Fed Presidents and School Lunches
It's nice to see some righteous anger at Beautiful Perfect Capitalism run amok. But can we collectively start caring about more than just the most egregious wrongs?
Earlier this week, Fintwit erupted in anger over disclosures from Dallas Federal Reserve President Robert Kaplan’s 2020 trading record. Our Capitalist Overlord made trades of over $1 million each in at least 27 different securities and investment vehicles, as reported on by the WSJ. Of course, Mr. Kaplan all the while was a key player in setting and then front-running Fed policies to inflate literally all asset classes to literal all time history of the universe highs, and he handsomely reaped the rewards. Best of all for him, these trades were *not* in violation of ethics rules, but of course, being the nice guy that he is, he now said that he’s going to sell all of his individual stocks now that they have conveniently increased by 100-1000% in value.
It’s nice to see some of his fellow asset-owning class get upset about such an abuse of power and inappropriate actions (when judged by normal morality, not some Federal Reserve self-defined ethics rules)… but why can’t the 1% (or the 5% or the 10%, which typically are who comprises Fintwit and those that generally set policy in this country) get equally upset about other injustices in our Beautiful Perfect Capitalist system?
Here are just some of the many other things that people, if they can find a few crumbs of conscious, should start getting upset about:
Tax evasion by the rich:
Also earlier this week, the NYT reported on a Treasury Department report which concluded that the 1% evade up to $163 billion in taxes per year. The 0.5% defrauds the government out of 20% of the taxes that are owed in accordance with law. That’s not from cute tax planning, that is theft from the Treasury and thus their fellow Americans. $163 billion is ~$500 per American citizen or (as Mitt Romney loved to quantify it, about ~$1,000 per American taxpayer). The Fiscal Conservatives threw fits over providing average Americans with a few thousand dollars in stimulus during a once-a-century pandemic when people were out of work or earning reduced wages, but the rich stealing $500 from every American year in and year out is totally OK. The nominal left in this country is hoping to increase funding to the IRS to help close this evasion-by-under-resourced-Taxman loophole; the Law and Order party called an increase of funding of the IRS to pursue tax cheats “an invasion of privacy.” Where is the outcry from Fintwit and the right over this theft?
Now some equally bad things that the financial aristocracy also can’t be bothered by:
PPP loan abuse:
To be fair to Fintwit 1%ers, they did get a little upset over a few instances of PPP abuse, but I believe its mostly because they hated the characters involved. Noted TV Talking Head and Long Island Bro Josh Brown’s firm took out a $1.3 million loan and eventually apparently paid it back after the entire internet made fun of them for managing $1.3 billion and yet going to the government teat as soon as times got a little tough. His West Coast cousin, Ross Gerber, also took out a loan whilst bragging about how much money he manages and how well his stocks are doing (and I do not think the internet has established whether he has paid it back or decided to keep the money). And as a third example, noted Tesla PermaBear Gordon Johnson also took out a loan for his two-person firm (which to be fair might be a bit more actually needed after Tesla ran up 1000% in the past year).
But what Fintwit has not gotten mad about is how the program was designed to be abused by wealthy business owners and how nearly all wealthy business owners have indeed abused it. The “loans” are automatically forgivable, i.e., they are really free money grants. If a loan is less than $2 million, there is essentially no chance of being audited once forgiven. Even if your loan is larger than that, all you have to prove is that you spent it on payroll and other applicable expenses. But that has nothing to do with the fact that so few of these people really needed money in the first place. In my day job, I get to see the financials of private companies, and I’ve looked at literally hundreds over the past ~year since we got beyond the first COVID wave. I would say that outside of entertainment and hospitality, nearly every company reported a 2020 that was comparable to if not better than 2019, and some companies (construction, internet, etc.) had bumper-crop years. And guess what? Maybe 5-10% of such companies voluntarily paid back the $500,000, $1,000,000, or $1,500,000 PPP “loans” that they received. Rather, end of year distributions for their owners just got a larger. Where is the moral outcry from the moneyed class over the taxpayer handing the better part of a trillion dollars to already-rich business owners? Not anywhere to be found, unless it was given to someone that they have a twitter beef with.
And in case you do not believe my anecdote, the SBA data supports the above: out of $521 billion of “loans” provided in 2020, $417 billion have been forgiven. 23,000 business owners have kept at least $2 million in free government money. Another 530,000 have kept at least $150,000. The asset-owning class was always going to come out of this pandemic better than they entered - it is what our form of capitalism demands.
