Thursday, May 19, 2016 12:30 am
Playing the suckers
“Heads I win, tails you lose” is a lousy state motto
All that the businessperson-turned-candidate offers as a credential is her success at business, it being assumed that the traits that made her a success in private life would make her a success in public life as well. That’s not far-fetched in cases of the company-building entrepreneur. But these days our private-sector heroes tend to be corporate managers or deal-makers or financiers who have found ways to make money without making things.
It was this class that installed Bruce “Nine House” Rauner as governor of Illinois and whose libertarian imperatives constitute the agenda of the New Republican Party. Chief among these worthies is Ken Griffin The Richest Man In Illinois. (I assume that is his name, since he is always referred to in the newspaper that way.) It was recently reported that Griffin was the nation’s highest-paid hedge fund manager in 2015. “Highest-paid” means something special in that context; Griffin last year made $800,000 per hour.
How does he do it? Explanations would be tedious. Instead, I will recall for you a humorous public interest TV ad aired in the Chicago area in the 2000s that urged customers to buy energy-efficient light bulbs. One commodity trader says to a colleague, “How many traders does it take to change a light bulb? Two – one to drop it and another to sell it before it hits the floor.” Griffin is good at selling dropped light bulbs.
Hedge funds offer the promise of higher-than-normal returns for higher-than-normal risks. (The market for hedge funds are the desperate, the greedy, the ignorant, the gullible.) Sometimes, over the short haul, they deliver. But innumerable studies now make clear that their success of this or that fund owes essentially to good luck or good timing. Over time every high-flying hedge fund crashes and loses their investors’ money, but because the managers get paid in fees, managers can make huge sums while their clients lose theirs. As a class they don’t deliver returns as fat as those earned via an ordinary garden-variety equities index mutual fund your grandmother invested in but they put more of those returns in their own pockets.
You’d think it would be obvious that putting the government of a nation whose voters include so many suckers in the hands of people who know how to play the suckers is a bad idea. An Illinois whose motto is “Heads I win, tails you lose” will indeed attract more Griffins but it won’t be a place many others will want to live. Nonetheless, in an era in which millions of Americans, including Illinoisans, saw their house values collapse and their real wages remain stagnant while virtually all of the gains made by the economy since the crash of 2007 went into the pockets of the owners and executives rather than workers, people look with hope to the class that caused it all. That’s because the difference between our out-of-work pipe-fitters and our Trumps and Romneys is income, not class. Plus, all share something more important to Americans than ideas or experience: They both hate the same people. It is a bond between them.
Business is a way to do things but it is also a way to see things. Business methods have a place in public administration but business goals do not. The other day, the governor said that he wanted to ensure that “every child goes to a high-quality school and can go on to a high-paying career.” When I was growing up, the young dreamed of saving the world. (It seemed so easy when we were 17.) Today, the young are encouraged to buy the world.
Ronald Reagan entertained similarly crass notions. America, he crowed, is a great country because anyone can grow up to be a millionaire. I would be prouder if America was a country in which one doesn’t have to be a millionaire to live a good and useful life. Today you need to have a million so you can buy in the marketplace all the things – security, green space, a decent education for kids – that people used to look to their governments to provide before millionaires decided that government’s job is to cater to business’s needs and not the public’s.
Contact James Krohe Jr. at CaptBogue@outlook.com.