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May 06, 2014 3:37 PM Hedge Funds Versus Kindergarten

By Ed Kilgore

The inequality issue is one in which economic and moral considerations can quickly become tangled. That’s particularly true at a time when defenders of free-market economics are increasingly prone to advance the argument that the “natural” distribution of resources via unregulated markets is a measure of the actual value of each person’s contributions to society, with any redistribution representing virtual theft.

Consider this data point from Ezra Klein today at Vox:

Alpha magazine is out with its annual “rich list” detailing the successes of the highest earning hedge fund managers in America. The news once again is that it’s good to be a successful hedge fund manager: the top 25 earned a collective $21.1 billion this year.
Even within that group there’s considerable inequality. The top earner, David Tepper, took home $3.5 billion which is about five times as much as either of the two men tied for the tenth slot.
How does that look in context? Well, it’s about 0.13 percent of total national income for 2013 being earned by something like 0.00000008 percent of the American population. Another way of looking at it is that this is about 2.5 times the income of every kindergarten teacher in the country combined.

Now I am open to the argument that hedge funds are at least a marginally useful lubricant to the efficiency of the U.S. and global economies. But you cannot tell me a handful of hedge fund managers add more to the wealth and productivity of America than all the kindergarten teachers combined. There is nothing “natural,” much less “moral,” about a system that distributes the fruits of the economy in that manner.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

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