When the mob turns against the rich, some of the rich put on rags and join them.
‘The granddaughter of Roy Disney, co-founder of The Walt Disney Co. with brother Walt Disney, said [last] Thursday on CNBC’s “Squawk Box” that she thinks “CEOs in general are paid far too much.”
‘“If your CEO salary is 700, 600, 500 times your median workers’ pay, there is nobody on earth, Jesus Christ himself isn’t worth 500 times his median workers’ pay.
‘“The problem is that there’s a systematic favoring of people who have accumulated an enormous amount of wealth,” she said.’
We’ve never met a CEO who was worth even 10 times his median worker’s pay. Then, again, we never met Jesus Christ.
But if owners want to pay their CEOs even 1,000 times what they pay their median worker, it’s none of our business.
But wait…what if the money itself has been fiddled? If a corporate CEO can borrow at near-zero real cost…why not pay himself millions…and bribe the shareholders too, by buying back their shares and goosing up the stock price?
It is a wicked world, Dear Reader. And wickedness takes on many shapes and disguises.
Some say capitalism has failed America. More likely, America has failed capitalism. Capitalism needs capital. Real money, in other words. The feds gave it fake money.
And now, in one of the most elegant and subtle scams in history, the elite (pseudo-capitalists) get the gains, while the losses are put onto the backs of the working classes — either in the form of a depreciated currency (as losses are monetized by the Fed), or in the form of the national debt (in which they are socialised by the federal government).
But whoa…that’s a lot to take in.
So, go at it step by step, as if we were dissecting a dead Democrat or a live Republican.
Yesterday, we were connecting the thigh bone of anti-capitalism to the leg bone of a corrupt US financial system.
You’ll recall that anger against the rich seems to be rising. You’ll remember too that the mob believes there’s something wrong with ‘capitalism’…that it is to blame for the wide gap between rich and poor.
Ms AOC, for example, said income ‘inequality’ was caused by capitalism and said the system was ‘irredeemable.’
But let’s get out our scalpel and take a look. Maybe we will see how this thing really works.
To simplify, there are only two ways to do things. Either voluntarily, by win-win deals…or involuntarily, by telling others what to do. Capitalism only makes sense as a voluntary, win-win system.
Socialism is different. An elite decides who gets what, by imposing win-lose deals — price-fixing, involuntary employment, tariffs, taxes, regulations — at the point of a gun.
Of course, there is no such thing as pure capitalism or pure socialism…Even in a communist system, people generally try to get along and go along, making whatever black-market deals they can get away with.
Over time, either the rulers loosen up so more win-win deals can take place (China)…or the system tends to fall behind (North Korea) and eventually, falls apart.
And in a capitalist system, there are always some people angling to use the feds’ muscle to force win-lose deals on others. Over time, more and more of them succeed, and the capitalist system becomes more and more corrupt.
Since we live in what is basically a capitalist system, we will turn our knife to our own sclerotic arteries and calcified joints — to see what has happened…
In a free, capitalist system, poor and middle-income people sell their time. That’s all they have.
Then, if they manage their finances prudently, they accumulate savings and eventually have enough capital to retire comfortably…perhaps passing the house and the family silver on to the next generation.
The rich, typically, have capital — either inherited or earned — in the form of stocks, bonds, or real estate. This capital is often a bigger source of income than their time.
Even those without much capital of their own can get in on the action. They get jobs as managers — CEOs, for example — and benefit from performance-related compensation, far beyond the actual value of their time.
A young man, right out of law school, for example, may help put together a merger or an acquisition…or paper over a share-buyback scheme…and earn a windfall.
That’s why, for more than 20 years, every mother’s son has been urged to go neither into manufacturing, nor sales, nor mining, nor law, nor agriculture — but to Wall Street. Why? That’s where the money was!
Is there anything wrong with that? Nope. It’s just capitalism in action.
But what if the feds had queered the whole thing by introducing a new kind of money that wasn’t real capital? A money that represented no savings, no invention, no output, no labour, no profit, no forbearance, no sweat, no innovation, and no real increases in GDP?
And what if the feds loaned this fake money to capitalists at fake, artificially low rates? And what if they used this fake money — with $3.6 trillion added since 2009 — to buy the capitalists’ assets, but not the working man’s time?
And what if, when the markets tried to correct the outrageous asset prices…in 2000, and again in 2008…the feds simply added more fake money, and turned Wall Street into a ‘heads I win…tails you lose’ deal…a win-lose deal, where the capitalist insiders won big and the working stiffs were left with $13 trillion more in debt?
Ouch! Now we’re cutting deep…to the bone…
…but we’re not finished. The autopsy continues…tomorrow.