Joel was, by his own admission, a smart ass. But let’s start at the beginning.
His mother, surrounded by her friends or family, often started her humble boasts with “My Joel is such a smart ass,” dragging out every word to make sure the listeners were on the edge of their seats to hear the latest ruses, sharpened insults of authority and vile sarcasm aimed at high and low alike, bequeathed to humanity by her beloved progeny. By the time he was eight he adopted the moniker himself and boasted about it to all who would listen. Bullies gave him a playful shove just to hear their families demeaned in the most outrageous language ever heard at a middle school. Even smaller kids were treated to pranks too numerous to count, yet they considered themselves lucky to have been thought of, to have been included in the constant upheaval which followed our hero, the illuminati of smart ass, Joel Pushkin.
His father Frank was not a fan, to be honest. He’d grown weary of the boy and his behavior before the boy’s tenth birthday; the taunting, the bawdy jokes at his expense, the flagrant disrespect, it was too much. Joel, grabbing his crotch, welcomed his father home from work with a “hey toadie, d’you manage to make yourself useful today?” Joel’s mother, the man’s wife by law, though she said nothing, appeared to share the same harsh opinion of their ‘old man’. She grabbed the paper bag out of Frank’s hand and upended its contents, cash in all denominations, onto the kitchen table. This is how the family survived, even flourished; through the generous donations of Chicago’s drug gangs, for which the old man proffered legal services. Mom, or Joyce, arranged the bills in stacks by denomination and then counted it all twice and put the totals into a ledger she kept on the counter. In one column was the amount they would declare to the IRS, and in the other was the ‘skim’, as Joyce and Joel referred to it. Joel, in addition to his finely tuned tongue, was also quite slick with the hand and always managed to pinch a $20 during the counting ritual.
On the rare occasion that the old man entered without a sack of cash, he received pretty rough treatment. Insults from the boy buzzed him like a swarm of bees, while Joyce glared disapprovingly, not at the boy of course, but at Frank. From time to time while indulged in creating an original barb the boy lost track of Frank and the old man would clock him with a knuckle. These hurt like the dickens and actually made the boy shrink away silently while Mom protested “we’re calling the police, we’re calling the police.” Of course she never did, how could she explain it all?
After the counting and accounting exercise, Frank headed upstairs for a shower, trying to remove some of the accumulated scum with a washcloth and a bar of soap. Meanwhile Joyce and the boy decided what they wanted to eat and ordered dinner. After dinner was delivered and scarfed down, the house relaxed a bit. They all went their own way, each with a screen and their own entertainment.
High school saw Joel settle down considerably, since by 9th grade the spread of size among the boys grew from a little to a lot, and Joel was on the low end of the curve. He continued to practice his smart craft against those he could outrun, like the linemen of the football team, whom he addressed while MCing a pep rally with “here they are, the fat asses just keep getting bigger, well, that oughta help ‘em out in prison.”
The one thing the smart ass lacked however was smarts, real smarts. He got by his classes with as little work as possible, but was not a student who took calculus and physics. He barely passed algebra and biology. He could throw together a paper on most any topic in an afternoon, and receive his normal B- or C. But he was not top school material.
After graduation with little idea of what came next, and with his captive audience in the cafeteria or the gym stands at school now thrown to the winds, Joel found himself in a quandary: What to do? After seeing his son through high school Frank moved out along with his tattered paper sacks of hard cash. Joyce got some alimony but since they had always shown the very minimum of income in order to avoid taxes, her take was not that to which she had become accustomed. Joyce got the house but decided to sell when homes in the neighborhood started to fetch unreal prices. Her new studio apartment in a high rise a few blocks from the lake’s shore seemed to Joel like a senior living arrangement, and he was not accustomed to couch sleeping. For her part Joyce tried to make inroads into her building’s social network and became less enamored of her son’s special talents after Joel gave a performance to rival Don Rickles when he ran across her card party one afternoon.
Eventually, Joel managed to find a job as a clerk in a start up hedge fund, Polity Investments, LLC, because he was willing to work for next to nothing in the founder’s basement. On the face of it the hedge fund was not a difficult business model to understand. They recruited high net worth individuals to invest and all the investments were put into a ‘fund’ with a specific investment objective. At the same time they heard pitches from businesses that sought investment, from real estate developers, entrepreneurs with great ideas, etc. Even Joel eventually understood what the hedge fund was all about.
Joel also started to take two classes at a local business college that had no entrance requirements other than a certified check, which Frank provided purely out of a sense of parental responsibility. But Joel was “out on his ass,” as he described it, after the card party brush up, so it was with heavy heart that he showed up at Frank’s new place, a two bedroom townhouse in a suburb adjacent to the one in which he grew up. At first Frank talked to him through the screen door, and then finally he let him in and they talked mano a mano in the living room for at least fifteen minutes, more than they had conversed ever, in either of their memories. There were rules to be followed in the townhouse; it wasn’t going to be a repeat of Joel’s childhood home. Frank was, by virtue of his trade, well acquainted with life at the bottom, and it was this knowledge that pricked his conscience enough to have him offer a room to his son.
