I keep thinking about Scott Fitzgerald and his remark that the rich don’t think like the rest of us. Unfortunately neither do their sycophants. Geoff Colvin wrote a column in Fortune recently that portrays the Occupy Wall Street movement as a collection of air heads who don’t know how the financial system works. (“America’s 400 Richest: Not a Club but a Collective (Really!)” by Geoff Colvin, Fortune, April 8, 2013 pg. 51.)
Colvin says that a common misconception among the 99%s is that the superrich belong to a club where the membership seldom changes. Such thinking is wrong, he points out. First of all, members of the 1%s group earn the bulk of their money through capital gains, not salaries, and their incomes rise and fall with the fortunes of the stock market. That means the names on the 1% rooster varies from year to year as the value of portfolios rise and fall with market movements.
I understand the ebb and flow that Colvin describes. One year I gained so much money on a single stock that it looked like I’d won a lottery. Come tax time, I was writing checks to my state and federal governments which were more than I earned in a year. During the next cycle, however, the market fell and so did my capital gains.
But Colvin, I fear, is making a distinction without a difference. When my stock fell, this Cinderella left the ball with nothing, not even her pumpkin. A dip in the market for the superrich means they retreat to their McMansions, their yachts and private jets in comfort. Yes, a club with a narrow membership qualification will vary from year to year, just as the category of “richest man in the United States” may seesaw between Bill Gates and Warren Buffet. But no one expects these folks to apply for food stamps anytime soon.
Colvin is right. Those in an Occupy Wall Street frame of mind, don’t understand the super rich or know who’s in and who’s out of the 1% club from year to year. What they do understand is that an obscene gap exists between the common man and those eligible for membership in that club. That Colvin should waste his time making an apology for these few can only be read as a light diversion in an otherwise serious financial magazine.
(Courtesy of www.smosh.com)