March 8, 2009
The Scrooge McDuck MythBy Tim Turner
Did Barack Obama learn what he knows about wealth by watching Disney cartoons?
Those of us keeping up with Forbes Fictional Fifteen may be aware of the world's richest duck. The miserly Scrooge McDuck is now valued by the scribes at a respectable $28.8 billion, topping the list as the world's richest fictional character. I grew up watching the Disney cartoon Duck Tales, featuring Scrooge and his adventurous nephews Huey, Dewey, and Louie. Sad as it may seem, I'm beginning to think that a lot of people learned economics from Saturday morning cartoons.
Sitting on a promontory overlooking the town of Duckburg, Scrooge placed his vast money bin, a secure vault holding literally several cubic acres of cash. Scrooge would relax by swimming in the change, which he could count to precision. On more than one occasion a quick swim would notify the penny-pincher of individual missing pennies.
Of course with the economy going down the drain under the guidance of corporate leaders, the question of economics and disparity come up quite a bit more frequently than normal. These questions are well asked. If corporate executives are swimming in cash, why are they leaving the rest of us high and dry?
One might ask where Bill Gates, Donald Trump, and other billionaires are piling the dough? We could take a little off of the top and make sure the rest of us have enough of the pie to keep fed. So where is Bill Gate's money bin? That's a trick question. I got you, ha ha. Bill Gates doesn't have a money bin. That's a cartoon you're thinking about; real billionaires don't store their money in bins, silly child.
It might be laughable, but sometimes I wonder if people actually think like that. So the question is: Where does Bill Gates really store his money? That is also a trick question. Ha ha, I got you again. Bill gates doesn't store any money. But, you ask, where is his approximately 58 billion dollars? That is very interesting indeed...
It turns out that Bill Gates probably doesn't own any money. Less than you'd think, anyway. No more than the contents of his pockets or maybe an overstuffed mattress. I have a couple of hundred dollars in a safe place, set aside for emergencies. Bill Gates, in all likelihood, has as much cash on hand as I do. So if my brash claim is true, where is the source of Gate's phenomenal wealth? Stock. Little pieces of paper that say "This is one piece of Microsoft Corporation". Mr. Gates has a considerable number of these. He may well be swimming in paper, but it ain't cash.
Naturally, our friend Bill the billionaire probably has a few bucks stashed away somewhere and he probably owns a few stocks that aren't Microsoft. That's called diversification, and all wise investors do it.
Diving to the Point
So what's the point of all this? Why flounder so childishly through this whole essay just to get to the part that Bill Gates owns a heck of a lot of stock? Seed corn, that's why.
Stocks are not money. That is the McDuck Myth speaking. Stocks are a piece of a company, not dollars. They are only worth what the company is worth. When the company is making good, its value goes up; when it falls on hard times, the value goes down. Billionaires are not swimming in loot, they're swimming in pieces of companies.
Now, what are those companies? Do you imagine the Microsoft Money Bin? The pile of cash that Microsoft loans Bill Gates to practice his breast stroke? No, disappointingly Microsoft is not made of money either. Microsoft is desks and computers and file folders full of 8.5 x 11 paper. Microsoft is everything that the Microsoft company needs to make computer software. This is their seed corn. Seed corn is a farmer's term. It means the seeds from the farm crop that must be saved in order to plant next year's fields. If the farmer eats or losses their seed corn, they have no seeds to plant next year and the farm will fail.
So, let's get back to socialism/communism/bailouts/benevolent government, or whatever happy euphemism it's hiding under these days. Whatever philosophy it is that cheerfully says "everything you own belongs to everyone who isn't you".
The McDuck myth is appealing: A greedy, selfish, short-sighted villain with a stockpile of (ill gotten) cash. Someone we can both blame and make pay for society's failures. Suction cash out of the Money Bin and fix the economy in a half hour (minus commercial breaks). It is natural to think like this: that's why Disney cartoons are written that way. But reality is not a children's show.
Skimming off of the top from a billionaire means taking a piece of their stock. Taking a piece of their working machinery necessary to employ people and generate social wealth.
But wait, you say, the billionaire doesn't pay taxes in stock, they pay them in dollars. And yes, you are right. They do pay in dollars. Considering how much money a billionaire has on hand (as we've just discussed), where do you think they get that money? From selling stock. And when we tax all of the billionaires, they all sell their stock at once. No other billionaires are waiting to buy. The price drops in order to get someone, anyone, to buy. No longer able to tap capital markets, the company may sell off its wealth-making equipment to pay its bills. People are fired.
The truth is there isn't that much money to skim off, any more than your can skim off the top of your house. Companies and billionaires are valued by assets, not piles of cash. And some wonder why the Dow Jones is dropping every time an Obama cabinet member announces a new plan to tax-and-spend our seed corn.
President Obama and his allies are peddling the McDuck Myth and the public is buying it hook line and sinker. It's time they stopped watching cartoons.
Tim Turner is a student of Game and Simulation Programming at a Seattle university. Formerly, an MM2 (ELT) for the U.S. Navy nuclear submarine fleet.