Return of the Gilded Age?

Reading the paper these days makes me feel fatigued. I am tired of reading about the misery in Africa - Darfur, the Congo, Sierra Leone - where nothing ever seems to change, of New Orleans where Bush probably still thinks that Brownie did a "heckuva job", and Edward's two Americas - honestly, since when did Fortress care about high school educated textile factory workers? Perhaps my renewed cynicism is unjustified. But I am inclined to think not.

The newspapers are full of articles discussing the growing inequality between the rich and the poor. They allege that today's concentration of wealth rivals that of the Gilded Age - the age of monopolies, Standard Oil, and the Vanderbilts (who were famous for their balls, especially the one where they dressed as "the poor"). They quote statistics where CEO pay is over 1000x that of the average employee. And if that isn't disturbing, one only has to look at the earnings of hedge fund and private equity managers. My parents used to say, if it's too good to be true, it is. And I believe them!

These private investors claim to be creating value, and no doubt they are indeed creating value for themselves, but what about the business they shut down, the communities they hurt, the people they fire? I have no doubt that Cerberus will manage to make a fist full of money on Chrysler but it will be on the backs of Chrysler's employees and the community.

People, including some of my friends, argue that the best way to give back to the community is not to volunteer through organized programs, but to amass enough wealth such that you are able to distribute it at your discretion. So perhaps that is what guys like Schwartz and Ross plan to do, but will that make up for the costs associated with accumulating that wealth? Also I can't help but wonder who is a better redistributer of wealth - the individual or the government. I recognize government is not a particularly inefficient vehicle, but I am inclined to think it is best for the average American. Individuals tend to give their money to pet causes that certainly to benefit some people, but perhaps not as many as they could.

But why even bother trying to determine if there is a better way. The people who have the money control the politicians who control the law. And the hypocrisy is unbelievable. Chuck Schumer, who is all about protecting the poor and the middle class, does not think it is reasonable to tax private equity/hedge fund carry as income. One can't help but wonder if that has anything at all to do with the fact that hedge fund managers are among his biggest supporters.

I am not really sure what it is that I am talking about anymore... so I am going to stop.