Why Not Eat The Rich?

For the last time.

I figure at least half of my readership understands this, but I’m tying to answer the question once and for all.

Q: What impact would it have if all billionaires and millionaires gave up half of their wealth? Would it benefit the poor or harm the economy?

A: Everybody who understands how to hold on to their money understands why this doesn’t work.

So let’s split the world into two shall we? People who know how to save & invest, and people who only know how to spend.

Within the group who know how to save & invest, are those who get to the point at which their savings and investments deliver enough returns so that those returns are more than they spend. Are you following me? Maybe I should give an example. I (the theoretical I) have made and saved & invested 2.5 million dollars. In addition to that I have learned how to live on 150,000 per year. So all I have to do is get 150,000 in investment income from my 2.5 million every year. That means I have to make 6% on my investment, and I never have to touch it.

Let’s imagine that I took my 2.5 mill and invested it all in Amazon and Apple. Well shoot, man I did great. In the year ending today I would have made 30% on Amazon and 25% on Apple. That’s because I’m a good investor. But what if I invested it in Rivian and HP? Well Rivian lost 31% and HP gained 16% So on the whole I’d be 15% in the hole. And Rivian is a 13 Billion dollar company.

How can a 25B company turn in to a 13B company in one year? Easy. People lose faith.

Do you know how to bet on football or anything? Well, that kind of depends which side of the split you’re on. You either know how to save and invest, or you just know how to spend.

What happens when you take a flyer? What happens when Dad says, well, we know how Junior wrecked his bicycle and destroyed his skateboard, but let’s let him drive the family car anyway. In other words, what happens when you bet on a loser? You’d be foolish to expect a miracle. Not saying that miracles don’t happen. Just don’t bet on a miracle. Sooner or later everybody has a track record.

The capitalists (OK now we get political) say, Bet On Winners. The socialists say. Take from the rich and give to the poor. The capitalists say “Make me, I dare you.” Then one day the socialists win and implement the policy called the “What impact would it have if all billionaires and millionaires gave up half of their wealth? Would it benefit the poor or harm the economy?” Policy.

Here’s what happens to me. I have to sell my Apple and Amazon stock. 1.25 million dollars of it. And guess what? So does everybody else with my net worth as determined by the AOC administration. Economics 101 question. What happens when you pull all of your money out of the stock market? But let’s go back to the Dad question. What happens when Dad says. “Jr, I’m through funding you. You’re on your own. See if you can make it in the real world with only half the money you’ve been promised”. Now Jr can only afford to buy his clothes from Walmart whereas yesterday his allowance and trust fund got him shopping at Hollister and afforded four years at Notre Dame. Suddenly Jr is no longer popular at school because he dresses ghetto and he’s headed to a JC.

Suddenly all of the Amazon and Apple investors say the same thing that Jr’s schoolmates did. “Oh shit what happened to you?” I lost my allowance and my trust fund. Eyeballs roll, backs turn. Jr is deflated. Just like Amazon and Apple.

So now I have to figure out how to get 12% on my money. So now I never ever ever take a chance on a second-rate company like Rivian or HP again. Because only the strongest of strongest survive.

And ah by the way, where did all of the investment money go? It went to cousin Pookie who was never going to go to college ever - who never saved a dime, in fact he owes everybody money. The first thing he did with Jr’s trust fund was go get some new Nikes and a gold chain and a trip to Vegas.

So the stock market plunges because it loses half of its investment. Some of the second-rate companies go broke. The surviving companies gobble them up at discount prices. And the retail establishements like movies and popcorn and beer and Dave & Busters and casinos make record profits (and there’s a riot at TJ Maxx). And then 2 years later the poor people remain poor.

BTW. Do you still have your Trump COVID stimulus check? Did you invest it or spend it? Hmm. Like I said. Two kinds of people.

So what else happens? You increase the gap between the rich and the poor. You destroy companies that had a good idea rather than the best idea in the world. You get consolidation and monopoly. Other countries say “Oh shit what happened to you?”, and the socialists declare victory. For 2 years. Then the party’s over.

PLUS you made the capitalists really pissed because investors like me will sell unless I can get a 12% return. So they fire more employees to raise their profits to something I will appreciate. And you will NEVER again get that 2 year party through democratic means.

And somebody stole Cousin Pookie’s new bling watch.

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Now I understand that this scenario doesn’t account for real estate and offshore investments. There are socialists who are smarter than AOC. But it’s important to communicate that the stock market is working money. It’s not jets, yachts, mansions, vanity farms, collectable artworks and celebrity restaurants. Then again, who’s going to buy those? Do you really want Barbara Streisand’s shoe collection and her Pinkberry stores?