A Fisking Of The Friess Letter

I’ve been busting my butt all week just to make ends meet, so I haven’t had a chance to get to this. But I’m due for a blog post, and so I thought a good fisking of Foster Friess’ Christmas letter would be enjoyable for all, and cathartic for me. (Note: this is in response to an email he sent directly to me, as well as to the News & Guide, which published it. I will assume that he wanted a response.)

-Pete Muldoon

(Foster Friess): Jackson Hole where I live  has a lot of wealthy people. (sic) Their incomes have been hit pretty hard since the 2008 meltdown, and many have had to sell homes and readjust life styles. 

Where is the basis for this claim? Corporate profits (especially those in the financial sector) have never been higher. The rich just got a tax break extension, and trillions of dollars in taxpayer money. They are making out like bandits. They are still building monstrous homes here. They’re still buying Congresspeople like there’s no tomorrow. So spare me the sob story about how you and your rich friends have been hurt by this. I don’t need to hear about how your buddy had to cancel the rhino horn inlays on their second yacht’s new ship’s wheel.

As a result, income inequality has been reduced. 

No. No it has not. It is worse than ever. The 30 year trend in the Gini coefficient (the accepted method of measuring wealth distribution) is stunning in its inexorable march toward a world in which you, your friends, and their children will own and control just about anything-a return to a feudal state.

And don’t think I didn’t notice your subtle shift from talking about wealth to income. You have arbitrarily defined income as wages, but rich people don’t get much money from wages. They make most of it from capital gains. This is why it’s infuriating to hear them complain about paying higher income taxes when they pay 15% on their biggest source of income, capital gains.

The Wall Street Occupiers and their sympathizers—including President Obama in a campaign speech in Kansas on Monday—tell us that income equality is a good thing.

First, Obama is not an Occupier. Not now, not ever. He might throw us a rhetorical bone or two, but that’s only because, like you, he is afraid that the people are starting to wake up.

Secondly, Occupiers generally believe that without some reasonable equality in wealth distribution, the rich will buy off politicians, rapidly accelerate and consolidate their gains, and the rest of us will end up powerless and increasingly poor. Which is what is happening today.

But while the incomes of the wealthy in Jackson and Teton County have decreased, so has the number of jobs. According to some accounts, 3,000 people are out of work. Because when the rich get poorer, so do the poor.

No, no and no. People are not out of work because the rich aren’t doing whatever it is they do here. They’re out of work because the rich blew up this huge housing bubble, convinced a lot of people to start careers in construction, and then watched it all collapse spectacularly, leaving these construction workers unemployed, and the businesses who relied on their patronage have been laying off workers. Also, when the rich destroyed the economy, the rest of America- the people that come to Jackson and spend money-got the shaft, and so they either don’t come here anymore, or they come here and spend far less than they would. The rich are, for the most part, a parasitic class, using their wealth and power to extract more and more wealth from those that actually do the hard work in this country.

But perhaps you are aware of a rich person who has been forced to cut back on people who clean toilets. I’ve worked for one. And I haven’t seen any evidence of that going on.

Margaret Thatcher, in her last speech from the House of Commons floor as British Prime Minister, zeroed in on the true view of those who complain about income inequality: “So long as the [income] gap is smaller, they would rather have the poor poorer.” She understood that those concerned about “income inequality” are preoccupied with an envy of the rich rather than a desire for the poor to be less poor.

The stupidity and arrogance of this paragraph is truly staggering.

In one sentence, you both employ the logical fallacy of an appeal to authority and  falsely attribute opinions to whole groups of people.

I don’t care what Margaret Thatcher “understood”. Because she sure as hell had an agenda and she sure as hell had no idea what motivates me or anyone else in the Occupy movement.

What’s more, you make the assumption that reducing inequality will mean the poor will get poorer. And this is not backed by any evidence, anywhere. Please explain to me how making the rich pay their fair share will make the poor poorer. And don’t give me any of this crap about how the rich need tax cuts so they can provide jobs They are sitting on trillions of dollars in cash. They have had repeated tax cuts, resulting in historically low tax rates. Where are the jobs, Foster? Where are they?

This argument relies on either a fundamental misunderstanding of corporate income tax, or a deliberate misrepresentation of it. Suffice it to say that it has been shown that tax cuts do not lead to jobs. If you doubt this, look out the window.

You are saying that I am preoccupied by “envy of the rich”. No, Foster, I am not. I don’t want to be rich, like you. I don’t want to spend my life accumulating money at the expense of others. There are more important things in life, and I know it will hurt to hear this, but I’m not pre-occupied with your money or lifestyle at all. I have a life that is rich and fulfilling in its own ways, and in ways which you will never comprehend. I wish I didn’t have to think about any of this, but I do.

The only reason I care, really, is because I don’t want my son to grow up in a world where his opportunities are limited to cleaning your children’s toilets.

If the American economy were like the Indian caste system, where there is no social mobility, those worried about inequality would have a point. But in America, income inequality simply means that for those who work hard, there is a way out of poverty.

Ok, here’s a link to an article pointing out that social mobility in the US ranks 10th out of 12 OECD countries, and far behind the leaders. So I guess Occupiers have a point. Unless your standard for the American Dream is “anything better than the Indian Caste System.” Which, frankly, does seem to be your standard.

