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FACING DOWN THE RULERS OF WALL STREET A HUNDRED YEARS AGO. THEY ARE BACK.

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Wednesday, October 29, 2008

CHEERLEADERS: A DIGRESSION

I started Tuesday with my usual early morning monetary fix at CNBC’s “Squawk on the Street”, hoping the Asian and European markets had regained a little sanity. They had, at lest for the day. But that allowed the financial junkies Becky Quick and Joe Kernen the time to comment on Wayne Huizenga. Wayne had told a reporter that he was going to sell his 50% ownership in the Miami Dolphins before Senator Obama became President and raised the capital gains tax. In Huizena’s words, “I’d rather give it to charity than to him. If you do it this year or you do it next year, the difference is humongous because of the taxes.” And Becky and Joe “tut-tutted” over the hopelessly unrealistic liberal policies of the Junior Senator from Illinois. It’s so sad all those liberals don’t understand economics like the geniuses Becky and Joe-the-stock-maven do.
It was a bad way to start my day; very, very angry. I was not angry with Huizena. He is just a business man. And as the realist hanger-ons on CNBC will be happy to tell you, profit is morally neutral, neither moral nor immoral. And with that guideline Wayne Huizenga is a very good businessman. He’s a self made billionaire who never graduated high school. Who knew there was that much money in Waste Management – other then Tony Soprano? Who knew there was that much money in video rentals – other than Sumner Redstone? And who knew there was that much money that could be milked out of the government and fans for sky boxes in a stadium you only use fourteen weeks out of fifty-two – and with a losing franchise no less - other than every other NFL owner? But I digress… Yes, I could spend the next four hundred pages running on about Wayne Huizega and number of south Florida sports clubs (the Marlins & the Panthers & the Dolphins) Wayne has used to siphon money out of the taxpayers’ wallets, until he had squeezed the team for maximum value and then sold for profit. His attitude seems to be that somebody owes him “a purple cushion for his pampered”…ah,…behind, to paraphrase Henry from the “Lion in Winter”. But there is an even deeper truth buried beneath the usual billionaire whining here, buried perhaps in section six hundred in Arlington National Cemetery, among other places; because, like loyalty to a sports franchise, patriotism seems to represent to Wayne (and by extension the cheerleaders at CNBC) just another commodity, sold to the suckers in the form of flags and banners and meaningless phrases like “We’re number one”. Yes, we are number one, as long as we pay Wayne for the privilege. But asking Wayne to help pay for the war in Iraq or Afghanistan or even his own stadium seems to be as pointless an exercise as to ask the cheering squad at CNBC to be more restrained in their unquestioning adulation for billionaires. It is profit that they are talking about, and profit, as pointed out earlier, is neither moral nor immoral. Unless, of course, you are a cheerleader on CNBC, and then profits are clearly a moral judgment, and validates those who make them – both the profits and moral judgments. In short, CNBC seems to see itself at times as a megaphone for the over enfranchised, such as Wayne. But now might be a moment to make one thing perfectly clear. I am being morally neutral about profits, as opposed to CNBC. The Wikapedia definition of a capital gain is as follows: “…the profit realized on the sale of a non-inventory asset…”, like the sale of a sports franchise. In other words, tires for your auto parts store which you sell for a profit are not a capital gain. That is earned income. At present the individual earned income tax rates in America are 10%, 15%, 25%, 28%, 33%, and 35%. Selling stock or oil futures for a profit is a capital gain. Under the Bush tax cuts, capital gains are taxed at 15% and 0%. In the pre-Bush tax era, which Wayne is so horrified of, capital gains were taxed at 15%, 28%, 31%, 36%, and 39.6%. In other words, in the pre-Bush era, those who ran a small business or labored in one are treated much the same as those who invest in big business. That, it seems to me, is a lot closer to moral neutrality than the philosophy preached by Becky and Joe on Tuesday morning.
A long term capital gain, an asset held for more one year, ,such as Waynes Dolphin francise, is taxed at an even lower rate. But that merely makes my point even stronger. And of course there are fleets and swarms and schools of lawyers and accountants who will ensure that Wayne will rarely if ever be forced to pay the same tax rate on his capital gains as the guy who runs a bar outside of Dolphin Stadium has to pay on his earned income. Being a billionaire will always have its advantages. And that is, maybe not as it should be, but as it really is. And that is about a morally neutral as I am going to get on the subject of Wayne and his profits margins.

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