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Posts Tagged ‘Billionaires’

Today I found this ad in my Facebook feed:

There are several current presidential hopeful front runners who routinely vilify billionaires, most notably Bernie Sanders and Elizabeth Warren. While I am generally aligned with most initiatives of the Democratic platform, I vehemently oppose this notion that “the billionaire class” is the root of our problems in America, and therefore we need to stick it to billionaires to “get even.” I really believe their type of economic extremism makes them unelectable.

This trend is not just American. Britain’s Shadow Chancellor John McDonnell during a protest stated that ““No one needs or deserves to have that much money, it is obscene,” during a protest of McDonald’s workers demanding higher wages.

In August of 2015 I wrote a post titled Musings about Vilifying Billionaires. This post is as valid today as it was when I first wrote it four years ago.

One of the best books about business I have read in a long time was Shoe Dog by Phil Knight, the founder of Nike. Here is my review from April 2018. Phil Knight is now number 16 on the Forbes 400 List with a net worth of $35.9 billion. Phil was a regular guy like you and I in the 1960s when he started selling shoes from the trunk of his car. The story of how he built Nike to what it is today is one of the most powerful stories ever told in business. If you have started and run your own business you will know how incredibly stressful and hard it is it make it work, succeed and survive.

Only somebody who has never had to make payroll, like a politician, will say something stupid like “nobody deserves to be a billionaire.” A statement like that exposes the speaker and is a testament to their ignorance and lack of understanding of basic economics.

Let’s go back to the meme above – Martha Kelly probably thinks it is the responsibility of the billionaires to feed the hungry, clothe the naked and cure the sick. And therefore, we should take the money away from the billionaires and let the government handle giving it to the poor. Yes – good luck with that! The same people that make asinine statements like “nobody deserves to be a billionaire” are the ones whom we’re going to entrust the money they are going to take away from the rich to properly distribute to the poor.

Bill Gates has given away more than $28 billion to charity, and he and his wife have managed how the money is being used. I trust Bill Gates 100 times more that the money is used in the right way and for the right causes than I’d ever trust Bernie Sanders or Elizabeth Warren with the same money. Bill made the money, he knows its value, he understands how money works, and he has an intuitive knack for solving problems. Sanders and Warren do not have any of those skills, and neither do most bureaucrats in government.

When the self-appointed redistributors say they are going to take “a little away” from the rich, who decides who is rich and who is not? Where is the threshold? What’s to stop them from saying that if you make more than $80k in your family you are rich and you have to give your surplus to the poor? Who draws the lines?

I say we need to leave the capitalist system alone.

The workers at McDonald’s can ask about more wages all they want. If they are not contributing more for those more wages, they don’t “deserve” those wages.

If they are envious of the amount of money the CEO makes, why don’t they become the CEO? Problem solved. Oh, it’s hard? Ahh, there lies the rub.

If they want to be rich, why don’t they start a company, like a shoe company (Nike), or a software company (Google, Microsoft), or a rocket company (SpaceX), or a car company (Tesla) or an online retail company (Amazon), or a replacement of all taxis company (Uber), and they can be a billionaires. Hey, any of the people who built the companies I have listed here started from scratch.

Bill Gates was a college student who liked math.

Phil Knight was a jock who liked running and couldn’t find good shoes.

Sergey Brin and Larry Page were math students at Stanford.

Elon Musk came to Canada as a twenty-year-old with no money in his pocket. He shoveled out sewer tanks as one of this first jobs in America, before he started a car company and a rocket company in parallel.

Jeff Bezos started an online bookstore from scratch in 1994.

Read the biographies of these men and then come and tell me they don’t “deserve” to be rich!

The American system works. The tax system should be fair and even for all. But vilifying rich people because they were successful after defying all odds and worked their butts off all their lives does not work and will not get Sanders and Warren elected.

Now I have to get back to work. After all, it’s Sunday night and there is a lot yet to get done.

 

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Sons of Wichita

The “Koch Brothers” have been a household name in American politics over the past twenty years; since Obama, however, they have been vaulted into the spotlight. They are either revered or loathed, depending on the point of view. Sons of Wichita digs deep into the Koch family history and background, and leads us all the way to the present time. Their story starts in the earlier part of the 20th century, when Fred Koch, a young and ambitious engineer starts building a business in Wichita, Kansas.

The sad fact is that once people begin to get something for nothing then they want more and more at the same price. It destroys their independence, their self-reliance, and transforms them into dependent animal creatures without their knowing it. The end result is the human race as portrayed by Orwell— a human face ground into the earth by

— Fred Koch

Fred had four sons, not just two, as we commonly think of the “Two Koch Brothers”, David and Charles. There are also Frederick, who is the oldest, and Bill, David’s twin, who are known a “the Other Koch Brothers” in their own right and with their own legacies.

Some one-star reviewers on Amazon complain about how this is not a business book but a “soap opera” of American politics. I don’t agree at all. The author didn’t try to write a business book. It’s a biography of a remarkable family. Whether you like or dislike their politics, their characters or their deeds does not really matter. He tells the story like it was and is, and readers can make up their own minds and form their own opinions.

Fred Koch created a company out of nothing during a difficult time in America. The depression, the second World War and finally the post-war years. To make it possible, he was engaged in decades of stressful legal battles. Nevertheless, he built a company that was doing some $70 million dollars in business a year when he handed the reigns to his second-oldest son Charles, then a man in his early thirties. Charles turned that 70 million dollar business into a 90 billion dollar business, more than a thousand times as big.

Charles possessed an uncanny ability to sniff out profitable ventures, and when he occasionally mired the company in money-losing deals, he quickly cut his losses. The results of his leadership spoke for themselves. Between 1960 and 2006, the company’s revenues increased from $ 70 million to $ 90 billion. During that timeframe, an original investment of $ 1,000 in Koch Industries would have swelled to $ 2 million, a rate of growth that outperformed the S& P 500 by a factor of 16. This was not just dumb luck. Charles had a formula.

— (p. 243)

After reading the book, I have come away with several main thoughts myself:

  • Fred Koch, the patriarch of the dynasty, instilled in his sons a set of values that eventually resulted in what they built. Those values are based on modesty, privacy, extremely hard work, lack of entitlement of any type, and shrewd business skills.
  • A spirit of fighting for the last crumb, and litigating mercilessly, under all conditions, was etched deeply into all four brothers. That attitude resulted in a business empire unlike any other in this country.
  • There were shady deals and ruthless deeds, some possibly illegal and doubtlessly immoral, that are at the foundation of the businesses of the Kochs.
  • Fred fostered political activism and passed it on to his sons. A powerful belief in the destructiveness of communism and socialism, based on what father and sons learned in the Soviet Union, was the foundation of their libertarian activities, which eventually led to their current Tea Party affiliations and American conservatism.
  • Before reading Sons of Wichita, what I knew about the Koch Brothers came from what I learned from their activities over the past decade in American politics, mostly from reports of the liberal media, including Rachel Maddow and Lawrence O’Donnell. That information was admittedly narrow and biased. I have gained respect for the Koch brothers as individuals, and I admire their business skills and approach.
  • There are a lot of activities of the Koch empire that may not be so clean, and the term “organized white-collar crime” is not far from the surface. I am not qualified to judge what has really happened, and whether these adverse claims would stand.
  • Anything the Koch Brothers are involved in must be taken seriously, very seriously.
  • They are now all in their sunset years, and as the new generation takes over, things will get softer and I would expect their political activism to fade.

While the book is not an easy read, I found it a page-turner nonetheless. It provides a fascinating view into one of America’s richest and enigmatic families.

Rating - Three Stars

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