SUMMER READING FOR THE SOCIALLY CONSCIOUS: Outrageous Fortunes
Summer Reading for the Socially Conscious
OUTRAGEOUS FORTUNES: Media Billionaires
and How They Change World Culture
by Rod and Alma Holmgren
ISBN: 0-9713929-0-0
available at most Bay Area bookstores or through BookPeople
Part of bring a decent writer (or editor) is knowing when to leave well enough alone. In the case of Rod and Alma Holmgren’s self-described “labor of love,” this important work should speak for itself, so we have reprinted a key chapter here. And for all the other mediageeks in our reading audience, this book is the motherlode — exhaustively researched and documented, and it even has footnotes for the all of us skeptics out there. -c.m.
The Gap Between The Rich and The Poor
Multimillionaire Joe gives his wife a million and tells her to spend $10,000 a day, then come back for more. She’s back in three months and 10 days. Multibillionaire Bud gives his wife a billion, tells her to spend $10,000 a day, then come back for more. She doesn’t live long enough to spend that billion; it would take 277 years.
Instead of $10,000 a day, the rank-and-file American worker, on the average, had to be content with his $51 a day in 1998. “Approximately 50 million Americans — 19 percent of the population — live below the national poverty line,” according to a Nation editorial. In 1998, “big league C.E.Os pocketed, on the average 419 times the earnings of the typical production worker,” New Yorker writer John Cassidy reported, adding, “Michael Eisner, the chairman and C.E.O. and primus inter parus of nineties plutocrats, earned more than $575 million in 1998.” These figures highlights the dramatic difference between America’s rich and the rest of society. Here we should also note that the three richest Americans, all profiled in this book, are Bill Gates with $63 billion, Paul Allen with $36 billion, and Warren Buffett with $28 billion. In 1999, they had “combined assets (that) were even more than the combined GNP of the 48 least developed nations.”
Bill Gates’s wealth dropped by 15 billion the day after a federal judge ruled against Microsoft in March, 2000. But the drop in his stock’s value didn’t bother him as much as the ruling itself. He still enjoyed the largest fortune in the world. His cofounder, Paul Allen, who lost $4 billion that day, was still right up there with around $36 billion.
When the first Kerner Commission report was issued in the 1960s, the rich-poor gap was already quite wide. When it was updated in 1997, Fred R. Harris, a Commission member, said, “We have more poverty and a greater percentage of poor people than we did 30 years ago, while the wealth and income gaps have widened.” Indeed, reporting on a 1999 Congressional Budget Office study, the New York Times said, “the gap between rich and poor has grown into an economic chasm so wide that this year the richest 2.7 million Americans, the top one percent, will have as many after-tax dollars to spend as the bottom 100 million.” If we consider the rich and poor on an international scale, “Today the wealth of the world’s 200 richest people is greater than the combined incomes of the poorest 41 percent of humanity.” A1999 UN report showed that “over the last four years the world’s 200 richest people have doubled their wealth to more than $1 trillion” and “in that same period the number of people living on less than a dollar a day has remained unchanged at 1.3 billion.”
Our media moguls — all of them — are high on the lists of the country’s — and the world’s — richest. The vast differences in wealth and income result in a wide range of contrasts in health, longevity, education, housing, travel, food, indeed everything that’s important in life.
In matters of health, any one of our media billionaires can call on the services of as many medical specialists as he or she wants. When Microsoft cofounder Paul Allen developed a fever in Paris while on a business trip, he was not satisfied with the diagnosis of a French doctor, so he booked a flight on a supersonic Concord jetliner from Orly Airport to Seattle. There, a team of specialists found that he had Hodgkin’s Disease, a form of lymph cancer. After two five-week courses of x-ray therapy, he resigned from Microsoft and took off for a year in Europe to think about what he wanted to do next. Today, the second richest man in the U.S., he is in good health, and heavily involved in a series of media companies.
A wealthy Allen can buy the latest medical treatment, no matter how costly, even if it isn’t covered by health insurance, while many poor people — 44 million of them in the U.S. — can’t afford even the most basic health coverage and so must rely on the federally- funded Medicaid program, if they can qualify.
