Who rules America

[twacowfca]

By definition, aren't hedge fund managers just siphoning money from other parts of the 1%?  I mean, in order to legally invest in a hedge fund your assets and income need to be in the 1% category.

 

So how can they be responsible for hurting any part of the 99%?

 

It's just rearranging the deck chairs.

 

Lots of hedge funds invest pension money and endowment money.

 

Okay, you are right about that.

 

However I wonder what the breakdown is for the hedge fund industry. 

 

For example:

How much of hedge fund profits (what % of fee profit) comes off the assets held by the bottom 50%?  I think the bottom 50% only have $1.5 trillion in combined net worth (at least according to The Daily Show).

 

I have a strong suspicion that for the most part the hedge funds are profiting off of the wealthy.

 

Not likely, unless you consider pension funds for public employees to represent the wealthy.  Calpers, for example, is huge all by itself. I think that the great majority of assets invested in hedge funds come from intermediaries.

[given2invest]

...Europe is asking it to join them in imposing a tax on what is mainly investor speculation...

 

Also hedge fund, or asset mgrs, etc., who make a living managing money need to pay income tax on their earnings not a capital gains tax. This is the biggest rip off of all.

 

99.99% of the population agrees with you on this one.  Shit, I was a hedge fund manager and I agree with you (as does all the managers I know).  But that .01% is very powerful.

 

Personally I cannot understand why this carried interest thing doesn't get changed first thing Monday morning when Congress opens for business. This is one of the things that make me give up hope on Washington. The entire country can agree on the foolishness of it and yet we can't even get that done.

 

I agree.  There is really no argument to be made why carried interest should not be charged a progressive tax rate.  It's earned income! 

[txlaw]

That's a great article.  It just shows how skewed most people's perspectives of wealth and income are in the US.

 

The fact of the matter is that the top 1% includes a lot of hard working people who don't have the political clout that large donors have, some of whom are super wealthy households (e.g., investment bankers), but most of whom are artificial entities (think about PACs and the problem of Citizens United).  Of course, we should also keep in mind that "We are the 99%" and "Occupy Wall Street" are marketing tools just as "Tea Party" is a marketing tool.  So I don't think you can really dismiss those people based on those catchy phrases/terms.

 

Another thing that we should take from this article is that many people in the 1% and, indeed, in the top 15% have a very skewed idea of the "financial worries" that people in the bottom 85% face because of the fact that they have to deal with their own "financial worries."  It seems like everyone and their mom in the top 15% thinks they are "middle class."  But think about what people who actually are "middle class" -- or who are "poor" -- have to face in terms of risks.  They don't have access to good schools.  Households can easily be bankrupted by adverse health developments.  These households are increasingly pushed out of the most attractive places to live in terms of lifestyle.  In urban areas, these employees often have to commute long distances to work at well paying jobs.  Savings are minimal and if put into traditional vehicles run by "Wall Street" cannot possibly be relied upon to have a decent retirement.  (Can you believe how many people were sold on the idea that they could actually compound their money at 10% over time after fees by putting their money with the professionals?)

 

This is why I'm a big supporter of progressive social insurance programs that are completely paid for because if you can mitigate those financial risks for a large part of productive society, you can truly unleash the power of our capitalist system in the US.  Unfortunately, a lot of people believe that social insurance programs are "socialism."

 

Meanwhile, the virtuous cycle of social mobility seems to have stalled in the US.  Instead of decreasing disparities between the middle middle class and the upper middle class/lower upper class, it appears that a lot of wealth that has been generated in the past two decades has accrued to the upper class. 

 

I also find it amazing that the people who derive large amounts of their income from investment/capital allocation have convinced many people in the lower 14.5% of the top 15% that investment should be taxed at lower rates than income from labor.  Apparently, investment prowess and capital allocation is a higher form of work.  I've never understood that, and I never will. 

[Packer16]

To what extent do you want to extend the social safety?  Where do you see the lack of opportunity?  As far as I can see people can educate themselves and excel if they wish to do it way the society rewards.  I know there are scholorships for students who have lack of funds.  However, they need to study something that they can earn good money at (science/engineering).  I know it will be harder for someone coming from a disadvantaged background but it has always been this way and what is important is not that it is hard but that it exists.  When you compare there situation with folks in other non rules based socities, it is easy because at least they know the rules to obtain wealth and they are not dependent upon having the right relationships to obtain wealth. 

 

What I find incredible is that so many of the slots for these well paying jobs are filled with foreigners.  What does that tell you about the choices folks make.  It tells me on the surface that we have a huge requirement for these folks but Americans do not want to take these jobs.  The has happened on the low skill end of the spectum as well.  I am all for the Jublilee concept (returning the means of production to popultion every 50 years) but I think this is happening all the time but folks are not taking advantage of it.

 

Packer         

[Myth465]

Packer as the son of a foreigner I think you are looking at things the wrong way. America is a machine that sucks in the best, brightest, and most hard working / hungry from all over the world. It also pulls in some low skill workers to round things out, but it definitely gets the cream of the crop. You are comparing that batch to Joe and Jane six pack. There are billions of people in China, India, and Africa who are much worse off than Joe and Jane, but arent allowed to come here.