Joel’s job at the hedge fund involved recording trades in a giant spreadsheet that the founder Alan had put together. Joel did not understand the spreadsheet and did not want to understand the spreadsheet. His job was to take an order and execution sheet and record certain numbers in certain cells of the spreadsheet; the sheet did the rest. He recorded a number and hit Tab or Enter and cells all over the sheet lit up with numbers. At first Joel worked on the sheet with kid gloves, afraid of making an error and causing the whole operation to start flashing red lights. But over time he did make errors which he found were easily correctable; the spreadsheet, now less forbidding, was just a daily function.
Over time Joel also took on the task of writing the fund’s brochures, prospectuses, investment decision descriptions, email newsletters to investors and PR wires for the financial press. This was right up Joel’s alley, and he became quite proficient at it. Alan appreciated the effort as well and Joel received a few raises and small quarterly bonuses. The two became colleagues, not friends really, since neither ever had or wanted friends, but work colleagues, men who could talk together about hard facts, net gains and losses, trades made and passed on. It was a real education for Joel and he started to think this was a future.
Over time he came to understand that the special sauce, as Alan called it, of this particular hedge fund was that it only invested in schemes, companies and ideas that had significant government involvement. When approached to invest in a real estate company’s new development, for example, Alan would question and probe the other side to understand if they had signed any government entity to a lease, or if the government had thrown in tax rebates, low interest loans or agency grants. At first the developers would try to explain that yes, they did have some small government interest, trying to soft sell it. But as Alan probed they would eventually realize that he was hedging his investment on the government’s overall stake in the development. At this point they would fairly shout a resounding YES, they had this or that government department signed to three floors in one building, had a sizable no interest government loan, a new highway exit and entrance ramp to their parking lot, and a grant from some agency or other and tax abatements. Alan would smile broadly at ‘abatements’, relax into his chair, and ask to see all the government agreements as soon as possible, and give the developers the “if everything I’ve heard rings true this looks like an excellent opportunity” line.
At the same time he was gaining street level understanding of investment, Joel was also studying econ at school. He came across the term ‘rent seeking’ and the more he read about it, the more it very aptly described the hedge fund, or at least the investments of the hedge fund. “The fact or practice of manipulating public policy or economic conditions as a strategy for increasing profits” was the textbook definition, and anyone with an imagination could see all the ways rent seeking in reality might transact.
He brought this up to Alan one day while they ate lunch. It irritated Alan, who was often irritated about one thing or another, but only because the definition no longer adhered to reality.
“It not like we are rent seeking by that definition, I mean I have no ability to manipulate anything, nor do I want to” Alan started. “And it’s not like the schemes we invest in are manipulating public policy either. The real estate developers don’t call their congressman when they want help, the congressman has already provided everything he possibly can to help the developer. And not just the congressman; the entire apparatus of government has made ‘rent seeking’ by that definition obsolete, from the money printers at the Fed, to the state, county and municipal government economic development agencies. Look, they have formally adopted all manner of this so called ‘rent seeking’ into law, policy and practice. The only question is does the business or scheme that approaches us have the wherewithal, the talent and skills, to grab all this munificence and make a profit from it? Well, if it doesn’t, then poof, it’ll be gone soon enough, because its competitors have those skills and no qualms about using them.”
We have those moments in life when the light goes on, a conversation or even a chance encounter provides us with a moment of dazzling clarity. This was such a moment for Joel Pushkin. From that lunch forward, he listened ever more attentively to the pitches made to the fund by those who needed investment. Likewise when the fund presented itself to wealthy individuals who wanted to secure the largest returns on their money as possible, Joel became adept attesting to the fund’s ability to find those investments with the greatest government involvement, and therefore the greatest probability of success and high returns at low risk. And he never used the term “rent seeking,” as it was considered a lowbrow activity, just above drug dealing in the eyes of the elite investment class. He also took very careful “high resolution notes,” as Alan called them, during investment pitches, noting government involvement in every scheme with as much detail as he could derive from the discussion.
During this period the fund started to do well, very well. They no longer rented temp office space for meetings and instead moved into a nice, adequate office halfway between downtown Chicago and O’Hare Airport. “We’re not billionaires yet,” Alan was fond of saying, “but we could be!” Joel was also thinking about his future. He’d finished a year and a half of business college and even talked to a recruiter at a local university about admission. The university would not accept any of the credits he earned at the business school, and Joel was not going to start over again from zero. The government funded university wanted a full four years before handing out a diploma, and, by law, admissions were at their discretion.
