America’s Love-Hate Relationship with Wealth
Published on - November 14th, 2011 (Modified on - November 30th, 2011) (by J.D. Roth) I was on the road for the past two months, first in Chicago, and then in Bolivia and Peru. As always happens, one of the side effects of travel is that I’ve been living in a media vacuum. For the past few weeks, I’ve heard almost nothing of current events.
That means I arrived home to find a strange phenomenon: Protestors “occupying” Wall Street. And Oakland. And Portland. And probably many other places as well. From the little I’ve heard, the Occupy Wall Street movement is trying to draw attention to the power wielded by big banks and transnational corporations. I haven’t had time to read up on the protests, so I can’t comment on the protestors’ motives or efficacy. But even before I begin to research Occupy Wall Street and its offshoots, they’ve given me plenty of food for thought.
While writing about money here at Get Rich Slowly for the past five years, I’ve noticed that people in general (and Americans in particular) have a complex love-hate relationship with wealth. People want to be rich — but they’re suspicious of those who already are.
The Wealth of Others
Almost everyone who achieves financial success believes they’ve done so through justifiable means. They believe they’ve earned their money (or deserve it), and they don’t feel guilty for having it. Too, we’re generally supportive and appreciative of our friends who make it big. (I can think of a handful of folks I know who have managed to acquire wealth, and I’m proud of each of them.) But when it comes to strangers who are rich? Then our attitudes seem to change.
There’s an underlying distrust of the rich in mainstream American society, which seems odd. Isn’t that what most of us aspire to? We all want to be rich, yet we resent it when other people manage to achieve their financial goals. We complain that they had advantages that we didn’t, or that they cheated, or that they don’t deserve the money. But what if the same thing happened to us? What if we became rich? How would we feel about such judgment and criticism?
Take my father, for instance. He was a serial entrepreneur, and managed to build two successful businesses during his short lifetime. He worked hard and dreamed big. He wanted to be rich so that he could provide his family everything they wanted.
One of my father’s many businesses on his road to “riches”…
At the same time, my father bemoaned other people’s success. He didn’t resent everyone who made it big, but he often complained that this fellow was successful because he caught a lucky break or that guy earned his fortune because he knew the right people.
Suspending Judgment
There’s no question that some people have lucked into wealth. I have a friend whose family owned a large manufacturing business; as a result, she’s benefited from a huge annual stipend from her trust. This has turned her into a slacker and layabout. She’s frequently out of work, and makes all sorts of excuses about why she can’t find a job. It’s difficult to be around her.
But at the same time, I know folks who have worked like dogs to accumulate their wealth. I know others who have scrimped and saved for decades to build their savings. Do I begrudge these folks for having a million dollars? Or three million? Hell, no. They’ve earned it. They deserve it.
But there are people who would judge them.
The media demagogues would have you believe that this is a partisan thing. That’s nonsense, of course. Being a Democrat doesn’t necessarily mean you hate the rich, and being Republican doesn’t mean you’re all for the wealthy. (My grandmother was the most conservative person I’ve ever known, and she hated the rich. I have a good friend who is as liberal as you’ll ever meet, and he’s pro-business, pro-capitalism, pro-money to the core.)
But if this love-hate relationship with wealth isn’t political, what is it? Is it a part of our Puritan heritage?
For myself, I’ve decided that I cannot judge a person for being rich. (Well, okay, sometimes I judge, but I try not to do so often.) I’ve communicated with many wealthy GRS readers and chatted with plenty of flush folks in real life. Most of the rich I know are like my real millionaire next door; they’ve built their wealth slowly, though hard work and smart choices.
My point is that in most cases, you don’t know how a person has achieved their lifestyle. It may be that the guy down the street with the large house and the fancy sports car financed that stuff on mountains of debt. Or it could be that he has scrimped and saved, or has worked long hours to build a business, in order to afford these things. Or, yes, maybe the rich guy down the road used to be big banker on Wall Street, sucking small investors dry through onerous fees.
Gates and Buffett, two of the richest men in the world. Heroes or goats?
Who Is Rich? Are You?
You can clearly see America’s love-hate relationship with wealth in the way we self-identify. Nobody wants to say they’re rich. But if you make $100,000 a year, you are rich. Not just by world standards, but by American standards. (The median household income in the U.S. was just under $50,000 in 2010. That means half the population earned less than that and half the population earned more.) I’d argue that if your family brings in more than $75,000 per year, you’re rich. But few people seem to agree.
But let me also be clear that I’m not condemning anyone for being rich. The name of this website is Get Rich Slowly, after all, and my aim is to help all of you destroy debt and build wealth. To me, wealth is a noble aim, especially if it’s used to improve your life — and the lives of others.
I don’t resent the wealthy. I don’t believe that wealth corrupts or that it attracts bad people. (It might, however, magnify your personality; if you’re already a jerk, having lots of money make you more of a jerk.) In fact, from my experience, most of those who have become rich have worked hard and made smart choices. (I can’t say the same for those who were born into wealth, but then I don’t know many folks that match that description.)
