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Speaker 1: Mr Trump after we published a story putting his net

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Speaker 1: worth at two point nine billion, came out in in

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Speaker 1: the Daily Mail and he said I was a dope

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Speaker 1: kid and wet behind the years. This episode is brought

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Speaker 1: to you by Nadex, the Binary Options Exchange. Binary Options

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Speaker 1: and swaps. Trading involves risk and may not be appropriate

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Speaker 1: for all investors. Hi, and welcome back to Bloomberg benchmarkt

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Speaker 1: podcasts about the global economy. It is Thursday, November twelve,

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Speaker 1: and I'm Tory Stillwell, an economics reporter with Bloomberg News

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Speaker 1: in d C. And I'm joined this week by my

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Speaker 1: co host, Akiedo, our editor for Benchmark in San Francisco,

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Speaker 1: and Dan is taking the day off to prepare for

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Speaker 1: his big move to New York. So it's just me

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Speaker 1: and Ywauki. Tori, how's it going pretty good? Do you

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Speaker 1: want to tell everyone about your Hawaiian adventure. Oh my gosh. Yeah,

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Speaker 1: I almost called in from Hawaii today where I was

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Speaker 1: on vacation, but sadly, I'm now back in reality. While

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Speaker 1: you were in Hawaii, did you have a chance to

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Speaker 1: follow some of the riveting monetary policy proceedings that happened.

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Speaker 1: I did see this one which definitely surprised me. It went,

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Speaker 1: God wants Yellen to delay rate hike to spring, lawmaker says, um.

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Speaker 1: This was Brad Sherman, who is a California Democrat and

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Speaker 1: the House of Representatives, and it was at a congressional

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Speaker 1: hearing where lawmakers were asking Janet Yellen fed chair all

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Speaker 1: these questions. Let's play the tape. God's plan is not

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Speaker 1: for things to rise in the autumn a matter of fact,

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Speaker 1: that's why we call it fall. Nor is it God's

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Speaker 1: plan for things to rise in the winter through the snow.

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Speaker 1: God's plan is that things rise in the spring, and

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Speaker 1: so if you want to be good with the Almighty,

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Speaker 1: you might want to delay until May. Okay, So was

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Speaker 1: it the nuttiest thing you've ever heard in a congressional hearing? Yeah, No,

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Speaker 1: that was the best. I think that just that's just

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Speaker 1: like quote of the century in terms of monetary policy.

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Speaker 1: I don't know, maybe there are better quotes, but incredible. Yeah.

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Speaker 1: And we should also note that after the hearing, Brad

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Speaker 1: German went on Twitter and said, don't actually think God

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Speaker 1: has an opinion on monetary policy, but if she did,

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Speaker 1: she with a capital s she would agree that the

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Speaker 1: EFFENC shouldn't increase rates in winter. Yeah. I think next

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Speaker 1: time maybe we could make a sacrifice to a follow

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Speaker 1: or something like that, like get some other deities involved here,

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Speaker 1: you know what I'm saying, Get all the gods on

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Speaker 1: our side. Oh my gosh. Yeah. So the context of

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Speaker 1: this is that the Federal Reserve is about to raise

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Speaker 1: interest rates. A lot of people think that this interest

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Speaker 1: rate hike is going to come in December next month,

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Speaker 1: so uh, you know, yelling is starting to come under

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Speaker 1: pressure from a lot of lawmakers to delay that um

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Speaker 1: And that's not surprise, right, It's it's not every day

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Speaker 1: that monetary policy is involved in these divine discussions, But

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Speaker 1: it's no surprise at all that a lot of people

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Speaker 1: want interest rates to stay at zero forever. At the

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Speaker 1: same time, a lot of people are pushing for interest

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Speaker 1: rates to be hyped sooner rather than later, especially some

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Speaker 1: of the more conservative leaning legislators who think that the

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Speaker 1: FED is really playing with fire here and they got

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Speaker 1: a little bit more ammunition. Or I guess maybe God

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Speaker 1: has a little bit working against him or her. I

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Speaker 1: don't I don't know. But the job's report came in, uh,

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Speaker 1: pretty strong for October. Payrolls were the strongest this year

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Speaker 1: two one, and wages were up two point five percent

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Speaker 1: from the year before, and that is a clear break

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Speaker 1: from the wage worth pattern that we've seen since the

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Speaker 1: recovery started. Really great news there, and if the trend

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Speaker 1: of higher wages continues, that'd be great news because it

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Speaker 1: helped alleviate some of the increase in income inequality that

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Speaker 1: we've seen over the past few years. And you know,

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Speaker 1: we've been hearing a lot about income inequality. Angus Deton,

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Speaker 1: who we spoke with a couple of weeks back when

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Speaker 1: the Nobel Prize this year, after doing research on it.

