8 Reasons To Hate Rich People

Posted on by TheLastPsychiatrist and tagged , , , , , , . Bookmark the permalink.

The personal finance magazine Kiplinger’s– which usually contains stories like “Ten Hilarious Tax Deductions” and “How To Get A Bond Fund Out Of Her Clothes” goes off the path to offer “8 Outrageous Executive Perks.”

It’s a traffic getter, I’ll admit– and when it gets featured on the front page of Yahoo it affords 2135 people the opportunity to leave written evidence that they’ve completely missed the point.  Go America.

Don Tyson retired in 2001, but Tyson Foods was so grateful for his past leadership that it financed vacations for Tyson and his close friends, paid their personal credit-card bills, and allowed him to charge unusual purchases — such as an $8,000 horse and a $20,000 oriental rug — to the company.

But perhaps the most objectionable perk was having Tyson company employees clean Mr. Tyson’s house and mow his lawn. According to a 2005 SEC settlement, Tyson Foods spent $203,675 having employees clean five different homes…  [and] $84,000 in lawn-maintenance costs…

or, even more outrageous:

[Qwest CEO Edward Mueller’s] employment agreement gave his wife and daughter the right to use the company jet to commute to and from California, where his daughter was still in high school. The phone company expensed $281,182 that year for Mueller family joy rides on the jet…

The CNBC angle is to say something like, “well, good CEO’s are hard to come by and you have to compensate them well or else they’ll go somewhere else,” which sounds plausible but is Don Tyson likely to go somewhere other than Tyson Foods?

In truth, the perks are economically irrelevant.  Mueller made $11M that year.  Mueller’s daughter could have eaten the plane and the accountants would not have noticed.

But the perks are easier for us to value than the money, which is why the media focuses on them.  I have no idea if $11M is a reasonable for a middle aged man with two chins, but I am sure that letting his daughter ride planes is unreasonable.  Even though it isn’t.

What Americans object to is the overlap between personal and professional life. It all smacks of feudalism. We barely tolerate “the company car,” we certainly don’t like the idea that individuals can access the benefits and protection of their lord anytime they want simply because they’ve offered him their allegiance.

But there’s another question: why would the CEOs want these perks?  Why not just ask for an extra $1M and buy your own plane or two sets of wives and daughters?

That’s why: because they didn’t.  They don’t see the plane as a huge expense relative to their compensation, so why not?  And they’re certainly blind to how it appears to other people– “wouldn’t people be angrier if I just got $12M, which is more money?” No.  See above.

We might speculate that these perks stroke their ego, make  them feel important– but again, they could buy those things themselves.  Another piece not to be overlooked is the management of these perks: it’s a lot easier for the company to run a plane for you than for you to run it yourself.

But the biggest reason is that the CEOs don’t see a separation between the job and themselves, their job is their life, that’s who they are, and when who they are needs to get their daughter to high school, who they are is giving her the plane.  That enmeshment is the source of much of the antagonism between “rich” and “poor.”  “I made the money.”  “The job made you rich.”

I will point out that the public’s focus on the perks over their nominal cost makes me suspect that we’ve lost our connection to the value of money; we have a better sense of the value of things. In as far as money represents an agreement of value, then I take this as evidence that the value of money is declining, i.e. that inflation is already here. I know the Fed doesn’t agree, but 2135 think otherwise. 

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30 Responses to 8 Reasons To Hate Rich People

  1. ZacharyBurt says:

    I think it’s ridiculous to take this as evidence that the value of money is declining bro. I think you’re right on with the ego thing. Each perk is a POINT OF EVIDENCE that helps structure this vague claim — I am better than you — and the more points you have, the more vague your claim is. Which makes it very persistent in the mind.

    Thank you, however, for an enlightening and paradigm stretching frame of CEO compensation. I bow to you!

    P.S. I feel like I deserve backlink karma for my posting here, ZacharyBurt should link to ZacharyBurt.com or my Twitter, @zburt, at the very least.

