- I wonder why rich people wonder why people hate them.
In Manhattan, the upscale clothing retailer Barneys will replace the bankrupt discounter Loehmann’s, whose Chelsea store closes in a few weeks. Across the country, Olive Garden and Red Lobster restaurants are struggling, while fine-dining chains like Capital Grille are thriving. And at General Electric, the increase in demand for high-end dishwashers and refrigerators dwarfs sales growth of mass-market models.
As politicians and pundits in Washington continue to spar over whether economic inequality is in fact deepening, in corporate America there really is no debate at all. The post-recession reality is that the customer base for businesses that appeal to the middle class is shrinking as the top tier pulls even further away.
If there is any doubt, the speed at which companies are adapting to the new consumer landscape serves as very convincing evidence. Within top consulting firms and among Wall Street analysts, the shift is being described with a frankness more often associated with left-wing academics than business experts.
“Those consumers who have capital like real estate and stocks and are in the top 20 percent are feeling pretty good,” said John G. Maxwell, head of the global retail and consumer practice at PricewaterhouseCoopers.
In response to the upward shift in spending, PricewaterhouseCoopers clients like big stores and restaurants are chasing richer customers with a wider offering of high-end goods and services, or focusing on rock-bottom prices to attract the expanding ranks of penny-pinching consumers.
“As a retailer or restaurant chain, if you’re not at the really high level or the low level, that’s a tough place to be,” Mr. Maxwell said. “You don’t want to be stuck in the middle.”
Although data on consumption is less readily available than figures that show a comparable split in income gains, new research by the economists Steven Fazzari, of Washington University in St. Louis, and Barry Cynamon, of the Federal Reserve Bank of St. Louis, backs up what is already apparent in the marketplace.
In 2012, the top 5 percent of earners were responsible for 38 percent of domestic consumption, up from 28 percent in 1995, the researchers found.
Even more striking, the current recovery has been driven almost entirely by the upper crust, according to Mr. Fazzari and Mr. Cynamon. Since 2009, the year the recession ended, inflation-adjusted spending by this top echelon has risen 17 percent, compared with just 1 percent among the bottom 95 percent.
More broadly, about 90 percent of the overall increase in inflation-adjusted consumption between 2009 and 2012 was generated by the top 20 percent of households in terms of income, according to the study, which was sponsored by the Institute for New Economic Thinking, a research group in New York.”
– The New York Times, "The Middle Class Is Eroding. Just Ask The Business World"
Tom Perkins is known is a founder of one of Silicon Valley’s top venture capital firms, Kleiner Perkins Caufield & Byers. He is not, however, a very adept historian.
In a letter to The Wall Street Journal, he suggests that progressives protesting income inequality are today’s equivalent of Nazi’s persecuting Jews.
(Perkins writes:) “Regarding your editorial ‘Censors on Campus’ (Jan. 18): Writing from the epicenter of progressive thought, San Francisco, I would call attention to the parallels of fascist Nazi Germany to its war on its ‘one percent,’ namely its Jews, to the progressive war on the American one percent, namely the ‘rich.’
From the Occupy movement to the demonization of the rich embedded in virtually every word of our local newspaper, the San Francisco Chronicle, I perceive a rising tide of hatred of the successful one percent.
… “This is a very dangerous drift in our American thinking. Kristallnacht was unthinkable in 1930; is its descendent ‘progressive’ radicalism unthinkable now?”
… This is the reductio ad absurdum of a rich-guy’s persecution complex. The Jews were a minority. The rich are a minority. Therefore, criticizing the rich is akin to committing genocide against the Jews. QED.”
I mean Jesus H. fucking Christ. Money can’t buy you happiness. But apparently it can buy you an assload of stupid.
(Photo: Zuma Press via the Post)
(Photo: AP via The New York Post)
A broad swath of the nation’s leading chief executives dropped its opposition to tax increases on the wealthiest Americans on Tuesday, while the White House quietly pressed Wall Street titans for their support as well.
Before Tuesday’s about-face, the Business Roundtable had insisted that the White House extend Bush-era tax cuts to taxpayers of all income brackets, but the executives’ resistance crumbled as pressure builds to find a compromise for the fiscal impasse in Washington before the end of the year.