I’m not saying that every rich person deserves to be so, and I’m not saying that we should move to a socialist society. I’m just puzzled why we simultaneously love and loathe the wealthy. Is this healthy? Is it normal? Is it just? How do you feel about wealth, both your own and that of others? Do you resent the rich? If so, why? When is wealth deserved and when is it not?
Occupy Wall Street photo by pweiskel08.
GRS is committed to helping our readers save and achieve your financial goals.Savings interest rates may be low, but that’s all the more reason to shop for the best rate.Find the highest savings interest rate from Ally Bank, Capital One 360, Everbank, and more.
This article is about Advanced, Economics, News, Odds and Ends
Disclaimer: This content is not provided or commissioned by American Express. Opinions expressed here are author's alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.
Discover is a paid advertiser of this site. Reasonable efforts are made to maintain accurate information. See the Discover online credit card application for full terms and conditions on offers and rewards.
SEARCH FOR RECENT ARTICLES
In America, although religious discourse is all around us, we don’t realize how much religion has influenced our culture. Even those of us who aren’t religious, accept messages from the Christian and Jewish scriptures without realizing where they came from.
So you raise an interesting point when you mention the Puritans.
A major theme of Reform Christianity (of which Puritanism was a part), is that some people are the “elect” chosen by God. How will you know if you’re in the elect? Because you’re prosperous.
In American culture, we keep coming up against this idea. We want to believe we are special or chosen. But if we aren’t wealthy, we wonder why and look for scapegoats. Or, we assume we will be wealthy one day and defend those who are. I call it Joe the Plumber syndrome.
I personally believe that money itself is neutral.
But as a communitarian, I’m concerned that some people achieve great wealth without concern for the externalities paid by everyone else that allowed them to become rich.
Externalities is an economic term and an important one. If manufacturers produce vinyl products and make a fortune selling them, they can only do so because municipalities and public health systems have taken responsibility for the costs of “cancer alley” where those products are made.
Much, though not all, of the OWS movement is protesting people who achieved great wealth while passing on the costs of their acquisition, the externalities, to the public.
If more people understood that, we’d have more solidarity between regular citizens on the left and the right. Everyone has reason to be concerned about both the benefits and the harms of wealth.
loading....
Reformed theology does NOT teach that if you are part of the “elect” you will be prosperous. Reformers never sought prosperity as proof that they were part of the elect. (Yes, they saw blessings from God, but they didn’t use them as proof of salvation.) Why should they dwell on material gains when their hope is in God and eternity?
The Puritans chose to be content with what they had. Today, society teaches us to embrace our human nature and envy. Buy this new toy because last year’s model doesn’t have all the new bells and whistles. Be the first on your block to own this. Use this product and you will look and feel better. Once you have this product, you will be happy.
But you’re not. Someone always has something better and the reason that you’re not happy must be because you don’t have what they have.
Or maybe you’re that person that everyone envies – but now you’re doing whatever you can to stay on top. So you’re still not happy, and now you’re hurting others.
Do people hate the rich because they have more money? Or do they hate the rich because they did illegal or unethical things to get or keep their wealth?
loading....
In the distant past that may have been the case, but a segment of the evangelical christian movement has embraced prosperity theology since the 50s. They believe that God blesses believers financially. Oral Roberts, Jimmy Swaggart, Jim Bakker in the old days, Bishop Eddie Long, Benny Hinn, Paula White are just a few who embrace this today.
loading....
I don’t think that those evangelists mentioned would claim to be reformed–far from it. That is almost funny. That is the “health and wealth” movement but that is very removed from the Reformed position.
loading....
I grew up in a reformed church, and I have to agree with Susan. We were never once taught that the elect are more prosperous, or more favored by God during their lifetime.
If our pastor had even hinted at that, he would have had a lot of explaining to do!
There may or may not be reformed Christians claiming that the elect are more prosperous, (I’ve never heard it before) but it’s very far from what I was taught.
loading....
Not all rich people have done illegal or unethical things in order to keep their wealth. In fact, I’m willing to bet the majority haven’t.
loading....
If just 5% (nowhere near the majority you posit) of the top quintile have been unethical in acquiring their wealth then that gives us 1% of the entire US population.
loading....
I can’t think of any statement that the Reformed believed that if you were elect you would be prosperous. Do you have any references from writers for this?
I do know our protestant heritage probably is responsible for our American emphasis on hard work and the notion of personal responsibility.
They also believed that taking care of “orphans and widows in their distress” displayed true religion as James says. That is why you have so many religion based orphanages. (Though I believe that other religions also have this emphasis too–this statement does not mean that others do not).
But Protestants (Puritans and Separatists) also wanted to teach their children to read, esp. so they could read the Bible as it was important to them. That educational emphasis has resulted in a lot of prosperity for Americans in general.
loading....
