Is it Fun Being a Billionnaire?

On March 2-3, 2009, Fox News conducted a poll in which the following question was asked:

Do you think asking the wealthiest Americans to pay more in taxes is a good idea because it levels the economic and social playing field, or a bad idea because it punishes hard work and success? SCALE: 1. Good idea because it levels the playing field 2. Bad idea because it punishes hard work and success 3. (Don't know)

Of course, anyone who knows anything about language will realize that the question is biased by its word choice. Who besides the envious and insane would want to punish hard work and success? However, as has amply been illustrated in the past few months, wealth is not necessarily the result of hard work. Take all of those CEOs who received incredibly huge compensation packets from their companies over the past few years, companies that are now bankrupt largely as a result of bad management decisions--companies that we, the American taxpayers, are supporting with our shift-worker salaries, our teacher salaries, our office manager salaries, our hair-dresser salaries (and so on). Those CEOs did not become wealthy through hard work. Neither did such extremely wealthy high-rollers as Bernie Madoff and "Sir" Allen Stanford.

Both men are being accused of running Ponzi schemes, of bilking billions of dollars from investors. Stanford's father established an investment firm in Mexia, Texas, and later father and son made money by buying up depressed property during the 1980s (how I remember that time, having lost money on a house, ourselves, during the oil bust of the '80s) and then re-selling the property later as the economy recovered. Robert Allen Stanford took his investment business out of the country (one can assume, to avoid taxes and oversight), and now owes millions of dollars in back taxes to the United States government as well as billions of dollars to trusting investors.

On Stanford Financial Group's website, Sir Allen attributes his wealth to hard work: "His philosophy of hard work, clear vision and value for the client remains the cornerstone of Stanford’s success today." What an ironic statement, in view of the charges held against the man today. I can't help but wonder about all those hedge-fund managers, the ones that don't have such a high profile as Bernie Madoff and Robert Allen Stanford. Does one really think "hard work" made them wealthy?

In the March 9th edition of The New Yorker, Alec Wilkinson has an article about Robert Allen Stanford, titled "Not Quite Cricket." (abstract here) The article focuses on Stanford's support of the game of cricket, particularly of the Stanford Superstars of Antigua. One passage in the article, however, really caught my attention:

We [the writer, Alec Wilkinson and Sir Allen Stanford] spoke about the elections in the United States, which were just a few days away. He was concerned that Barack Obama would raise taxes on rich people. I mentioned the name of a hedge-fund manager who had made more than a billion dollars in a year--even if he'd had to pay half of it in taxes, I said, he'd still have more than five hundred million left. Stanford studied me for a moment, as if I were an odd sort of specimen, and then replied, "I just hope they don't squeeze the life out of the last engine in the economy that's got any gas left." Stanford reportedly owes the United States slightly more than a hundred and four million dollars in back taxes. (25)

Remember this guy when someone next asks you whether the "wealthiest Americans" should be taxed more.

Here you can watch Sir Allen Stanford yukking it up with CNBC's Carl Quintanilla: "Stanford: Yeah, it's fun being a billionaire". As you watch this, remember that authorities have been suspicious of this man's enterprises for more than fifteen years. Perhaps investors wouldn't have lost money had those suspicions been pursued more diligently and had media suck-ups asked the tough questions. (Same for Madoff) And here you can watch Jon Stewart's perfect take-down of the financial acumen of CNBC: Jon Stewart, March 4, 2009.

And at CNN.com, you can read of how money buys influence and reputation: "Standard Financial: How To Buy a Reputation". Nothing new under the sun.

UPDATE, "Not one iota of evidence that starving the beast works...":
Bruce Bartlett, domestic policy advisor to President Ronald Reagan and a treasury official under President George H. W. Bush, writes in Forbes that the Republican claims about raising taxes have not proven to be true. See his article, "Higher Taxes: Will the Republicans Cry Wolf Again?", online, at Forbes.com, February 27, 2009. (h/t)

And for another view on taxing the rich, read Daniel Gross's article in Slate, "War on the Rich?", posted March 5, 2009. (h/t)