Bill Moyers
May 15, 2014
Pharrell Williams has reason to be happy. The singer and music producer has had the world’s hottest pop single over the past six months. His “Happy” has been topping the charts everywhere, from the United States to Lebanon and Bulgaria.
If this bouncy ditty keeps selling, Williams might even end up 2014 as happy as Taylor Swift, the most lavishly compensated musical artist in all of 2013. Swift took home $39.7 million for the year.
A hedge fund manager in 2013 needed to take in $300 million just to make the top 25. Ten years ago, in 2004, an aspiring hedge fund kingpin only had to grab $30 million to enter the industry’s top 25 elite.
But Pharrell Williams, if he should hit that lofty mark, probably still wouldn’t be feeling nearly as tickled and giddy as the over 3,000 power suits who were swaying to “Happy” last Monday.
Those suits — an assemblage that included most of the major domos of hedge fund America — were attending an annual high-powered investment conference in Manhattan. At the conference’s close, reports Businessweek, the attendees all rose as “Happy’s” infectious beat filled Lincoln Center’s Avery Fisher Hall.
What had the hedgies so happy? The rest of us found out the next day. In 2013, the trade journal Alpha revealed, the hedge fund industry’s top 25 earners collected $21.15 billion, a whopping 50 percent over their total the year before.
A hedge fund manager in 2013 needed to take in $300 million just to make the top 25. Ten years ago, in 2004, an aspiring hedge fund kingpin only had to grab $30 million to enter the industry’s top 25 elite.
Numero uno on this year’s hedge fund pay list: David Tepper, with $3.5 billion. Three other fund managers pulled in over $2 billion. Totals this grand essentially make Taylor Swift’s millions look like a paycheck for a Holiday Inn lounge act. Swift averaged $109,000 a day in 2013. Tepper’s daily average: $9.6 million.
But the real enormity of America’s annual hedge fund jackpots only comes into focus when we contrast these windfalls with the rewards that go to ordinary Americans. Kindergarten teachers, for instance.
The 157,800 teachers of America’s little people, the Bureau of Labor Statistics tells us, together make about $8.34 billion a year. Hedge fund America’s top four earners alone last year grabbed $10.4 billion.
Cheerleaders for hedge fund America consider such comparisons unfair. Hedge fund titans, they trumpet, are making a huge contribution to education. They’re investing, for instance, millions upon millions in the charter school cause.
True enough. Hedge fund billionaires are indeed investing colossal millions in charters, educational entities — often tied closely to for-profits — that take in public tax dollars but operate independently of local school board oversight.
Hedge fund manager cash has gone both to individual charter schools directly and into political war chests to support candidates who want to see charter networks expanded. Thanks to this cash, charters have become a major fact of American educational life, with a “market share” that rivals traditional public schools in many big cities.
Many educators consider charters a diversion of badly needed public tax dollars into unaccountable private entities that cream off top students and refuse to take in the most challenged.
Hedge fund flacks hail this growing charter presence as a new window of opportunity for underprivileged kids in failing traditional schools. But many educators consider charters a diversion of badly needed public tax dollars into unaccountable private entities that cream off top students and refuse to take in the most challenged.
Plenty of research reinforces this perspective. One survey of recent studies, released last week, sees a charter school landscape full of “bad education, ridiculous hype, wasted resources and widespread corruption.”
Also in that landscape: plenty of high-return investment opportunities for hedge fund managers. A federal tax break known as the “New Markets” tax credit lets hedge funds that invest in charters double their money in seven years. Charters have become, notes one education analyst, “just another investor playground for easy money passed from taxpayers to the wealthy.”
The final indignity? The families of those kindergarten teachers who make less in a year than the average top 25 hedge fund manager makes in 15 minutes pay a greater share of their incomes in taxes than hedge fund moguls pay on theirs, thanks largely to a notorious tax code loophole — known as carried interest — that Congress has not yet seen fit to plug.
Hedge fund masters of our universe, with this loophole in place, will continue to rake in hundreds of millions and pile those millions into billions. And they’ll continue to use those millions and billions to distort our political process, in education and every other public policy realm they happen to dance into.
That should not leave us happy.
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