  2. stellachiara says:

    Why are the arrangements these guys make with their own companies anyone else’s business ? As long as it’s not our tax money that unwillingly pays their salaries or bonuses or refueling costs, making this an issue at all is motivated by nothing other than envy, a poor understanding of economics, and the desire to whip up a false controversy (maybe you could add “it’s just interesting to know how the very rich live,” but that certainly wasn’t the tone here.)

    And, you have an interesting point about inflation.

    • max says:

      Two comments:

      -The personal use of company property is illegal unless it is declared as compensation by the beneficiary, and taxes are paid on the use. I’m sure a few tens of thousands of dollars in unpaid taxes is trivial to guy like Tyson, but it is our tax money. (See Claire McCaskill)

      -How the rich live is our business. Unless you think the current state of income disparity is hunky-dory.

      • George says:

        “The personal use of company property is illegal unless it is declared as compensation by the beneficiary, and taxes are paid on the use. ”

        Which is none of your business, it is the government’s business to enforce laws not yours.

        “I’m sure a few tens of thousands of dollars in unpaid taxes is trivial to guy like Tyson, but it is our tax money.”

        If he has any unpaid tax money that is between him and the government, not between him and “us”. Stop trying to rationalize your desire for theft and violence against the rich.

        “How the rich live is our business. Unless you think the current state of income disparity is hunky-dory.”

        This is a rationalization for envy and narcissism.

    • George says:

      “Why are the arrangements these guys make with their own companies anyone else’s business ? ”

      How else will we be able to enshrine envy into law?

      • CubaLibre says:

        You say envy, I say equality. Let’s call the whole thing off. (Well, let’s call your comments off – I’m still going to push for raised taxes myself.)

        • Nik says:

          This is off topic of the main article, but people’s view of taxes is insane. Taxing the rich at a higher percentage rate is despicable, and here’s why. Taxes make the government work. Taxing the rich at a higher rate equates to us asking them to fund it. Those that don’t pay taxes (those that make less than 60k per year I think) should be ashamed that they aren’t pulling their weight. This is our nation, it should be a point of pride to contribute equally. When a family moves, the teenage daughter shouldn’t be expected to help move the couch, but she should pack up some plates. That’s what she can do. Someone who makes 40k shouldn’t pay the same absolute amount as someone who make 600k, but they should pay the same percentage. That’s what they can do.
          Entitlement is a bad thing, and everyone thinks that rich kids are the only ones who have it. The truth is, the majority of this nation has it. We believe we are entitled to the rich and big business funding this nation, and we should be ashamed of that. Maybe if everyone felt the burden a little more we wouldn’t tolerate government fiscal waste, but it’s easy too not care much when they’re wasting someone else’s money.

        • jh says:

          You don’t have to “push” to raise taxes. You may elect to pay as much as you want under the current IRS code. Just fill in the large amount you want to give to the IRS under Voluntary Contribution and give, give, give more taxes. Why wait or expect them to “force” this on you . . .

  3. Comus says:

    Maybe you’re reading too hastily into the inflation bit. It just might be an issue of sheer number. People are enraged already at the large salaries (A) and now they even have free stuff (B)! What next, they’re going to personally nullify my achievements? See we’ve already gotten used to the inequality that they make more money, and to be fair we wouldn’t be more furious to them if they made 1.8bn instead of 1.4. We already compare ourselves to them in monetary wealth and feel inadequate or whatever. But now, in addendum to that, they also have other things for me to be envious of, especially as the wellbeing is taking (or perceived as) a downward spiral for the regular folk.

    It’s like if you’re neighbourgh buys an expensive sportscar in comparison to your Hyundai.This is a bit of an narcissistic injury, but you can live with this. Even if he/she would buy more stuff to the car, or even buy another one. But if instead he also has a beautiful/handsome spouse, a better house, nicer kids, whatever, then it’s amok-level envy.

    2+2=5. Which is more than a naked four.

    • George says:

      “We already compare ourselves to them in monetary wealth and feel inadequate or whatever.”

      There is no “we”. I do not feel inadequate as a human being because Warren Buffet has more money than I do. If you have those feelings they are on you. Stop trying to rationalize your envy as someone else’s fault.

