If you’re an amoral person with political connections, it’s possible to make a lot of money.
Warren Buffett lined his pockets by making a government-subsidized investment in Goldman Sachs during the financial crisis.
The rest of us suffered and he got richer, but the left seems to be okay with that perverse form of redistribution because he supports class-warfare tax hikes. Sort of like buying an indulgence in the Middle Ages.
Hey, nice work if you can get it.
But Buffett may be an amateur compared to the crony capitalists at Citigroup.
The just-confirmed Treasury Secretary Jack Lew was given a huge bonus for leaving Citigroup several years ago. Did the company give Lew a bonus because they were happy to shed his $1.1 million salary after he presided over gigantic losses at the firm’s alternative investments division?
Don’t be silly. He was showered with money specifically for leaving the company to take a “high level position with the United States government”
Again, nice work if you can get it.
But Lew’s loot is pocket change compared to the $115 million that former Clinton Treasury Secretary Robert Rubin received for helping to steer the company into financial collapse.
So is this evidence that the private sector is systematically stupid?
I wish that was the explanation.
Instead, this is tragic evidence that it’s possible to “earn” a very high return when you “invest” in cronyism.
According to the Treasury Department’s Special Inspector General, Citigroup got $45 billion of TARP handouts and $301 billion of guarantees.
Not to mention an estimated $13.4 billion subsidy thanks to the government’s too-big-to-fail policy.
Since we’re talking apples and oranges, I have no idea how to compare the value of the payments to Lew and Rubin with the value of all the handouts and subsidies that Citigroup got (and is still getting) from taxpayers.
But I do know that mere mortals like you and me don’t have a prayer of “earning” the incredibly high returns that Citigroup received by “investing” in Robert Rubin and Jack Lew.
And let’s not forget what Goldman Sachs “earned” by “investing” in the previous Treasury Secretary, Tim Geithner.
Hey, nice work if you can get it.
And you can even be absolved of your sins by supporting higher taxes! What’s not to love. You get millions of dollars that you could never earn in a genuinely capitalist economy, and all you have to do is agree to give back an extra 5 percent or so if tax rates go up.
But if you’re someone like Tim Geithner, maybe you can avoid the extra burden by cheating on your taxes. Of course, you’ll be taking a risk of having your wrist slapped if you get caught. And that can really sting for 10 seconds.
Remember, rules and laws are for the peasants, not the cronyist 1 percent.
Nice work if you can get it.
And there are lots of opportunities for unjust enrichment, as explained in this video.
The moral of the story is…well, that you should be a libertarian if you want to be a decent person and not reward those who are indecent.
P.S. At least Jack Lew has now shown us that it’s perfectly fine to invest in the Cayman Islands and benefit from tax competition.
But only if you’re an insider, of course. Nice work if you can get it.
[…] several parts of this excerpt that deserve attention, including passages that are correct (such as bailouts giving undeserved money to the rich) and passages that are nonsensical (the financial crisis was caused by intervention, […]
[…] several parts of this excerpt that deserve attention, including passages that are correct (such as bailouts giving undeserved money to the rich) and passages that are nonsensical (the financial crisis was caused by intervention, […]
[…] nothing wrong with rich people getting richer (assuming they earn their money rather than getting special favors from politicians). But also because ethical people should be concerned about improving the lives of the less […]
[…] great when people become rich by providing goods and services to the rest of us. It’s nauseating when people become rich because of bad government […]
[…] This rubs me the wrong way, just as it rubbed me the wrong way when one of Obama’s cabinet appointees got a similar payout. […]
[…] This rubs me the wrong way, just as it rubbed me the wrong way when one of Obama’s cabinet appointees got a similar payout. […]
[…] This rubs me the wrong way, just as it rubbed me the wrong way when one of Obama’s cabinet appointees got a similar payout. […]
[…] she also points out that Treasury Secretary Lew (a oleaginous cronyist) is no friend of American business because of his embrace of worldwide taxation and […]
[…] revolving door of insiders who shift back and forth between the private sector and government, but their real job is always to be working the system to obtain undeserved […]
[…] revolving door of insiders who shift back and forth between the private sector and government, but their real job is always to be working the system to obtain undeserved […]
[…] https://danieljmitchell.wordpress.com/2013/02/28/jack-lew-and-citigroup-how-the-corrupt-rich-get-unju… […]
[…] be sure, we have examples of insider favoritism and undeserved wealth in rich nations, but it’s a matter of degree. Cronyism is an undesirable feature of our economy, […]
[…] be sure, we have examples of insider favoritism and undeserved wealth in rich nations, but it’s a matter of degree. Cronyism is an undesirable feature of our economy, […]
[…] be sure, we have examples of insider favoritism and undeserved wealth in rich nations, but it’s a matter of degree. Cronyism is an undesirable feature of our […]
[…] in 10 lifetimes. So long as they earn their money honestly (i.e., not via government favoritism like some statists), their financial success is […]
[…] in 10 lifetimes. So long as they earn their money honestly (i.e., not via government favoritism like some statists), their financial success is […]
[…] several parts of this excerpt that deserve attention, including passages that are correct (such as bailouts giving undeserved money to the rich) and passages that are nonsensical (the financial crisis was caused by intervention, […]
[…] several parts of this excerpt that deserve attention, including passages that are correct (such as bailouts giving undeserved money to the rich) and passages that are nonsensical (the financial crisis was caused by intervention, […]
[…] https://danieljmitchell.wordpress.com/2013/02/28/jack-lew-and-citigroup-how-the-corrupt-rich-get-unju… […]
[…] via Jack Lew and Citigroup: How the Corrupt Rich Get Unjustly Richer with Crony Capitalism | Internation…. […]
If tax hikes are class warfare, what are tax cuts? Especially when spending isn’t cut before they are implemented?
@Dick Richards I’m pretty sure this is the reason Democracy has a notional 200 year time limit. “Once the public learns it can…” and here we are.
Is there a way back? I like Glenn Reynolds’ tax formulation that any earnings post government work is taxed at 50% for five years after having had one’s fingers on the levers of power.
Federalist Paper 55 anticipated a much stronger role for the states in saving us for this corruption.
I RECENTLY SAW AN ARTICLE CANT FIND IT STATING THAT THE DEBT INCREASES BY 85 MILLION EVERY WEEK IS THIS TRUE AND WHERE DID YOU HAVE IT
The more the public subjects the economy to collective economic management, the more instances of cronyism pop up, the more the public dislikes businesses, the more collective management the electorate imposes on the next ballot. The vicious cycle deepens. Economic growth, already lagging three percentage points below the world average, remains subpar. The decline continues, relentlessly compounding your standard of living towards the world average.
But short term hope springs eternal. Eventually, one of these days, enough, near complete, regulation and collective economic management will finally paint cronyism into a corner. At which point, the significant [ha,ha] altruistic percentage of the population, even under flat effort-reward curves, will spring forward to serve collectively planned central goals, to match the five percent annual world growth trendline and avert American decline. Sure….
Unbeknownst to American naiveté, this is the door of promise most cultures have opened, only to never recover and decline into irrelevance.
When the game is clearly rigged, the competitors will put as much or more effort into rerigging the game in their favor than in playing to the best of their ability.
In a similar vein, companies do not pay wealthy DC attorneys because they are fond of wealthy DC attorneys; they do it because there is an ROI. If we take the crony out of capitalism, the wealthy DC attorney business would dry up.
No wonder they booed the requisite three times.
They do not wish to be bound by unambiguous laws. Thou shall not steal doesn’t have enough leeway around the edges, does it?