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MAKING CONTACT

Transcript: #34-98 Narrowing the Gap: Wealth and Economic Justice
August 26, 1998

Program description at http://www.radioproject.org/archive/1998/9834.html

Phillip Babich: Welcome to Making Contact, an international radio program seeking to create connections between people, vital ideas and important information. This week on Making Contact:-

Mike Lapham: We believe that the burden of paying taxes in this country should fall more squarely on those who are more able to pay.

Phillip Babich: The United States has the largest gap between rich and poor of any industrialized nation and the disparity continues to grow. According to the Organization United for a Fair Economy, the wealthiest 1% of the population has more assets than the bottom 92% combined. At the same time one out of every four children in this country is born into poverty. Now, some of the US’s most well off individuals are advocating for a more equitable means of income distribution. On this program, we take a look at what’s known as Responsible Wealth. I’m Philip Babich, your host this week on Making Contact.

In July, consumer advocate and one-time presidential candidate Ralph Nader wrote an open letter to Bill Gates, who is chairman of the Microsoft Corporation and number one on the Forbes 400 list of the wealthiest individuals in the United States. Nader urged Gates to join with other billionaires to address the unequal distribution of wealth worldwide. Gates’ fortune is estimated to be more than 64 billion dollars. Several weeks later Gates had not responded but other wealthy individuals are already organizing to promote social change and reform laws and institutions that primarily benefit the well to do. One such person is Jenny Ladd who founded a group called Class Action. She inherited a fortune from her families New-England based company. Ladd says that one reason the growing gap between rich and poor is not in the interest of the wealthy is because communities are breaking down and there’s increasing security risks for everyone.

Jenny Ladd: Money certainly does give one the privilege of good health care, of good education, of housing, there is absolutely a privilege in having wealth. But, living in a society where there are some people who have a lot and where some people have very little actually creates quite a tension. It means you spend your money on security systems, it means you walk around frightened, it means you see other people in pain. There is a part of your own humanity that is cut off. We can’t create community. My sense of security is based in relationship and based in friendship -based in communities that work, where people are able to be there to help one another. That is the real basis of security, from my point of view. And having distribution of wealth so skewed really ruptures that sense of community, really prevents people acting from that sense of community.

Phillip Babich: Ladd is also taking part in a small workshop that has grouped four low-income people with four wealthy people to open up a dialogue about class. She says that the concept of class is often ignored in the United States but it’s very much a part of our society.

Jenny Ladd: Very clearly there is class. I mean our country attempts to be democratic politically; it does not and has not attempted to be democratic economically, I would say. My wealth comes from a man -his name is Charles Pratt. He made money through oil, way back at the turn of the century; it’s been passed down. I come from an aristocratic New England family; in that sense, there are obviously classes. We were all sent to private schools, I come from a family of people who went to private schools and who also gave to progressive philanthropies. I’m not saying philanthropy also is the answer either, it can sometimes just maintain the status quo. But, there are very clear classes in the sense of educational privileges -doorways that you can get into because you went to Harvard or because you know certain people or because you grew up with a certain set of literature, history and so forth that is the common lingo that marks you as someone who is from a higher class of some kind. I know many people who- the issue of language, again, this has come up in our cross-class group: accent, use of words, all are doorways or barriers to access to power often.

Phillip Babich: Jenny Ladd, founder of Class Action.

Peggy Law: Now, our listeners may find this a little hard to believe that people of wealth, who are getting wealthier everyday because of the economic conditions really want to change things. So, are you talking about sort of tinkering things a little bit so it gets shared around or are you talking about really restructuring the tax system and the economic system?

Phillip Babich: Making Contact’s Peggy Law speaking with Mike Lapham, project director of the organization Responsible Wealth, a project of United for a Fair Economy. Responsible Wealth recruits individuals who are among the top 5% of income-recipients and asset-holders in the United States.

Mike Lapham: We are talking about changing the rules. There are things that we can do to bring the bottom up and there are things that we can do to keep the top from getting so high. Currently, CEO’s, for example, are paid 212 times the average worker in the company. Meanwhile, people at the bottom end of the ladder are not able to earn what it takes to put a roof over their head, food on the table, have health insurance. Many of them are working part-time, two or three jobs. My background is in the housing field: for the last ten years, I worked providing low-income housing. The arithmetic is very simple, if you look at what it costs to rent a one-bedroom apartment in a city like Boston and you look at what a person on minimum wage makes in a year, the numbers just don’t add up. And when we have executives being paid millions of dollars and bonuses and not providing their employees with a livable wage, then that’s not a good situation for the country.

