Bottle Visits the Trash Heap
I usually avoid this hallway. So much garbage, so little value. Still though, plenty of quiet for thinking. Maybe the Lady of the Heap has some good advice. Hey, Lady? You in here?
L: Bottle? It has been a long time. How are things progressing?
B: Up and down. It’s a wacky ride out there. Not sure the end is ever going to materialize. The Auditors are really pushing and warping the boundaries of reality, you know?
L: Yes, yes, I know. Doesn’t help that they aren’t real enough to punch in the gut.
B: Exactly! Hard enough to conceptualize real people, let alone the imaginary consequences of their actions.
L: Well, you know me, I like a good tirade as much as anyone. Go on, pour it out.
B: Ok, you asked for it.
One of the biggest problems I keep running into is that there are no actual billionaires the way people think there are. They get this glazed look in their eyes when you tell them those Lords and Ladies don’t have any actual money the way regular people have a jar of quarters, or even $10,000 in a savings account. All they have is some level of control over a localized economy. They are literal Kings and Queens, like you, guarding their piles of garbage. No offense.
L: None taken, go on.
They own corporations, they are literally the government of an economic State, and for the most part they live their lives on the ledger of those corporations. If/when they need physical money, they sell some portion of their assets to pay for it. It might be 5% of some stock, it might be selling a mansion or a rare sports car, it might be firing 500 employees from some underperforming factory.
Yes, of course there are standard commericial bank accounts and all the normal stuff, but for the most part all of that money exists only in the process of exchange, it’s all earmarked into the foreseeable future in the form of a contract or in the form of taxes. The only money that exists in tangible form is the money that walks in the front door and leaps out of our pockets, a process in which they literally do not participate.
It’s easy for people to misunderstand that because the roles are reversed down here on the hot pavement. Down here, money is what you need in order to do whatever it is you want to do, but up there, money is merely the result of what you do. In the minds of Musk or Bezos, or Buffett, or any of them they do not work for money, they steer the ship that trickles that money down to you. They literally divide their assets and slosh them around to keep up the appearance of progress and growth.
Where does that difference come from? It comes from the liability shelter of the corporation itself. I like to pick on Musk (he’s an easy target), so we need to understand that Musk is neither financially responsible for the 5 or 6 companies that form the economic bubble he lives in, nor is he responsible to the American economy beyond paying taxes on any portion of revenue that exceeds deductible business expenses. Musk the person neither makes nor spends any actual money, he simply manages the balance between income and expense for that corporate network which includes his personal cost of living. All he actually does is trade assets and occasionally take a nap at Grimes’s house.
I’m not picking on him just to be mean, and I’m not saying what he does is right or wrong, I’m simply trying to point out that his reality is very different from yours and mine. His actual goal is to send human beings to Mars. Silly or not, that’s all he really cares about. Whether he consciously thinks about it or not, he doesn’t actually care about anything on its own terms, if it doesn’t help accomplish acquiring the money, technology, or protections for his own personal brand of manned interplanetary space flight, then Musk doesn’t give a crap.
Let’s shift to Warren Buffet. Buffet is the owner and CEO of Birkshire-Hathaway. His salary is only $100,000 a year (compared to Musk, whose salary is basically $0.00). The rest of his net worth is completely invested in his subsidiary holdings. Buffett is a lot more complicated than Musk, because Buffet is basically his own investment firm.
The BH Economy, for lack of a better term, is fueled entirely by a 6-7% royalty on profits, as opposed to Musk’s Government contracts and intellectual property. What does that really mean? It means that Buffett, as an objectively successful investor, personally insures BH. BH then provides corporate services to their subsidiary companies (GEICO, Kroeger, etc., you can go look up the list for yourself, it’s public knowledge), and reinvests its profits at Buffett’s direction. The way you should think of it is that Warren Buffett himself is giving you a business loan for 6% of your net profits. If your company makes 2-million in profit, Buffett gets $200,000 of it, and reinvests the profit from that wherever he thinks it should go. That’s a paraphrase, obviously, but mostly accurate. It sounds very similar to Federal/State income tax because it is, the only structural difference is that Warren Buffett is King, he is the government of the State of BH.
The proof is in the pudding, so to speak, his track record speaks for itself. What we really need to understand is that this exact scenario is what the Economic Right says is 100% better 100% of the time than any form of Federal Government intervention or regulation of the US economy. Is that true? I mean, BH lost 11-billion in 2020 from buying Precision Castparts in 2016 because PC folded. What happens when he dies? He is 90, you know?
To be clear, yes, that 11-billion vanished into thin air as far as BH is concerned. Buffett paid 32-billion to buy it, but liquidation only returned 21-billion to his portfolio. Remember, Buffet only makes 100k a year, every bit of the rest is in the little black box we call “the stock market.” That 11-billion was part of the working capital of PC, and it has conceptually diffused across the entire money supply. It’s not really true, but you can start to conceptualize that 11-billion loss by saying it inflated the money supply by $33 per person in the US. All things being equal, the government should expect an aggregate increase in consumer spending, say about half, 5-billion. People will spend $5-billion more than they would have if PC was still in business. That spending could go to paying off credit card debt, or buying a new toaster, or whatever. What I’m trying to get at is if I hand you $30, you are highly likely to immediately spend $15 on something you would not have before. Not everyone will react that way, but a lot of people do in the real world, half of a windfall is a completely justifiable splurge.