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Speaker 1: Herschiko started it late last month as something that's actually

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Speaker 1: hurting their sales, and it seems like every US presidential

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Speaker 1: candidate is being asked what they do to fix it.

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Speaker 1: Tori on the show, we've talked about average wages, we've

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Speaker 1: talked about median wages, but we haven't really talked about

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Speaker 1: the fact that the fates for the rich and the

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Speaker 1: poor the book, who are on opposite ends of the spectrum,

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Speaker 1: have been really different in how they're diversion. So hopefully

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Speaker 1: for today's episode, we'll be able to talk about what

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Speaker 1: it takes to be rich in America. Today. Well, let's

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Speaker 1: talk a little bit more about these income tears for

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Speaker 1: the quote rich and the quote core. Uh, let's break

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Speaker 1: those down a little bit. And we talked to our

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Speaker 1: data guru, Waylu. She's based in New York and crunches

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Speaker 1: just incredible amounts of census data for us. She's just

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Speaker 1: amazing at it. And she told me that Bloomberg generally

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Speaker 1: defines riches the top twenty of incomes and inteen you

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Speaker 1: were by that definition, you were rich if you made

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Speaker 1: a little over a hundred and twelve thousand dollars, if

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Speaker 1: that's what your household income was. By contrast, the bottom

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Speaker 1: twenty percent, you're in that bottom twenty if you your

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Speaker 1: household made about twenty one five hundred dollars. So there's

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Speaker 1: about a one hundred thousand dollar different, right, It's pretty big,

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Speaker 1: and poverty at the way low end of the spectrum.

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Speaker 1: A single person is living in poverty if they make

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Speaker 1: about eleven thousand, seven hundred seventy dollars or less a year.

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Speaker 1: So I feel like that's really low for the poverty line.

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Speaker 1: I mean eleven thousand dollars a year. It depends on

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Speaker 1: how many people are living in the household. To the

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Speaker 1: more people you have, the threshold gets a little higher. Um.

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Speaker 1: But yeah, it's it's mind blowing that someone could could

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Speaker 1: survive on that limited amount of money, you know, Tori.

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Speaker 1: Why does it matter if the rich are earning a

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Speaker 1: bigger share of the pie the way they have been

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Speaker 1: over the last twenty years. I mean, if the pie

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Speaker 1: is getting bigger and on average people are earning more,

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Speaker 1: doesn't really matter if some people are taking more and

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Speaker 1: more of the pie than others. I think the main

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Speaker 1: reason people are concerned about it is because we know

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Speaker 1: that poor people spend a much larger proportion of their

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Speaker 1: incomes in their paychecks than rich people do. And to

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Speaker 1: kind of illustrate this, I have some data, of course, um,

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Speaker 1: and it's it's actually kind of striking. The first time

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Speaker 1: I looked at it, I got it mixed up. Because

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Speaker 1: the numbers are so crazy. But so for the lowest

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Speaker 1: twenty percentile of income, their income before taxes was about

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Speaker 1: ten thousand dollars in the year ended June. This is

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Speaker 1: coming from the Bureau of Labor Statistics, about ten thousand dollars.

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Speaker 1: Think of that, their average annual expenditures for that same

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Speaker 1: amount of time was about twenty three thousand dollars. So

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Speaker 1: they're going in like huge amounts of debt here based

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Speaker 1: on their income UM. By contrast, the highest twentieth percentile,

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Speaker 1: their income before taxes is about a hundred sixty six thousand,

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Speaker 1: and they're spending about a hundred and one thousand UM,

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Speaker 1: so much smaller sharing. So they're just they're just not

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Speaker 1: spending as much, right, and they spend on totally different

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Speaker 1: things um. Where people often spend much more money on

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Speaker 1: food and housing, whereas wealthier people will funnel a lot

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Speaker 1: more money into things like pensions and insurance UM. So

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Speaker 1: a lot of economists have talked about this as a

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Speaker 1: reason as to why the recovery may have been so weak,

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Speaker 1: because we've got, you know, this concentration of wealth and

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Speaker 1: these people aren't spending it as much as I should say, right,

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Speaker 1: so there's normal person rich and then there's rich person rich,

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Speaker 1: which is kind of that seems like an alien universe

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Speaker 1: to me. But do you want to go over those

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Speaker 1: numbers too waylou Again, our data guru told me that

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Speaker 1: that super rich is going to be like the top

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Speaker 1: five percent of household incomes and that was about a

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Speaker 1: little over two hundred and six thousand dollars for a household.