 

There will always be Joe and Jane, we can either design a system which allows them to live with dignity, and also allows society to get the most use of them. Or we can continue working to transform Joe and Jane to Mohammed, Sameer, Chang, and Abraham who are literally the best and brightest from the rest of the world. I dont think the ladder will work very well.

[twacowfca]

Packer as the son of a foreigner I think you are looking at things the wrong way. America is a machine that sucks in the best, brightest, and most hard working / hungry from all over the world. It also pulls in some low skill workers to round things out, but it definitely gets the cream of the crop. You are comparing that batch to Joe and Jane six pack. There are billions of people in China, India, and Africa who are much worse off than Joe and Jane, but arent allowed to come here.

 

There will always be Joe and Jane, we can either design a system which allows them to live with dignity, and also allows society to get the most use of them. Or we can continue working to transform Joe and Jane to Mohammed, Sameer, Chang, and Abraham who are literally the best and brightest from the rest of the world. I dont think the ladder will work very well.

 

Hear! Hear!  Very well said!  :)

[txlaw]

Packer as the son of a foreigner I think you are looking at things the wrong way. America is a machine that sucks in the best, brightest, and most hard working / hungry from all over the world. It also pulls in some low skill workers to round things out, but it definitely gets the cream of the crop. You are comparing that batch to Joe and Jane six pack. There are billions of people in China, India, and Africa who are much worse off than Joe and Jane, but arent allowed to come here.

 

There will always be Joe and Jane, we can either design a system which allows them to live with dignity, and also allows society to get the most use of them. Or we can continue working to transform Joe and Jane to Mohammed, Sameer, Chang, and Abraham who are literally the best and brightest from the rest of the world. I dont think the ladder will work very well.

 

Hear! Hear!  Very well said!  :)

 

I second that.

[txlaw]

I guess with regards to extending social safety, I favor keeping social security, and I like the idea of mandating healthcare coverage for all, although I recognize that not addressing costs is "kicking the can down the road," so to speak.  An unemployment insurance system similar to Germany's seems pretty good too.  All of this must be paid for though, and I'm not sure taxpayers are willing to do this.

 

Other than having a basic financial social safety net, I would say that educational opportunities, both for minors and for workers who have been let go, has to be better addressed in the US.  It's well and good to say that students should be focusing on science and engineering because they're more likely to get good jobs with those sorts of degrees, but in today's world, you have to be prepared for your job to become obsolete or less secure if the only requisite to having your job is knowledge.  Actually, I believe that the whole concept of education must be revamped in the US.  I want to see more cutting edge programs like Khan Academy, and I think we need to bust these teacher's unions that focus more on the job prospects of the teachers than on the kids, who appear to get the short end of the stick.

 

Regarding opportunity, I'd say it's a fact of life that there is no such thing as equality of opportunity.  The ovarian lottery is real, and your background will effect what opportunities you have in life.  In fact, sometimes you can have the best of backgrounds, but you will have problems in life (for example, those who come from advantaged upbringings but who are genetically inclined to suffering depression).  My view is that we should create an environment that brings out the potential of as many people as possible.

 

[Packer16]

Myth, 

 

Thx for your reply but isn't the current model unsustainable over the long term and is dependent upon the rest of the world not moving to a rules based system/culture?  Isn't another alternative to encourage folks to focus on being educated in fields where there are jobs.  At this point people may be saying this but the incentives are not there.  Why not charge less tuition for folks in those fields to encourage folks to enter those field and provide loan amounts based upon expected earnings like any other loan.  I think you may get Joe and Jane to become engineers if the incentives are there.  Now you don't know as the incentives are not.

 

 

Packer

[Myth465]

People ask me why I choose Accounting and I tell them its the language of business, and I wanted to be a businessman and decided that learning the language would be useful (been interviewing lately and this is my go to BS answer). When pressed for the truth or after a few drinks. I tell them that I was a terrible student because I was uncommitted, and I got a B in my Accounting class without trying or going to most of the lectures. Everyone else struggled and hated it. All the Marketing, Management, and ISQS majors were just praying for a C or D and were putting in tons of hours. Tech was screwed in 2000 so I switched from Info systems to accounting...

 

My job is pretty easy to me, but most people I know would be bored to tears, or confused doing it. I am pretty mathematical, but engineering would bore me or confuse me. Someone else said that they were sitting in a room full of English majors and couldn't see any of them as engineers based on the conversation, and their coursework. I cant draw a straight line and could never do anything creative, artistic, or imaginative. Also couldnt do anything requiring adequate or grammar spelling (you all have seen me, and thats after spell check). If you think we have a surplus of of none math and science guys due to incentives then I need to take you to a Liberal Arts college in a university for a meet and greet. Most of those guys are generalists at best. People just aren't wired for certain things.

 

I agree with your proposal and am fairly pragmatic. If I were king, I would develop a skills shortage list. Put key skills where foreigners are filling jobs, and would offer a rate reduction or 10% fee reduction for grads in that degree. It will help at the margins inmo but isnt the solution to our employment woes.

