I was late for school. My new 10-speed—
salvation! Throwing my math book into a plastic shopping bag, I fled breakfast to negotiate the cars, fences and cats through the alley to arrive at the 20th street stop sign; purring through it without a care.
Thirteen year olds didn’t have carriers on their bikes so I held the bag and handlebar in my left hand, leaving my right hand to brake, which allowed the book in the bag to dangle. Entrepreneurial-like, I was building up momentum when I glanced down at the bag, brushing lightly against the front tire. Forty years later, I still cannot comprehend why I didn’t connect the dots about my impending danger. For some strange reason, my brain simply didn’t get the memo that the feces were about to hit the rotary oscillator!
In the next instant, I found myself weightless, flying through the air in super slow motion, like I was starring in my own Super Bowl commercial. As I hurtled over linebackers that looked suspiciously like handlebars, I carefully eyeballed my pavement runway some 20 feet away. At that moment, Houston didn’t have a problem—I did!
My “progress” was cut short by the laws of randomness, physics and stupidity because my math book had found its way into the spokes, forcing the front tire to a sudden stop, which propelled my flight. At the time, I had no idea that this experiment would empower me, some 40 years later, with higher understanding of the science, math and politics of 2012 economics.
The subject has always scared me. I think economics scares most people because it embodies paradox—a logical statement or group of statements that lead to contradiction. While the average Canadian clearly understands the difference between rich and poor, he cannot comprehend how the plutocrats got so far ahead in the shoot-out. In the past dozen years, compensation for Canada’s top 50 CEOs has risen by 444 per cent while the middle class has stagnated. Today, the average Canadian CEO makes 250 times what the average worker makes—up 25 times in the last decade. The extreme inequality of personal income in Canada and the US is North America’s shame. Denial of wrongdoing by the one per cent is a paradox. They assure the rest of us that we needn’t be concerned about “markets correcting” or “the outcomes of market forces.”
In 1985 there were 13 American billionaires. Today, there are over 1,000. It gets worse: the richest one per cent of Americans control more wealth than 90 per cent of the US population—combined. This is a country out of control. Canada lags behind the US with 25 billionaires in 1999 and 55 by 2009. So how do we fix this?
By learning how to think again.
By using full brain thinking about bad math books in spokes, we learn to look at a problem from the opposite direction; eliminating, at least momentarily, our personal bias. It is in a different region of the brain, that we gain a new perspective that enables us to steer clear of what I call “fairy-tale bias” or “Disneyland Bias.” You see, once upon a time your brain was young and impressionable and it welcomed cartoon characters like Scrooge McDuck and Richie Rich into your family creating your perspective of happily ever after. Anthropomorphic billionaire ducks and rich kids that we learned to love at an early age, strengthend over time in the powerful neural networks of our brains—big, emotional memories. McDuck and Rich are not John Paulson and Bill Gates.
If we connect the dots about real life billionaires like Paulson, a completely different perspective emerges—one that is anything but cute. In 2007, when the hedge fund manager received $3.7 billion betting against the US sub-prime mortgage market, he effectively jammed Wall Street’s new math book into the spokes of the worldwide economy. While cashing in on the misery of others—he triggered the crash and subsequent financial meltdown.
In creating the happiest place on earth, Walt Disney himself made 108 times more money than his housekeepers in 1966—today, Disney CEO Robert Iger makes 781 times as much as his housekeepers; something monacled Ducks, comic book rich kids and Walt himself would not approve. Cartoon characters are adorable and cute—Walt’s billionaire CEO…not so much. Don Henley’s hit song The End of the Innocence sums it up this way: “But ‘happily ever after’ fails as we’ve been poisoned by these fairy tales.”
Unfortunately, the 99 per cent and the one per cent both choose to blame the government for the world’s financial woes and that confounds us because it also portrays the illusion that we are on the same side. This is human bias at work again. We have been force-fed a steady diet of “taxes bad—billionaires good” for decades. Billionaires are truly gifted when it comes to perpetuating the illusion that they are “gifted.” They see themselves in their own Super-Bowl commercials; self-made men, flying over football fields, men who “made it” without much help from society—when the exact opposite is true. Billionaires owe most of their success to society. We all rely on centuries of “accumulated societal knowledge.” Many billionaires bullied their way to the top or simply bought out competition, leaving themselves entities that look an awful lot like monopolies.
Because both groups attack politicians and the tax system that supports democracy, it might appear that we all have the same enemy. Again, the opposite is true. Financial companies donated billions of dollars to federal political campaigns and Washington lobbyists, which led to the repeal of Glass-Steagall and deregulation. The floodgates opened, which effectively gave hucksters, speculators and reckless bankers blank checks for the next decade. Politicians feel completely and utterly indebted to the billionaires and CEOs who got them elected. Power follows money. We desperately need politicians with the fortitude and clear thinking that Franklin Delano Roosevelt displayed in 1933.
I don’t dislike billionaires. I do dislike the way their brains work—or don’t work if you like. And I don’t like the way extreme inequality is threatening our quality of life and democracy. I do, however, really like millionaires. Millionaires are great for the economy, specifically because they do not stockpile their cash like billionaires do. They spend it and they expect to pay more taxes—because they make more.
A group called Patriotic Millionaires sends this message to Congress via a series of YouTube videos that lay bare the wisdom of many successful millionaires. One after another, they appeal to their government to tax millionaires (themselves) more. “Tax me, tax me, tax me,” they say. The only billionaire that I know of tooting the “tax me more” horn is Warren Buffett.
Federal tax rates in Canada are 22 per cent for $42,707 and under, then 26 per cent up to $85,414 and 29 per cent for anything over $132, 406.
Perhaps our greatest human bias is that somehow we have come to believe that our freedom is compromised or will be lessened if taxes go up. We have been conditioned into thinking that tax cuts create more freedom. We were brainwashed into believing that freedom can operate like a hedge fund; and that if taxes are cut, we’ll gain more freedom! If taxes go up—we’ll lose our freedom. The opposite is true. Do you want to live in a society where governments will request meetings with plutocrats to ask for money to fix the potholes in your streets or to build bridges or universities? If that happened the billionaires would hang their corporate signs on the buildings and bridges so we are all reminded of how “gifted” they really are.
The ninety-nine per cent understand that economic progress is only possible when money is put into action—actually spent. Imagine the trillions of dollars sitting in the bank accounts around the world of billionaires and trillion-dollar, too-big-too-fail banks and oil companies? Are the one per cent waiting for fire sales or are they hoarding? Doesn’t matter—we suffer from either scenario.
Today, our economic progress has been halted by the laws of irrational bias and greed. Terrible economic math continues to invade the spokes of democracy—every day.
Incidentally, after my landing 40 years ago, I got up, dusted myself off got back on the bike and continued on to school. Bill Gates is now richer than 140 nations on the planet. John Paulson made $3.5 billion with a bet that devastated millions of working class people in the sub-prime mortgage fiasco. How long will we allow the bad math of billionaires to invade the spokes of society? ~Paul Byrne