While at a bookstore near the university, where he compared the textbooks they used to the ones he knew - very nearly the same, or in some cases exactly the same - he came across a whole case of books for Dummies, comprising a range of topics. Just for fun he looked to see if there was one for Rent Seeking. But of course there was not, and then he stopped grinning about it and stood straight up, looking forward, and thought “that’s the ticket.”
The idea of writing a book bounced around his head and oddly enough he mentioned it to his Dad Frank one Saturday afternoon. “You should go for it,” Frank replied, without hesitation. “That could be a very interesting book, informative and even hilarious in a way. Most people have no idea what their government does everyday.”
Joel got to work that night, laying out an outline in a spreadsheet, to which he added lines in between other lines at a quick pace as the ideas rolled out of his head onto the screen. He remembered there was a book about coffee tables that unfolded into a coffee table. This led him to the idea that a book about rent seeking should itself do some rent seeking. That night and over the next few months, whenever he was not writing, Joel set himself the task of researching all available government handouts for business, from grants, to low interest loans, to free legal and technical expertise, to tax rebates and abatements.
The hedge fund’s new offices had started to fill up by this point. Alan hired a head of legal, a corporate lawyer who got bounced out of big firm when his drinking went too far. Jimmy got dried out and Alan, an old friend, decided to give him another shot, and of course Jimmy would cost less than half the firm’s outside legal fees. There was also a receptionist, a dark haired girl with bright green eyes named Madeline, and a head of contracts hired. The gang of five as Joel called it became the little fund that could. The special sauce started to find a real market; high net worth individuals had their accountants call and request marketing materials. “Yes, add us to your database and let us know when you’re going to start another fund,” was the general sentiment. Meanwhile, the firm had so many companies looking for investment that Alan had Joel do a phone interview first and then they would decide who to invite to pitch to the firm. When a company came to pitch their scheme the fund now had four members in attendance, a sign not only of its growth but also it maturation as a money manager.
The book didn’t take long to write, as Joel had all the notes from all the meetings he’d attended. He had an excellent first draft and even help from his colleagues at work. Alan was 100% behind the project because Joel’s bio on the back cover would include the words Polity Investments, LLC. One problem was what to title the 250 pages of all the known ways to involve the heft of the government in your profit making scheme. “Rent Seeking” had some panache, but again it seemed lowbrow to all who considered it. Finally Maddy the receptionist came up with “government profits, you know, for dummies.” This was received enthusiastically by the whole team. Meeting adjourned, they all left with a spring in their step and a glow in their mercenary hearts.
Joel walked away with an especially bright glow; Maddy’s “Government Profits” was just the ‘in’ he was looking for, and by the end of the day she’d agreed to dinner with Joel as a small thank you for her contribution.
Once Joel had a first draft he got in touch with the dummies publisher and they pounded out a deal. There were still lots of little details to consider, and they worked Joel to no end on edits and rewrites. But the important thing is that he had a book contract in hand that he could use to apply for a wide variety of government handouts. But he also needed to be a company to really take advantage. He was all set to incorporate himself when Alan offered him the use of Polity Investment, LLC. “No worries,” Alan said “just use our limited liability corporation, make it simple.” This turned out to be a boon for the book’s rent seeking opportunities since many government officials knew about Polity Investments, LLC from previous work.
Joel’s book contract awarded him a retainer of $24,000 to be paid if three installments of $8,000 each. When the book ‘hit the shelves’ he would earn 16% of wholesale sales to be applied to the retainer. When the retainer was met, Joel would receive the 16% of sales as a quarterly payment. The whole team laughed at the contract, “small potatoes” Alan called it. Joel was a little hurt by Alan’s frankness, but then the government largesse started to roll in. It wasn’t long before Joel had $250,000 in grants for the book, and Alan had more tax abatements and rebates than he knew what to do with. The government was thrilled with a book about all the hard work the government did and all the money it handed out to boost the economy.
On publication day, three cases of the book arrived at Polity’s office by UPS. They had a Prosecco toast that afternoon after the phones stopped ringing, and Alan made a light but heartfelt speech about how Joel had grown with the fund’s help. Joel took a few copies home and his Dad Frank nearly stopped breathing he laughed so hard at Joel’s newfound wealth and the story of the book’s beginning and its fulfillment, now in his hand.