“We recognize that part of the solution has to be tax increases,” David M. Cote, chief executive of Honeywell, said on a conference call with reporters. “That’s the only thing that allows a reasonable compromise to be reached.”
Even as the Fortune 500 leaders announced their shift, the White House continued to work behind the scenes to woo some of Wall Street’s most powerful financiers — a group that had largely abandoned President Obama in his bid for a second term after supporting him in 2008.
After seeking out corporate leaders from industrial companies last month, the White House has intensified outreach to Wall Street in December.
On Wednesday, several hedge fund managers, including Daniel Och, the billionaire founder of Och-Ziff Capital Management, will meet with Valerie Jarrett, a top adviser to the president, and members of the White House economic team.
Last Monday, White House officials sat down with a more than half a dozen top bankers and financiers, including Gary D. Cohn, president of Goldman Sachs, and Greg Fleming, head of wealth management at Morgan Stanley.
The differing strategies — highly public meetings with corporate America and private arm-twisting with Wall Street — both appear to be aimed at winning popular support for higher taxes on the wealthy. The trade-offs being roundly fought over in Washington, like what government programs may be cut and which entitlements may be spared, are less important in this effort to muster highly compensated chieftains whose support for tax increases will provide cover for Congressional Republicans wary of being seen as too quick to compromise on higher tax rates.”
The New York Times, "Unlikely Backers In A Battle Over Taxes."
Something tells me Boehner’s backing down soon.
I know that a lot of us believed when we lowered capital gains rates in the 1990’s, that that was the right thing to do; that it would stimulate growth. (But) you go ten, 15 years later, and you see this divide between the richest Americans and the poorest Americans. You drive through Manhattan, Greenwich (Connecticut), where people have just accumulated — and Boston, wherever — just remarkable wealth! Vast sums of wealth! They are, you know, the landed gentry! And you sit there and you go, ‘You know what? These people that live in these mansions, and private jets, and live an extraordinary life like few Americans lived 30 years ago — they can probably deal with a 20 percent tax rate on capital gains instead of 15 percent. I don’t think that’s going to wreck the economy.’
And I think there are a lot of Republicans that are saying what a few of us were saying (during) the election — I think Bill Kristol said it: ‘Why are we fighting and risking our majorities protecting billionaires that are hedge fund guys that are paying (a) 14 per cent (effective tax rate)?”
– MSNBC host and conservative JOE SCARBOROUGH, asking rhetorical questions of detached rich folks and their Republican anti-fair-tax-rate defenders.
Guys, I get it: providing healthcare benefits to employees costs money. And, as a group, you tend to prefer things that do not cost that — I watch Undercover Boss. But own your layoffs and your policies. Let’s stop pretending that suddenly, with this election, bosses have been transformed into reluctant assholes.
Obamacare is just the latest excuse to wriggle out of the social contract. For many years now, full-time benefits like sick days, maternity leave, pensions, lunch hours, chairs — have disappeared by magically transforming full-time employees into ‘independent contractors’ or ‘part-time-20-year temp help.’ Wanna avoid paying half of your employees’ Social Security tax? Reclassify them as ‘independent contractors’ so they pay it all themselves! Make them fill out a 1099! ‘That’s not a full-time busboy — that’s Juan Co., LLC!’
…So let’s cut the ‘I’d loooove to be able to give employees healthcare — I just can’t!’ Let’s face the facts: pizza and coal companies are just unlucky enough to have a labor force that can’t be outsourced — you happen to be among the few industries that still has to hire Americans! I’m sure that if you could outsource your pizza-making to China, I’m sure that ‘Papa John’s’ would become Papa San’s. Which is actually (Japanese), but, you know, for the joke. You understand.
…So maybe next time, take all the millions you donated for partisan political purposes and pump it back into the type of healthcare advances that may ultimately increase business productivity! And then, we can just keep pizza out of politics.”
– JON STEWART, responding to business owners like Papa John’s CEO John Schnatter threatening to fire employees because of the implementation of Obamacare, on The Daily Show