The Lakers and Other Paradoxes

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A few random thoughts from the week:

– Sympathies to the owners and managers of the Los Angeles Lakers, who last week had to cope with Kobe Bryant’s public grumbles of dissatisfaction. (First, the Lakers get rid of star player Shaquille O’Neal, partly at Bryant’s urging, then have to deal with Bryant’s whining about how the team is weaker now that the Shaq is gone.)


Granted, the Lakers could have handled the entire matter better. Still, dealing with a disgruntled star employee may be any manager’s toughest personnel problem. There is seldom a graceful way to settle such a matter. About anything you decide will be criticized, and at least one faction of the other employees will be upset no matter what you do.


– The Los Angeles City Council’s impulse to impose rent controls on most apartments that are built to replace old rent-control apartments points up the futility of the entire rent-control exercise. Of course, the City Council’s desire is to maintain as many affordable apartments as possible, but discouraging apartment owners from building new apartments seems contrary to that goal.


– After the Business Journal published the annual list of Wealthiest Angelenos, which appeared in last week’s edition, a television reporter asked me what stood out about the list and what we could learn from it. A good reporter’s question prompts you to rub your chin.


I scanned the list and it occurred to me that, for the most part, the wealthiest among us are self-made entrepreneurs. Sure, a privileged few were handed immense family money or well-established enterprises, and many were brought up in comfortable houses that allowed them to go to good schools and get a big jump on success. Still, the United States, unlike many other countries, doesn’t have many intergenerational family fiefdoms that are off limits to those in lesser castes.


Indeed, many on the Wealthiest Angelenos came from reasonably average backgrounds, and some were poor and immigrants. They started businesses, successfully managed them, sold them and started or bought others. To me, at least, looking over the list and seeing such names as Kerkorkian and Udvar-Hazy and Saban is a reassuring reminder that the system works, that this is a place where talented, driven people of modest upbringing can literally make a fortune.


-S peaking of wealth, my favorite article of the week was in Barron’s and headlined “The Great American Savings Myth.”


You’ve probably seen articles in recent years about how Americans are saving less money than ever. In fact, the savings rate has turned negative recently, meaning we’re collectively spending more than we’re earning. It’s a crisis. We’re going to die broke, yada, yada. That all makes for alarming reading.


Trouble is, it’s very misleading. The quaint way the government statisticians count savings does not include most capital gains. Throw in the value of homes and the value of stocks, etc., and household wealth has never been greater than it is now. And it’s been rising fast.


Barron’s broadened the definition of savings, did some calculating, and figured the real savings rate is alive and fine.


This does not equal a get-out-of-jail free card. Most people need to save more for retirement. And some at the bottom truly have no savings of any kind. But the good news is, there’s no widespread middle-class savings crisis.



Charles Crumpley is editor of the Business Journal. He can be reached at [email protected].

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