If Only Robert Reich Knew Anything

We’re told that American capitalism is fixed:

You might say the $110bn man deserves this because he founded and built Amazon. But Amazon is a monopolist with nearly 50% of all e-commerce retail sales in America, and e-commerce is one of the biggest sectors of retail sales. In addition, Amazon’s business is protected by a slew of patents granted by the US government.

50% does not make you a monopolist. Further, it’s about 38%. And ecommerce is perhaps 9% of retail sales. Having 3.5% of retail sales does not make you a monopolist.

As to patents, they’re near all about cloud computing. Even that – admittedly ridiculous – one click shopping patent no longer applies as it has expired. The patent protections have near nothing to do with ecommerce that is.

A second way to make a billion is to get insider information unavailable to other investors.

Well, yes, OK.

Insider trading is endemic in C-suites, too. SEC researchers have found that corporate executives are twice as likely to sell their stock on the days following their own stock buyback announcements as they are in the days leading up to the announcements.

Oh dear. C suite executives aren’t allowed to trade the company stock in the lead up to an announcement that might affect the price of the company stock. It’s illegal, you know?

The reason much C suite trading takes place just after such an announcement is that buybacks tend to get announced with quarterly or annual results. And the couple of weeks just after such announcements is often enough the only time it is legal for C suite execs to trade the company’s stock.

That is, this trading pattern is a result of the measures we put in place to stop insider trading, not evidence of it.

A third way to make a billion is to buy off politicians.

Well, yes, obviously that’s true. So, we’d better stop politicians having power over the economy so they don’t get bought.

The fifth way to be a billionaire is to get the money from rich parents or relatives.

About 60% of all the wealth in America today is inherited, according to estimates by economist Thomas Piketty and his colleagues.

All of which is most fun. For, when someone dies we don’t stick all their wealth into grave goods which get buried with them. Thus all of this generation’s wealth is going to get inherited by someone, right? The 40% presumably being that portion of today’s wealth that was newly created by this current generation.

Even more fun is that Reich is applying this obviousness about wealth in general to the wealth of billionaires. And it simply ain’t true that 60% of today’s billionaires became so as a result of inheritance. Far from it in fact, the list of billionaires is remarkable for the number of self made fortunes on it.

But then wouldn’t the world be a different place if Robert Reich knew anything?

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Spike
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Spike

Reich starts with the assumption that private wealth is bad, and gathers factoids to support it. You can’t blame him for scooping up several bad apples!

Amazon is no monopolist but in fact a reaction to eBay, which took flight when eBay worsened its terms to dealers to try to make a decent profit. Your other points are quite true. Reich is left with the “syllogism”: It’s possible to earn a billion, it’s possible to steal a billion, so all billionaires are thieves.

Barks
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Barks

That Reich holds himself out to be an economist should be a crime. The guy was, and is, simply ignorant. And further, laws against so-called insider trading, in the long haul, do nothing but limit to us all information that would help the market’s search for knowledge.