In Defense of the Rich

Quick story to kick it off. There was a firefighter in a wealthy town in New Jersey. Summit, Short Hills, Chatham, something like that. The firefighter had a king-size chip on his shoulder. Fucking rich bastards. He couldn’t drive through town in his beater car without thinking that everyone was looking down on him, a lowly firefighter. Well, his child came down with a very serious illness. And guess what? All the rich people in town pitched in, raising hundreds of thousands of dollars for his care. The kicker? One of the so-called rich people was on the Board of Trustees for the hospital, and got the kid a private room. Suffice it to say that the firefighter’s tune changed after that.

Rich people are in the news today, after Zohran Mandami’s primary win in New York. I’ve written about envy here and other places. That’s really where a lot of this antipathy comes from—envy. If I wrote about it here, we would not be covering any new ground, except to say that certain economic systems based on envy lead to poverty, depredation, and violence. Envy is a sin, one of the seven deadly sins, and it’s the only one of the seven that you can’t have any fun at. Someone has more money than you? Take the high road. Allow yourself to say: “Good for him.” I am pretty rich, but I know plenty of people who are richer than me. Good for them.

All that aside, (most) rich people do a lot of good in the world. First of all, have you ever gotten a job from a poor person? If you have a job, pretty much by definition you are working for a rich person. Now, there are good bosses and bad bosses, and laid-back bosses and taskmasters, but if you do a good job, and you don’t make a nuisance of yourself, you can have a house and a car and a family and some cash in the bank. You don’t have to come up with a killer app. You don’t have to come up with an amazing idea. You don’t have to worry about production, or operations, or regulation, or taxes, or payroll. You just have to show up and do what you do and get paid what you get paid and you can have a pretty good life. Over the years, there have been politicians who have said things like you didn’t build that and there is nobody in this country who got rich on his own, trying to detract from the achievements of entrepreneurs. We know better. I am an entrepreneur, I have three different businesses, and two of them are not doing so great right now! That’s the risk, and I own it. That’s why I get paid the big bucks (when things are going well).

I think people have a little empathy for small business owners such as myself, but not for big business, where things can go poorly and people still make millions of dollars. Well, there is an explanation for that, too—professional management talent is hard to come by, and it is a question of supply and demand. Also, you want incentives in place for management for when things do go well. Not to say that things are occasionally unfair—the traders at Merrill basically looted the company when Bank of America took over, but for the most part, the market rewards responsibility and punishes irresponsibility, just like your credit score. Since we’re talking about Wall Street, which people seem to think is a bunch of white guys throwing money at each other, you would last about five seconds in that job. Well, you would last about five seconds in the job that I had. There is the occasional sinecure and toll-taker, but when large amounts of risk are being transferred, there is stress, and most people have no comprehension of the stress. When I was at Lehman, my heart would be exploding out of my chest about six times a day. Hence all the gray hair.

Rich people also—pay for government? Most people think they are taxpayers. In reality, they are tax receivers. We can go through the stats if you want, about how the top x% pay y% of all income taxes, but you have seen it before. The rich disproportionately pay most of the taxes. Trump wants to make the tax code even more progressive, with taxes only applying to households making $200,000 or more, which would result in the entire tax burden of the United States of America falling on 5% of the population. Maybe you should…send a thank-you note? Of course, there are aspects of the tax code that people consider to be unfair, such as the tax treatment of capital gains, and the step up in basis, and for sure, the super-rich have relatively low effective tax rates as a result. The people who really get socked with taxes are the working rich: dentists, doctors, lawyers, professionals, and small business owners with pass-through entities that pay the top marginal tax rate. Maybe you should send a thank-you note to them. I think the point that Trump is trying to make is that if you are not in the top 5%, your contribution is so insignificant that it’s not even worth filling out a return. Still, $1.1 trillion in taxes is collected from the bottom 95%, and most of that comes from the 90-95^th percentile, so if you lower their marginal rate to zero, not only is that unfair, but you have a big revenue hole to plug with something else, like—raising the top marginal rate, which falls on dentists, doctors, lawyers, professionals and small business owners with pass-through entities. Life is so fucking stupid.

Rich people also—pay for a lot of other stuff? Symphonies? Art museums? Scholarships? Walk into any art museum and what do you see on the wall? The donor wall. You make a lot of money, you have a lot of it sloshing around, and you are in a position where you can do some good. Some people have pointed out that the class of billionaires that existed 100 years ago, the Carnegies and the Rockefellers, had more of a philanthropic instinct. I think it is still there. I once had Bill Perkins on my radio show years ago, and we were having a debate about giving. I said that people should postpone their giving to later in life to give their wealth a chance to compound and accumulate, so they can give more later. He argued that the rate of return on that donated money is higher than what you would earn in the market, and you should donate it now. A lot of rich people are retarded about giving money. I am thinking of Bezos in particular. They were assembling guillotines outside his place in DC and he responded by donating $10 billion to fight climate change, no strings attached. That is dumb. His ex-wife is giving multiple nine-figure unrestricted donations left and right. Also dumb. Here’s a fast fact for you: in 2002, Bill Gates was worth $40 billion. From 2002 to 2012, he donated $26 billion. At the end of 2012, he was worth $80 billion. Now he says he is going to give it all away. I know some people think that Bill Gates is a turd (I tend to agree), but he has been smarter about giving that most of the rest of the billionaire class. There are different philosophies on this, but I don’t fault anyone for leaving money to their kids. Your kids might turn into jerks, but it’s your property, and you can dispose of it as you wish. For what it’s worth, I agree with the step up in basis.

Also, rich people are cool! I stepped up my game and moved into a nicer neighborhood last year, and the neighbors are a lot nicer. No fireworks going off in the middle of the night. No loud music playing. No Bud Light cans everywhere. Everyone is super friendly. If you ever saw the reality show Myrtle Manor, you know what happens in trailer parks. Now, I also live in the South. Rich people in the Hamptons are not so nice—this I know for a fact. And Bill Gross was being a complete douchebag to nis neighbors. Rich people behaving badly is a thing, but it’s a thing because it’s so rare. Yes, I have met my share of smug assholes. Yes, sometimes there is a lack of humility. I find this to be the exception rather than the rule. But the exceptions are…discouraging. When I see behavior like that, I just think to myself, there but for the grace of God go I.

I will tell you my least favorite species of rich person: the cheap fuck. You got $100 million in the bank, and you’re leaving 15% tips. You’re tipping the valet $3. When your high school or college passes the hat for donations, you’ve got your hands in your pockets. Some rich people really are afraid that they’re going to run out of money. America being what it is, there is a lot of class mobility, and a lot of billionaires came from not-so-great circumstances. I heard a story of a billionaire who was always trying to score free tickets out of his financial advisor. If you are adequately diversified, it is pretty much impossible to run out of money. I know some millionaires who have never spent more than $100 on a hotel room, have never bought a new car, who still fly (gasp) Spirit. As time passes, I don’t get angry at these people anymore—I have sympathy. It’s a mental illness, more than anything.

Rich people aren’t so bad. They have problems like anyone else. You might think you’d trade places with them in an instant, that their problems are easier than your problems, that you would prefer their problems to your problems, but you probably wouldn’t. It’s 8pm on a Friday. You’re four beers deep, and the rich guy is still working.

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I implore you to pick up a copy of RULE 62: Meditations on Success and Spirituality. If you read it, and you internalize it, you will never need a therapist again. Spend $20, save $20,000-. Sounds like a good deal to me.