Peggy Law: And so you have this group that’s called Responsible Wealth; what is it and who’s part of it?

Mike Lapham: Responsible Wealth is an alternative voice of wealthy people in the top 5% of income and wealth in the country. That’s, believe it or not, people earning, households earning more than a $125,000 a year or with net worth in excess of half a million dollars. We are bringing together individuals and business leaders who have fallen into those categories, who are really all concerned about this growing divide, this growing economic gap in this country, and feel like it’s time to speak out more publicly. A lot of us give money to various causes and spent our time on various efforts to try to help in one way or another some social cause. But, this project is about using our voices to speak out; there needs to be an alternative voice to the voice that we see and hear prowling the halls of Congress, writing laws for their own special interests, going and having coffee with President Clinton. There needs to be an alternative voice that says, "Enough is enough, we don’t need more tax-breaks, we don’t need to cut the estate tax -something that only benefits the top 2%. We don’t need to cut capital gains tax; there are plenty of investment opportunities. The people who that affects -primarily the people in the top-10% of our economy- those people don’t need more incentives to invest and more money put into their coffers."

Peggy Law: Given the fact that those who make the rules are those who benefit by the rules right now, how hopeful are you that it’s possible to turn this country around so that it works for more people than just the very few?

Mike Lapham: I think there’s a growing sense of inequality in the country, I think people are starting to be outraged at what they see, in terms of CEO salaries, in terms of lay-offs, while a CEO gets a huge pay bonus and lays-off 10,000 or 40,000 workers in a year. I think there’s a growing movement towards saying, "We need a better system." Responsible Wealth is one voice in that movement; I think we’re tapping into some very influential people- descendants of founders of large corporations; many of our members are currently CEO’s or entrepreneurs; some have worked in high levels of government. We are bringing together a very powerful group of individuals to speak out on this. Responsible Wealth believes that those of us in the top 5% or the top 1% are doing just fine. I mean, 30 years ago, the top tax rate was at 90% before President Kennedy came into office; he cut it down to 70%. It’s only been in the past 15 or 20 years that it was cut as low as 28% under Reagan and Bush. If you look at what’s happened to our national debt during that time, there’s a very close correlation between the amount of money that has remained in the pockets of the wealthy and what our national debt is. And we believe that the wealthy in this country can afford to pay more taxes. It’s not about spending more as a whole country; it’s about where it’s distributed. We believe that the burden of paying taxes in this country should fall more squarely on those who are more able to pay. People who most of their income is from wages and most of it goes to basis needs of food, clothing, shelter -we don’t feel that they should be bearing the brunt of the tax burden.

Phillip Babich: Mike Lapham, project director of Responsible Wealth, speaking with Peggy Law.

Shereen Meraji: You are listening to Making Contact, a production of the National Radio Project. If you want more information about the subject of this weeks program or you would like to learn how you can get involved with Making Contact, please give us a call. It’s toll free: 800-529-5736. Call that same number for tapes and transcript orders.

Phillip Babich: Joining us now in the studio is Bob Burnett. He is formerly a vice-president with Cisco Systems, one of the companies that built the equipment for the internet and one of the fastest growing companies on the NASDAQ. He’s now working with Responsible Wealth. Bob, thanks for joining us on Making Contact.

Bob Burnett: It’s nice to be here.

Phillip Babich: Let’s back up a little bit in your life story and tell us how you first got involved with Responsible Wealth.

Bob Burnett: Well, I’ve been involved with Responsible Wealth for about a year; one of the board-members, Tracy Gary, made me aware of the organization. I went to the first national founding conference, which was held in New York, and I decided that I really wanted to put some energy into it. I proposed a particular role for myself and it was accepted. So, things have led to this point where I’m one of the board-members and I’m sort of the businessperson on the board. I’m the one that sort of is responsible for outreach to the business community and helping formulate the policy initiatives that are addressed to business-communities and so forth.

Phillip Babich: And why is it that you wanted to get involved with Responsible Wealth?

Bob Burnett: Well, most immediately, I just am very concerned about the growing gap between the rich and the poor in this country. I feel that it’s a very serious problem that’s not well understood and little publicized and I feel it’s a very great danger to our society. So, I really wanted to do something about it at the national level. But, in the long term -I’m a Quaker. I have this sort of dual personality where, at one end, I’m a technologist and I’ve been involved in computer-business since the sixties; but, also, since the war in Vietnam, I have been involved with the Society of Friends -I’m a Quaker. And one of the tenants of Quakerism that I really hold close to my heart is that of equality and this has led me to being involved in the Civil Rights Movement and various kinds of social movements that have to do with equality as an issue. And I think economic inequality is a huge issue for this country. So, it’s connected to a longer-term ethical interest.

Phillip Babich: You know, a prevalent concept in the US society is that one is able to generate their own wealth or make their own stake or make their own claim. What’s your experience and how does that jive with economic justice or equity? Do you believe that there is something inherent about the economic system in the United States that doesn’t allow for everyone to "make it," as it were?

Bob Burnett: Yeah, I believe that that is becoming less and less true. Because, although I’ve generated my wealth in my lifetime, I’ve been very fortunate and my parents were middle-class. Particularly, as I’ve worked with people in my community who are less fortunate and with young people, I realized that I’ve really had considerable advantages and privileges as I grew up. I think that for a lot of children in the United States now, it’s really inconceivable that they would amass a large amount of wealth, because they start with such great social handicaps. For example, I never worried about food, even in hard times my parents still put reasonable meals on the table. That is not true with a lot of the poor. We see children going to school here in Oakland and in Berkeley where I live, that don’t have adequate food. They go to school hungry in the morning and if it wasn’t for a school lunch program or a snack program at their daycare center or whatever, they wouldn’t have adequate nutrition. So, I just feel that inequality is becoming increasingly onerous in society and it permeates a whole lot of different levels.

Phillip Babich: You know, along the same lines, with regard to the gap between rich and poor, one thing that comes to mind is this correlation between executive compensation and employee lay-offs. We’ve all read story after story, especially over the last few years: massive lay-offs. One example I’ll site is the Kodak company, which laid off over 20,000 workers last year and the company CEO, George Fisher, received 60 million dollars in stock-options. From your experience, you were a vice-president, as we mentioned, within a large company, Cisco Systems. How were some of these decisions made? I know that Cisco Systems might not have been hatched, as it were, but how are some of those decisions made?

Bob Burnett: Well, yeah, Cisco never had lay-offs when I was involved with them and, to my knowledge, they haven’t had lay-offs since, so I can’t speak from that experience. But, I was involved as a manager in Silicon Valley before I came as an executive at Cisco and I did go through a lay-off period in a semi-conductor company in Fairchild; there, it was all concerned with profit. So, the situation that you describe at Kodak is nauseating to me; but it seems to me that it derives directly from a corporate perspective that focuses entirely on the next corner -and the next corner is profit. So, when the profits are threatened, then -in order to hold the stock price up- they lay-off people. Then, the executives are richly compensated for performing this onerous task. I think there’s something really wrong with the system -that we’re so focused on money. One of the problems, I think, about the growing gap between the rich and the poor is that we really have two competing value-systems. We have a value system that’s the corporate value system where money is everything and as long as you make money and as long as the stock price holds up, then you’re rich, powerful and famous. And we have another value system that we need to talk about more which really values people and it really says that the real security and the well-being of this country is wrapped-up in the people and people being well taken care of and having the basic necessities of life. And I think that these two value systems are in conflict here and we need to talk about it. As a Quaker, it’s part of the Judeo-Christian heritage, I really value equality and I value people and I have to say that I think corporations have gotten out of control in this context —that something needs to be done about it and that’s why I’m involved in Responsible Wealth.

Phillip Babich: And one thing that comes to mind is the recent strike fronted by Teamsters and the United Auto Workers against General Motors. There were a few articles in the mainstream press essentially claiming that the strike was good for America because it was supposedly cooling down the economy; there were enough workers laid-off and enough slow down in production. Is that, perhaps, one example of this kind of conflict in ethical systems that you are talking about?

Bob Burnett: Yeah, I think that would be a good example. But, more directly related to Responsible Wealth, part of what we are interested in is a living wage -that everyone who is working has a living wage and that’s tied up, I think, to the demands of the unions in the GM strike. It’s not just living wages; it’s actually protecting jobs and all that. I think those are very important stands that need to be talked about throughout this country; that it’s more important, in some cases, that corporations have less profits, but that they pay their workers a living wage and that they maintain jobs. That’s a stance that is alien to corporations, but I think it’s a positive one for the overall social well-being of the country.

Phillip Babich: Are you and others involved with Responsible Wealth suggesting a reform of the economic system or an overturn? Exactly how far do you want to go to reach this point of equity?

