The first of these articles was Joan Vennochi's column in the December 9 Boston Globe, entitled "The rich rewards of cutting jobs." She laments the loss of 1,400 jobs at State Street Corp., even as that company reports profits that have grown to $427 million. These are not typos -- the profit at State Street could pay the salaries of everyone at my university for a decade, but it is slashing its workforce because of anticipated "headwinds" -- meaning the possibility that profits might shrink in the future. Those "headwinds," of course, are competition from other banks that are similarly greedy and, yes, deeply unpatriotic. Vennochi's critique centers on the fact that the bank was happy to take money directly from taxpayers in the form of a bailout and indirectly in the form of the social safety net that will provide some relief to its
victims, er, employees.
I whole-heartedly agree with Vennochi, of course, and made a similar case about Jeff Immelt a couple of weeks ago. Welfare cheats who receive thousands are pilloried by the talk-radio crowd, while welfare cheats who receive millions are the heroes of "free enterprise." In this case, though, I'd like to focus on the difference between public-sector and private-sector spending. An amazing number of people have allowed themselves to be convinced that only the private sector can be economically productive, with the public sector merely "eating" the taxes paid by the private sector. (See my recent article on Jeff Jacoby's twisted logic on taxes.)
The $14-million earner to whom I refer in the opening is State Street CEO Jay Hooley. Like most top executives in the United States, he is radically overpaid, and he thinks it is because he has rare and special skills and abilities. The reality is that in any organization, pay increases with proximity to the people who make decisions about pay. A corporate compensation committee is not going to stiff someone they have to play golf with the next morning. (Check this out; it is an axiom of corporate geography. Sometimes the higher pay is deserved, but rarely is it more deserved than it would be farther down the hall.)
I now consider Hooley rich instead of super-rich, because those with truly stupendous fortunes have had it long enough -- and deep and wide enough -- that they have become less anxious about grabbing more of it. Bill Gates and Warren Buffett have already earned as much as State Street would earn in the next century at the current pace. Each. And the interest on the interest of their fortunes would pay for someone like Mr. Hooley (who in turn could use the loose change in his couch to employ a geography professor full-time.)
I do not write this to suggest that the wealth makes these men any better than Hooley or than the rest of us. But I have noticed that it makes them a bit more reasonable and patriotic. They recognize that they have more money than they could ever use, and that it would be a mistake to pass it along to their kids. Writing for the MetroWest Daily News, Rick Holmes describes the billions earned by these two men, their understanding that it is not really "earned" in the sense of being deserved, and their commitment to give most of it away. Now they are bringing their peers on board, with great success. Forty billionaires have already made the commitment, according to Holmes. Enough wealth is in their hands to make a serious difference in the world.
While billionaires are giving as much as 99 percent of their wealth away, the highest priority of the U.S. Congress seems to be preventing millionaires from having to contribute their fair share.
This 2006 photo of Warren Buffett with Melinda and Bill Gates
was distributed worldwide by AP, but I found it in China Daily.
This is an interesting coincidence, as the nouveau-riche of China
are the next target of the Buffett-Gates campaign
to encourage generosity among billionaires.
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