Posts filed under “Really, really bad calls”
Take a look at the Robin Hood Index chart at right (via Bloomberg). It shows the effect of confiscating all of the wealth of each country’s wealthiest individual and redistributing it to the poorest 15 percent of the nation’s population:
The impact of taking all of the wealth from one person varies by country, based largely on population size and the wealth of the richest person. Consider what happens if we took all of the wealth ($80 billion) of Microsoft co-founder Bill Gates and redistributed it to the poor. According to an analysis by Bloomberg News, the poorest 15 percent of Americans would get a one-time payment of $1,736 each.
Using Bloomberg Billionaires Index, we see that adding Warren Buffett’s $60 billion would bring the payment to about $3,000. My back-of-the-envelope calculation of adding the next few billionaires — Charles and David Koch ($98.7 billion), Jeff Bezos ($48.9 billion), Mark Zuckerberg ($41.8 billion), Larry Ellison ($40.8 billion), Larry Page ($35.2 billion) and Sergey Brin ($34.3 billion) — brings the total to about $450 billion and would make the payment about $10,000 per person. It takes the next 20 or so billionaires on the list to move that to $20,000.
While a one-time payment of $20,000 might be nice for a few weeks or months, it solves precisely none of the long-term problems facing the poorest Americans. It does not:
– Improve education and career training.
– Help create more job opportunities.
– Enhance health care, including lowering infant mortality.
– Increase availability of fresh and healthy food.
– Improve infrastructure and ground transportation.
– Increase longevity.
– Create safe, integrated local policing.
– Update the reliability of the electrical grid or improve access to broadband.
– Ensure voting rights.
This list includes many of the basic needs and important rights and civil liberties that the poor have demanded for decades. Any deficiencies in these areas can’t be resolved through a giant wealth transfer.
The trouble is, there are few signs that our elected leaders are willing or capable of providing the conditions so that the poor are in a better position to help themselves. Indeed, partisan wrangling in Washington has so paralyzed the government that many of its basic function have been seriously degraded. Regardless of your political views, these are: A common defense, the legal system, emergency police and fire services, infrastructure and basic education. (Yes, the private sector can provide some of these services, but not for the entire nation’s population and not without gross excesses and failures that exceed the shortcomings we see in government).
Almost everyone except for small number of extremists (who would rather there be no government) say they want the business of government to be done efficiently and without rancor. But how is this to be accomplished, when today’s leadership seems unable to do anything except raising enough money to get re-elected to continue the paralysis for another congressional term?
Let’s take just one example — the tax code. Leave aside for the moment that it has been heavily tilted during the past 30 years to favor the wealthy. Rather, focus on what everyone knows to be true regardless of ideology: the code is absurdly complex and subject to being gamed by those with the best accountants and tax lawyers. So if everyone knows this, why does reform never seem to happen? That suggests (at least to me) that it is the lobbyists and not elected officials who are truly running Washington.
The bottom line is simply this: There are enormous problems facing the nation, and as long as we keep electing the same people, and allowing the same influencers to fund their campaigns, there is unlikely to be any significant change from the status quo anytime soon. This paralysis seems to have made some billionaires very nervous. But the last thing we should do is delude ourselves into thinking that making the rich less rich does a lot for the poor in the absence of better government.
Originally published as: Hurting the Rich Won’t Help the Poor
My Sunday Washington Post Business Section column is out. This morning, we look at why buying a boat may — or may not — be a good or bad financial decision. Its really an excuse to look at the Department of No — the advice which says “Never Do XXXX” is often just…Read More
Today’s column is a going to be a bit technical, but stick with it. It’s about litigation and gaming the system. No, we’re not discussing Volkswagen’s diesel deception. Instead, we are going to look at the way some organizations seek advantages when it comes to adjudicating disputes. In the world of investing, this comes up…Read More
@TBPInvictus In yet another assault on economics, which is already begging for mercy in the wake of his ongoing intellectual dishonesty, Mark Perry recently tweeted the following: Coincidence? Restaurant jobs in WA state ex-Seattle are up +5,600 since Jan. vs. down in Seattle MSA by -100? pic.twitter.com/lB8DZmHhai — Mark J. Perry (@Mark_J_Perry) September 22, 2015…Read More
Whenever I am going through a rough patch in my life, it’s nice when a friend offers kind words of encouragement, some motivational thoughts – Hey! You can get through this! — and everything eventually gets better. Perhaps that’s what JPMorgan Chase Chief Executive Officer Jamie Dimon was thinking when he in effect told the poor – Buck up! Things…Read More
Via Word Spy comes todays WOTD fact-resistant adj. Impervious to reason, counterexamples, or data, especially when they contradict one’s opinions or values. Examples 2015: While scientists have no clear understanding of the mechanisms that prevent the fact-resistant humans from absorbing data, they theorize that the strain may have developed the ability to intercept and discard information en…Read More
Category: Really, really bad calls
How to ruin your financial life, #badadvice Barry Ritholtz Washington Post, September 13 2015 About two years ago, Ezra Klein wrote in The Washington Post about University of Chicago social scientist Harold Pollack, who “managed to write down pretty much everything you need to know on a 4×6 index card” about investing. I thought…Read More
From the “Here We Go Again” files: Yet another big pension fund has decided, despite the overwhelming evidence to the contrary, to engage in higher-risk, higher-cost investing. One day, this might end well, but history is replete with an almost-unbroken string of examples where it hasn’t. You might have missed the Wall Street Journal article during the…Read More
Now the DOJ Admits They Got it Wrong William K. Black September 10, 2015 By issuing its new memorandum the Justice Department is tacitly admitting that its experiment in refusing to prosecute the senior bankers that led the fraud epidemics that caused our economic crisis failed. The result was the death of…Read More