 

----

 

I tried to phrase it as politely as I can. I am fairly left of center politically, but am a realist. I dont think people are all the same but its the system that screws them over (the left), and I dont think people just need to be pushed to work harder and be given better options and choices (the right). Some people are just dumb. They will occupy the space towards the bottom of society.

 

INMO what you are proposing is trying to create a super country of citizens. It wont work inmo. I have been across a large part of the world and I have encountered dumb though hardworking people in all countries. We can improve those choices and options for people, but arent there people in your life who simply arent able to move past working a cash register, or other low skill job. I know plenty of these folks. Havent you come across a guy and wondered how he got dressed in the morning. Did you really think it was simple that he went to the wrong public school.

 

As someone else pointed out the ovarian lottery is real, and its a disservice inmo to believe that you are where you are solely because of access and choices. Its like a beautiful girl who doesnt appreciate what god gave her, and discounts it. Its just not fair to the ugly girl... We all have potential inmo, but that potential isnt equal and inmo is range bound. We should be pushing people towards the top end of their perspective range, but shouldnt kid ourselves on how far everyone can go.

 

----

 

INMO people arent being realistic about the jobs debate. 2 billion people are coming online and have entered the labor force during a period of increased globalization and mechanization. I just dont think there are enough jobs to go around for everyone on the planet. You can probably now supply toy demand for the world from a city full of factories in China, vs. probably several hundred spread across the world. Thats great for people who want to buy cheap toys, great for that city in China, great for logistic companies, but kinda sucks if you made toys in Italy or small town US.

 

Americans are priced out due to our higher lifestyle and costs (which we should aim to keep), and are quite comfortable shipping their jobs overseas to low skill workers (company managers and politicians are). I dont see how you get around the labor arbitrage. If we pushed a few more people into fields where there are shortages, that would be great, but that does nothing for the displaced low skill worker. You could try to retrain him, but depending on the prior job and the new job, that may not work well. To pretend that everyone is better off due to globalization is dis-ingeniousness at best. Everything has costs, everything has winners and losers. Win win deals are so great, because they are so rare.  We should have an honest debate and deal with the downsides of the decisions we make..

 

txlaw actually has the right idea. Workers in this day and age need to be flexible. I would be looking to push in more generalists and revamp those liberal arts degrees to produce well rounded adaptable learning machines. College should probably be pushed down to 2 years also outside of specialized degrees like Acct, Engineering, Medicine, Science, and a few other things. Ken Robinson has the right idea as well, we just arent all built to be engineers and scientist. I could hack engineering and would likely dislike it more than accounting, and science is a big no no for me. We need to get more out of everyone and not funnel everyone into the job of today. Its likely that job will be significantly different tomorrow.

 

 

Thats my long rant for the day, I should be out enjoying Halloween, nice night for people watching - women wear all sorts of crazy things  ;D.

 

[txlaw]

Apropos to our discussion -- Gates on educational inequalities as main obstacle to social mobility:

 

http://seattletimes.nwsource.com/html/technologybrierdudleysblog/2016626758_bill_gates_on_being_the_top_1.html

[ERICOPOLY]

When pressed for the truth or after a few drinks. I tell them that I was a terrible student because I was uncommitted, and I got a B in my Accounting class without trying or going to most of the lectures. Everyone else struggled and hated it. All the Marketing, Management, and ISQS majors were just praying for a C or D and were putting in tons of hours. Tech was screwed in 2000 so I switched from Info systems to accounting...

ice night for people watching - women wear all sorts of crazy things  ;D.

 

I had a similar path.  I was determined to do accounting at one point when I was in junior college, but I had to complete calculus and statistics as part of it.  So I did the full year of accounting that they offer in JC, took business law, etc...  I found myself enjoying the math classes the most so I thought I'd do statistics and thus I applied to math departments when I was ready to transfer to 4 year school.  Then once at UCLA they required me to take a year of C++ programming as part of the math degree I was seeking.  Then I liked programming so much that I switched into a Math/Applied Science major and chose CS as the applied major.  The horror of this approach is that in order to complete my major I had to pass 7 upper division CS classes from the Engineering school yet I was completely unqualified (before taking the C++ programming, my only computer knowledge was word processing).  So suddenly I'm in the Engineering department (totally unqualified by the way) taking upper level undergraduate CS classes like Operating Systems, yet I don't even know what the hell a "makefile" is -- being a complete novice in the field, I've never written anything in "C" and don't know what the heck the term "assembly language" means or what a "compiler" really does, I skipped all the lower division CS classes, and here I find myself being graded on a curve against mega-nerds who were programming computers in diapers, and I still passed it all only because I studied practically 24/7.  I think I still have post traumatic stress from that experience.  Prerequisites really are important by the way.

 

No real plan, just blown by the winds and eventually graduated  :D  My GPA from CS classes is probably a C+, but considering the circumstances I'd say I did rather well -- not exactly going to help me get into any graduate schools though.

 

But none of it matters, they never asked for my GPA when I interviewed with Microsoft.  They were amused by my perseverence so perhaps it's a good approach after all.

 

 

[Myth465]

I cant believe Microsoft didnt want the GPA. Times have changed...