Hastert slanders Soros: Or, Explaining capitalism to supposed capitalists.

I'm sure House Speaker Dennis Hastert considers himself a capitalist. But, he's not a bright one. According to the conservative Washington Times, Hastert said the following about billionaire hedge fund manager George Soros:

"You know, I don't know where George Soros gets his money," Hastert said on Fox News Sunday. "I don't know where -- if it comes overseas or from drug groups or where it comes from."

By drug groups, Hastert means illegal drug cartels. See, because George Soros believes that we need to legalize drug groups. Capitalism lesson #1 is that drug cartels would hate for the U.S. to legalize drugs. They would all be put out of business by major multinational companies like Altria!

Hastert's angry at Soros because Soros is a big backer of Moveon.org and other groups seeking to get Bush out of office. Still, Hasert asks a good question and so we move onto Capitalism lesson #2: Where does George Soros get his money?

He works for it. Soros is one of the most successful hedge fund managers of all time. A hedge fund is an unregulated investment vehicle that invests money on behalf of wealthy individuals and institutions like public pension plans. I believe that Soros has, in his largest fund, something like $12 billion under management. He is paid 1% of that per year to make decisions about that money. So, gets $1.2 million a year just for that. But since this is a hedge fund, Soros also receives 20% of the profits he makes for his investors. The market was up about 23% in 2003. Let's say Soros didn't do quite so well, let's say he trailed the market and brought in a 20% return in 2003. For that, Soros would have been paid $480 million. For one year of work.

Does a man who makes half a billion dollars a year need to take money from drug cartels? Eh, no. Does Dennis Hastert understand capitalism? Eh, no.