Marie Antoinette never said that, you know?
One of the hot topics on the View and around the water cooler has been the growing disparity between the rich and poor. It has been the subject of numerous “The Daily Show” satirical vignettes by Jon Stewart. Most recently, he had a series of sketches on the fight of labour unions in Wisconsin, which highlighted the growing disparity of monies earned by those fat cat teachers with their $50,000 annual salaries and 10-year old Toyota Tercels vs. the poor, cuddly globe-trotting financiers with their $500,000 salaries plus bonus for juniors and their 10-month old yachts for which they can’t afford decent hired help anymore, what between the Democrats clamoring for lower bonuses and the Republicans clamoring to keep out job-stealing, illegal immigrants.
Here are two articles for your viewing pleasure: People are willing to work for free. You heard that right. For free and no benefits. Meanwhile, the top 25 individuals in the hedge fund industry earned a combined $22 billion.
Read the following two quotes (one from each):
Hedge fund managers can still have huge paydays even in years when their funds do not perform well. That is because of the millions they earn in fees from charging state pension funds, college endowments and wealthy individuals to manage money. These fees are typically collected regardless of whether the firm has a profit or a loss.
People who work for free are far hungrier than anybody who has a salary, so they’re going to outperform, they’re going to try to please, they’re going to be creative.
Think of what this means for capitalism. My pet theory regarding economics is that the world is governed by immutable laws of economics and the debates on socialism vs. capitalism, West vs. East, China vs. America, left wing vs. right wing, etc. completely miss the point. Read the above two quotes again. Who do you think is creating more wealth in the country? More value for money? Being more productive? Contributing to GDP?
I’ve been thinking a lot about capital and wealth in these terms lately. I will be posting in this vein for the forseeable future I think (see why in my first post). You have been warned.