We often hear the Uber wealthy try to justify their exorbitant Annual Incomes.  They’ll have you believe that:  they generate phenomenal investment returns for their investors; that they create jobs and that they are upstanding corporate citizens.  The truth, however, is closer to:  investment performance is often mediocre (biggest isn’t always best) and the closest that they might get to jobs is as corporate raiders (piling on debt and closing plants).  Fines for any indiscriminations are generally paid by the Investors in their Funds.

Paul Krugman, Nobel Laureate and Economics Professor at Princeton University, provided a good analysis of the Claims of the Top One Percent (or One-Tenth of One Percent), and the Reality for the rest of America.  His last column is linked as follows:

The 25 highest-paid Hedge Fund Managers earned a combined $23 Billion.  Sure, some might have advanced degrees; but, then so do Schoolteachers.  To put that into perspective, that small group of (all) Men earn more than twice as much as every Kindergarten Teacher in America–combined.  Also, due to a Tax Loophole (wide enough to drive a semi through) their Tax Rate is limited to just 15%–probably lower than yours and mine.

Professor Krugman suggests that Hedge Fund Managers are actually financial speculators.  He then points to the teachings of renowned early Twentieth Century Economist, John Maynard Keynes, who revolutionized Economic Thought in his time.  Lord Keynes characterized financial speculation as: “anticipating what average opinion expects the average opinion to be”.  Krugman further asserts that “…since they make much of their income from fees, they’re actually in the business of convincing other people that they can anticipate average opinion….”   Tarot cards anyone?



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