“But isn’t that . . . ‘Socialism’??”

He who frames the question wins the debate.

I’ve been struck in recent months, talking to various people about the economy, by two things:

One. The generally limited vocabulary people have when it comes to understanding all things financial — even people who are otherwise very sophisticated, well-educated, etc.; and

Two. The tendency — again, amongst otherwise sophisticated people — to somehow equate outrage about Wall Street misconduct and calls for genuine, structural reform with a “fringe” political agenda.

The “S Word”

So, what do you call someone who thinks:

–Hedge fund managers should pay a higher tax rate than teachers or firemen? (They don’t; thanks to an especially sleazy tax break, their compensation — called “carried interest” — is taxed at 15%).

–CEO’s shouldn’t make literally *400 times what the janitor makes — up from the 30x-40x that prevailed for almost half a century (roughly from the ’30’s to the ’80’s).

–Having half a dozen monster financial institutions — whose balance sheets can literally be measured as a % of U.S. GDP — is bad for our economy and political system.

Apparently . . . . “a socialist.”

Sorry, folks, but we already have a socialist economy.

Except that it’s socialism at the very top . . . and capitalism for everyone else.

*The 400 times is merely an estimate; the truth is, no one really knows, because executive compensation disclosure rules are exceptionally murky and porous.

It’s also the case that CEO compensation is not set by the market; it’s determined by captive boards of directors — which is to say, the CEO’s themselves.

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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