Unemployment clawbacks:
In recent days, anecdotes (which the media has started to pick up) have revealed that many states are beginning to try to claw back unemployment benefits from people who, to their attestation, were rightfully owed the money (which is the same or a higher bar than PPP loan recipients had to make). Here is but one example - an Oklahoma woman who was laid off, and lost her house and car before benefits kicked in and she eventually received $17,000, and yet is now being told to repay the money that she supposedly did not deserve. She lost her job. She went through crisis. But now, the state wants their money back, just because she doesn’t deserve it or something. Contrast that with the PPP millionaires who got to keep their free government money while suffering no hardship, with no questions asked. The country likes to reward the rich for being rich and make life harder for the poor - it is in our DNA.
Minimum wage:
Federal minimum wage remains $7.25 per hour, the same level that it was set at in 2009. That’s $14,500 per year on a full time job (if you can get full time hours on minimum wage). Meanwhile, the moneyed class and the general boomer voting bloc have no cognizance of this, as they grew up during a time when minimum wage was almost livable and now expect their gardeners and restaurant staff to work for the bare minimum “because that’s how things were and we did ok”.
But that’s not actually how things were. As shown in the chart below, the tail end of the boomer and the front end of Gen X enjoyed a minimum wage (and educational costs, also captured in this chart) that was far more livable than it is today. Minimum wage has fallen by 30% on a like-for-like basis since the late 1970s. In the late 1970s, the boomer rhetoric of “I paid my way through college” was not counter-factual - you could pay for a year’s tuition with 500 hours of minimum wage labor. Now, it takes 2,300 hours.
And yet, there is no urgency in righting this wrong. Sure, certain states are a bit higher than $7.25, but no state is anywhere close to the $26/hour that minimum wage should be at when reflecting productivity gains - such gains must instead be allocated to corporate profits and thus the shareholder class. And sadly, this is an issue that seems unfixable until the boomers die out - while a majority of Americans support an increase in the minimum wage to at least $15/hour, the dinosaur, corporate-funded Democratic party, who controls the White House, Senate, and House, refuses to take any action to implement a broadly popular policy lest it displease their donors relying on that cheap labor.
Healthcare costs are out of control, and it is mostly because we insist on enriching health insurers, private medical practices, and pharmaceutical companies (and to a much lesser extent, “FuNd ThE WoRLd’S ReSeArCh” by paying high costs for pharma and letting other countries get drugs for rational prices - the same insulin that costs $100 in the US costs $10 in Canada or the UK). The US pays nearly twice as much per person per year on medical costs as comparable countries - we’re at $11,000 per person per year. If we reduced that to an average of comparable countries, there would essentially be $5,300 put back into the pockets of average Americans or the country as a whole, enabling savings, investment in infrastructure, and countless other underfunded programs. But alas, it is more important that children of congressmen conspire to increase pharma prices for the benefit of shareholders and their personal enrichment. It is more important that we allow a family to make billions of dollars killing hundreds of thousands of people with opioids and then absolve them of any criminal responsibility. That’s the American way. And worst of all, the boomer voting block now gets free healthcare (and we are about to give it to the youngest of them, with Democrats working to reduce the Medicare age from 65 to 60, as if that is some benefit to the country as a whole).
And while there are plenty more injustices, lets wrap it up with one of the most shameful examples:
Real American opposition to free lunches because children could “become spoiled.” In what country should a policy maker, or anyone with any semblance of a heart or conscience, be upset that children are provided with food? Only our cold-hearted, Beautifully Perfect Capitalist, Greatest Country in the History of the World - where we just gave over $500 billion dollars to millionaires but think that a kid having a full belly is some moral dilemma.
So what is the conclusion? There isn’t any rosy one. This country has lost its moral compass. The boomer 1% controls the government which then creates policies that enrich the boomer 1% in a self-sustaining positive feedback loop. The Right has been largely taught to hate The Other, even when it goes against their own best interest. And when the 1% or 5% on the fringe occasionally gets upset (or perhaps just jealous) at a certain most horrendous example of such grift (the Fed President), it is met with a token mitigation, which allows the continued ignoring the day-in and day-out benefits that they and their peers accrue, while actively choosing to make life harder, or at least not any easier, for the working class.
The truth is, we already live in a Star Trek-like post-resource-scarcity society - this country is rich enough to eliminate hardship for all. There is no need for people to be bankrupted by medical costs, lose houses and cars over a lost job, or have their children go hungry at lunch. But we prioritize enabling the rich to get richer. I hope one day that changes. I am not holding my breath.
How does it end? I don’t know that it does, at least until the boomers die off. Until then, I suspect that inflated asset prices and pro-upper-class policies will be maintained so that boomers can liquidate their 401ks and sell their houses to fund shuffleboard at a Florida condo in their golden years. And once they die off, Millennials and Gen Z will be left to pick up the pieces. At least I think that the younger generations see through the bullshit a bit more clearly and hopefully have a bit more empathy towards their fellow citizen.
- Elmo 2028 (if America still exists at that point)
Preach Elmer. Insanity reigns supreme