Wednesday, April 16, 2008


The obscenity of capitalism

Today's pornography:
Hedge fund managers, those masters of a secretive, sometimes volatile financial universe, are making money on a scale that once seemed unimaginable, even in Wall Street’s rarefied realms.

One manager, John Paulson, made $3.7 billion last year. He reaped that bounty, probably the richest in Wall Street history, by betting against certain mortgages and complex financial products that held them.

Mr. Paulson, the founder of Paulson & Company, was not the only big winner. The hedge fund managers James H. Simons and George Soros each earned almost $3 billion last year, according to an annual ranking of top hedge fund earners by Institutional Investor’s Alpha magazine, which comes out Wednesday.

To make it into the top 25 of Alpha’s list, the industry standard for hedge fund pay, a manager needed to earn at least $360 million last year, more than 18 times the amount in 2002. The median American family, by contrast, earned $60,500 last year.

Combined, the top 50 hedge fund managers last year earned $29 billion.
Like John McCain, I admit that economics isn't my strong suit, but I do know that the problem isn't simply that such people are parasites on actual working people, sucking up money which could have paid the salaries ($29 billion/$60,500) of 446,000 families (close to a million people given the prevalence of 2-income families), but that they distort the priorities of society, sending capital in unproductive directions which could have been used in ways which not only would have produced actual things that people need, but which also would then have had a "multiplier effect" providing even more benefit. Not to mention run-on sentences. :-)

Why stop here? There's more...

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