some two years after the recession that began in 2007 officially ended.

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A world in protest

At Open Democracy, Paul Rogers writes: The authorities are undertaking a legal and judicial counter-offensive against the “occupy” camps that have sprung up in central locations in New York and London. But scores of camps remain across north America and western Europe, part of a diffuse and dispersed phenomenon that has acquired a life of its own within a few short weeks.

These protests echo others earlier in 2011, including the turbulent actions in Greece and the extensive mobilisations in Spain (see “A time of riot: England and the world”, 11 August 2011). They also connect with developments elsewhere: the mass student demonstrations in Chile that moved from opposition to a failing education system to a much wider campaign against marginalisation, and the protests by middle-class Israelis against their more restricted life-chances (albeit such conditions are still far outranked by the great poverty in the nearby occupied territories, notably Gaza).

This upsurge of demonstrations is largely a response to the renewed economic crisis and to the enduring spectacle of financial institutions paying huge salaries and even larger bonuses to their elites while the majority of populations bear the brunt of government-imposed cuts. More broadly it recalls the large-scale anti-globalisation movement of the late 1990s, not least around the Seattle (1999) and Genoa (2001) summits. This movement receded after 9/11 and the launch of the wars in Afghanistan and Iraq – but it has now returned, albeit in a different guise, as a result of the accumulating economic crises of 2007-11.

These protests, demonstrations and movements may well be sustained or they may (at least in the short term) recede. Yet in a global perspective they reflect two processes that lend them deep importance. [Continue reading…]

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The threat of solidarity — when power becomes afraid of the people

Martin Luther King Jr leading civil rights march from Selma to Montgomery, 1965

The 99% shut down Wall Street, November 17, 2011

Students lock arms before police assault, University of California at Berkeley, November 9, 2011

After a police assault (shown in the video above) on non-violent student protesters — whose only arms were the ones they interlocked — Robert Birgeneau, the chancellor at Berkeley, issued a statement saying:

It is unfortunate that some protesters chose to obstruct the police by linking arms and forming a human chain to prevent the police from gaining access to the tents. This is not non-violent civil disobedience. By contrast, some of the protesters chose to be arrested peacefully; they were told to leave their tents, informed that they would be arrested if they did not, and indicated their intention to be arrested. They did not resist arrest or try physically to obstruct the police officers’ efforts to remove the tent. These protesters were acting in the tradition of peaceful civil disobedience, and we honor them.

What Birgeneau objects to is resistance in any form and interlocking arms in defiance of an advancing line of police is indeed an act of resistance.

But more than that, it is an act of solidarity and nothing threatens institutional power more than unity among ordinary people.

When burly police officers thrust night sticks into the chests of young students, this is not simply what is euphemistically called a “show of force,” but instead seems to be a display of “forward panic.”

In the kind of police violence that sociologist Randall Collins has dubbed forward panic, a cauldron of pent up tension suddenly erupts. Among Collins’ insights is that because people (including police and soldiers) universally have high-threshold inhibitions that restrain them from becoming violent, when those inhibitions suddenly fall away, the targets of violence will most often be those who are perceived as weak, unwilling or incapable of hitting back. Fear targets the easiest opponent.

This is the micro-social context in which the police lash out, but at the same time there is a broader context that fuels the fear of those who have been invested with the power of the state.

In the face of mass resistance, the primary line of defense for the police is not their weapons or shields — it is an idea already under challenge: that the state is more powerful than the people. And once the fault-lines in that idea have been exposed, the power equation is in jeopardy of suddenly being reversed.

Over the last twelves months, in the Middle East, in Europe, and now in the United States, the seeds have already been planted which could grow into the most dangerous idea that ever swept the world: that we have a greater interest in uniting than we do in being set apart; that what we might gain together will far exceed what we can achieve alone.

Human solidarity — this is what now threatens governments, corporations and every concentration of power.

* * *

Protesters in New York today were joined by one former police officer who sees that it his duty to stand with the people: Retired Police Captain Raymond Lewis from Philadelphia.

This afternoon, Captain Lewis was marched away in cuffs after being arrested by the NYPD.

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Palestinian ‘Freedom Riders’ arrested on bus to Jerusalem

The Washington Post reports: Evoking the nonviolent tactics of the American civil rights movement, six Palestinian activists boarded an Israeli commuter bus linking Jewish settlements in the West Bank to Jerusalem on Tuesday and were arrested as they tried to ride through an Israeli checkpoint on the outskirts of the city.

The group, part of a loose network of independent activists in the West Bank, called themselves “Freedom Riders,” taking the name of civil rights activists who in the 1960s challenged segregation on interstate buses in the southern United States and were attacked by violent mobs.

