Personal Fortune, Economic Disaster

I don’t follow pro sports very closely these days, but growing up, I remember a statistic in basketball and hockey called the “plus/minus ratio.”

The goal was to filter out individual statistics like goals scored or baskets made, and instead, focus on each player’s net contribution to their team.

The result was something called the player’s “plus/minus” ratio.

To calculate it, you added the total points scored by the player’s team while he or she was on the ice (or court), then subtracted the total points scored by the opposing team.

So, a player who didn’t score much, but was great on defense, would have a deceptively high plus/minus ratio.

So would a consummate team player, who unselfishly aided his or her teammates’ point-scoring.

Net Minus

What makes me think of this is Angelo Mozilo, former CEO of subprime lender Countrywide, who now stands accused of (civil) fraud.

Leaving aside the particulars of the subprime business, what’s clear is that Mozilo’s total compensation over the last decade or so was several hundred million dollars.

Compare that to the carnage caused by the the toxic loans his company made: hundreds of thousands — if not millions — of foreclosures. Conservatively, say the number is 500,000.

Assuming each foreclosure costs $50,000, Mozilo’s conduct arguably could be said to have cost the economy $25 billion. And that’s before taking into account the human suffering, dislocation, etc. caused by all those foreclosures.

That makes Mozilo’s “plus/minus” ratio a rather lopsided negative $24.5 billion. Not quite up there with Bernie Madoff (minus $50 billion), or the senior management of AIG, Merrill Lynch, or Goldman Sachs — but a pretty staggering sum, nonetheless.

Compare that to the contributions made by a teacher, a fireman, or a talented doctor, whose pay may be nominal, but whose efforts add real wealth to the economy, and society generally.

Unlike the Angelo Mozilo’s of the world, they would all score very high on the social “plus/minus” scale.

Not to mention the “financial” Hippocratic oath: ‘first, do no harm.’

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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