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Speaker 1: The ultra rich is going to be like the top

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Speaker 1: one percent. And for that data, I am going over

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Speaker 1: to UH to E p I. They wrote this big,

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Speaker 1: big report at the start of the year UM looking

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Speaker 1: at income inequality trends for for decades. For the US,

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Speaker 1: the average income of the top one percent was about

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Speaker 1: one point three million dollars. If we want to think

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Speaker 1: like out of your mind rich, like stupid amount of

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Speaker 1: money wrenching. Uh. The threshold there, the income threshold of

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Speaker 1: the top point zero one person is nine point nine

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Speaker 1: million dollars. Uh. We're gonna take a quick break for

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Speaker 1: a little more what these people are like, like what

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Speaker 1: kind of lifestyles they must have. We've drafted Caleb Melby,

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Speaker 1: a reporter for our executive pay team whose main job

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Speaker 1: it is to try to figure out how much money

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Speaker 1: people are making. And before he was with us here

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Speaker 1: at Bloomberg, he was a reporter at Forbes, where he

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Speaker 1: got the license to run around the country hunting for

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Speaker 1: hidden billionaires, which he also does here, and before that

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Speaker 1: he was an intern in New York living in the

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Speaker 1: same dorm as me. Hello, Caleb, what what are these

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Speaker 1: people like? Hey? I mean it was interesting listening you

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Speaker 1: talk about that, that that top tier, that that million

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Speaker 1: what was a million and a half? Is that what

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Speaker 1: you're thinking about? Yeah, So, so to give you an idea,

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Speaker 1: like how much farther beyond that percentage point, uh you

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Speaker 1: can go? I mean, uh, at at the Bloomberg Pay Index,

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Speaker 1: we're tracking uh the two d highest paid people and uh,

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Speaker 1: they're they're making each of them upwards of twenty million

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Speaker 1: dollars a year. And when you were talking earlier about

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Speaker 1: how they spend that money on different things, they're they're

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Speaker 1: point in pensions, they're pointing in in insurance. I mean

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Speaker 1: that's simply because it's really hard to try to figure

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Speaker 1: out how to spend all that money, and a lot

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Speaker 1: of them really defer it and often in uh tax

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Speaker 1: advantaged ways, um sock it away for the future. I

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Speaker 1: feel like it is not that hard for me to

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Speaker 1: figure out how to spend a couple of million dollars UM.

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Speaker 1: So I don't want to sound too sympathetic, No, I

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Speaker 1: don't mean mean to be uh to ask you to

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Speaker 1: feel an overwhelming amount of empathy for them. These are

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Speaker 1: very specialized problems. I was I was in one billionaire's

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Speaker 1: apartment about a month ago, and I won't to tell

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Speaker 1: you who it was, but he was he was obsessed,

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Speaker 1: um with trying to figure out how to pass his

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Speaker 1: international company onto his heirs in this tax efficient way.

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Speaker 1: And that's one of those things that you really see

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Speaker 1: occupying their thoughts. Your your your normal person is trying

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Speaker 1: to figure out how to stock away enough for retirement

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Speaker 1: and and for them, it's how do I take everything

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Speaker 1: I've sucked away and pass it on to the next

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Speaker 1: generation of familial ownership. How many billionaires have you met

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Speaker 1: in your life? Uh? You know I I've been to

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Speaker 1: conferences where there's there's dozens of them. So at this point,

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Speaker 1: your who's my favorite? There's a really colorful character out

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Speaker 1: in Brooklyn. His name is David will lent Us. He

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Speaker 1: essentially built the neighborhood of Dumbo, this uh chic industrial

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Speaker 1: neighborhood right on the water. And he's this really crass, funny,

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Speaker 1: brash guy. Who who Who's the first to admit that

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Speaker 1: you do not have to be a genius to make

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Speaker 1: it in real estate. And I find I find his

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Speaker 1: honesty very very um exciting and new, and as far

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Speaker 1: as billionaires go, he's the sort of guy you can

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Speaker 1: talk to and don't feel like you're talking to an alien.