The Palestinian activists said they were demanding the right to travel freely to Jerusalem, to which access from the West Bank is restricted by Israel, and protesting against bus companies running lines serving Jewish settlements. Israel tightened restrictions on entry of Palestinians to Jerusalem after a string of suicide bombings in the city during a violent uprising that erupted in 2000.

“We are using civil disobedience to disrupt the status quo,” Fadi Quran, one of the activists, said before boarding a bus operated by the Israeli Egged company at a stop serving settlements several miles north of Jerusalem. An Arab headscarf on his shoulders, Quran wore a T-shirt that said: “We shall overcome.”

“As part of our struggle for freedom, justice and dignity, we demand the ability to be able to travel freely on our roads, on our own land, including the right to travel to Jerusalem,” said a statement read by Hurriyah Ziada, a spokeswoman for the activists, in Ramallah before the group set out for the bus stop on back roads to avoid army checkpoints.

At the Hizma checkpoint on Jerusalem’s northern outskirts, Israeli police boarded the bus for identity checks and asked one of the Palestinians, Badia Dweik of Hebron, whether he had a permit to enter Jerusalem.

“Why don’t you ask the settlers for a permit?” Dweik replied, referring to the Israeli passengers. “It’s my right to ride the bus. This is racism. I’m just like them.”

“No permit, no entry,” a military policewoman told him. After Dweik refused to get off the bus, a group of officers tried to drag him off, but he went limp at the narrow doorway, thwarting the initial attempt to arrest him.

Nadim Sharabati from Hebron, sitting next to Dweik, was also told to get off. “Do you demand permits from settlers who come to our area?” he asked. A policeman replied, “Those are the laws.”

“Those are racist laws,” Sharabati said. “Tell me, isn’t this racist discrimination between me and the settlers?”

After a standoff, a larger police contingent boarded the bus and hauled off the activists, arresting them for trying to enter Jerusalem without permits.

The bus protest, which organizers said would be followed by more, drew responses ranging from indifference to hostility from Israeli passengers on board.

“Terrorists!” snapped one man.

Esther Cohen, from the settlement of Maaleh Levonah, said that allowing Palestinians on Israeli buses in the West Bank was a security risk and that she feared one could get off and carry out an attack in a Jewish settlement. Tapping her finger on the bulletproof window of the armored bus, she said, “When we can ride in an ordinary bus, then they can get on as well.”

Watching the activists and a crowd of journalists gather at the bus stop near his settlement, a man who gave his name as Hananel said that Palestinians should ride their own buses. “This is a Jewish state here,” he said.

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Economic segregation divides America

The New York Times reports: The portion of American families living in middle-income neighborhoods has declined significantly since 1970, according to a new study, as rising income inequality left a growing share of families in neighborhoods that are mostly low-income or mostly affluent.

The study, conducted by Stanford University and scheduled for release on Wednesday by the Russell Sage Foundation and Brown University, uses census data to examine family income at the neighborhood level in the country’s 117 biggest metropolitan areas.

The findings show a changed map of prosperity in the United States over the past four decades, with larger patches of affluence and poverty and a shrinking middle.

In 2007, the last year captured by the data, 44 percent of families lived in neighborhoods the study defined as middle-income, down from 65 percent of families in 1970. At the same time, a third of American families lived in areas of either affluence or poverty, up from just 15 percent of families in 1970.

The study comes at a time of growing concern about inequality and an ever-louder partisan debate over whether it matters. It raises, but does not answer, the question of whether increased economic inequality, and the resulting income segregation, impedes social mobility.

Much of the shift is the result of changing income structure in the United States. Part of the country’s middle class has slipped to the lower rungs of the income ladder as manufacturing and other middle-class jobs have dwindled, while the wealthy receive a bigger portion of the income pie. Put simply, there are fewer people in the middle.

But the shift is more than just changes in income. The study also found that there is more residential sorting by income, with the rich flocking together in new exurbs and gentrifying pockets where lower- and middle-income families cannot afford to live.

The study — part of US2010, a research project financed by Russell Sage and Brown University — identified the pattern in about 90 percent of large and medium-size metropolitan areas for 2000 to 2007. Detroit; Oklahoma City; Toledo, Ohio; and Greensboro, N.C., experienced the biggest rises in income segregation in the decade, while 13 areas, including Atlanta, had declines. Philadelphia and its suburbs registered the sharpest rise since 1970.

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The Occupy movements are the realists, not the ruling elites

John Gray writes: The Occupy movements have been attacked for being impractical visionaries. In fact it is the established political classes of the west that are wedded to utopian thinking, while the protesters are recalling us to the actualities of human experience. Based on economic theories that left out human beings, the global free market was supposed to be self-regulating. Now a process of disintegration is under way, in which the structures set up in the post-cold-war period are visibly breaking up.

