Sunday, January 03, 2016

The Patriotic Millionaires

I suggest reading the whole article at the following link:

By Michael Kranish Globe Staff December 26, 2015

Morris Pearl, a former managing director of the world’s largest investment company


as Pearl settled into a corner table, he was deeply troubled. For the past three decades, he had worked at a Who’s Who of Wall Street firms and made his fortune.

When he started, he believed that the world of high finance he’d joined was part of a virtuous circle, greatly enriching those at the top but also helping those of all incomes by enabling growth, industry, and jobs.

But he has come to have doubts. On this morning, as it happened, a group that he heads called Patriotic Millionaires helped unveil the latest startling report on income inequality. It said the gap had grown even greater, with America’s 20 wealthiest people owning as much as the bottom 152 million.

The report underscored Pearl’s fear that the compact between Main Street and Wall Street, which helped draw him here, had unraveled.


The question he asked himself this day was fundamental: how responsible for this gap was Wall Street, and the way it has changed during his career? The answer, he feared, was that it played an even greater role than many realized, even if that notion isn’t widely understood or much evident in the economic rhetoric of the presidential campaign.

“I don’t want to live in a country where everybody is on the edge of not being able to get by, and that’s what I’m afraid we’re moving to,” he said. So he began to study what had changed — and what needs to change.


A landmark study released earlier this month by the Pew Research Center said a historic tipping point has been reached in the diminishment of the middle class, with the group having suffered a 28 percent drop in their median wealth from 2001 to 2013.

A key reason is that many people’s income has stagnated. The average annual salary of the American male worker is about $50,000, down from $53,000 a generation ago in inflation-adjusted dollars, even as productivity has sharply risen.


Laurence Fink, the CEO of BlackRock, is perhaps the most vocal critic of short-termism, writing a letter to Fortune 500 executives earlier this year in which he blasted the lack of long-term investing.

Then, in a harshly worded column that appeared on the website of McKinsey & Co., a business consulting firm, Fink castigated fellow Wall Streeters for what he called “a gambling culture in which we tune out everything except the most immediate outcomes.”


“I’ve benefited amazingly,” Pearl said. “Yeah, I’m a smart guy and I have occasionally worked hard at different times in my life. But a lot of it was sort of having the luck, having to take a few computer science classes, taking advantage of public schools. . . . It is not because God told me to be rich; it is not because I worked that much harder than other people.”

He had heard of a new group called Patriotic Millionaires, composed of “high net worth” individuals whose initial focus was on raising taxes on some of the richest Americans.

For example, they criticized a tax break known as “carried interest,” which enabled certain hedge fund managers to pay the equivalent of the capital gains tax rate on their earnings, meaning their rate was lower than clerical workers pay on their regular earned income.


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