Humph Contemplates Economics (while convalescing)

With a recently-pulled ligament in his hindquarters, Humphrey has been couch-bound (and traveling in his carrier), but mainly catching up on his reading since he's not yet ambulatory.

Humphrey in his carrier - he is very frustrated that he can't walk, jump and climb.

The Globe & Mail quoted Bill Gross, the manager of the world’s largest bond fund Pimco ($244-billion in holdings!) in a fit of metaphoric brilliance. “It’s as if the Earth now has two moons instead of one and both are growing in size like a cancerous tumor that may threaten the financial tides, oceans and economic life as we have known it for the past half century. Welcome to 2012.”

What???

But that wasn’t the only one today. The Globe & Mail’sTara Perkins compared investors’ recent awakenings about financial markets to learning the hard truths about Father Christmas:

“…with the turbulence continuing, long-cherished beliefs are being questioned and middle-aged investors are being hit with hard truths, much like children learning about Santa Claus. It turns out that house prices don’t always go up.”

Humphrey is very confused about how any of this could possibly be news to anyone. Really, were people so caught up in the fantasy of high finance? Did they really believe the fairy tale of the Invisible Hand of the Market?

Humphrey, of course, has a tendency to over-estimate human ability to understand things that are obvious to him.

Now, Humphrey’s investments are modest (in the one-figure range), but the latest news suggests that hard work (if you’re a CEO) is your best bet, not investments. On Monday, a report released by the Canadian Centre for Policy Alternatives (CCPA) reported that Canada’s highest-paid CEOs earn the equivalent of the average Canadian annual wage in less than a day!  Based on the 2009 wages of Canada’s best paid 100 CEOs, they got an average of $6.6-million, despite the recession, compared with the average income of $42,988 and the average minimum-wage worker’s income of $19,877. And of the 100 top-paid CEOs, guess how many were women? One!

Astounding! Especially when you consider that these rates of pay are being lavished on people while many of their companies are not exactly doing well!

This reminded Humphrey of some research that Mark Kingwell described in his book, The World We Want: that people want to have things and wealth relative to what other people have, not for themselves. For example, most people say they would prefer to earn $50,000 while others earn $25,000; instead of earning $100,000 while others made $250,000. This kind of result holds even when it is true that a flatter income distribution level would be better everyone. As long as people measure themselves against other people, we are caught in the “smart for one, dumb for all” trap.

So, after this week's financial news, Humphrey as decided that he will immediately abandon any and all investments, and update his CV to apply to be the Chairman of a major financial institution as soon as he ligament heals. He figures he has a better shot at corporate chiefdom than his female guardian, given the statistics. Competent headhunters dealing in high-level canine occupations are welcome to contact him.