Bob Burnett: Well, that’s a really good question and I would say, what I want now, is a national dialogue on this subject. I think that we need to have a national discussion about this conflict in the value-systems. More specifically what Responsible Wealth is talking about now I think, are four kinds of reforms. One of them has to do with the living wage campaign that is raising the minimum wage to what really is the living wage for workers. Another is to start taxing excessive executive compensation. That is, there is a bill in Congress -the Sabo bill- which talks about when compensation for the executives is above and beyond a certain ratio with that of the lowest paid worker then it will be taxed at the corporate level. Another thing that we’re interested in is reducing, you know, tax loopholes. And then the third is changing the system where there is corporate welfare. As you know, at the same time where welfare is being reduced, there is still a very high level of subsidies to corporations for various kinds of goods. For example, for ethanol production: Arthur Daniels Midland. And, for tobacco production, we’d like to get that whole system replaced. So, we’re talking about very specific things. But first and foremost I think is that a country engages in a dialogue, you know what really are our values and what really is important for the long-term well-being of the society.

Phillip Babich: I think probably there are a lot of low-income people who might be engaged in some sort of dialogue about equity and about wanting a living wage etcetera. Are you seeing any movement among some of your peers who have made a lot of money, who are considering this issue more and more?

Bob Burnett: Well I’d say some movement but not enough. I mean, we need to do more work here. And one of the issues here is the fact that people in Silicon Valley, for example, are so busy; they are consumed by their corporate lives. So, part of it is breaking into that whole system and engaging with them; what we are trying to do now is to find ways to do that. So we’re working I think at the moment kind of at the periphery of that. That is we’re working with groups like the Social Venture Network and the like. Sort of groups of business people that are socially responsible to make them aware of this and to engage them with a dialogue. And then what I hope is that we’ll expand that circle. But it is a very difficult proposition to engage and to find the time to engage in a dialogue with the people that are running the corporations in the Silicon Valley because they spend all their time working in the corporate life.

Phillip Babich: Interesting. We’ve raised this question earlier in the program: a lot of what you may be recommending is against your own interest and against the interest of other people who have a fair amount of wealth. What are some of the reasons, you mentioned some earlier, ethically, but perhaps looking at society and where our society is heading, what are some of the reasons why, again, you proposed a more equitable tax structure, disincentives for lay-offs in corporations.

Bob Burnett: Well, again I think, it’s only against my interest depending upon your perspective. As an example of that, last year the capital gains rate was reduced, and in the near term I guess that is against my interest because I do pay capital gains tax. And so I did of course get additional income from that change in the law. Parenthetically that additional income is all going to charity so it actually isn’t affecting my standard of living. But in the long term what’s interesting me is living in a just society, and my children and my grandchildren living in a just society. And I don’t think any of us -no matter what our means- want to live in a society where there’s a class of the rich and there’s a huge class of the poor and there’s nothing in between. This has got all kinds of consequences for democracy and for life in the United States, as we know it. No one wants to live like that, no-one wants to live in a society where if you go outside, you know, in certain enclaves, you know, you are at risk because people are so desperate that they’ve armed themselves and so forth. So we’ve got to take a long-term perspective on this and from a long-term perspective these kinds of social reforms are absolutely in the interest of the rich. It has to do with the quality of life for society for decades to come.

Phillip Babich: We’ve been speaking with Bob Burnett; he was formerly vice-president with Cisco Systems and he’s now working with Responsible Wealth. Bob, thanks for joining us on Making Contact.

Bob Burnett: It was very nice to be here; thank you very much.

Phillip Babich: If you want to learn more about Responsible Wealth, you can give them a call; their phone number is 617-423-2148.

That’s it for this edition of Making Contact, a look at income distribution and responsible wealth. Thanks for listening. And special thanks this week to Peggy Law, for recorded portions. Norah Haldeman and Shereen Meraji assisted with production. I’m Phillip Babich.

If you want more information about the subject of this week’s program, call the National Radio Project at 800-529-5736. Call that same number for tapes and transcripts or if you’d like to make a comment or suggestion for future programs. That’s 800-529-5736.

Making Contact is an independent production funded by individual contributors. We’re committed to providing a forum for voices and opinions not often heard in the mass media. Our national producer is David Barsamian. Phillip Babich is our managing producer. Our senior advisor is Norman Solomon. Peggy Law is our executive director. Our theme music is by the Charlie Hunter Trio. For everyone at Making Contact, thanks for listening.