I confess that I read only two newspapers each day, the Wall Street Journal and the New York Times; this is made much easier because I can use my Blackberry to get the most relevant articles. I also can tell you that the old adage, "it's like sticking your head in the oven and your feet in the refrigerator," does indeed apply...on balance I have an "average temperature" but that doesn't bode well for the rest of the body.
In any event, because I am lacking much in the stuff that would cause me to be enthusiastic about writing, I am putting together some things that I have been sitting on for a while. Here is the first installment.
Rich Versus Poor
A friend, former colleague, fellow venture capitalist and such recently put together a blog that in typical fashion, attempts to explore the growing gap between rich and poor people. He doesn't take a stand because that is not his way. But I think that he is asking questions that go beyond first principles.
For example, he opines that rich is self-evident and poor is relative. I think this is completely backwards, notwithstanding that the government defines rich as a family that makes $250,000 per year or more (ask 100 people that make $250,000 if they feel rich right now and you will get an alarming answer.) My point is that poor is obvious (you can't feed yourself or your family or you are stuck on the New York streets) and that rich is conditional on how you became so.
There are people who have created things...I am not a Bill Gates fan or a Warren Buffett devotee either, because I believe that luck is a heavily discounted factor with respect to success, but to me, it is inarguable that they have, over time, created value for society.
Other "rich people" have destroyed value but they continue to get paid exorbitant sums. AIG was founded in 1919 and now, virtually ceases to exist, having lost the entire earnings accumulated during nearly a century. Lehman Brothers was founded before the Civil War...where are they now? I could mention many dozen firms and organizations that have encountered a similar fate, including GM, Chrysler, et al but I'll spare you those details.
What has happened here?
Yesteryear, getting "rich" involved producing value in a product or service. All the great industrialists in the past did so, despite often having nefarious reputations. But in today's society, it is easier to steal than it is to create.
All the great nations, China, Russia, India, the United States, (you name them, Britain and France have long since lost greatness) have become kleptocracies. If you don't believe me, then please explain how a rich person like Bernie Madoff can pull off his scam for decades. Also please inform as to why there are hundreds (if not thousands) of unoccupied concrete buildings in China. When you are finished discussing these items, I'll throw a bunch more at you.
My points with respect to my venture capitalist friend are that (1) he is hopelessly naive about who is rich and why they are rich, (2) that being rich is not "ipso facto" a good thing, (3) the poor don't have money but they (for the most part) aren't stupid...they see the fat cats getting theirs without retribution and they are properly enraged. (4) As I have so often noted, there is a re-basing coming in America (and the world) but it will not be a pleasant thing and there may be much social strife that attends this.
Finally, an unrelated note on venture capitalism. It has long since ceased to be a positive economic driver in America...there have been negative financial returns since 2000 and the phrase "early stage investing" has become an oxymoron. This saddens me greatly and I am trying to change the footprint, but the kleptocrats seem to be commanding all the resources.