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Monday, October 16, 2006

You Can Complain, Or You Can Make Money

First off, I stole the headline, from Ben Stein's column in the NYT. Now that I've confessed that sin, let's read Mr. Stein's ideas.

The rich certainly have more money than the poor (that is, after all, what makes them rich). You can either moan and groan about that fact, or you can do something to make yourself rich. (Hint, HR is not the way into multi-million dollar salaries. Sure Sr. VPs of HR at large companies make $200,000-$400,000 plus stock and bonuses, but I would be shocked if you're ever promoted into the president's job.)

Here is some of his advice:
• You do not get to it by studying African feminism in the 19th century, whether or not you are at an Ivy League college. You do not get to it by studying Bulgarian poetry. You do not get to it by any field of endeavor or study that is esoteric and has no connection with helping other people either become healthy or make money.

And this:
• You are always better off working in a field where torrents of money are sloshing through and you can grab a handful as it goes by. That means Wall Street. Finance is the ultimate great business.

Go read the whole thing.

4 comments:

First Year said...

Oh you don't know how much I agree. So many people told me I was nuts because instead of studying poli-sci or something worthless that would render me unemployable. I studied accounting/hr/business management instead so that if I changed my mind, ran into a roadblock or bump along the road I would still be employable. Its just an easy concept.

Evil HR Lady said...

Hey, I studied political science!

And, it was sooo unhelpful when I went to get a job. That's why I had to temp for 6 months before I could get a real job--I needed to gain some actual skills.

First Year said...

Sorry Evil HR Lady.... maybe I'll change that to Art History :)

dlaw said...

Ben Stein is a very funny guy and always a great writer, but as an economist he should know better than to write this:

"Another way, possibly more satisfying in the long run, would be to ask yourself how the top 1 percent of wealth holders and income earners got to be that way, and then to try to do it yourself."

The assumption underlying is that income differentials and savings choices have created the distribution of wealth we see in America. A paper by the Minneapolist Fed, available here in .PDF format shows that this is not the case. Ben Stein should know that, but very few economists talk about the fact that if they put in the visible earnings differentials and savings choices into a model, the models simply will not reproduce the wealth inequality in the U.S..

What you have to model is different behavior for rich people's money than non-rich people's money. Returns must be higher for the savings of rich people than non-rich. Also, rich people must have more access to entrepreneurship because of barriers to borrowing. Even those changes in the model are not quite enough. Effectively, you have to make those changes permanent. In other words, there has to be an intrinsic, economic advantage to being rich that is self-perpetuating.

I think Stein probably identifies what that is in this sentence: "You make money by making money for people who already have money." In other words, income-seekers themselves are the people who must be perpetuating the advantages of the rich, thus making the rich ever-richer.

Of course the problem is that the logic of the very few models that do replicate the wealth distribution data tend to predict that the rich will get richer and at an accelerating rate. Mr. Stein points out quite rightly that it is unwise to choose a field of study which does not contribute to the economic system, since we all must (and it's our privilege to contribute to such a good one). But accelerating wealth accumulation for the already-wealthy implies that rich people will be getting richer without adding anything like a commensurate amount of benefit to the economy - and that this situation will get worse, not better, over time.

Clearly some re-thinking has to be done, unless we are all satisfied to work for the benefit of a small group of people who have far, far more money than they can even spend.