You read that heading right. According to Absolute Return+Alpha, the top 25-earning hedge fund managers made over $22 BILLION (yes, with a B) last year, with 6 of the top 10 making over a billion (again, with a B) each. To put things in perspective, if you made more than $10,000,000 last year, you were in the top 0.01% (well, 0.0095%) of filers. These guys made 50, 100, 300x that much.
In 2006 (the last year the IRS makes the data available), only 400 filers reported income of more than $110,000,000, and the entire reported income for those top 400 filers was only slightly over $8,000,000,000. That’s the same amount Bridgewater’s Ray Dalio and Paulson & Co’s John Paulson reportedly made last year. Think about that. Last year, TWO people made as much as the 400 highest-earning people did just a few years prior.
While I have a much, much (much!) longer essay in the works about income inequality and the drivers thereof, I think this a good time to touch briefly upon the subject. This week alone, I’ve read three articles decrying the top 1% (explicitly or otherwise) as making off the the Country, at the expense of Everyone Else. This is bullshit.
Instead of attacking the top 1% – the income floor on which is about $400,000 – or really attacking any income group, we should be asking why people are in these groups, how they got there, and what they’re doing differently from Everyone Else that such a large % of income continues to accrue to them, increasingly so. I can promise you that every fund manager in that top 25 list works at least 70 hours/week, probably closer to 100 if you count “social” events that are really business by any other name. What about CEO’s, investment bankers, traders, power-lawyers, doctors, consultants, and other top professionals? Same thing. What about professional athletes and entertainers, surely their lives are more relaxed, right? Wrong.
In reality, the only people in the top 1% who don’t work insane hours under (often) similarly insane pressure are, in the immortal words of Gordon Gekko, “widows and idiot sons” i.e. those living off the interest/capital gains from their inheritance/trust funds.
I doubt there’s many in the top 1% that works 40 hour weeks with 3+ weeks of paid vacation and another week or two of sick/personal days. Similarly, I doubt there’s many in this group that have a defined-benefit pension and/or are members of a union. In the ultimate analysis, critics of “the rich” have to acknowledge that the vast majority have not only taken significant career/lifestyle risks to get where they are on the earnings ladder, but have sacrificed what most of us would deem a “normal” life (and quality thereof).
With extremely rare exception, you can’t have your cake and eat it, too. Blind jealousy without context is self-defeating; you simply can’t attack “the rich” without acknowledging and accepting that most people – indeed the vast majority thereof – lack the dedication, work ethic, personality, and general inclination to do what it takes to make it into the upper echelons of earners. But once you do accept this fact, income inequality, tax policy, and social mobility debates take on an entirely different tone. Alas, even those who should know better seem to have a hard time opening their eyes…