Why Are We So Obsessed With Everyone Else's Wealth?
You all the know urban legend of the conversation between F. Scott Fitzgerald and Ernest Hemingway.
Fitzgerald: “Let me tell you about the very rich. They are different from you and me.”
Hemingway: “Yes, they have more money."
It never happened, but it points to an interesting question: Why are we in America so fascinated with other people’s wealth?
We talk about it, make movies about it, track it incessantly. We have the Bloomberg Billionaire Index and the Forbes 400. We track the heirs to the Wal-Mart fortune, and took note when the Koch Brothers wealth surpassed $100 billion.
There seems to be an unhealthy obsession with other people’s money in America. I plead guilty to contributing to this. Whether it is about hedge fund managers or the wealthiest New Yorkers, I have posted chart after chart on the subject. My focus is usually -- but not always -- an explanatory warning on the dangers of excessive fees for investors. That was the underlying focus of my presentation, Romancing Alpha, Forsaking Beta.
However, the most viral thing I have ever posted at Bloomberg View was a chart highlighting the difference between the Rich and the 0.01%. It had nothing whatsoever to do with fees or investing or anything else. It is merely a salacious chunk of chart porn about "OPM" -- Other People’s Money.
We follow the wealthy the way we follow our favorite sports teams. I am surprised some fantasy billionaire game has not yet popped up.
Or is that what the stock market has become?
News reports frequently mention how much notational wealth has been made or lost with every gyration in the markets. I am far more concerned with corporate earnings and the overall health of the economy than with how much the fortune of boy billionaire Mark Zuckerberg rose or fell on any given day. But that does not seem to be how some of the financial media see it. I don’t understand why the latest showdowns between billionaire fund managers are somehow considered news. The issues seem irrelevant.
I do not understand why the rest of us need or want to be drawn into this.
I was reminded of this fixation while working on a research project on Wall Street bonuses (check this site soon for some astonishing details). Half of the Street uses bonuses as bragging rights, even a recruitment and retainment tool. Bankers talk about bonuses, announce them, publicize them. These are the pikers, the people whose bonuses, while obscenely large, are not quite so obscene as to cause actual embarrassment. The big money is in the section of finance that tries desperately to keep bonuses a secret. These sums of money are so vast as to actually shame their recipients. Perhaps some of them have guilty consciences, as they realize their riches are as much the result of luck as actual skill.
At least, that is the case for some of them. The alpha generators and rainmakers can keep their hundreds of millions of dollars, guilt free. Some --think Steve Jobs and Bill Gross and Larry Page and Jim Simons -- have earned their obscene wealth. Not so for many others.
Perhaps this explains the sudden national focus on wealth inequality. Rising stock markets, increasing concentrations of wealth, and relatively low tax rates (look at historic tax rates before e-mailing me) have made this a red-hot issue. The Financial Times just named Thomas Piketty’s tome on economic inequality, "Capital in the Twenty-First Century," the Business Book of the Year.
Regardless, most of the country retains an unhealthy fixation on OPM. I have a sneaking suspicion it is only going to get worse.
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