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Speaker 1: Tell us more about your job, what do you do

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Speaker 1: every day? More often than now we are we are

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Speaker 1: not meeting executives. We are not meeting billionaires. That's not

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Speaker 1: what our day and day out looks like. It does

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Speaker 1: happen sometimes, and and that's that's fun. But normally people

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Speaker 1: are not particularly interested unless you're talking about, say Donald Trump,

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Speaker 1: uh in talking about what they make or how much

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Speaker 1: they're worth. So we spend a lot of our time

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Speaker 1: talking into off the record sources, former employees, insiders, going

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Speaker 1: through documents, making Foyer requests to the government to unseal

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Speaker 1: certain documents or acquire certain documents that help shed light

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Speaker 1: on these massive fortunes that are at the center of

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Speaker 1: you know, the world economy. You've met Donald Trump, right, yeah,

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Speaker 1: a few times now, and he's called you what was what?

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Speaker 1: What was that that he called you Donald after we

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Speaker 1: published a story, said Donald, Mr Trump, after we published

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Speaker 1: a story putting his net worth at two point nine

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Speaker 1: billion came out in in the Daily Mail, and he,

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Speaker 1: according to the Daily Mail story, said I was a

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Speaker 1: dopey kid and wet behind the ears. Sounds that right, Yeah,

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Speaker 1: he's He's not not a guy who who takes slights

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Speaker 1: light lightly. By the way, how much what is Donald

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Speaker 1: Trump's network earth compared to the approximately ten billion that

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Speaker 1: he has self reported to the media, So we we

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Speaker 1: put him at two point nine billion as opposed to

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Speaker 1: that ten billion, and uh, one really big way to

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Speaker 1: account for a large part of that gap is the

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Speaker 1: three point three billion he ascribes to his brand value

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Speaker 1: that he considers like it a line item all onto itself, um,

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Speaker 1: which is certainly a really special asset to have. And

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Speaker 1: when we talked to experts, we uh they said that

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Speaker 1: for like his uh, you know, collection of golf courses,

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Speaker 1: there is a Trump premium. It means something to play

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Speaker 1: golf on a on a Trump course, and and that

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Speaker 1: that's applied to our valuation of those golf courses. But

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Speaker 1: when you look at certain things like say Trump Tower

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Speaker 1: here in New York, a lot of that is condos

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Speaker 1: that he's since sold off long ago. So you see

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Speaker 1: that huge skyscraper you assume it has to be worth

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Speaker 1: a lot of money, and it is, but there's actually

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Speaker 1: hundreds of other people that have sentach chunks of what

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Speaker 1: what a skyscraper like that is worth? And what would

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Speaker 1: you say that your brand value is, Caleb, my my

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Speaker 1: brand value is? I mean, can I get a Chipotle burrito? Yeah? Man,

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Speaker 1: after my own heart. So, Caleb, you and I have

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Speaker 1: talked about this a little a little bit last week,

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Speaker 1: but I was chatting with a friend and he actually

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Speaker 1: got a little a little hot and bothered because some

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Speaker 1: of your colleagues, all of our colleagues, broke this news

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Speaker 1: about a Walmart air being twenty seven billion dollars poor

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Speaker 1: than everyone else thought. And he was mad because he

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Speaker 1: basically said, I mean the like the cliff Notes version

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Speaker 1: is we're being nosy. Why does it matter they're still billionaires?

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Speaker 1: And why would we like splash this all over the

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Speaker 1: front page of our website? So rude, et cetera. Um,

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Speaker 1: there's no journalistic value in this. What is the journalistic value?

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Speaker 1: It's a fair question. And is somebody who when he

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Speaker 1: was in college imagined he'd be writing album reviews his

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Speaker 1: whole life? Uh? I like, I I definitely sympathize with him.

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Speaker 1: But the report that David DeYoung and Tom Metcalf put

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Speaker 1: out on Christie Walton and her son Lucas Walton, I

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Speaker 1: encourage anybody to go out and read it. And the

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Speaker 1: question as to what news value this has, I think

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Speaker 1: becomes once you get past that headline number pretty relevant.