The tricky question is how much of that 5-billion will walk right back through the front door of a BH subsidiary every year? We’ll just divide BH’s 245-billion in revenue by total GDP: 245-billion/22-trillion is a little over 1%. So, 50-million. Pretend that’s pure profit, BH gets its 6%, we’re feeding BH 3-million a year that they just keep reinvesting.
Actual math says it will take 3,700 years to make up that 11-billion loss, but actual math isn’t the same as corporate math. BH ‘s reported net profit was 26-billion, let’s say they devote 10% of it to recouping that loss, how long to absorb that 11-billion? 10% is still 2.6-billion, so they basically recoup that loss in 4 years. Does that matter to BH? I don’t think so. Does it matter from the ground up? Yes, absolutely. Think of it as 4 years of stagnation inside the BH economy, basically half a decade of real, everyday people treading water. Where does that put us? Oh, look, a Presidential election. Warren Buffet did a Stupid thing when Trump was elected, and we could easily be at the break-even point around the time of the next election.
L: So, what does that mean for you, Bottle?
B: Well, it’s really just one possible way Buffett might compensate for that loss. If your money comes from what Buffett does, you might expect to feel stagnant for the next 4 years and get really conservative with your own spending. The point is that it doesn’t matter very much to him personally, he has no reason to care. The manager of a Kroeger store might care a lot, though. It could mean having to fire 2 cashiers, and those 2 cashiers very much care about not having a job anymore.
I don’t like net worth as a measure of value, especially when it acts as the Auditor of what regular people can and can’t do. Narzon is back behind the curtain whispering “Mars, Mars, blast humans off to Mars,” and Musk just replies “Yes Ma’am, nothing else really matters to me.” Buffett’s sitting there saying “What do I care? I’m going to die soon, even if I live to 104.” Down here on earth, though, people are getting sick and dying, even Rupert Murdoch and his son are foregoing their salaries this year, which by the way is the exact opposite of Milton Friedman’s intentions and a whole lot like Communism, States are literally taking rights away from their citizens and blocking access to Federal appeal, and I’m still trying to find $250,000 in the couch cushions. For what? Just so we can leave more human garbage in space? So we don’t have to drive our own cars anymore? So Iowa can feed the whole world’s appetite for pork, and soy beans, and $0.20 cheaper gasoline? I can do or quickly learn to do anything, but no one with money has any interest in anything except turning their competition into their employees. We the people are an annoyance to the wealthy, but the other side of that coin is that the wealthy are an incredible hindrance to everyone else.
The only way to pay off my debt is to be in more debt, and I think we can all agree that’s stupid. The only thing I’m failing at is convincing people to give me enough money to pay back my student loan debt. At a certain point you have to say it’s not my fault, it’s Corporate America’s fault because they refuse to let money they don’t need circulate outside their control. I need $3,000 a month in my pocket just to get back to 0, but I’m stuck in the under 2k club. The real problem is that there isn’t any way for the business sector to recoup that extra money, once you hand it to me it’s gone forever because I don’t have the collateral necessary to promise to give you more in return. I’m willing to admit that we’re both being greedy, but I’m not willing to admit that our motivations are equal when you have the ability to help me but refuse to admit that you just don’t care. Honestly, I’d have more respect for you if you did. I wouldn’t necessarily want to hang out with you, but at least I could say “at least he’s honest.” Buffett can eat an 11-billion mistake, but I can’t even write him a letter asking for a quarter-mil because he doesn't have it just lying around.
L: It doesn’t sound like there’s any conclusion there, Bottle.
B: There is, I just haven’t arrived there yet. At the end of the day, a self driving car and a passenger ticket to Marvin’s planet don’t help me in any way, because all I’m hearing from the outside world is that the faster I legitimately work myself to death to shore up someone else’s bottom line, the better off financially my friends and family will be because that’s the only way my debt goes away without begging for their money, and that’s the only proper, fair, and morally righteous way the world should be.
L: That’s sounds pretty morbid.
B: That’s because it is. Extremely morbid, and extremely real. I choose to keep putting it back in a bottle, but some of my actual friends made that choice in the other direction. I don’t blame them, it’s pure mental torture out here.
L: So what are you going to do?
B: Well, I’m going to keep being me, and I’m going to have Compy throw together a GoFundMe fundraiser. All I lose is a little bit of egotistical pride, and there’s at least a possibility that someone might help. Possible is better than nothing.
L: Sounds like you didn’t really need my help at all.
B: Au contraire, I needed you most of all, Garbage Lady. Like I always say, I have no idea how it will turn out until I actually do it, and I literally have nothing to lose; couldn’t have put it into words if you weren’t here to listen.
Or, if you prefer, there's always my tip jar at
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