Saturday, October 27, 2012

The Vilification of the 1%?

Billionaire financier and Home Depot co-founder Ken Langone told Bloomberg Television's Trish Regan on "Street Smart" that he is "proudly part of the 1%":
Langone on his past:

"As a little boy, my first job was delivering newspapers and then I had a variety of different jobs. I worked in a butcher shop, I worked in a supermarket, I worked in construction. I dug ditches on the Long Island expressway in 1954, 1955, 1956. During my summers off from Bucknell, I was a day laborer and they were building the section of the expressway from the city line to Shelter Rock Road. That was the way that I was able to augment my needs for college. My parents did what they could do but I still had to work to help because it was only about $2,500 a year to go to Bucknell. Today it is $53,000 a year, which is kind of sad."

On whether it's frustrating to hear politicians talk about working Americans vs. the 1%:

"Let me say this loud and clear. I am proudly part of the 1%. I worked like hell to become part of the 1%. I don't want anything back for what about to say, but it also happened. By my virtue of Bernie, Arthur and I getting into the 1%, we bought 330,000 people along with us, the great Home Depot, great paying jobs to wonderful bright careers and futures. I was once part of the 99%. The goal of being in the 99% was to get not from the standpoint of the money, but the standpoint of the accomplishment, the standpoint of the satisfaction. The thing that I find tragic today--I don't know what the hell a conditional mortgage obligation is, I don't know what subprime debt is. I have never owned any of it. I have invested in companies, I have worked in companies, we have built companies, we have created jobs."

"I have been in Wall Street all of my life. I love it. It has been good to me. I know many wonderful, decent, honorable, ethical hard-working people that were in Wall Street with me. This vilification of what is going on in America today is disgusting. We're upside-down right now. Sure, things were done that were wrong. Sure, excesses happen. But there's plenty of blame to go around. There is Barney Frank, the Congress, who pushed the American dream that everyone should on a home. Now, everyone should not own a home. There is a lot of people that can't afford it. There are a lot of people who don't have a responsibility to own a home. The point of the notion that this is going to be the American dream, everyone was in the pool swimming and all of a sudden when it blew up, then you look around for scapegoats."

On whether it's more difficult for young people right now:

"I wish I was their age because the opportunities that are out there now are as good as they were as I've ever seen in all my life. They might be harder to identify, but they are there. But once you identify them and once you figure out what the human want is and you address that human want with the supply of whatever they need, you can do well. I don't buy into this notion. We will get through this period of experimentation with socialism. Do not buy into this notion. We will get through this time of experimentation. What would you call it? Take from the rich because the rich are bad? That's how I feel."

"Let me really play with a liberal's head. I don't know whether other people should or shouldn't pay taxes. I know I can, and I am willing, to pay more taxes. I know I should not get social security. I don't need it. I won, so don't give it to me. But if you want to do that to me, do it in a constructive way that what you take from me beyond you already get is sequestered to reduce this humongous debt that we have so these kids that have not been born yet aren't burdened by our lavish lifestyles."
Ken Langone raises some good points but fails to acknowledge other equally important ones. First, there are many good and ethical people on Wall Street. Problem is that the incentives are all screwed up and the relentless and myopic focus on short-term gain often leads to dangerous herding behavior which culminates in financial crises, wreaking havoc on the real economy.

Second, while I have nothing against the 1%, I worry about economic inequality and the decimation of America's middle class. There is no question that the ultra-wealthy pay a lot of taxes but they too have to do their part in bringing down the debt in a meaningful way. To be sure, the best way to bring down debt is by creating good jobs, expanding the middle class, but extending tax breaks on the 1% is simply irresponsible and will only exacerbate economic inequality which has already reached dangerous levels.

Third, while billionaires like Ken Langone don't need Social Security, millions of Americans rely on it to get by in their senior years. This is particularly true after the 2008 crisis which slaughtered 401(k) savings plans. Moreover, as more and more companies dismantle defined-benefit pension plans and offload pension risk to insurers, millions more will be facing pension poverty in retirement. This too will add to an already stretched social-welfare system.

Fourth, every generation has its struggles, but I worry about students graduating in this economy. To say that they have the same or better opportunities than the previous generation is utter rubbish. American students are graduating from college with record debt and are struggling to find jobs commensurate with their skill set.

Fifth, using the term "socialism" to describe the US economic system is laughable. Over $1 billion was spent on political ads in this election. Washington is all about money, power, Wall Street and disability. In fact, many argue that the system has become nothing but corporate welfarism as bailouts go to big banks and other large corporations, leaving the poor, unemployed and underemployed out to dry.

Finally, while I concede that the majority of the 1% worked extremely hard to get there, wish all these billionaires would acknowledge how damn lucky they are. From Bill Gates, to Warren Buffett, to Ray Dalio, to Ken Langone and whoever else enjoys the spoils of great wealth, never overlook the 'luck factor' in their lives. There are millions of others in the 99% who work just as hard, if not harder, and will never amass anything close to their wealth.

Below, Geeknet CEO Ken Langone talks about his life and career on Bloomberg Television's "Street Smart." Also embedded a Moyers & Company show where Bill Moyers is joined by Matt Taibbi and Chrystia Freeland to discuss the rise of plutocracy and how the super-rich have willfully confused their self-interest with America's interest.