Anyone with a smattering of history could see that the hubristic capitalism of the past 20 years was programmed to self-destruct. The notion that the world’s disparate societies could be corralled into a worldwide free market was always a dangerous fantasy. Opening up economies throughout the world meant ordinary people were more directly exposed to the gyrations of market forces than they had been for generations. As it overthrew existing patterns of life and robbed large numbers of people of any security they might have achieved, global capitalism was bound to trigger a powerful blowback.

For as long as it was able to engineer an illusion of increasing prosperity, free-market globalisation was politically invulnerable. When the bubble burst, the actual condition of the majority was laid bare. In the US a plantation-style economy has come into being, with debt-servitude for the many coexisting with extremes of volatile wealth for the few. In Europe the muddled dream of a single currency has resulted in social devastation in Greece, mass unemployment in Spain and other countries, and even, for some, reversion to a life based on barter: sucking society into a vortex of debt deflation, austerity policies are driving a kind of reverse economic development. In many countries a settled bourgeois existence – supposedly the basis of popular capitalism – has become an impossible aspiration. Large numbers are edging closer to poverty and a life without hope.

History tells us how perilous this process can be. It has been taken for granted that a sudden collapse of the kind that occurred in the former Soviet Union and more recently Egypt cannot happen in advanced market economies. That assumption may be tested severely in coming years. While totalitarian mass movements of the sort seen in the 30s are not going to return, Europe’s demons have not gone away. Blaming minorities and immigrants is a perennially popular response to economic dislocation, and ethnic nationalism can be hideously destructive. In the US the continuing demise of the middle class could engender a style of politics even more rancorous and unhinged than that prevailing today. A figure such as Father Coughlin, the Depression-era radio demagogue, shows what can be expected as the economy continues its slide. With the rise of trigger-happy politicians like Mitt Romney and the need for Obama to act tough, it would be unwise to rule out the prospect of another major war.

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Capitalism is the crisis

Poster by Favianna Rodriguez: “As a woman of color, and as a Latina working predominantly in spaces that affect la Raza, the current moment offers me the opportunity to talk about how Wall Street has affected our families. In case you didn’t see it, Pew Research center recently released a report on how Latino Household Wealth fell by 66% from 2005 to 2009. That means we lost 2/3 of our community’s assets! Now that’s an important reason why Latinos should care about the Occupy movement.”

Download this poster here [PDF].

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The new progressive movement

Jeffrey Sachs writes: Twice before in American history, powerful corporate interests dominated Washington and brought America to a state of unacceptable inequality, instability and corruption. Both times a social and political movement arose to restore democracy and shared prosperity.

The first age of inequality was the Gilded Age at the end of the 19th century, an era quite like today, when both political parties served the interests of the corporate robber barons. The progressive movement arose after the financial crisis of 1893. In the following decades Theodore Roosevelt and Woodrow Wilson came to power, and the movement pushed through a remarkable era of reform: trust busting, federal income taxation, fair labor standards, the direct election of senators and women’s suffrage.

The second gilded age was the Roaring Twenties. The pro-business administrations of Harding, Coolidge and Hoover once again opened up the floodgates of corruption and financial excess, this time culminating in the Great Depression. And once again the pendulum swung. F.D.R.’s New Deal marked the start of several decades of reduced income inequality, strong trade unions, steep top tax rates and strict financial regulation. After 1981, Reagan began to dismantle each of these core features of the New Deal.

Following our recent financial calamity, a third progressive era is likely to be in the making. This one should aim for three things. The first is a revival of crucial public services, especially education, training, public investment and environmental protection. The second is the end of a climate of impunity that encouraged nearly every Wall Street firm to commit financial fraud. The third is to re-establish the supremacy of people votes over dollar votes in Washington.

None of this will be easy. Vested interests are deeply entrenched, even as Wall Street titans are jailed and their firms pay megafines for fraud. The progressive era took 20 years to correct abuses of the Gilded Age. The New Deal struggled for a decade to overcome the Great Depression, and the expansion of economic justice lasted through the 1960s. The new wave of reform is but a few months old.

The young people in Zuccotti Park and more than 1,000 cities have started America on a path to renewal. The movement, still in its first days, will have to expand in several strategic ways. Activists are needed among shareholders, consumers and students to hold corporations and politicians to account. Shareholders, for example, should pressure companies to get out of politics. Consumers should take their money and purchasing power away from companies that confuse business and political power. The whole range of other actions — shareholder and consumer activism, policy formulation, and running of candidates — will not happen in the park.

The new movement also needs to build a public policy platform. The American people have it absolutely right on the three main points of a new agenda. To put it simply: tax the rich, end the wars and restore honest and effective government for all.

Finally, the new progressive era will need a fresh and gutsy generation of candidates to seek election victories not through wealthy campaign financiers but through free social media. A new generation of politicians will prove that they can win on YouTube, Twitter, Facebook and blog sites, rather than with corporate-financed TV ads. By lowering the cost of political campaigning, the free social media can liberate Washington from the current state of endemic corruption. And the candidates that turn down large campaign checks, political action committees, Super PACs and bundlers will be well positioned to call out their opponents who are on the corporate take.

