Tuesday, May 10, 2016

We All Can't Be CEOs - and Why We All Aren't

My classmate at GMI, now President of General Motors.  What does she have that I don't?  Turns out, quite a few things.

One aspect of this "income disparity" debate is that the underlying premise is based on two fallacies.  First, it is based on the idea that rich people "took our money away" somehow and that we have a right to get it back.   Second, it is based on the fallacy that successful people "just got lucky somehow" (of course, we have no idea how) and that they should share their fortune with us.

Taking the first item briefly, this is, of course, stupid.    No one "took your money away" from you, you gave it away to other people.   And in many instances, the folks making a lot of money in the world are not being paid by you and thus have no connection with you whatsover.

Consider this piece from Reuters.   Hedge fund managers are making $13 Billion a year - collectively, of course (auto workers are making the same amount, I'll bet, but of course, there are more of them).  Some folks are outraged by this, saying it is "proof" that income inequality is out of control.   But a hedge fund manager manages money for very rich people - often other Billionaires.   If you are reading this, chances are, you are not invested in a hedge fund.   The hedge fund manager gets paid by the hedge fund shareholders, and if they didn't think he was worth a Billion dollars, they'd fire him - by withdrawing their money from the fund.   And in the last few years, many have done just that, realizing that making money in the stock market isn't all that hard, when the market is going up.

But again, their pay is between them and their customers.   How does it hurt you one iota if some Billionaires decide to pay their money manager a Billion dollars?   It doesn't so just shut up.

The second half of the argument is the subject of this blog.   Do successful people "just get lucky" or is there something else involved?   Usually, successful people have opportunities as indeed we all do, in one form or another.  The difference between us slugs and the Corporate CEO is that they didn't squander their opportunities.

Consider the President of GM shown above.  She and I went to the same school - General Motors Institute.   She's now President of GM (good for her) and I'm not.   Why was this?   Well, for starters, I drank a lot in college and smoked a lot of pot - and eventually flunked out.   I sort of pissed on a golden opportunity.   And while I did get accepted at the school, my grades were not all that great and I did not get a coveted position with one of the larger divisions.  Again, missed opportunity.   I decided that smoking pot was more important than being successful - literally.

And people make this decision all the time and claim they are not making a decision.   But if you smoke pot or get drunk, you are limiting your options in life.

But that is not the only thing that drags us down.   Depression, low-self-esteem, issues with family, and other psychological issues (which are often manifested by drug and alcohol use) can prevent us from being more successful.

Billionaires and Corporate CEOs don't sit around all day long on discussion groups griping about their Mothers or whining about their childhood.   They move on with life and don't let these sort of things cripple them emotionally.   And no, few people have perfect childhoods or good relationships with their birth families.    Some of the most successful people in this county came from totally screwed-up families, but managed to be successful anyway. 

Don't get me wrong, luck also comes into play.  But as Thomas Jefferson once (supposedly) said, "I find my luck improves the harder I work" - but of course, he had slaves.

The reality is, the reason I am not as successful as my classmate, or making a Billion dollars a year like a hedge fund manager is that I didn't try to do these things.   I managed to make some success of myself in life, but not as much as I could have.   And that was a choice.   When I was a technician at Carrier, I met a young Patent Attorney who came to the lab to see if a flow sensor I had contrived would be Patentable.   I recall at the time thinking that Patent Attorney was a job I would never have.   But about five years later, well, I was one.   Giving up the pot smoking and drinking (and feeling sorry for myself and obsessing about "family") was a big step in that direction.

Most of us get distracted from our goals in life.  Some folks spend countless hours online, blogging about politics or whatever (mea culpa) - which really doesn't do much to help your own bottom line at all.   The political obsessive is also usually a loser, even at (especially at) a Tea Party or Trump Rally.  They put their faith in a political leader who promises to "make them great again" when the real power for their greatness lies in their own hands, and is being squandered at protests and rallies.

And so on and so forth.   The guy who spends his every waking hour in the garage with his Camaro is giving up on a lot of other aspects of his life - as is the guy who financially stressed himself to buy a brand-new Camaro.   The family who is "house poor" so they could have a look-at-me house isn't going to be taking any risks in life, such as starting their own business.   They can't afford to, as they are mortgaged to the hilt.

I was able to start my own practice only because I didn't have a crippling mortgage.   That was one trap I didn't fall into.   Others are not so lucky - convinced that having the trappings of wealth is the same thing as having wealth.   And this is probably the most common trap for Middle-class Americans to fall into.

And the deal with wealth is that there is a snowball effect once you have it, and also a reverse snowball effect once you lose it.    As Warren Buffet said, "The first Billion is the hardest."   Once you've made that, well, all sorts of doors are open to you, as well as the best deals.    Once you fall off the economic ladder, however, you are punished with fees and fines and high interest rates - further kicking you down the ladder.

The common denominator in all of this is personal choices.    While some of us will never be successful regardless of personal choices (although this is actually a small number of people) the majority of us will not be successful because of the choices we make in life.    Few of us will be Billionaires, that is a given.   How you even become a hedge fund manager is beyond me.    But a lot of us can become Millionaires, or at least be comfortable and happy with the lives we have.

The key is, I think, is to not let the distractors dominate our lives.  If you spend a lot of time and energy obsessing about your family or you are depressed all the time, life is not going to go well for you.  If you want to alter your mind with drugs and alcohol, you will not become wealthy.   If you want to obsess about politics or an old car, you are trading success for those things.

The people who are successful, for the most part, did not "take away" anything from us.   Most made their money through their own actions - the amount of inherited wealth in this country is not as large as Sanders supporters think it is.  The difference between the very rich and you and I is that you and I squander a lot of our energy and opportunities on bullshit.  It really is as simple as that.

* * *

Of course, there are two other factors to consider.

First is talent and ability.   Not all of us have the same talents.   I can't run the four-minute mile, nor am I a particle physicist.    And it most cases, we can't change our talent and abilities, although we can hone what we already have.   And yes, this is "unfair" in that you are born with a certain set of smarts or body type, and really can't do too much with that.

But on the other hand, some seriously ugly people become movie stars, and some fairly dumb people become Billionaires.   They have to work at it more, though.

The other aspect is that we can't all be in charge.   In any organization, there are leaders and followers, and the largest problem facing American industry today is that there are too many Vice-Presidents and not enough people actually working.

So most of us are destined to be drones.  But what level of droneship is going to depend not just on your talents and abilities, but also the choices you make.