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"What this says to me is that the VC industry, as a whole, is being incredibly successful at extracting rents from dumb institutional investors. These investors wouldn’t dream of investing in a public company where there was no transparency as to basic questions like how much money the principals were being paid, but they happily invest in venture capital funds where the founders cream off so much of the income that younger top performers end up leaving the firm. And in general, VCs are incredibly good at playing fear off against greed: would-be investors really want massive VC returns, and they really don’t want to be left out in the cold."
"Which got me wondering whether the future that is already here might include a class for whom space travel is not merely an interesting idea, but one that is affordable."
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The diminishing marginal utility law dictates that the more money we have, the less utility we get from any additional incremental gain. And this bites the top 1% very hard indeed.
Examine the world around us from the point of view of someone with a net income of $5M/year ...
Food is essentially free; you can afford to spend $1000 per meal, three meals a day, in the most expensive restaurants in London or Tokyo or Manhattan, and not make a dent in your income. (Oddly, even the hyper-rich don't typically spend $1000 on lunch every day: a more realistic expectation might be to dine out expensively twice a week, for $100K/year, and have the best of everything in-house the rest of the time, with a live-in chef, for another $100K/year.)
Clothing is essentially free; want a different $5000 suit for every day of the week? That's going to set you back only $35K! Spouse wants a dozen designer evening gowns a year? That's still going to be on the low side of $200K.
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There are some things that having an income of $5M/year, or even $5Bn/year, can't buy you.
First on the list is health.
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First, writes Galbraith, it is important to understand that most of the current statistics on inequality are flawed. For while economists typically focus on income data – or measures such as the “gini coefficient” – these are extremely crude and tend to focus on outdated ideas about how economies work. Second, he adds, if you crunch the numbers in a more granular and up-to-date way, this challenges some orthodoxies. In particular, most economists (and politicians) have assumed in recent years that the US was becoming more unequal because of industrial change, such as a loss of manufacturing jobs to China.
But Galbraith sees little evidence of this. “At the global level, the data give no support to the vast outpouring in the professional literature arguing that changes in inequality are based on so-called ‘real factors’ such as a race between technology and education,” he writes. “On the contrary, financial factors explain a very large share (practically everything) that can be explained.”
"We dream about it, argue about it, worry about it, celebrate it, spend it, save it, we transfer it from one emotion to another. But what exactly is money? And why do we trust it? Frances Stonor Saunders takes a journey through some of the fundamentals of money.
During her journey she dips her toe into the world of quantitative easing. How is that money invented? Is it as real as the pieces of paper in our wallets? And she explores some of the reasons for the calls to return to a gold standard. Essentially, she tries to gain a better understanding of what this stuff which we call money is really about; how and why do we maintain our faith in it, or has it just become too complicated?"
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He really ought to know that even with the protection of tenure and considerable autonomy, most faculty in most higher education put in long hours because they believe in their profession. So what’s going on here?
I think it’s fairly simple. You know the classic “First they came for the X, then they came for the Y, and I did nothing, and then they came for me?” schtick? This is one of those stories. In fact, it’s the end of one of those stories. They already came for the doctors and the psychiatrists. They already came for the lawyers. They already came for the accountants and auditors. They already came for all the professions. Professors are the last to be broken on the wheel, the last to be put at their station in the new assembly lines of the 21st Century Service Economy.
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What’s lost? Well, in a word, quality and individual attention except for the precious few that can pay for the full luxury version of such services. The rich still had their suits tailored at Savile Row after everyone else was buying a mass-produced shirt. But in this case, those values might be more precious and important to the larger human missions of education, medicine, psychiatric treatment, auditing and so on. That’s really what you lose: the sense of vocation, of calling, of dedication to something bigger. The new publics of liberal democracy understood that education, medicine, law, accounting and so on were important to their resilience and thriving in a way that artisanal consumer products were not.
"Of course there was a place where ideas weren’t simply for sale, I thought: the professions. Ethical standards kept professionals independent of their clients’ gross pecuniary interests.
These days, though, I’m not so sure. Money has transformed every watchdog, every independent authority. Medical doctors are increasingly gulled by the lobbying of pharmaceutical salesmen. Accountants were no match for Enron. Corporate boards are rubber stamps. Hospitals break unions, and, with an eye toward future donations, electronically single out rich patients for more luxurious treatment.
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And as we serve money, we find that money wants the same thing from us: to push everyone it beguiles in the same direction. Money never seems to be interested in strengthening regulatory agencies, for example, but always in subverting them, in making them miss the danger signs in coal mines and in derivatives trading and in deep-sea oil wells. You can have a shot at being part of the 1 percent, money tells us, only if you are first committed to making the 1 percent stronger, to defending their piles in some new and imaginative way, to rationalizing and burnishing their glory, to exempting them from regulation or taxation, to bowing down as they pass, and to believing in your heart that their touch will heal scrofula.
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On the other hand, you would also have been listening to the greatest names of professional economics. And this, we know, is in keeping with President Obama’s deepest instincts: trust the experts.
But what happens when the experts are fools? What happens when their professions are corrupted, their jargon has become a shield against outside scrutiny, their process of peer review has been transformed into a device by which a professional faction can commandeer the discipline, excommunicate rivals, and give members of the “us” group endless pardons for their endless failures?
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"Everyone who has been paying attention knows that there is a strong anti-science movement in this country — driven partly by populist anti-intellectualism, but increasingly by corporate interests that just don’t like what science has to say. It’s an old problem — tobacco companies succeeded for years in sowing doubt about the health effects of smoking — but it’s become significantly worse in recent years."
Seven studies using experimental and naturalistic methods reveal that upper-class individuals behave more unethically than lower-class individuals. In studies 1 and 2, upper-class individuals were more likely to break the law while driving, relative to lower-class individuals. In follow-up laboratory studies, upper-class individuals were more likely to exhibit unethical decision-making tendencies (study 3), take valued goods from others (study 4), lie in a negotiation (study 5), cheat to increase their chances of winning a prize (study 6), and endorse unethical behavior at work (study 7) than were lower-class individuals. Mediator and moderator data demonstrated that upper-class individuals’ unethical tendencies are accounted for, in part, by their more favorable attitudes toward greed.
A series of studies conducted by psychologists at the University of California, Berkeley and the University of Toronto in Canada reveal something the well off may not want to hear. Individuals who are relatively high in social class are more likely to engage in a variety of unethical behaviors.
"To understand newspapers’ 15-year attachment to paywalls, you have to understand “Everyone must pay!” not just as an economic assertion, but as a cultural one. Though the journalists all knew readership would plummet if their paper dropped imported content like Dear Abby or the funny pages, they never really had to know just how few people were reading about the City Council or the water main break. Part of the appeal of paywalls, even in the face of their economic ineffectiveness, was preserving this sense that a coupon-clipper and a news junkie were both just customers, people whose motivations the paper could serve in general, without having to understand in particular."
"This election should be fought on this pie chart. Where are we going to spend our collective wealth? On guns, jet fighters and tanks or on schools, hospitals and roads. This will mean that the Democrats will have to have the courage to fight the “soft on terrorism” brickbrats thrown by Newt or Mitt. Ron Paul is already used to hearing this bullshit, and it doesn’t seem to be bothering him."
"Finance has always been complex. More precisely it has always been opaque, and complexity is a means of rationalizing opacity in societies that pretend to transparency. Opacity is absolutely essential to modern finance. It is a feature not a bug until we radically change the way we mobilize economic risk-bearing. The core purpose of status quo finance is to coax people into accepting risks that they would not, if fully informed, consent to bear."
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