Economy  
comments_image Comments

How Dracula Hedge Funds Are Sucking Us Dry

What notion of economics or ethics justifies the fact that it would take the average family more than 35,000 years to earn as much as the top hedge fund managers earn in one year?
 
 
Share
 
 
 
 

The official June unemployment rate is 9.2 percent. The real rate is 18.5 percent (which includes involuntary part-time workers and the unemployed who haven’t looked for jobs in the past 4 weeks.) Nearly 30 million Americans are unemployed and we need more than 21 million jobs to get back to full-employment (defined as 5 percent). 

Meanwhile, the top 10 hedge fund elites make on average nearly $1 million an HOUR. We’ll never find the resources to solve the unemployment crisis until we redistribute some of this obscene wealth.  

It starts by putting to rest the notion that hedge fund elites are just like any other. They are not. They make more money than everyone else, including our top movie stars and athletes...and they pay lower taxes.  

While working on my next book on financial elites, we dredged up a variety of “Top Ten Income Lists” (from sources like Forbes and Equilar) for just about every kind of high-rolling celebrity and CEO imaginable. Here are previews:  

  • Oprah led the pack by hauling in an incredible $290 million in 2010.
  • U2 at $190 million was the top pop musical group.
  • Leonardo DiCaprio ($77 million) is the leading Hollywood star.
  • Tiger Woods ($75 million) remains the highest paid athlete even though he doesn’t play much golf these days.
  • Half of the highest paid non-financial CEOs are in the entertainment business, led by Phillipe Dauman of Viacom ($84.5 million).
  • Only six out of the 100 highest income Americans on these lists are women. 

You also might find it interesting that the top Wall Street bankers are keeping a low-income profile these days. Maybe it’s an attempt to avoid stricter regulatory curbs on their financial casinos. Jamie Dimon of J.P. Morgan Chase led the bank/insurance top 10 list with an income of $20 million (which, by the way, is half as much as Glenn Beck’s 2010 income). Lloyd “Doing God’s Work” Blankfein of Goldman Sachs was 10th on the banker list with an income of $14.1 million.   

All in all, we’re talking about serious money --- except for the fact that hedge funds make 100 times more than bankers.  

Here’s the summary table for the “Top Ten” lists for 2010 -- to put the numbers in perspective, median family income is included.

The Highest Income Celebrities, CEO and Hedge Fund Managers (2010)
     
The Top Ten Average Yearly Income Number of years if would take for the average American family to earn as much.
     
Hedge Fund managers $1,753,000,000 35,217 years
Movie directors/producers $126,000,000 2,531
Top celebrities from all fields $119,800,000 2,407
Pop musicians $87,200,000 1,752
Non-financial CEOs $47,100,000 946
Athletes $44,600,000 896
Movie stars $42,600,000 856
Authors $26,900,000 402
Lawyers $20,000,000 402
Bank/Insurance CEOs $16,600,000 333
     
Median Family Income (2009) $49,777 1 year

For me, the right-hand column says it all. What notion of economics, fairness or ethics justifies the fact that it would take the average family more than 35,000 years to earn as much as the average hedge fund elite earns in one year? And hedge fund honchos can’t sing, dance, write, direct, or play baseball. Yet, whatever they do dwarfs what such stars make. They also don’t make iPads or social media or cars. Yet they make many times more than CEOs of non-financial corporations. What could those hedge fund moguls possibly do to earn such riches? 

In economics, there’s supposed to be a connection between what you earn and the economic value you produce. Otherwise, it’s called an economic “rent” – which is just a polite way of saying it’s an outright rip-off. These guys (and they are all guys) are ripping off our economy, and it's up to us to put a stop to it. 

 
See more stories tagged with: