The Parable of the Talents, updated for the post-Bush era

[jmowreader]

In the Book of Matthew we learn of Jesus' Parable of the Talents. Jesus told of a hard man who was going on a long journey. This hard man had three employees. He called them before him and granted one five talents, another two talents and the third one talent.

After a period Jesus didn't really discuss, the hard man returned and asked for an accounting. The first man had invested his five talents wisely, and doubled them to ten talents. This of course was seen as a good thing. The second man also invested his talents, and doubled them to four. The third, knowing what an asshole his boss was, stored his talent for safekeeping. The boss had this employee's ass kicked, took away his talent, fired him and had him hauled out into the woods.

Fast forward two thousand years. The modern hard man grants his three employees seed money in increments of thousands of dollars, since talents are no longer used as currency. One employee receives $5000, another $2000 and the third $1000. At the accounting, many years later...

The first employee came forth with a sad look on his face.
"I knew you would want a very large return on your money, so I invested it all with Bernie Madoff."
The boss put his head in his hands. 'Oh God. Tell me everything.'
"After the first three months I had doubled your money to $10,000. I thought you'd like this, so I reinvested with Mr. Madoff's Silver Excellence Fund, and doubled that to $20,000. He then offered to put me into his Gold Elite Fund, but the minimum membership fee was $100,000, so I mortgaged my house to raise the additional $80,000. Eventually, Madoff's whole Ponzi scheme collapsed. Sir, there are two refrigerator boxes in the alley behind your mansion. Please don't remove them, as my family and I are living in them."

The second employee was even sadder.
"Sir, I knew Bernie Madoff was a crook, so when he offered to double your money I ran like hell and invested with a company called AIG."
'Okay, that's two pieces of bad news today, but tell me what happened.'
"I invested the $2000 with AIG in something called a Naked Credit Default Swap. Next thing you know, I'd run your money up to $10,000. Another investor called me up and offered me a chance to get into naked short selling."
'What the hell is naked short selling?'
"It's selling stock you don't own. The guy made it sound like a really good way to make money. Anyway, I started naked-shorting Bear Stearns stock. Bear Stearns collapsed because of all the naked shorting, and the SEC really got pissed. They found out all the people who were doing it and brought them up on charges. Fortunately for me, I made sure to put your name on the documents instead of mine. You have an appointment to report to prison next Wednesday."

The third employee was less sad than the other two. FAR less sad.
"You only gave me a thousand dollars. You can't do anything really creative with only a thousand dollars, so I didn't, at least not at first."
'Well, what did you do?'
"I bought a 90-day certificate of deposit. It made fifteen percent, so when I cashed it out I had $1,150."
'I can live with that. What did you do next?'
"Ninety-day certificates of deposit sounded like a good idea at the time, so I just rolled the money over into new ones. Eventually I'd doubled it."
'That sounds decent. Did you do anything else after that?'
"Of course I did. I found out about Joe's fraud, where he recorded your name on his short selling documents. That wasn't very nice, so I found a lawyer who works really cheap and paid him $500 to have Joe's transaction tickets amended. Now Joe's name is back on them where they should be, and you don't have to go to jail anymore. Joe, they're looking for you. Moving to Paraguay might be a good idea."
'Very nice of you. But did you do anything else to make money?"
'Of course. I had $1500 left after getting you out of trouble. Someone put a really used hot dog cart on Craigslist for $500. I bought it, spent $100 to clean it up, and bought $400 worth of food to sell in it. Then I gave it to my wife and had her find a really busy street corner to set up in."
'What about the other $500?'
"I held onto that as working capital."
'This is sounding better and better all the time! What else did you do?'
"You know how much money a hot dog cart makes?"
'No.'
"Let's just say it's substantial. Eventually I had enough money to buy five more carts, and then a few roach coaches. I used the money these made to buy 30 percent of a meatpacking plant. After six months, I bought the rest of the plant because the owner was ready to retire. Of course, I kept expanding the number of hot dog carts I had. Eventually I got tired of the poor quality of the Chinese ones I was getting and opened a factory to build them. I think you drove past it on the way in here."
'So now you're a meatpacker?'
"No. One afternoon, a man in a suit bought one of my hot dogs from one of the 400 carts I've got in sixty-three American and five Canadian cities."
'FOUR HUNDRED?'
"Yeah. Pretty cool, huh? Anyway, the man loved the taste of my hot dog and gave me his card. You ever hear of some outfit called ConAgra?"
'Uhh...you mean the biggest food company in the world?'
"Very much so, although I didn't know it at the time. Anyway, ConAgra paid me $65 million for my three meatpacking plants, my network of hot dog carts and the four distribution centers I had. They didn't want the hot dog cart plant, so I kept it and expanded it to make truck bodies and fiberglass church steeples. Steeples are really good to me--we're shipping 200 a month. I also got named assistant vice president of new product development at ConAgra. I have three products in production right now, in addition to all the meat products ConAgra bought when they took over my plants, and two more entering production at the next new-product cycle. One of the three is on that plate in front of you."
'What did you do about Joe and Tom?'
"Well, Joe's on the run from the authorities for destroying Bear Stearns through financial malfeasance, or he soon will be. As for Tom, I figured anyone who'd invest with Bernie Madoff is too stupid for me to employ, so he's still on your payroll. Sorry, boss."
'And what about my thousand dollars?'
"I spent it on a huge party after ConAgra bought me out. Instead, I got you 10,000 shares of ConAgra common. It's throwing off a 19-cent-per-share dividend, so every year you should get a check for $1900. Sound good? Look...I'm thinking about building a 175,000-square-foot organic tortilla factory in Los Angeles. You want twenty percent?"

The morals of this story are three:

1. Those things which sound too good to be true, sound that way for a reason.
2. Crime does not pay, except maybe if you're a Bush and there were no Bushes in this parable, sorry.
3. A well-planned strategy of hard work and investing in wealth-creating industries will always create higher returns over the long run than gambling on wealth transferrence.