Opinion

The Great Debate

Steven Cohen: The Gilded Age revisited

There he is in all his tarnished glory: Steven A. Cohen, arguably the most famous, and infamous, hedge fund manager in the United States. Maybe the world.

He lives in a 35,000-square foot Greenwich, Connecticut, mansion with an indoor skating rink, golf course and everything an exclusive school might offer. His New York City duplex in Bloomberg Tower is for sale at $115 million. He’s staying in a $23.4 million Greenwich Village maisonette, while his $38.8 million 8,250 square-foot house nearby is being renovated. Last summer he bought an East Hampton beach house for $60 million. He has another place there — 10 bedrooms and a spa — but it isn’t close enough to the water.

Cohen’s extensive art collection could fill a private museum. It includes Jeff Koons’ enormous yellow balloon dog sculpture and Pablo Picasso’s “Le Rêve.” Damien Hirst’s dead shark, preserved in formaldehyde, hangs from the ceiling in Cohen’s office. This may or may not be an intentional symbol of his methods of operation.

Though he is selling some of his art this week, Cohen is unlikely to have a tag sale — even after the $1.8 billion settlement he made this month with the SEC on behalf of his hedge fund, SAC Capital Advisors, which admitted to insider trading. He is enjoined from managing other people’s money — forever. But with a more than $7 billion fortune left, Cohen can set up a family office to invest the remainder.

One Gilded Age gives way to another, the money goes round and round, and the more things change, the more they stay the same.

Why low social status can be bad for your health

Inequality is at an all-time high in America. Since the 2008 crash, recent IRS figures show, the wealth of the top 1 percent grew 31 percent while the rest of American incomes grew by less than 1 percent. But although it might appear that income disparities affect only the poor and have primarily an economic impact, dozens of studies now link extreme inequality with poor health and shorter lives, across the entire socioeconomic spectrum.

Overall, the United States has among the largest social and economic inequalities of any rich country. Japan and the Scandinavian countries have the smallest. The more equal countries also have the longest life expectancies — and the richest American men only have the life expectancy of an average Japanese man, which is 4.5 years longer than the U.S. average, according to Sir Michael Marmot, a leading researcher on inequality and professor of epidemiology at University College London. He notes that residents of affluent suburban Maryland live, on average, 17 years longer than people in inner city Washington, D.C.

Marmot’s own research focuses on the UK, where a national healthcare system provides all socioeconomic classes with quality care. He has compared low- and high- ranking British civil servants over the course of their lives on a variety of health measures, ranging from cancer to obesity to alcohol addiction. For virtually all conditions except breast and prostate cancer (it is not clear why these are exceptions), Marmot found that those at the bottom are at dramatically greater risk, with overall mortality up to three times higher, depending on the specific condition. Increased levels of unhealthy behavior among the less-affluent — like smoking — did not account for all of the differences. Also, even the lowest-ranked civil servants in Marmot’s research were employed, meaning that those on bottom rungs weren’t impoverished, simply less well-off.

Obama on King, but in a passive voice

It was a sermon — of sorts.

President Barack Obama’s address at the Lincoln Memorial on Wednesday only rarely echoed the cadence — the preacher’s rhythm — of the speech he was there to commemorate, and could not match its moral force. But this was a sermon all the same.

It was, to be precise, an exhortation against economic inequality — a fitting message on the 50th anniversary of the March on Washington for Jobs and Freedom, and certainly in keeping with Martin Luther King Jr.’s dream.

But the real measure of yesterday’s speech is not whether it was as powerful as King’s — will any speech ever be? — but whether it was the most effective speech Obama could have given on this stage, at this moment in time.

Trying to raise a family on a fast-food salary

Fast-food workers in more than 50 cities Thursday are striking for fair pay and the right to form a union — the biggest walkout to hit the industry. This latest round of labor unrest comes 50 years after hundreds of thousands of Americans, led by Martin Luther King Jr., joined the March on Washington for Jobs and Freedom, demanding not only civil rights, but also good jobs and economic equality.

One demand of the 1963 marchers was raising the federal minimum wage to $2 an hour. In today’s dollars, that’s roughly $15 an hour — what the striking fast-food workers are now calling for.

For all the progress made since 1963, the reality is that economic inequality persists and continues to grow. Income inequality is greater today in the U.S. than in any other OECD nation, except Chile, Mexico and Turkey, and exceeds that of many developing countries.

Fighting discrimination, as inequality grows

I grew up in the segregated South. I tell students the story of how, as a young boy, I went with my mother to Bloomberg’s Department Store on High Street in Portsmouth, Virginia. There was a stack of doilies on the ladies’ hat counter and I asked my mother what they were for. She explained that a black woman had to put a doily on her head before trying on a hat, because a white woman would not purchase a hat that had been on a black woman’s head.

