New Hope for the Hard-Core Rich
Easterbrook, Gregg
New Hope "for the Hard-core Rich Pulling themselves up by their cummerbunds by Gregg Easterbrook In these perilous economic times, even the landed gentry and the mighty corporations have...
...But there are limits to what taxpayers can do to help...
...By taxing those goods and services patronized solely by the wealthy...
...Consider the cruel tricks fate has played on Chrysler and on General Public Utilities, owner of Three Mile Island...
...This is not as easy to accomplish as one might immediately suppose...
...The rich should bail each other out...
...Under no circumstances would BORE be used to compensate those who waste money through high living...
...In keeping with the protocol of the rich, however, formal BORE regulations would not require those seeking bail-outs to tell colossal lies to Congress in person...
...all products advertised in The New Yorker...
...any car that costs more than a house...
...By driving up prices, it will make their products more exclusive and hence make the rich more eager to buy...
...BORE would build a tastefully appointed headquarters in Piramidina, Italy, birthplace of Carlo Ponzi...
...How long, after all, can average working folk afford to subsidize wealthy freeloaders...
...Clearly, society is to blame...
...The poor are not plagued by such disabilities...
...Still, some greedy lettuce picker might try to apply for a BORE grant...
...For example, a surcharge equal to 25 percent of the purchase price would be imposed on: all property that adjoins water...
...During round-theclock negotiations for a high-risk billiondollar loan, no banker had asked him, even in passing, how much he was worth...
...The rich deserve special consideration...
...Under BORE, corporations would be bailed out only if they achieved bankruptcy through incompetence, greed, or sloth...
...There would be a final, catch-all category for BORE bail-outs...
...Only those usedto money would qualify...
...New Hope "for the Hard-core Rich Pulling themselves up by their cummerbunds by Gregg Easterbrook In these perilous economic times, even the landed gentry and the mighty corporations have trouble keeping themselves in Krugerrands...
...Obviously, annual income would not be a reliable indicator...
...They find themselves unable to drive their own cars, place their own calls, or drink wines bottled during their lifetimes...
...If they lacked business acumen-for example, a senior executive had recently tried to bribe a uniformed police officer in full view of television cameramen...
...Consider the brothers Hunt, who inherited several billion, devoted their lives to losing it, and last spring nearly succeeded...
...Anybody who knows how much he’s worth can’t be worth very much...
...Working in the same building, the Hunts had pursued identical strategies in a small field for seven years entirely by For this soul-baring confession, the Hunts were rewarded with their bail-out speculating...
...Of course the sight of a fallen investment baron, forced to sublease his Mercedes to make ends meet, may tug at the public heartstrings...
...Last spring, the Hunts were called before Congress to testify about their zany, madcap adventures in silver...
...I do not stay apprised of what my brothers own...
...Gregg Easterbrook is an editor of The Washington Monthly...
...The Hunts' risk failed, as risks are wont to do...
...If consumers don't bail us out, GPU said, our stockholders will take a bath...
...and any liquids 12 years or older (excluding cafeteria coffee...
...Under this plan, only the BORE fund, and never the consumer or taxpayer, would be required to replenish wealthy persons or corporations that fumbled away huge sums on foolish ventures, overseas bribes, or felony fines...
...After all, the tax codes already exist for that purpose...
...This brought to light one of life’s delightful bits of kismet...
...Chrysler demanded that the taxpayers bankroll its blissful ignorance...
...After all, an inventor, artist, or hard-working salesman might make $75,000 one year, then never get above the poverty line again...
...It would extend largesse to any wealthy person who had improved his financial standing by brazenly insulting the American public...
...GPU neatly overlooked the fact that by definition stockholders are those who share the profits in return for risking their capital...
...Nelson Bunker Hunt was asked approximately how much money he had left...
...I don’t know,” he replied...
