Poor Steve Wynn — the Nevada gambling mogul isn’t getting the respect he deserves! To hear him tell it:
“I’ll be damned if I want him (President Obama) to lecture me about small business and jobs,” he told Ralston. “I’m a job creator. Guys like me are job creators and we don’t like having a bull’s-eye put on our backs.”
“I can’t stand the idea of being demagogued, that is being put down, by a president who hasn’t created any jobs and doesn’t even understand how the economy works,” he added.” [LVSun]
Stephen Colbert had some well chosen words for this attitude, and offered a solution — the formation of the Protecting Industry Titans and Yachtsmen, or the P.I.T.Y. Party. Evidently, Mr. Wynn is seeking membership.
The moguls like Wynn certainly are getting touchy these days. Mr. Wynn is sounding ever so much like hedge fund manager Leon Cooperman, from Freeland’s article, and Colbert’s satire:
Cooperman argued that Obama has needlessly antagonized the rich by making comments that are hostile to economic success. The prose, rife with compound metaphors and righteous indignation, is a good reflection of Cooperman’s table talk. “The divisive, polarizing tone of your rhetoric is cleaving a widening gulf, at this point as much visceral as philosophical, between the downtrodden and those best positioned to help them,” Cooperman wrote. “It is a gulf that is at once counterproductive and freighted with dangerous historical precedents.” [New Yorker]
Excuse me for a moment — as a member of the 53% who did pay federal income tax in 2011, but whose vehicles must do without their own elevators, I have to ask: When did getting your itty-bitty feelings hurt preclude you from making sound business decisions in your own interest?
First, what happened in the recent recovery which might have exacerbated the sense that the 0.1% were raking in far more than might be expected for any small element in the overall economy?
Chrystia Freeland captured the trends in two paragraphs back in 2011:
“Before the recession, it was relatively easy to ignore this concentration of wealth among an elite few. The wondrous inventions of the modern economy—Google, Amazon, the iPhone—broadly improved the lives of middle-class consumers, even as they made a tiny subset of entrepreneurs hugely wealthy. And the less-wondrous inventions—particularly the explosion of subprime credit—helped mask the rise of income inequality for many of those whose earnings were stagnant.
But the financial crisis and its long, dismal aftermath have changed all that. A multibillion-dollar bailout and Wall Street’s swift, subsequent reinstatement of gargantuan bonuses have inspired a narrative of parasitic bankers and other elites rigging the game for their own benefit. And this, in turn, has led to wider—and not unreasonable—fears that we are living in not merely a plutonomy, but a plutocracy, in which the rich display outsize political influence, narrowly self-interested motives, and a casual indifference to anyone outside their own rarefied economic bubble.” [Atlantic]
BUT, don’t mention any of this or they’ll get their feelings hurt?
Note that both Cooperman and Wynn perceive themselves as members of the focus group formulated Job Creators category. If one remains hermetically sealed in one’s “rarefied economic bubble,” then this might be understandable.
Thus within the confined realm of their “narrowly self-interested motives,” excluding the needs of any around them, Wynn and Cooperman are free to indulge in the level of self pity necessary to excuse their opposition to paying a mite more in taxes to support the interests of any others. Or, that other 99%.
Secondly, “it’s all about me,” isn’t necessarily a good philosophical foundation for business practices. Note the arrogance of Wynn’s articulation, “Guys like me are job creators and we don’t like having a bull’s-eye put on our backs.” Mr. Wynn should know better. What happened to his business in the wake of the Housing Bubble collapse?
Visitor volume, reported as 54,267,549 for Nevada in 2008 dropped to 49,731,901 in 2009. It dropped to 49,684,782 in 2010 as the Recession deepened. [NVRA] Airport travel, convention attendance, visitor volume, all those statistics Nevadans watch carefully were down. People de-leveraging from household debt, and especially those who lost jobs, don’t answer Nevada’s siren songs. Those people are included in a group commonly called CUSTOMERS.
If too many customers are too financially strapped to play with our fancy lights and whistles money grabbing machines or to play at our flashy green tables then Mr. Wynn’s operations decline — back to the bad old days of the Bingo Parlor in Maryland?
Who doesn’t understand how the economy works?
If those who consider themselves the Elite excavate their own custom designed bunkers in which only their economic needs really count, and bombard the political system with their avaricious ideology, then it won’t be too long until the customers they require to sustain their operations evaporate.
Income inequality trends were in place prior to the Recession, as illustrated by this graphic from the Congressional Budget Office:
Income increased by 275% for those in the highest quintile, by 65% for the next highest group, by just under 40% for the next 60% of the income earners, and 18% for those in the bottom quintile. [CBO]
Notice that since 1982 the percentage of wealth accumulating to the top 1% of American income earners has increased, and increased rather dramatically since 2002.
Now it’s time to ask the obvious question: If wealth accumulation trends continue, and it appears that they have during the recovery period —
“In 2010, average real income per family grew by 2.3% (Table 1) but the gains were very uneven. Top 1% incomes grew by 11.6% while bottom 99% incomes grew only by 0.2%. Hence, the top 1% captured 93% of the income gains in the first year of recovery. Such an uneven recovery can help explain the recent public demonstrations against inequality. It is likely that this uneven recovery has continued in 2011 as the stock market has continued to recover. National Accounts statistics show that corporate profits and dividends distributed have grown strongly in 2011 while wage and salary accruals have only grown only modestly.” [Saez pdf] (emphasis added)
— then how do the ultra-rich intend to keep their businesses profitable? Especially in Mr. Wynn’s case, the casinos being essentially entertainment retailing?
One of the time honored ways to determine if a business is in trouble is to see if it is gaining a larger share in a declining market. Obviously, if a declining number of people have the financial capacity to spend their discretionary income on entertainment, then this doesn’t bode well for entertainment establishments. Pursuing economic and taxation policies which precipitate further contraction in wealth accumulation among a majority of the population isn’t conducive to creating an expanding market for anyone’s products. The President appears to have grasp this point, Mr. Wynn and Mr. Adelson perhaps not so much.
Moguls do not create jobs. Moguls, and other businesses owners, hire people. If they have a lick of sense they do not hire anyone they don’t need. Another time honored rule of personnel management says: If you don’t need Cousin Harry don’t hire him. Nothing will drive any business into the ground faster than an inflated payroll — especially when it threatens to morph into the family tree.
For the umpteenth millionth time — staffing levels should only be increased when the current employees cannot make or provide the goods and services demanded by the customers, with an acceptable level of customer service.
Demand is what creates jobs. For all the self-congratulatory posturing of the economic elite, if no one is buying the vehicles, purchasing the furniture, or spending a night with the slot machines — there will be less demand and with less demand comes the natural restrictions on hiring. The old Supply Side Hoax was never more than an artificial justification for greed. It certainly isn’t the way to keep an economy growing. The President understands this, some of the touchy moguls not so much.
Perhaps someone would like to procure one of Mr. Colbert’s Million Dollar Certificates, suitable for framing, telling Mr. Wynn that at least one person likes him?