Initially, I actually supported Occupy Wall Street. I united, in spirit, with them in their stand against government bailouts of poorly managed businesses. Then they started the "99%" campaign, and my support stopped. I have nothing against the 1%. In fact, I aspire to be one.
Class warfare has always existed in America, on some level. The Great Recession appears to have transformed despising the wealthy from an activity of the scorned and bitter to the de rigeur social movement of the decade. Quite frankly, I just don't understand it. Everyone wants to be rich, yet we hate those that are? Is this just jealousy run amok, or is there a deeper, more insidious issue at hand?
I think I've figured it out:
1) We misunderstand the rich. I blame reality television for this. If comments on news articles are representative of the American public, when most people think of the wealthy, they think of Paris Hilton, Kim Kardashian, or even Steve Forbes. Inherited wealth. But most millionaires didn't inherit their wealth, they earned it. The reality is a full 80% of millionaires are first generation. They worked hard, took risks, and made the most of opportunities - they didn't have their money handed to them. Most of the 1% are doctors or small business owners. Why would we hate these people instead of admire them?
2) We don't understand Economics. A common argument from those frustrated with the growing wealth gap is CEO pay. I'm not sure why we focus on CEOs in this discussion when they comprise a mere 10% of the hated 1%, but we do. This indicates people don't understand the Economic Law of Supply and Demand. There are 7 billion people on this planet. There are probably 700,000 who are qualified (education, experience, capabilities) to be a CEO. Given my experience with CEO's, I wouldn't credit more than 7,000 people as capable of being good CEOs. What does that mean? The supply of good CEOs is in severe deficit to the demand of good CEOs. When a product is scarce, its value rises. The other market force in play here is risk. Being a CEO is not an easy job which is why so many CEOs are very quickly former CEOs. The average tenure of a CEO is not much more than a Kardashian marriage (two Kardashian references in one post...I'm culturally relevant!). To entice someone into risk usually requires money. So CEO pay is driven both by scarcity, and by risk. Of course it is disproportionate.
3) We forget who are the "investors". This is the element that, ashamedly, amuses me the most. We bemoan "Wall Street Investors" for taking risks and causing catastrophe and forget they take risks because the investors they represent want larger and larger returns. And who are the investors? The 99%. The everyday working man. But, wait, you don't have a stock broker or an investment portfolio? You do if you have a 401k or a pension plan. The largest single owner of wealth in the United States is not Bill Gates or Warren Buffet - it's CALPERS, the State of California's employee retirement plan. At $202 billion, CALPERS is equivalent to four Bill Gates. The top 300 pension funds own $20 Trillion of wealth. It are these pension funds that drive decisions on Wall Street. So the great, macabre joke of the financial collapse, the sad truth behind the greed that led to this disaster, is that it is shared not by the 1% who, according to the research published in the book "The Richest Man in Town", invest in their own business, not other people's. The greed belongs to the 99% who demand higher returns in their 401k plans!
Ultimately, we will never eliminate class warfare unless we implement Pure Communism and everyone receives an equal share of the GDP. We will never eliminate a wage gap in a society that rewards higher skills with higher pay. And you won't get rich by occupying Wall Street. You won't improve your financial situation by sitting in a park cooking s'mores with your friends lamenting how unfair the world is. You get rich by taking risks, by thinking unconventionally, and by generating revenue by all legal means.
You want to change the system? Occupy a seat in government. You want to get rich? Occupy a job that people value.
Occupying Wall Street is just another way of saying: "I live in my parent's basement".
Class warfare has always existed in America, on some level. The Great Recession appears to have transformed despising the wealthy from an activity of the scorned and bitter to the de rigeur social movement of the decade. Quite frankly, I just don't understand it. Everyone wants to be rich, yet we hate those that are? Is this just jealousy run amok, or is there a deeper, more insidious issue at hand?
I think I've figured it out:
1) We misunderstand the rich. I blame reality television for this. If comments on news articles are representative of the American public, when most people think of the wealthy, they think of Paris Hilton, Kim Kardashian, or even Steve Forbes. Inherited wealth. But most millionaires didn't inherit their wealth, they earned it. The reality is a full 80% of millionaires are first generation. They worked hard, took risks, and made the most of opportunities - they didn't have their money handed to them. Most of the 1% are doctors or small business owners. Why would we hate these people instead of admire them?
2) We don't understand Economics. A common argument from those frustrated with the growing wealth gap is CEO pay. I'm not sure why we focus on CEOs in this discussion when they comprise a mere 10% of the hated 1%, but we do. This indicates people don't understand the Economic Law of Supply and Demand. There are 7 billion people on this planet. There are probably 700,000 who are qualified (education, experience, capabilities) to be a CEO. Given my experience with CEO's, I wouldn't credit more than 7,000 people as capable of being good CEOs. What does that mean? The supply of good CEOs is in severe deficit to the demand of good CEOs. When a product is scarce, its value rises. The other market force in play here is risk. Being a CEO is not an easy job which is why so many CEOs are very quickly former CEOs. The average tenure of a CEO is not much more than a Kardashian marriage (two Kardashian references in one post...I'm culturally relevant!). To entice someone into risk usually requires money. So CEO pay is driven both by scarcity, and by risk. Of course it is disproportionate.
3) We forget who are the "investors". This is the element that, ashamedly, amuses me the most. We bemoan "Wall Street Investors" for taking risks and causing catastrophe and forget they take risks because the investors they represent want larger and larger returns. And who are the investors? The 99%. The everyday working man. But, wait, you don't have a stock broker or an investment portfolio? You do if you have a 401k or a pension plan. The largest single owner of wealth in the United States is not Bill Gates or Warren Buffet - it's CALPERS, the State of California's employee retirement plan. At $202 billion, CALPERS is equivalent to four Bill Gates. The top 300 pension funds own $20 Trillion of wealth. It are these pension funds that drive decisions on Wall Street. So the great, macabre joke of the financial collapse, the sad truth behind the greed that led to this disaster, is that it is shared not by the 1% who, according to the research published in the book "The Richest Man in Town", invest in their own business, not other people's. The greed belongs to the 99% who demand higher returns in their 401k plans!
Ultimately, we will never eliminate class warfare unless we implement Pure Communism and everyone receives an equal share of the GDP. We will never eliminate a wage gap in a society that rewards higher skills with higher pay. And you won't get rich by occupying Wall Street. You won't improve your financial situation by sitting in a park cooking s'mores with your friends lamenting how unfair the world is. You get rich by taking risks, by thinking unconventionally, and by generating revenue by all legal means.
You want to change the system? Occupy a seat in government. You want to get rich? Occupy a job that people value.
Occupying Wall Street is just another way of saying: "I live in my parent's basement".
Posts
No comments:
Post a Comment