Sunday, July 15, 2007

Where does wealthy come from

Very interesting New York Times article about the new class of super-wealthy, and the debate over whether they really "deserve" all that money. This is how one of those guys justifies his huge wealth accrual:

Other very wealthy men in the new Gilded Age talk of themselves as having a flair for business not unlike Derek Jeter's "unique talent" for baseball, as Leo J. Hindery Jr. put it. "I think there are people, including myself at certain times in my career," Mr. Hindery said, "who because of their uniqueness warrant whatever the market will bear."

He counts himself as a talented entrepreneur, having assembled from scratch a cable television sports network, the YES Network, that he sold in 1999 for $200 million. "Jeter makes an unbelievable amount of money," said Mr. Hindery, who now manages a private equity fund, "but you look at him and you say, 'Wow, I cannot find another ballplayer with that same set of skills.'"

At an intellectual level, what I find most outrageous about the superwealthy is not that they think they "deserve" to earn insane multiples more than mere mortals, or even that they think of themselves as a force for good in the world (which some of them may be). No, what's most appalling is the way they think their wealth is entirely due to their own talent, and that it has nothing to do with the public providing a structuring environment in which such wealth is achievable. They have no awareness, in other words, that "the market" is a construct that depends, hugely, on norms and services that are collective -- and that arguably should be paid for by those who benefit most from them.

The Derek Jeter parallel is astounding mainly not because some tycoon has the temerity to compare himself to Jeter -- who, incidentally, gets his $20m+ a year despite being the second-worst fielding shortstop in the bigs. What's most amazing is that Hindery seems to have no inkling that Derek Jeter's getting paid millions for hitting a leather ball with a stick is not simply a result of "innate talent," bur rather has something to do with the structure of the sports market. If anything, such sports metaphors ought to give these latter-day robber barons pause. Consider this simple mental test: is the reason why the top baseball players today get paid 30x what they did in the 1950s or 1920s because they are 30x more talented than their predecessors? Or might it have something more to do with the way the market for major league sports has changed over the intervening years? And who shapes that market?

Sometimes I wonder whether assholes like Hindery say stuff like this to the New York Times as of some Grover Norquist-orchestrated PR effort to keep the top marginal tax rates down. (Can these people really believe in the hearts believe that markets are "natural" and not man-made? Have they really no appreciation for the enormous element of luck that plays into business success -- much, much more so than success in professional sports?) But then I remind myself what people I've met like this are like, and I realize that they really are that arrogant and that ignorant.

And let's not even get into the way in which the existence of a class of superwealthy people fundamentally undermines the operation of a democracy that has evolved a de facto pay-to-play model of representation.

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