      • Comus says:

        Sorry to have offended you. It is of course merely an approximation of the common atmosphere, as observable eg. in the youtube comments mentioned. Of course this does not mean every single human feels this way, as I did not have the spare time to prepare a global survey to verify that claim. How silly of me, to generalize in such an extraordinary way. I have no idea of why the scientific community bangs on about probabilities either.

    • foxfire says:

      Good point. “He has a nicer car” could be a $40k Corvette or a $200k Porshe, but at the end of the day “nicer car” is just a single item on the list. The way to really tweak peoples indigination is to increase the size of the list.

      If you want to make people really hate the CEO, don’t say he makes 50 million a year. Just start listing all the things he has(that he bought with that 50 million), that the average person doesn’t.
      10k square foot house in the hills
      8 sports cars
      private jet
      vacation home in Aspen
      Live in maid

      In my opinion, listing the advantages of making 50 million a year has more impact than if you just say he makes 50 million a year.

      • Fifi says:

        What it does is bring the money into real world terms for people who don’t make us much and can’t really imagine what making 12 million dollars buys (other than “everything”) – it commodifies it essentially. The fact that the perks are often worth more than someone makes in a year personalizes and commodifies it in a way that an abstract 12 million doesn’t. I don’t think it has anything to do with inflation per se, it’s about personalization and commodification.

        • foxfire says:

          Yes and no.
          It does make things more concrete, but it also engages a cognative bias.

          Look at the list I made, The things on the list are not all equal, but most people will treat the items in the list as if they were.

          For example, I would say richy rich has 3 sports cars or I could say he has a Corvette, a Porche, and a Ferrari. The former gets read as 3 sports cars being 1 thing that he has that I do not. The latter gets read as 3 things he has that I do not. Despite the lists being equivalent in value, listing them as individual cars has more emotional impact.

  4. FrederickMercury says:

    what is it about internet articles about economics/wealth that instantly attracts aggressive and rude conservative commentors?

  5. larrykoubiak says:

    What is funny about perks like that is that they do look indeed outrageous, as they benefit the guy on the top of the food chain. Since he is on top, the things he’ll do/buy are likely to be out of proportion, because the system is designed that way.
    But anyone who has worked in a corporation knows that the same system applies to them too, only in a more controlled and “reasonably scaled” fashion.
    You might not get the private jet, but you might get a car with gas card if you’re an exec, or a new phone if you’re just an employee. And the reason why the CEO gets the big prize is simply Management by Envy : give you a glimpse of the greatness you could accomplish should you work harder.
    So i guess they aren’t so mad that he’s flying/filing ludicrous expenses, they are mad that they don’t. It’s more about status than actual wealth.
    As for the value of money, the sole fact that one guy gets to do those things and the company can afford it and thinks it’s a worthy investment goes to show that at the very least, money isn’t an agreement over one’s work intrinsic value, but rather over how much others value the status it represents. And since there is no way to define that value clearly and set it in stone, yes, inflation is there, and will grow steadily.

  6. AnonymousAtLarge says:

    I disagree. This does not bother people because it harkens back to feudalism. It bothers people because it seems unfair. It’s not fair to call a jet a company expense when it is not a company expense. Poor people who have to budget their starbucks coffees get miffed when they hear about rich people charging stuff like this to the corporate expense accounts.

    The great and terrible thing about being human is that your brain has all this intuitive reasoning and logic for navigating the world. It works most of the time but also fails a lot of the time. Even though 12m is more than 11m, and it is more than 11m + company jet…12m in pay seems FAIRLY EARNED thus no one complains. Fair is fair, this is what you earned, enjoy it.
    On the other hand, 11m + company jet seems like cheating, and humans are hard wired programmed to hate social cheaters. Especially social cheaters who are already in a privileged station in society… those are the kinds of social cheaters we love to string up and burn to death.

    It’s very easy to see how that seemingly deceptive profiting bothers people more than simply increasing take home salary. If I tip a really great waiter $40, he earned it and I am glad to do it. If a waiter forges my tip to change from $15 into $20, I am enraged because this is stealing and it is not fair (even though absolute payment is less).
    It’s really all an illusion though because there is nothing fair about CEO salaries, they are all crooks whether or not they are getting a company jet or if they simply buy the jet and pay for it themselves.

