Sunday, January 19, 2014


Sam Polk was a young man of modest means who wanted to make a lot of money. He got into Columbia University and set his sight on Wall Street. Along the way he developed, by his own admission, a dependence on alcohol and drugs, then got clean and sober. But when he got to Wall Street, as he explains in a New York Times op-ed today, he fell prey to what he now regards as another addiction:
IN my last year on Wall Street my bonus was $3.6 million -- and I was angry because it wasn't big enough. I was 30 years old, had no children to raise, no debts to pay, no philanthropic goal in mind. I wanted more money for exactly the same reason an alcoholic needs another drink: I was addicted.
He went from a $40,000 first-year bonus to a million-plus annual salary in a few years, and it was never enough:
... I was nagged by envy. On a trading desk everyone sits together, from interns to managing directors. When the guy next to you makes $10 million, $1 million or $2 million doesn't look so sweet.

... I was a giant fireball of greed.

... I wanted a billion dollars.
He sees wealth addiction as widespread, and toxic:
Like alcoholics driving drunk, wealth addiction imperils everyone. Wealth addicts are, more than anybody, specifically responsible for the ever widening rift that is tearing apart our once great country. Wealth addicts are responsible for the vast and toxic disparity between the rich and the poor and the annihilation of the middle class. Only a wealth addict would feel justified in receiving $14 million in compensation -- including an $8.5 million bonus -- as the McDonald's C.E.O., Don Thompson, did in 2012, while his company then published a brochure for its work force on how to survive on their low wages. Only a wealth addict would earn hundreds of millions as a hedge-fund manager, and then lobby to maintain a tax loophole that gave him a lower tax rate than his secretary.
Polk alludes to the real problem here, but I don't think he ever quite nails it. The problem isn't the existence of wealth addiction. We're always going to have wealth addicts, just as we're always going to have alcoholics and drug addicts.

The problem is that, in this case, we're letting the addicts decide how society deals with their addiction.

In a way, this is what we do with guns in America, at least at the national level and in the red states: we let the junkies control who can obtain the stuff, how freely it's sold, and how few restraints we can put on its exchange, by means of their unchallenged access to elected officials. With great wealth, especially over the past thirty-plus years, we've allowed the the wealthiest and greediest -- whose access to public officials is even greater than that of the gun lobbyists -- to talk us into curtailing the tax and regulatory policies that served as checks on their access to the stuff, and have thus permitted them to do massive harm to society as a result of their abuse. In a way, with wealth we have a sort of narco-state, where the cartel leaders intimidate the authorities into avoiding crackdowns on the trade. The only difference is that, in the case of wealth, it's actually empowering to be high on your own supply.

Wealth addicts will always be with us. Their addiction has probably always been a significant driver of our economy. But in the past we constrained their access to their drug of choice quite a bit more, and we also put more restrictions on what they could do while high. But they're writing the drug laws now.


Jimmi the Grey said...

I prefer the term Ferengi. Wealth addict leaves me with the feeling they are victims as opposed to victimizers.

aimai said...

I see the wealth addict argument, such as it is, as identical to slut shaming and the focus on the "breakdown" of the black family--it turns into an individual problem of sin and seduction what is really a systemic problem. People have always worked for money and status and they always will. Whats different about the high stakes traders? That they and their owners think that no rules apply to them and that the amount of money they can garner takes them out of the ordinary laws and regulations.

We could control this with a few simple legal changes. Taxation, taxation, taxation. High bonuses should be a trigger for an accounting investigation into the basis for the bonus just as the high rate of returns Madoff was promising should have triggered an investigation every year. Then bonuses should be taxed at a high rate, in a progressive way, so that the kind of bonus oriented thinking and aggressive, risk taking behavior associated with the big score simply won't pay off. Also, all that hedge fund money should be taxed like regular income and not at the special 15 percent rate.

Ten Bears said...

Calling it an "addiction" is making excuses for inexcusable behavior. Like "Christians" fornicating on Saturday night, only to be "forgiven" Sunday morning, it's bullshit, there is no such thing.

If you can't hang the rat bastards from the nearest lamp-post, throw them from the nearest roof.

No fear.

Victor said...

Thank Steve,
I never looked at this in this way.

Smart analysis - as usual!!!

Ten Bears said...

On second thought, and third read, it's not a drug or alcohol user making excuses, it's a woman beater blaming everyone but himself. Textbook Domestic Abuse 101. Also textbook typical "American".

No feat, only contempt.