“In a number of studies, both international and domestic, rates of heart disease, cancer and longevity seem to be influenced for the worse by a skewed distribution of income and wealth.” The U.S. is among the few countries in the industrial world without universal health care.
A1998 study at the University of Michigan found that those who are poor in the U.S. don’t live nearly as long as those who are rich. The study by epidemiology professor John Lynch “found that the death rate is higher in areas with higher income inequality, and the higher the inequality, the higher the death rates.” A 1999 report on America’s health by United for a Fair Economy found “21,000 children have stunted growth and 120,000 suffer from anemia because their families must decide between food and rent.” The Economist reported recently that “Almost one in five American children lives in poverty, a rate about twice as high as in the big economies of Western Europe.” In 1997, after the welfare reform law was passed, there were “an estimated 30 million hungry poor in America, of which 12 million were children” and “some 63 percent of the elderly are at moderate or high nutritional risk.” Among industrialized countries, the United States has the highest level of “human poverty — covering life expectancy, illiteracy and underemployment,” according to a United Nations report in mid-2000.
Ready access to medical care, good food and excellent housing all help the media billionaires stay active in their businesses well beyond normal retirement age. Kirk Kerkorian, who owns MGM Studios, just started a casino in Detroit and bought a second huge casino hotel in Las Vegas after he fathered a child at age 82. John Kluge, at 85, is still very much in charge at his Metromedia conglomerate. So is Sumner Redstone, who at age 76, runs the huge Viacom- Blockbuster-CBS megaconglomerate.
Most of the media billionaires completed college, some at schools like Harvard and Yale. And their children can make a choice of which universities to attend without looking at costs. Don Graham of the Washington Post empire went to Harvard and then to a special executive management program at Stanford.
Rupert Murdoch went to Oxford, John Malone to Yale, Sumner Redstone to Harvard and Harvard Law School. Exceptions: Bill Gates dropped out of Harvard after the third year because he was involved in computers, and Ted Turner was kicked out of Brown for breaking the rules. Almost all of America’s media billionaires had the college opportunity, and of course their children do. But for poor young Americans, and even many in the middle class, college is out of the question. This is especially true for ghettobound minorities, particularly Latinos, whose per capita income is even lower than that of blacks. Even at public colleges and universities, tuition and expenses have skyrocketed. “Tuition and fees have risen 94 percent since 1989, nearly triple the 32 percent increase in inflation,” according to Business Week in 1994. The article added, “Even as a good education has become the litmus test in the job market, the widening wage chasm has made it harder for lower-income people to get to college.
Kids from the top quarter have no problem: 76 percent earn bachelor’s degrees today, vs. 31 percent in 1980, but less than 4 percent of those in the bottom quarter families now finish college, vs. 6 percent then.” And since that 1994 report, tuition and living costs have risen steadily at both public and private colleges.
The income gap, growing at a time of unprecedented economic prosperity, is matched by a growing gap in living conditions, While almost all the media billionaires enjoy luxurious quarters, usually in several parts of the country, and often abroad, poor families have serious trouble getting a mortgage. Those who live in apartments often don’t have enough money to buy adequate food and clothing after they pay the rent. Across the county, there are 700,000 homeless, who roam the streets during the day and sleep in doorways or under bridges unless they are lucky enough to find space in homeless shelters.
In contrast, Anne Cox Chambers, worth $10 billion in 2000, has a villa in Provence, France, as well as the Rosewood Estate in Atlanta and a huge plantation in South Carolina. John Kluge’s properties include the $250 million Morven Farm with its 50- room Albemarle House, a $30 million house in Palm Springs and a luxurious penthouse apartment in New York. Ted Turner is the largest landowner in the world, with homes on many of his properties scattered across the U.S.. Bill Gates’s $75 million home in Medina, Washington, is actually five houses, “pavilions” connected by underground passageways, with the main house covering 40,000 square feet. David Geffen has a $47.5 million estate in Beverly Hills. Prince Alwaleed of Saudi Arabia lives in Riyahd in a palace, with five wings and more than 150 servants. The new palace is five times the size of his old one down the street, which has been set aside for his son. Exceptions: Warren Buffett and Sumner Redstone, both of whom live in simple homes in cities where they grew up.