Those who think that the cold weather will end the protests should think again. A new generation of leaders is just getting started. The new progressive age has begun.

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Putting U.S. foreign aid in perspective

Most Americans vastly overestimate how much the U.S. government spends on foreign aid. In a recent poll, the median answer was that 25% of the federal budget goes to foreign aid. In reality it is about 1%. Along with the idea that the U.S. spends massively overseas is the idea that America gives and the rest of the world takes, but in its most recent rankings, the Centre for Global Development places the U.S. #17.

Click on the image below to explore the CGD’s 2011 Commitment to Development Index.

David Roodman, senior fellow at the Center for Global Development in Washington, DC, introduces the Commitment to Development Index, which ranks wealthy nations by how much they help poorer ones.

The index is not without flaws in some of the reasoning it applies. For instance, in arriving at its overall rankings (which aggregate aid and other components such as security) the position of the U.S. was boosted this year thanks to Obama’s troop surge in Afghanistan. Because the war in Afghanistan has a UN mandate, the CGD dubs it a “peacekeeping” operation!

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The ultra-rich got to where they are through luck and brutality

George Monbiot writes: If wealth was the inevitable result of hard work and enterprise, every woman in Africa would be a millionaire. The claims that the ultra-rich 1% make for themselves – that they are possessed of unique intelligence or creativity or drive – are examples of the self-attribution fallacy. This means crediting yourself with outcomes for which you weren’t responsible. Many of those who are rich today got there because they were able to capture certain jobs. This capture owes less to talent and intelligence than to a combination of the ruthless exploitation of others and accidents of birth, as such jobs are taken disproportionately by people born in certain places and into certain classes.

The findings of the psychologist Daniel Kahneman, winner of a Nobel economics prize, are devastating to the beliefs that financial high-fliers entertain about themselves. He discovered that their apparent success is a cognitive illusion. For example, he studied the results achieved by 25 wealth advisers, across eight years. He found that the consistency of their performance was zero. “The results resembled what you would expect from a dice-rolling contest, not a game of skill.” Those who received the biggest bonuses had simply got lucky.

Such results have been widely replicated. They show that traders and fund managers across Wall Street receive their massive remuneration for doing no better than would a chimpanzee flipping a coin. When Kahneman tried to point this out they blanked him. “The illusion of skill … is deeply ingrained in their culture.”

So much for the financial sector and its super-educated analysts. As for other kinds of business, you tell me. Is your boss possessed of judgement, vision and management skills superior to those of anyone else in the firm, or did he or she get there through bluff, bullshit and bullying?

In a study published by the journal Psychology, Crime and Law, Belinda Board and Katarina Fritzon tested 39 senior managers and chief executives from leading British businesses. They compared the results to the same tests on patients at Broadmoor special hospital, where people who have been convicted of serious crimes are incarcerated. On certain indicators of psychopathy, the bosses’s scores either matched or exceeded those of the patients. In fact on these criteria they beat even the subset of patients who had been diagnosed with psychopathic personality disorders.

The psychopathic traits on which the bosses scored so highly, Board and Fritzon point out, closely resemble the characteristics that companies look for. Those who have these traits often possess great skill in flattering and manipulating powerful people. Egocentricity, a strong sense of entitlement, a readiness to exploit others and a lack of empathy and conscience are also unlikely to damage their prospects in many corporations.

In their book Snakes in Suits, Paul Babiak and Robert Hare point out that as the old corporate bureaucracies have been replaced by flexible, ever-changing structures, and as team players are deemed less valuable than competitive risk-takers, psychopathic traits are more likely to be selected and rewarded. Reading their work, it seems to me that if you have psychopathic tendencies and are born to a poor family you’re likely to go to prison. If you have psychopathic tendencies and are born to a rich family you’re likely to go to business school.

This is not to suggest that all executives are psychopaths. It is to suggest that the economy has been rewarding the wrong skills. As the bosses have shaken off the trade unions and captured both regulators and tax authorities, the distinction between the productive and rentier upper classes has broken down. CEOs now behave like dukes, extracting from their financial estates sums out of all proportion to the work they do or the value they generate, sums that sometimes exhaust the businesses they parasitise. They are no more deserving of the share of wealth they’ve captured than oil sheikhs.

The rest of us are invited, by governments and by fawning interviews in the press, to subscribe to their myth of election: the belief that they are the chosen ones, possessed of superhuman talents. The very rich are often described as wealth creators. But they have preyed upon the earth’s natural wealth and their workers’ labour and creativity, impoverishing both people and planet. Now they have almost bankrupted us. The wealth creators of neoliberal mythology are some of the most effective wealth destroyers the world has ever seen.

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