Ain't capitalism grand?

 
The Journal has a fascinating story of a man who had a really, really good 2007.

Hedge fund manager John Paulson pulled down an estimated $3 billion last year ($4 billion, according to some accounts) betting that banks had done a poor job underwriting real estate loans. He correctly figured that the valuations of real-estate investment vehicles like CDOs (collateralized debt obligations) were vastly overblown. The result for his investors? One of Paulson's funds returned 590% in '07.

For those who complain about "income inequality," I pose a simple question. Would it be better for a Saudi Arabian prince or a Chinese General to have made those risky wagers? Or is it better for a smart American to have created a successful investment firm and returned incredible results to his investors?

Income inequality is the fantastic byproduct of free-market capitalism... and those who oppose it would do well to move to Cuba to immerse themselves in an alternative model. In fact, the more income inequality, the better. Bill Gates pulled down tens of billions of dollars by creating Microsoft, and thereby helped make the U.S. a tech behemoth in the process.

Of course, no one tell Paul Krugman any of this. He's not exactly the sharpest tool in the shed, so it's bound to confuse him.

Update: In October, Paulson also gave $15 million to the Center for Responsible Lending, which assists families facing foreclosure.