Politics of envy? What politics of envy?
As Andrew
Leonard notes today, both John Edwards and Hillary
Clinton were given the softest of softballs last night, when asked
about hedge funds in the Democratic debate.
Edwards completely flubbed the answer ("You know, I’ve been all over the
country, organizing workers into unions and raising the minimum wage, and also
working at a poverty center at the University of North Carolina"), and
Clinton wasn’t much better ("What we’ve got to do here is get back to having
a Democratic president who will set the rules, so that we can continue to build
our economy, we can inspire and incentivize people to take those risks, but
we begin to repair the damage that has been done by this president and Republican
Congress.")
Meanwhile, the likes of Marc Lasry, a hedge fund manager who
himself says that he makes an "obscene" amount of money, seem to think
that hedge funds have an "image problem". Reports DealBook:
It’s easy for regulation-minded politicians to make their case by simply
ticking off numbers. Just this week, Institutional Investor’s Alpha
Magazine estimated that three hedge fund managers — James H.
Simons of Renaissance Capital, Kenneth C. Griffin
of Citadel Investment Group and ESL’s Edward S. Lampert
— surpassed $1 billion in earnings last year.
Evidently, it really isn’t easy for politicians to make that case.
As Matt Cooper points
out, presidential candidates might be something of a special case, since
they’re going to be trying to raise a lot of money from hedge-fund managers.
But even so, the vast majority of the impetus behind calls for hedge-fund regulation
is coming from dry-minded technocrats like Tim Geithner, and
not from tub-thumping populist politicians.
There are good reasons to regulate hedge funds, and there are also good reasons
not to. Up until now, the debate has remained at a high level, where it belongs.
But any complaints from hedge-fund managers about the politics of envy risk
turning into self-fulfilling prophecies. As we’ve seen, there’s no sign of such
rhetoric thus far.