After dinner, and after Frank had a cocktail and glossed through the book he said to Joel “You know my father raised us, his family, in a completely different world. Back from WWII he had the GI Bill for nightschool, but that was it. He built the rest of his life with his weekly paycheck from the A&P Grocery chain. Of course, back then there was no city or state income tax, property taxes were next to nothing, a man with kids paid no federal income tax and social security was 2% split between the employer and the employee, but of course everyone knew the employee paid it all, but still…now the combined taxes for a wage earner is 60% or more after you consider it all, including the 10.25% Chicago sales tax. Imagine one tax fives times greater than what my Dad paid total. On the other hand, the government taketh, and the drug gangs giveth I guess. They’re not the brightest bulbs on the tree, but they did figure out that wage earning was not life sustaining, much less lucrative.”
“Well, be that as it may,” replied Joel, “I’ve got to get ready for tomorrow morning.” Some government guy had gone on a morning talk radio show and brought up Joel’s book as the not only “the bible for 21st Century business” but a “paean to America’s can-do spirit!” The phone at Polity rang off the hook with requests for comments and appearances. Tomorrow it started and though Joel was all set to prepare himself for the interview, he had no idea how to prepare for a book interview. He paged through the book again, which was helpful as it had been almost ten months since he wrote some of the chapters. He also thought to rough the book up, bending back its pages and making a little tear and creases in the cover, so that it looked like even he was using it as a rent seeking bible.
Radio, then newspapers and finally TV appearances; the story was too good to pass up for the media: “He can’t drink legally yet, but this kid knows how to make a profit,” was typical of his TV talk show intros. There were a few newspaper columns about whether it made sense for the government to be the economic intermediary for business, but overall people were incredibly enthusiastic about the whole scheme. What’s not too love was the general sentiment, boy meets government and gets rich? Who doesn’t want to hear a feel good story like that? And the punchline, wow, that really killed when the host announced that “the book was not only about government profits, but it made a government profit of $250,000!” The station crew held up the “Applause” and “Standing O” signs then, and the place would light up.
Light up? So did book sales of course, with all the publicity. Two million and counting even before holiday sales, and then the Spanish language edition came out for our Latin friends and the “small potatoes” contract was now gargantuan. Joel was rolling in cash now, but really had no chance to enjoy it. His agent booked anywhere and everywhere. Joel spent so much time in LA that winter that he had a tan he hadn’t even noticed when he finally returned to Chicago.
When he finally landed back at Polity that spring, things had really changed. There were four new investment professionals to screen investment applications and decide which applicants made the cut. Alan spent most of his time with not just high net worth individuals, but also pension funds, unions and large financial institutions, all seeking high returns with low risk, the Polity Investments’ special sauce. Most depressing though was the fact that the receptionist Maddy was now dating one of the new investment guys. Her face told the story even before Joel could say hello. She said, as explanation though he’d not asked, “we really didn’t think you were going to come back,” which Joel thought was very strange. Its meaning hit him when he walked into his office to find his ‘things’ in two boxes in the corner and one of the new investment portfolio managers sitting at a very cool, very new desk. On the phone of course, the new guy smiled and pointed to the boxes and gave Joel the thumbs up.
Likewise, Alan was on the phone but he noticed Joel through the side glass on his office door and waved him in, pointing to a new leather chair in front of his new, very cool desk. Alan hung up the phone eventually, and said “well if it isn’t the boy who can’t drink but knows how to make a government profit? That must have some ride you got on huh? How’s LA man, lots of girls right?” Alan seemed legitimately keen to hear about the girls.
Joel explained that he had to get carted all over the place which took hours in the car on Cali freeways. Then Alan interrupted him and said “look Joel, things have obviously changed around here after you left on the book tour. These new guys all have prominent MBA’s. All I really have open now is a marketing role, like brochures, all that stuff you did when you started. I didn’t think it would be something you’d want now. So look, we owe a lot to the book, I won’t lie, it kind of put us on the map nationally - we’ve got real estate deals from Arkansas to Maine cooking right now - and I want to say thanks and make a contribution to your future….” He walked back around to his desk drawer and pulled out a large pink check for $100,000 and handed it to Joel, who at this point was struck dumb.
“Ok,” was all Joel was able to mutter and then Alan and he walked up front to reception. Maddy looked at him like he was a dummy being escorted off the premises by security. As the door closed Alan gave a wave and said “Don’t be a stranger.”
Joel took the check to the bank. They also printed out a statement for him and he was startled to see his balance. “Who knew a book could be this lucrative,” he thought. If he had only the $250,000 of government profits plus Alan’s $100,000 contribution, it would have been more money than he’d ever had. But now he had multiple millions. That afternoon he had an Italian beef sandwich, a favorite, and then purchased a condominium in the north shore suburb of Evanston. He also dropped by the Post Office to pick up his passport.
Joel never moved into the condo. On a whim, he took a flight to Buenos Aires one day and no one, Frank, Joyce, Alan or Maddy has heard from him since. The book, now several years on, is still a respectable seller on Amazon.
I'm just this far from believing every word.