    Our brains have not evolved to intuitively reason these astronomical sums of money in a modern post agricultural society. So it fails spectacularly , we feel very cheated when we hear of CEOs who make 11 + corporate plane (not fair!) but it’s cool if they make 11m sans plane.

    • SNAFU says:

      Nothing you wrote contradicts the above piece.

      I say the problem is envy, at least greed can be controlled or directed. Stop worrying about what other people are doing and worry about yourself.

    • Sfon says:

      The forging in your waiter example an attack on your ability to have enough power to protect yourself. That is a much more significant loss of power than the big tip or a larger upfront price. Whether that extra $5 is fair compensation or not has nothing to do with our feeling threatened by it.

  7. syntaxfree says:

    It’s called the availability heuristic. Look it up on Wikipedia, doc.

  8. octo says:

    Feudalism hits it on the mark, but I would frame it in a slightly different manner.:

    The alternative compensations suggest that the company seems to serve Mr Tyson and his family, rather than the company as a whole paying Mr Tyson for his valuable services in managing its affairs.

  9. Nik says:

    Something that bothers me about the disgust from both the commentators here and the general public is that they feel like they should be able to regulate how this company chooses to spend its money. Its not a government institution, so its not public funds. In fact, its a private company. You can’t even buy stock. Are we so used to the government telling us how to run our own lives that when we see a company handling its business in a way we disapprove we think they should accommodate our business model?
    We already accept that different jobs receive different compensation. Why should we be outraged that the retirement package is different too? The only difference between an autoworkers pension and what this guy is getting is the price tag. Higher position, higher pension. Nobody bitches that a police captain receives a better pension then a detective. Why not be angry about that? What did the captain do to deserve mor…oh that’s right, its part of what he receives for his services.
    If a guy makes enough to buy a big screen tv, should the entire neighborhood have the right to come in and watch it whenever? That seems wrong to us because we can relate to it. The reason we feel Tyson is cheating is because the amounts involved are too much for us to process, thus we don’t associate the social rules we all abide by with the “super rich”, they’re not the same as us.
    Its so strange that we have such outrage at the compensation high management gets. They produce things, they’re smarter than most, better than most, but there’s no outrage that Snookie makes millions for being a whore on tv, or “the sitch” for getting a six digit advance for having a ghost writer pen his book. He didn’t even write it. He literally produced nothing and got paid. Where’s the outrage?
    We’ve been hoodwinked into believing that the old American Dream is that if you work hard, you’ll make it and that the rich have stopped that from being true. That’s bs and its why communism uniformly fails. The reality is, if you’re better, you’ll make it. Better can be smarter, faster, stronger, more clever, better at lying and cheating, but the deal is you’re on your own. Use what you’ve got, be innovative, and look at those that have a shit ton of money and think, “God damn. I want a piece of that action”. This is the reason we are losing our national power. China, India, Brasil, etc., they see the USA and think, how do I get what they have? They don’t get to reach into our coffers and take the cash, they have to outsmart us. In the US, if you’re poor or even doing ok, you don’t have to outsmart anyone, someone else will take care of it.
    I am ashamed of myself for accepting government kick backs (aka tax refunds, that’s what they really are. Payoffs for your vote) and for y’all. Shame on us all.

    • Nik says:

      Tyson Foods is a publicly traded company, my bad. But if you don’t own stock, don’t bitch.

    • Mister Michael says:

      I’m here to pick a nit. You say we’re losing our national power because we’re pampered milksops. This leaves out a lot of other factors. For example, China, India and Brazil all have had massive setbacks to recover from. The last time that the US got really wrecked up domestically was the Civil War unless you count Pearl Harbor. Now China got wrecked up pretty bad in World War Two and then they had Mao’s insanity to contend with for years. India had British occupation to deal with as well as the Indo-Pakistani Wars. Brasil has contended with all sorts of domestic problems and their population has pretty much doubled over the last fifty years. All three of these countries have large populations, vast resources and major setbacks in common. When they start modernizing away the setbacks, isn’t it only natural that they become bigger players on the world stage?

      There’s more to disagree with in your post but it’s not too likely that many people will take an interest in this response to a comment on an almost eight-month-old article, anyway.