...And remember that when General Public Utilities entrusted its billiondollar reactor to engineers who thought they were running a Crock Pot, it wanted consumers to cover the loss...
...But instead, the Hunts called on Paul Volcker, chairman of the Federal Reserve...
...I look after my own investments,” he said...
...If they exhibited total disregard for the environment-for example, had spent millions building a disposal pipeline direct from a pesticide plant to a city reservoir...
...Screening corporations for eligibility would be more complex...
...This would be enough to bail out the Hunts, Chrysler, and GPU and still have enough left over for a meeting of the Business Roundtable...
...What about Chrysler, which floundered by sticking with products like the Nimitz Brougham while every other manufacturer shifted to smaller cars...
...I call this the Last Laffer Curve) According to a complex econometric model constructed by The Washington Monthly with the aid of a recentlypardoned Swiss bank official, such a system of surcharges would pump at least $5 billion a year into BORE...
...Each ROLcertificate would be embossed with BORE’S emblem, the golden bucket, and emblazoned with the legend, “From each, according to his portfolio, to each, according to whom he knows...
...any object worth more than $10,000 yet small enough to swallow...
...After all, they've got more money than the rest of us...
...Perfectly wellmanaged companies lose money every day, through no fault of their own...
...That is, did he have enough collateral to make good the loan he was demanding...
...How much longer can the poor bailout the rich...
...Volcker, it appears, coerced several banks into bailing out the Hunts via a billiondollar loan, without so much as Alfred duPont to co-sign...
...By establishing BORE, the government could insure that only those in the 50-percent brackets would be sapped to support their incompetent compatriots in the manner to which they so quickly become accustomed...
...How would BORE funds be raised...
...Thus he clarified a peculiarity of wealth that is difficult for the common man to appreciate...
...However, it can be done...
...Speculation is the business of risking all to gain a dramatic profit...
...They were asked to justify their demand for a bail-out loan...
...This system will not, as you might fear, cause a hardship for those who provide the affected goods and services...
...For example: If they were slow in responding tG market conditions-e.g., were still manufacturing a product outlawed in the 19th century...
...So how would individuals be screened for BORE eligibility...
...In this way the government can actually stimulate the economy and increase tax revenues by skillful overregulation...
...Honest work builds character...
...It somehow seems unjust that those who acquire great wealth can also lose it...
...There pleas for bail-outs would be heard by a panel of the supplicant’s peers-prep school admissions directors, former SEC officials, and retired oil company executives...
...So the poor would have t o be made to sympathize with the handicaps to which the rich alone are subject...
...The standard would be that set by the Hunts...
...That's why The Washington Monthly proposes a BailOut the Rich Endowment (BORE) to be funded entirely by the well-to-do...
...Then W. Herbert Hunt informed the hearing that he never knew his family was buying silver...
...As usual, this bail-out was a t the average person's expense, since it increased inflation and absorbed Reserve-supplied funds that otherwise might have gone into productive uses...
...Poor people probably will complain about being denied BORE help...
...Surely this qualifies them for indefinite BORE subsidies...
...This 25- percent surcharge would also be imposed on the salaries of those professionals who serve only the rich: tax attorneys, cosmetic surgeons, off-duty Las Vegas dancers, and the Delaware legislature...
...This is understandable...
...They could hire lawyers to do it for them...
...The Hunts, for example, got into trouble by engaging in silver speculation...
...If the brothers had any self-respect, they would have sold off their assets to cover their debts and gotten jobs sweeping up the local Dairy Queen...
...Or a t least it seems unjust to the wealthy, who come to the government demanding bailouts...
...To preserve the recipient’s dignity, money would be provided through a new category of financial instrument, the ROL, or “repayment- optional loan...
...He would need money, and thus be ineligible...
...These would be immediately eliminated from consideration...
...Those who acquire shameless hordes of moneyoften after years of intense and even legal efforts-suffer debilitating side effects...
Vol. 12 • September 1980 • No. 7