But Buffett flies in a private plane, having once owned a jet which was so expensive he called it “The Indefensible.” Like other billionaires, the media moguls all tend to fly in private planes; and become newsworthy only when they board a scheduled airliner.
On the ground, of course, they travel in limousines, either private or rented. Bill Gates’s wealth in 1997 was $40 billion, the same year Congress passed and the president signed the new law to “end welfare as we know it;” the law made $54 billion in welfare cuts. “More than half those cuts were taken from food stamps on which 25 million poor Americans depended.” A year later, it was noted that Bill Gates’s wealth (then $58 billion) was “greater than the (federal) budgets for welfare and food stamps combined.” And the U.S. Department of Agriculture told us in 1999 that almost 10 percent — one-tenth — of U.S. households “are going hungry or don’t have access to adequate food.”
Those who left welfare, according to Peter Edelman, former member of the Clinton administration, are, “on balance, worse off; a third to a half of them, depending on the state, haven’t found jobs. Many others who have are still poor, their benefits cut.”
The media billionaires, both in the United States and abroad, are all white, only three are women — Anne Cox Chambers, her sister, Barbara Cox Anthony, and the late Katharine Graham — all three of whom inherited their media wealth. The “glass ceiling” prevents women from rising to the very top, no matter how good they are. And black Americans are also unable to reach up; their skin is the wrong color.
Oprah Winfrey is the only black American in the Forbes 400 with wealth well below a billion. “While the racial income gap is terribly wide, the racial wealth gap is even wider,” reports Shifting Fortunes, a book about the wealth gap and its consequences. It adds that “the median black household had a net worth of $7,400 in 1995 — about 12 percent of the $61,000 in median wealth for whites. Median black financial wealth (net worth minus home equity) was just $200 — a mere 1 percent of the $18,000 in median financial wealth for whites.”
Only two of the media billionaires have shown a willingness to give real chunks of their wealth to needy causes — Ted Turner and Bill Gates. Turner’s billion dollar gift to the United Nations made headlines, as did the creation in 1999 of the Bill and Melinda Gates Foundation, with $17 billion to educate minority students and fight global poverty and health problems. By 2001, Gates Foundation funds totaled $25 billion. The others tend to give to their alma maters, as in John Kluge’s gift of $125 million to Columbia University and George Lucas’s $6 million to the University of Southern California. Some, like Steven Spielberg, make their gifts anonymously, so there is no way of knowing the amounts or the recipients.
While all the super-rich have far more than they need, they don’t all engage in what Thorstein Veblen a century ago called “conspicuous consumption.”
Most of them are careful to look and act like ordinary members of the middle class. “Many of today’s billionaires seem fantastically determined to appear middle class, “ writes a Forbes reporter, adding, “Bill Gates likes to be seen in his oversize sweater, Jeffrey Bezos sits at a ramshackle desk he made from an old door, and Warren Buffett always reminds us about his modest Omaha house.”
Of course, the multi-media billionaires are not the only ones responsible for the wide and widening gap between rich and poor. But that gap is not a topic frequently visited by the mogul-owned media, a panel of professional journalists agreed in March, 2000. Panelist Paula Madison, vice president of News Channel 4 in New York, “laid responsibility on journalists for a lack of interest in poverty issues.”
The yawning gap between rich and poor at the beginning of the 21st century is very much like the gap brought by the Industrial Revolution a century ago. The people responded to that gap, and what it meant to their lives, with the Progressive movement, led by Teddy Roosevelt and Woodrow Wilson. That movement brought a better life for working families and a great enlargement of America’s middle class. Another important product of the Progressive movement was the Sherman Anti Trust Act, which led to breakup of the worse monopolies.
Is it time for a new Progressive movement? And if so, will it call for breakup of the super-giant media monopolies such as AOL-Time-Warner-Turner, Disney-ABC, Viacom-Blockbuster-CBS, and News Corporation’s media properties in the U.S.? The Justice Department’s use of the anti-trust laws at the end of the 20th century to try to break up the giant Microsoft empire may be a start.
Rod and Alma