These are hard times for America’s gold miners. They’re scrambling to get ahead, but seeing their pay dropping.
Take Bob Mercer, who’s been a top miner for years, but last year even Bob was down. He pulled in only $125 million in pay. Can you feel Bob’s pain?
Well, these aren’t your normal miners. They’re hedge-fund managers, digging for gold in Wall Street. Indeed, if you divided Mercer’s pay in his “bad year” among 1,000 real miners doing honest work, each would consider it a fabulous year.
Nonetheless, hedge funds are figurative gold mines, although they require no heavy lifting by the soft-handed, Gucci-wearing managers who work them. These gold diggers are basically nothing but speculators, drawing billions of dollars from the über-rich by promising that they’ll deliver fabulous profits.
But the scam is that Mercer, whose hedge fund is Renaissance Technologies, and his fellow diggers get paid whether they deliver or not.
Their cushy set up, known as 2 and 20, works like this.
Right off the top, they take 2 percent of the money put up by each wealthy client, which hedge fund whizzes like Mercer keep even if the investments they make are losers. Then, if their speculative bets do pay off, they pocket 20 percent of all profits.
Finally, hedge-fund lobbyists have rigged our nation’s tax code so these Wall Street miners pay a fraction of the tax rate that real mine workers pay.
Last year, the 25 best paid hedge-fund operators totaled a staggering $11 billion in personal pay — even though nearly half of them performed poorly. Meanwhile, Donald Trump, who promised last year to close that special hedge-fund tax break, has mysteriously omitted that vow from the “tax reform” framework that the White House released this fall.
Guess who was one of Trump’s most generous funders last year? Bob Mercer.
Jim Hightower is a radio commentator, writer, and public speaker. He’s also the editor of the populist newsletter, The Hightower Lowdown.