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Speaker 1: I mean, you have this family that controls what is

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Speaker 1: currently I believe, like the third the second biggest company

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Speaker 1: in America UM, and how they divvy up that fortune

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Speaker 1: and how they control it, and in turn, how they

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Speaker 1: control Walmart Company, I think is inherently newsworthy. And as

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Speaker 1: you dig farther into that story, what David and Tom

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Speaker 1: uncovered was this fascinating estate structure that helped UH John Walton,

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Speaker 1: Christie's UH now deceased husband, essentially cut his tax bill

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Speaker 1: in half. So when we're talking about policy in terms

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Speaker 1: of income inequality, we we need to look at the

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Speaker 1: decisions we've already made as a nation in terms of

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Speaker 1: the options available to the super rich for passing these

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Speaker 1: fortunes on. You know, because one, once you you move

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Speaker 1: past that five million estate threshold, big taxes start to

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Speaker 1: kick in, and yet we still have all these loopholes.

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Speaker 1: And I think if you droll into that story, beyond

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Speaker 1: the fact that there's this guy who nobody has really

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Speaker 1: ever heard of or talked about, Lucas Walton, who has

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Speaker 1: most of what we thought was his mother Christie's fortune,

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Speaker 1: what you see is this really interesting passing of the

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Speaker 1: torch that helped avoid a lot of taxes for the

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Speaker 1: Walton family. You know, I think this really comes down

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Speaker 1: to the fact that it's really hard to know how

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Speaker 1: much everyone's wealth is. You know, wealth is different from income.

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Speaker 1: Income is what you make every year, but wealth is

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Speaker 1: the amount of money that you accumulated over a lifetime.

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Speaker 1: It's all over the place, often in multiple countries if

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Speaker 1: you're a rich person, the way many of Caleb subjects are,

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Speaker 1: and so it's really it's it's not a very transparent universe.

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Speaker 1: That's why I think your team, Caleb is really cool,

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Speaker 1: because you're bringing more transparency to this space. Yeah, and

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Speaker 1: I mean we I've talked to readers about our stories before,

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Speaker 1: and some of them are just interested in those big numbers.

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Speaker 1: Some of them are interested in those entrepreneurial stories. Some

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Speaker 1: of them are interested in those, uh, the tax strategies,

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Speaker 1: the way they allocate that wealth like you were describing Aki,

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Speaker 1: and probably for our readers, like keeping up with the

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Speaker 1: Jones is to like how close am I think? Absolutely?

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Speaker 1: How how close am I I could be them? Um?

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Speaker 1: If you dig into any major wealth story, there's almost

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Speaker 1: always some element of luck, which I think keeps us

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Speaker 1: all reading because we always hope that maybe we could

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Speaker 1: have that. Especially in the era of tech startups with

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Speaker 1: Unicorn and valuations, we're all kind of hoping that we

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Speaker 1: have that next billion dollar idea, right. But I feel

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Speaker 1: like in today's society, if anything, people feel like they're

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Speaker 1: even farther away from that goal of becoming rich than

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Speaker 1: I don't know, maybe people fifty years ago. I feel

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Speaker 1: like that sense of the American dream really went down

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Speaker 1: the toilet in two thousand eight. Yeah, I get that

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Speaker 1: sense too. But what what? What's interesting, only only ever

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Speaker 1: having done this beat post two thousand and eight, is

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Speaker 1: that um hunger for these these stories hasn't gone away

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Speaker 1: for one reason or another. UM either because it feels

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Speaker 1: so far away and so foreign, almost like it's a

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Speaker 1: fairy tale. Maybe that's the case, or maybe there's something

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Speaker 1: aspirational in it, but readers keep on keep on company

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Speaker 1: these stories and droves. Well, here's hoping that we all

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Speaker 1: have the luck to be millionaires and billionaires one day.

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Speaker 1: Or Caleb, if you're the one who makes it, that

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Speaker 1: you share some with me. I have preferably in chili potel.

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Speaker 1: I have some ideas right now. If Mark Andreason is listening,

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Speaker 1: I'd love to pitch him. Thanks again for listening to

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Speaker 1: Bloomberg Benchmark will be back again next week. Until then,

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Speaker 1: you can find us on the Bloomberg terminal and on

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Speaker 1: Bloomberg dot com, as well as on iTunes, pocket cast,

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Speaker 1: did your Google Play and all those great platforms. And

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Speaker 1: while you're there, please take a minute to rate and

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Speaker 1: review the show so more listeners can find us and

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Speaker 1: let us know what you thought of the show. You

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Speaker 1: can talk to and follow us on Twitter at at

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Speaker 1: Tori Stillwell at A seven and for our very special guest,

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Speaker 1: Caleb at Caleb Melby. See you next week. This episode

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Speaker 1: was brought to you by nat X. You know, any

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