Tuesday, December 27, 2011

You Gotta Have Skin In The Game

I was going to write about this article where some in the 1% make an empire-strikes-back statement but Matt Taibbi did the work for me.

Here is the initial "you gotta have skin in the game" statement:
Asked if he were willing to pay more taxes in a Nov. 30 interview with Bloomberg Television, Blackstone Group LP (BX) CEO Stephen Schwarzman spoke about lower-income U.S. families who pay no income tax.
“You have to have skin in the game,” said Schwarzman, 64. “I’m not saying how much people should do. But we should all be part of the system.”
Some of Schwarzman’s capital gains at Blackstone, the world’s largest private-equity firm, are taxed at 15 percent, not the 35 percent top marginal income-tax rate. Attacking the banking system is a mistake because it contributes to “a healthier economy,” he said in the interview.
Mmm. I have come across that "skin in the game" thingy all over the net, recently, and it annoys me greatly, for the reasons Taibbi gives:
But it seems to me that if you’re broke enough that you’re not paying any income tax, you’ve got nothing but skin in the game. You've got it all riding on how well America works.
You can’t afford private security: you need to depend on the police. You can’t afford private health care: Medicare is all you have. You get arrested, you’re not hiring Davis, Polk to get you out of jail: you rely on a public defender to negotiate a court system you'd better pray deals with everyone from the same deck. And you can’t hire landscapers to manicure your lawn and trim your trees: you need the garbage man to come on time and you need the city to patch the potholes in your street.
And in the bigger picture, of course, you need the state and the private sector both to be functioning well enough to provide you with regular work, and a safe place to raise your children, and clean water and clean air.

Taibbi then goes on to point out that people like Schwartzman are not really part of the same system. If you are rich enough you don't need Medicare, the police (you hire your own security) and you certainly don't need Medicaid. Ideally, the very rich don't need a government, except as military protection and a legal system which keeps their wealth safe.