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FAIR PAY? John Paulson and 5 Billion Dollars

To paraphrase the great Russian author, Leo Tolstoy, "How much money does a man need?"
       John Paulson, a hedge fund trader earned one billion dollars in pay last year.  How much is one billion dollars?  Let us assume that the government taxes him at 35% interest.  (This assumes that he has no lawyers and financial wizards to hide the money.)  Thus, he took home $650,000,000.  So how long will that last?  Let us also assume that he gets no interest on his money.  (Too hard for me to calculate if he does get interest.)  So he and his wife and his two children go on a shopping spree.  Each day they spend $10,000 per day.  At the end of 65,000 days they would run out of money.  How long is 65,000 days?  That is 178 years!  So he and his children will never run out of money.  But there is more.  That was his pay.  But he personally earned another four billion dollars in investments in his own company.
   Let me ask another question.  Which person, prior to 2010, earned the most money in a single year?  If you guessed John Paulson you would be right, as he earned 3.7 billion dollars in 2007.
    I am all for fair pay, but no individual is worth being paid one billion dollars in a year.  GM, which actually produces something, cars, with over 200,000 workers, earned four billion dollars last year.  But how did Paulson improve the economy?  What services did he provide? 
   St Paul, no relation to Paulson, wrote:  "For it is written in the Law of Moses: 'Do not muzzle an ox while it is treading out the grain.' Is it about oxen that God is concerned? Surely he says this for us, doesn't he? Yes, this was written for us, because when the plowman plows and the thresher threshes, they ought to do so in the hope of sharing in the harvest." (I Corinthians 9:9-10)  So just like an ox gets to eat, just like a tenant farmer (plowman and thresher) participates in the harvest, the worker should be paid.  And they must be paid a fair wage.  But earning one billion dollars is simply immoral.  No man's work is worth one billion dollars, let alone five billion dollars. 
    Well one man's work is worth five billion dollars.  And that is the work Jesus Christ did coming to the earth to save us from our sins, and ultimately having to die on the cross.  His work is worth more than we can count.  But Jesus was the Christ, and John Paulson is only John Paulson.
     One of the best short stories is Leo Tolstoy's "How much land does a man need?"  I read it annually as a  reminder to lay up for myself treasures in heaven, not on earth.

Re: FAIR PAY? John Paulson and 5 Billion Dollars

Glenn, I couldn't disagree with you more.  As reformed believers, we believe that God is sovereign over all things including the money that we earn.  He owns the catlle on a thousand hills.  As I recall, in John 19:10 Pontius Pilate said to Jesus that he had the power to set him free or to crucify him and Jesus said that he would not have that power unless it had been given to him from above.  Doesn't the same hold true with Paulson?  Would he not have his great wealth unless it had been given to him from above?  Isn't it also true that with great wealth comes great responsibility?  He alone will be judged if he doesn't use his wealth in a way that honors God and builds the kingdom with the wealth that has been given to him.  Who are you to judge his wealth?  Who are you to limit what God gives to somebody?

Re: FAIR PAY? John Paulson and 5 Billion Dollars

      I think that there is a vast difference between Pontius Pilate and John Paulson.  As you wrote, Jesus said in John 19:11: Jesus answered, You would have no power over me if it were not given to your from above.  St. Paul wrote the same in Romans 13:1-2:  Everyone must submit himself to the governing authorities, for there is no authority except that which God has established.  The authorities that exist have been established by God.  Consequently, he who rebels against the authority is rebelling against what God has instituted. . .  So in the case of Pilate, Pilate derived his authority from God.  It was positional authority, and when he was no longer governor, he lost that authority.
     Then you write: Doesn't the same hold true with Paulson?  Would he not have his great wealth unless it had been given to him from above?
     Authority is completely different than wealth.  While God certainly owns the cattle on a thousand hills, and while God is certainly sovereign, that does not necessarily mean that what Paulson earned was from God.  By that same logic, the poor are that way because God chose to give that person a cockroach.
     You write that Isn't it also true that with great wealth comes great responsibility?  My response is that great wealth may come from great responsibility, but it not necessarily.  Steve Jobs has become very, very wealthy from making a fine product, ipads, iphone, ipods, etc.  Ford Motor Co. President and CEO Alan Mulally just received $56.5 million stock award for his work.  But at least he did something.  The Ford hourly workers all got five thousand dollar bonus checks.  He turned Ford around and made the company profitable, something that Ford has not been since 1999.  Alan Mulally at least produced something.
    But the question is what were John Paulson’s responsibilities?  Does a hedge fund trader lose money?  Never.  You see they get 2% profit (handling fee) of everything that is invested.  So if you invest one million dollars, his profit for that year is $20,000 (two percent of one million dollars).  If the next year, your stock did not do well and declined to $900,000, the hedge fund trader still gets paid $18,000.  So he gets paid, even if the stock goes down.  If on the other hand the stock goes up to $1,500,000 then he gets 2% of $1,500,000 ($30,000), and he gets 20% of $500,000 or $100,000.  But it is even better than that.  Since the $500,000 is a capital gains, and since hedge fund traders pays no tax on capital gains, the $100,000 is pure profit!  That is all with a million dollars as it is easier to understand.  A billion dollars is too much money for me to understand.
    So bottom line, if the stock down, he makes money.  If the stock goes up, he makes more money - 2% of net worth, plus 20% profit of all gains and he pays no taxes on that gain.  And that is why the top hedge fund managers are so rich - the average compensation is about 910 million dollars per year, with the minimum pay of 210 million dollars.
    The related question is how much is a man worth?  For example, the minimum wage is $7.25/hour.  So a man working 40 hours a week, 52 weeks a year will get paid $15,080/year.  So John Paulson has more responsibility and works harder, much harder than the man in the street.  Is he worth 100 times more?  Let us say he is worth 1000 times more.  So 1000 times  $15,090 is just over $15 million.  Okay, then pay him 15 million dollars.  But he earned 66,666 times more than the man is the street.  Is he really worth that much?  A billion here, a billion there, soon is real money.  Further, he bet that the sub-prime mortgages would fail (and by shorting the positions, once the mortgages started to fail, he helped cause the collapse), and he earned 3.7 billion dollars in 2007.  That year he earned 246,666 more than the person earning minimum wage.  So what did he do that was so valuable?
     Another example is Robert Nardelli.  He was the CEO of Home Depot, and after seven years the stock price had gone down.  So he was forced out/quit.  His severance pay was $210 million in cash and stock options, including a $20 million severance payment and retirement benefits of $32 million.  So when a guy gets fired for poor performance, he gets paid quite handsomely. 
    Just because it is legal, does not mean that it is right.
    Finally, John Paulson shows no charitable streak.  Even Bill and Melinda Gates have set up philanthropic trust.
    I am not advocating government intervention.  I am not advocating communism.  What I am advocating is for justice.  If an ox is worth its wage, and we should not muzzle an ox so that as it treads out the grain, it gets to eat, neither should one ox get 246,666 times what the lowest worker gets.  No man is worth that much money.     

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