I don’t want to get into a lengthy response to the Bloomberg article about Wall Streeters whose reduced bonuses mean they have to limit the three-bedroom vacation rental to one month rather than four, or who can’t ski Aspen this winter. Nor do I want to go point by point through Megan McArdle’s reply (“Are the Rich Completely Undeserving of Sympathy?”). I just want to talk about this comment from an attorney that’s appended to McArdle’s post:
Another factor I’ve noticed with my bankruptcy clients is that a very rich person whose income takes a sudden precipitous drop to a still-pretty-good income can actually wind up in more financial trouble, faster, than a very poor person whose income drops to zero. If you were making $300k a year and spending $200k of it on fixed expenses, and your household income drops to $125k a year, unless you have substantial liquid savings or are able to sell your house and your car and your boat yank your kids out of private school REALLY fast, you’re going to wind up in bankruptcy in a fairly short space of time….
I guess what I want to ask is: why don’t these people have “substantial liquid savings”? Why don’t they have a plan for a possible calamitous economic downturn? Isn’t understanding the volatile nature of financial markets their freaking job?
Aren’t they supposed to comprehend this kind of risk much, much better than the rest of us? And, by the way, isn’t risk the reason they and their Masters of the Universe superiors supposedly deserve the big bucks in the first place? Isn’t that the heroic myth of big-time capitalism — that, unlike us paper-pushing, ditch-digging, wage-slave drones, they accept the potential for tremendous harm to their own economic well-being in order to be the Randian heroes who keep our economic engine chugging along?
I’m not even getting into the fact that they and their bosses and colleagues actually caused the damn downturn in the first place. That’s reason enough to withhold sympathy. But even those not directly involved should know they’re in a risky business. Instead, just the same way they want profits privatized and losses socialized, they want to corner the market on praise and then demand a socialist redistribution of sympathy.
(X-posted at No More Mister Nice Blog.)