My students think I am making all this up. They refuse to believe such things were true. It is too absurd, they insist.

In his “I Have a Dream” speech 50 years ago, Martin Luther King Jr. said, “The life of the Negro is still sadly crippled by the manacles of segregation and the chains of discrimination.” While the problem of discrimination has not been fully resolved, the country has made great progress since King spoke in 1963, which was before passage of the Civil Rights Act.

The Supreme Court ‘s Gilded Age redux

The Supreme Court belongs to the small club whose members seem to assume that saying something makes it so. It deals in precedents — not the same thing as dealing in history. It prefers obiter dicta to the messiness of the past.

In his Citizens United opinion, Justice Anthony Kennedy wrote, “By definition, an independent expenditure is political speech presented to the electorate that is not coordinated with a candidate.”

Really? The equation of money with speech has gotten a lot of well-deserved attention, but the inelegant “not coordinated with a candidate” seemed attached only to define “independent.” Does the phrase mean that if expenditure was coordinated with a candidate it was not political speech and thus not protected?  We are about to find out.

‘Democratic wing’ of Democratic Party takes on Wall Street

The chattering classes are fascinated by the Republicans’ internecine battle to redefine the party in the wake of the George W. Bush calamity and the Mitt Romney defeat — from Senator Rand Paul’s revolt against the neoconservative foreign policy, to intellectuals flirting with “libertarian populism.” Less attention has been paid, however, to the stirrings of what Senator Paul Wellstone dubbed “the Democratic wing of the Democratic Party” — now beginning to challenge the Wall Street wing of the party.

Perhaps the strongest demonstration of this was the barrage of “friendly fire” that greeted the White House’s trial balloon on nominating Lawrence Summers to head the Federal Reserve Bank. More than one-third of Democrats in the Senate signed a letter supporting Janet Yellen, now vice chairwoman of the Fed. More than half of the elected Democratic women in the House of Representatives signed a similar letter. Many were appalled at the notion of passing over the superbly qualified Yellen for Summers, with his notorious record of denigrating and dismissing women.

But, as Katrina vanden Heuvel, editor of the Nation wrote in the Washington Post, Summers also drew opposition because he was the “poster boy for the Wall Street wing of the party — literally.” (Summers joined then-Treasury Secretary Robert Rubin and then-Federal Reserve Chairman Alan Greenspan on the now risible 1999 Time magazine cover celebrating the “Committee to Save the World” — before the global financial collapse exposed the folly of their policies).

from David Rohde:

Two American families — and two Americas

Over the last 20 years, two middle class American families -- the Stanleys and the Neumanns -- have done all the right things. Milwaukee natives, they worked hard, learned news skills,  and tried to show their children that strivers would be rewarded.

But their lives -- as captured in an extraordinary Frontline documentary -- are an American calamity. Followed by filmmakers for two decades, they move from dead-end job to dead-end job, one of the couples’ divorces, and most of their children spiral downward economically, not up.

The Stanleys and the Neumanns are a microcosm of the middle class that President Barack Obama -- and House Republicans -- will spar over for the remainder of Obama's presidency. And they are part of a global trend. Across industrialized nations, income inequality is growing and people like the Stanleys and Neumanns are the losers.

from The Edgy Optimist:

Obama sees the limits of government

President Barack Obama made the middle class the focus of his State of the Union address on Tuesday. He was lauded by some as fighting for jobs and opportunity, and even for launching a “war on inequality” equivalent to President Lyndon B. Johnson’s 1960s War on Poverty. He was assailed by others for showing his true colors as a man of big government and wealth redistribution.

Yet the initiatives Obama proposed are striking not for their sweep but for their limited scope. That reflects both pragmatism and realism: Not only is the age of big government really over, so is the age of government as the transformative force in American society. And that is all for the best.

Wait a minute, you might reasonably object: What about healthcare? What about the proposals for minimum -wage increases, for expanded preschool, for innovation centers, for $50 billion in spending on roads and infrastructure? Surely those are big government and aim, effectively or not, for transformation?

Populists, plutocrats and the GOP sales tax

February 1913 marked a turning point in U.S. history. One hundred years ago this month, the states ratified the 16th Amendment, clearing the way for adoption of a federal income tax. Two decades before, in 1892, the Populist Party had first put a progressive income tax on the national agenda.

The income tax faced steep conservative opposition. Since it was enacted, in fact, the political wars over income tax have never stopped. Conservatives battled against it when it was first proposed and have continued the struggle ever since. Now, Tea Party conservativism has given that fight new force.

The economist Joseph Schumpeter called tax systems the “thunder of world history.” Because if you dig beneath the rhetoric, tax systems reveal the underlying direction in which societies move. The saga of the income tax says a great deal about changes in America.

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