And let’s face it, for most of the 99%, working hard is something that we do every day. Because we have to, just to survive. Getting ahead? Good luck.

The Ruling Political Elite would prefer more income equality, where the likes of Steve Jobs could never have risen to the top to generate wealth for themselves and others—and where everyone has to rely on government handouts rather than self-enterprise.

The ruling political elite? For God’s sake. Look in the freaking mirror, Foster. The ruling political elite is you. It is you. It is you. Please point out one member of the Ruling Political Elite that is not subservient to the rich, and is actually trying to reduce inequality. There is no other way to describe this statement but as a lie. It’s not misleading, and it’s not confused. It’s a lie.

And what does Steve Jobs have to do with any of this? Nothing. Absolutely nothing. You know people admire him for designing nice computers, so you’re just dropping his name.

And who is looking for handouts? Who, Foster? Name someone. Just one.

Oh wait, I know a whole class of people who are constantly taking government handouts. They get them very easily, because they control the government. These people are called the rich. Look in your rolodex. I’m sure you can spot plenty of them.

These “narrow the gap” advocates present a chart with an escalating line illustrating the rich getting richer and a second flat line below it postulating that the poor have stayed constantly poor. But the people in that lower group are constantly changing! In 1964, when I came out of the Army with basic assets of $800 of accumulated leave pay, I was in that bottom group. Steve Jobs  was in that group, receiving free food from the Hare Krishna  folks. But we worked our way out of it! This ability to succeed is the mainspring of the American dream.

Yeah, you know what? In 1964 the top tax rate was 70%. In the ten years before that, it was 91%. Back then, the people in the lower group were changing. But now, after 30 years of policies that you and your friends have written, the only way the poor are changing is that there are more of them.

In 1964, unemployment was 5%. Today it’s double that. So it’s wonderful that you and Steve Jobs were fortunate enough to come of age during a time when labor unions had strength, and Medicare was being designed, and top tax rates were high, and our country was investing in education and infrastructure.

Thanks a lot for ruining all that for the rest of us.

Those who have lost their jobs in Jackson Hole would be better off if the income of some in Jackson suddenly soared to higher levels. With more wealth (and, yes, even a wider income disparity), there would be more money for everyone—retailers, plumbers, carpenters, waitresses, ski instructors—because wealth creates jobs.

In a vacuum, I suppose it might be marginally better if the wealthy suddenly had more wealth. Especially if they created that wealth by designing some new product, or doing something productive.

But in the real world, the rich will get that money by taking it from the rest of us, and then let us earn it back by cleaning their toilets.

My hard-working parents focused on sustaining our family rather than worrying about the “income gap.” My dad bought and sold cattle, and my mom, who dropped out of school in eighth grade to pick cotton to help her single mom and eight siblings, canned fruit, froze vegetables, and butchered chickens in our basement so we wouldn’t have to pay “those expensive store-bought” prices.”

And the Pilgrims suffered greatly in their first winter in North America. So what?

Franklin Delanor Roosevelt, in a 1933 radio address, said, “We cannot read the history of our rise and development as a Nation, without reckoning with the place the Bible has occupied in shaping the advances of the Republic….Where we have been truest and most consistent in obeying its precepts we have attained the greatest measure of contentment and prosperity.”

Another appeal to authority. (Two authorities, this time. That’s a double fallacy!)

I suppose that I’m entitled to one myself, then. From the New Testament:

•  In the temple courts [Jesus] found men selling cattle, sheep and doves and others sitting at tables exchanging money. So he made a whip out of cords, and drove all from the temple area, both sheep and cattle; he scattered the coins of the money changers and overturned their tables. [John 2:14 & 15.]
• Watch out! Be on your guard against all kinds of greed; a man’s life does not consist in the abundance of his possessions. [Luke 12.15.]
•  You cannot serve both God and Money. [Matthew 6:24.]

And of course, my personal favorite:

•  Again I tell you, it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God.” Matthew 19:24

So in that “pre-entitlement” era, before the Woodstock crowd launched its drug and sexual revolution and became the “Me” generation, all of us knew that these centuries old Jewish  scriptures taught that envy was a sin. With our wealth we are to “be our brother’s keeper,” meet the needs of the poor, and to be a blessing to all those God puts in our path.

So go find someone who is envious and throw a stone at them. We want justice.

It’s amazing to see someone who is promoting inequality criticize the generation that brought us the civil rights movement, the peace movement, and the safety net movement as the ME generation. Your philosophy appears to be “Look out for ME, and then everything will be great for everyone else.”

The Good Book exhorts us to share in people’s sorrows as well as joys.

Ah. Well, I can see you are taking it as your personal mission to create more sorrow for us to share in. Wonderful Christmas message, Foster. I’ll just hope for joy for you and yours, if you don’t mind.

 In those days we honored the productive, the successful, and, yes, the rich. 

Oh. We’re longing for the days in which the rich got more respect. Those poor rich. Always being disrespected. Having to employ security guards to make sure that the poor don’t get too close and say something mean. This will probably keep me up tonight.

And we believed that, in America, anyone who worked hard could become one of the rich. 

Anything is possible, I suppose.

Merry Christmas, Happy New Year, and go bust your butt to widen the gap!!

Merry Christmas to you, too, Foster.

— Pete Muldoon