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Not a parable

What would you do first if you won the lottery? Would the first thing be hire an attorney to form a limited trust?

So, y’all have heard about the asset managers winning one hundred million dollars in states’ lottery money by now. The theme of the story is probably that the rich get richer—these guys pocket something close to $35M each (twenty-two and a half million euros) (today), which Mark Spencer at the Courant describes as considerably more assets to manage. Which is true, although depending on how high up they are in their Greenwich Asset Management firm, they may well be handling accounts in the hundreds of millions of dollars. And depending on how old they are, they may well have expectations of taking home six or seven mil a year over a five-year peak earning period anyway. The extra $35,000,000 will make their total considerably more, but possibly in the way that an extra $350,000 would give me considerably more assets to manage.

Which would be nice, by the way.

The thing that’s interesting to me, though, is the way in which these three fellows reactions were very different from mine, or probably from yours. One of them buys the ticket; I don’t know and can’t guess what arrangements they had about potential winnings. I have been in workplaces where one person took the kitty and bought a string of tickets, with the expectations of sharing any winnings among that week’s contributors. This may have been something like that, or something different altogether, but whatever it was, the three of them are in some sense sharing the ticket. And it comes up a big winner. So what do they do?

They do smart things. They get a lawyer. They make a trust. They minimize their tax liabilities. They probably make security arrangements. And then they claim the ticket. And even then, they don’t talk to the press; they defer everything to their attorney.

I don’t know if there has been a quantitative study, but the anecdotes are that many big-money lottery winners not only fail to get happy but often wind up broke. The fact is that handling money is a skill, possibly a talent and a skill, and our lives in the 99% do not train us in it. I have said (probably here, possibly too often) that it’s one of the institutional problems of inequality—if you need to trust somebody with your investments, and you are in that upper class, you can use your dad’s guy, or your father-in-law’s guy, or your Princeton room-mate’s guy, or your Princeton room-mate, if that’s what he is doing these days. Not that all those people turn out to be honest, but a lot of them are as honest as they need to be to keep their clients. Movie stars, pop musicians and other lottery winners do not necessarily have guys they can go to, and we hear about them being ripped off with such frequency that it’s no longer a surprise. It’s not that the system is rigged against them, it’s that the system is rigged against everyone, and well-connected people have ways around that as they have ways around everything else.

This is the story of the wealth managers winning the lottery, a story of the one percent. Now, as it happens I do not think that the government has any obvious role in eliminating that difference as it pertains to lottery winnings (other than leaving the numbers racket to organized crime, as would be my preference), but the story is culturally instructive about what we have taken to calling the one percent, what F. Scott Fitzgerald simply called the very rich. They are not like you and me, he said. Not (as Ernest Hemingway quipped) just because they have more money, and not because as Mr. Fitzgerald retorted) they possess too much too young. Because the world they live in is not our world, the connections they have are not our connections, and the resources they have are not our resources. Their instincts, then, are not our instincts, and their results are not our results. There is a difference between the one percent and the ninety-nine percent, and we would do well, as a society, to remember that.

Tolerabimus quod tolerare debemus,
-Vardibidian.

Comments

This is absolutely true: I have a quite elaborate scheme of what to do if I were to win the lottery. Step one: schedule a meeting with my lawyer and accountant to establish a trust to manage and a charitable organization to disburse my winnings. Step two: claim the winnings. I've had this plan for years.

Now, I just need to play the lottery once in a while.

peace


I'm pleased to see well-off people playing the lottery, since I know on average it's just a willingly-paid tax, and I was afraid all the people being so taxed were those with the least spare money to spend^H^H^H^H^H give away.


I think it still amounts to a regressive tax...


It surely does much of the same work as a regressive tax. And I do admit I was surprised to see that wealth managers were purchasing tickets, because (a) I would have guessed the payoff to be less alluring to them, and (2) I would have guessed that the terrible, terrible odds would be difficult for a wealth manager to ignore. I have to say, I wouldn't want my investments to rest in the hands of somebody who buys Powerball tickets.

Thanks,
-V.


There's a difference between a gambling addiction and buying a Powerball ticket on a lark. If three guys went in on a Powerball ticket, that's got to be the lark kind of playing, rather than the compulsive kind of playing.

I remember in high school going out to a fancy dinner with my girlfriend's family, then afterwards her grandfather made a big production of taking us into a corner store and buying us a joint lottery ticket. Probably an object lesson in relationship permanence.

At any rate, one of my various IT jobs was working for a company that made automated trading software. Playing the stock market is in fact a kind of compulsive gambling. Long odds are one thing, but an opportunity to turn thirty-five cents into thirty-five million? That would be very appealing to this crowd.

peace


Incidentally, how terrible that the easiest way to feel like one is escaping poverty is to develop expensive addictions: drugs, booze, gambling, video games...

peace


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