“You know who didn’t have any bad years? Bernie Madoff — until he got caught.” — Ken Fisher
The new Martin Scorsese film “The Wolf of Wall Street” is all the rage these days. I refuse to see the film (which I understand holds the world’s record for gratuitous use of the F-bomb, more than 500 times). But my friend, hedge fund manager Anthony Scaramucci, has viewed the film, and he told me he disliked the way Wall Street is portrayed. “The actors celebrated thievery,” my friend said.
Anthony, who heads the Skybridge hedge fund, hosts the SALT (SkyBridge Alternatives) Conference every year in Las Vegas (highly recommended). He also wrote an excellent book a few years ago called “Goodbye Gordon Gekko: How to Find Your Fortune Without Losing Your Soul,” referring to the infamous character of the first financial assault film, “Wall Street” with Michael Douglas. You can buy his book from Amazon about maintaining ethics while working on Wall Street.
He should write a sequel “Hello, Jordon Belfort: How to Lose a Fortune and Your Soul,” because that’s the inevitable result of anyone who engages in “unbridled greed” and hedonism on Wall Street. You may fool people on Wall Street for a few years, but eventually the game catches up with you and you end up destroying your reputation and your life.
I’m teaching a course, “Modern Political Economy,” at Chapman University in California and we just finished our class on Adam Smith, the father of modern economics and an advocate of “unfettered capitalism.” We tried to answer the question, “Does capitalism promote greed?” Smith rejected this notion. In fact, Smith argued that the commercial society moderates the passions of greed and dishonest business practices.
I can tell you from my experience that anyone who defrauds the public will sooner or later fail on Wall Street and on Main Street.
You Blew It! The Feds Lose the War on Poverty
This week memorializes (I hesitate to use the word “celebrates”) 50 years of Lyndon Baines Johnson’s (LBJ) War on Poverty, which he began in 1964. Unfortunately, the war has been lost. Let the record show that there’s been little or no progress, and a great deal of failure, when it comes to fighting poverty in the United States.
Historically, poverty was in decline since World War I — until LBJ declared his own war in 1964. Economic historians like Stanley Lebergott demonstrated that poor families had made tremendous progress during the 20th century. More of them enjoyed the benefits of modern society — by 1970, 99% had homes with flushed toilets, 92% with running water, 58% with central heating, 99% with electricity and refrigerators, and 41% with automobiles — all considered luxuries in 1900.
Great progress was made with the Welfare Reform Act of 1996, under the support of a Republican-led Congress and Democrat President Bill Clinton. Enrollments on food stamps actually declined, as the working poor dug out of deep poverty. But that all changed with the 2008-09 Great Recession under President George Bush and then President Barack Obama. Today, more than 47 million Americans are on food stamps.
I think the War on Poverty should be renamed “The War Against Poor People.” We need to change our approach and focus on ways to get people out of poverty rather than ways to keep them happy on food stamps, Medicaid and Section 8 housing. Otherwise, we will see a gigantic leap in the number of fourth-generation welfare recipients.
In case you missed it, I encourage you to read my e-letter column from last week about the federal government adopting the Gross Output statistic I have championed. I also invite you to comment in the space provided below.