Historically, the doctrine of the “elect” and of material success mirroring elect status was a tenet of Calvinism, not of Protestantism in general nor of the Puritans in particular.
loading....
I would like to see some sort of support for the statement that historically the doctrine of the “elect” and of material success mirroring elect status was a tenet of Calvinism. This is certainly not my understanding of Calvinism, which has nothing to do with material success as far as I know. Beyond statements like this with no reference to any specific calvinist who believes this, I’ve never seen anything indicating that this is true.
loading....
Nowhere in Calvinism, Puritanism, nor Reformed theology is there a doctrine of receiving material reward for being part of the “elect”. Sorry.
loading....
Usually in Spain or Britain people say that we don’t like rich people, but the Americans do. So Instead of thinking “lucky bastard” of the guy in the big Merc we belive the Americans say “one day I’ll drive one”. It seems envy is universal, or western at least.
loading....
Good post!
loading....
Interesting topic, J.D.!
Even though I’d love to say that this doesn’t apply to me, the shoe fits!
We have friends who are millionaires and when we were struggling to make ends meet, I would think, why don’t they help us? They have extra! They’ve always lived frugally, so they could retire early. When we ate at McDonald’s together, they ordered off the dollar menu, but, nope, not us.
Now that our household income is going to pass $100,000 this year, I tell myself that WE are the ones who worked hard to get to this point.
I guess we’re approaching wealthy, but I still don’t feel like it.
Wealthy is a label that always fits someone else, right?
loading....
I find your reasoning to be a bit strange. Maybe its because you have been away from the media and missed some details about the Occupy-activities. Anyway, as I understand them they are not protesting “rich” people (especially as defined by you in the post), but the financial system and the people who have been taking advantage of it. It is partly the externalities that Pamela is writing about, “privatizing” success and “socializing” costs.
They are also focusing on the 1% richest people owning and earning almost all of the growth of the last decades, while the middle class have had the real income lowered during the same period.
For some nice slides with data see Business Insiders informative explanation at http://www.businessinsider.com/what-wall-street-protesters-are-so-angry-about-2011-10
What I find so baffling about what I understand from the discussions in the US can be illustrated by the often used example of the terrible example of my native Sweden. “We wouldn’t want to be socialists like in Sweden”. But Sweden tops almost all country comparisons (sometimes together with the US), like competitiveness, innovation, entrepreneurship, most profitable companies and wealthiest people per capita, etc. Most importantly Sweden has a much higher social mobility than the US*. Basically the American Dream is alive and well in Sweden, not so much in the US. And still these countries with better social mobility are considered a bad example. Strange
* See http://www.suttontrust.com/reports/IntergenerationalMobility.pdf and http://www.economicmobility.org/assets/pdfs/EMP%20American%20Dream%20Report.pdf
loading....
To put it more simply: the occupy protesters are protesting people who have gotten rich at the expense of of others. Those that run legitimate businesses, that help others, provide fair costs and treatments, and don’t exploit people are not the scorn of the majority of the protesters. However, most of the “rich” that are being protested got that way through the exploitation of others, or manipulating the system (see bank bailouts), or Through other means.
loading....
Another good article that clarifies what people are mad about, which isn’t those who get rich through hard work, but those who get rich by cheating – which is what Wall St is basically doing on an industrial scale – is at Rolling Stone:
http://www.rollingstone.com/politics/blogs/taibblog/owss-beef-wall-street-isnt-winning-its-cheating-20111025
loading....
Exactly. Occupy has little to do with “the rich.” It’s not about your neighbor next door having a lot of money. Each person has their own issues, which is why it’s been so difficult for the media to understand the movement, but for me it’s about getting corporate money out of our political system. Citizen’s United is insane. If you think that corporations and unions pumping unlimited money into a campaign is “free speech” you’re crazy. That money and those “voices” will (and have) drown out the voice of the American people. Washington and Wall Street are too close for comfort, and that needs to change.
loading....
Ahhh, but it will be about your rich neighbor next door. Just give it a little more time and as the gulf between the haves and the have-nots widen that is exactly what it will be about. Unless, of course, the moral fiber of the nation survives and people don’t stoop the woeful lows of the OWS crowd. If you have folks down there pooping on cars and speaking anti-semitic language out loud, you know there is a very troubled and ignorant section of society and what will keep that from spreading their sick illogic? Only a strong moral fiber holding it together in the majority of our nation.
loading....
Thank you for this comment. As Mother Jones said, “It’s the Inequality, Stupid!” http://motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph
Most of the Occupy protesters are focused on those that made and maintained their wealth with taxpayer dollars. The millionaire next door is not the 1%. And the wealth of the 1% dwarfs any regional cost of living differences.
The Occupy story also encompassed many larger money issues. I live in DC and walk past Occupy K street everyday – these people are protesting the influence of money in politics. Many Occupy [College Campus] protests are decrying predatory student lending and the generally rotten bill of goods their generation has been sold.
loading....
Exactly. There is a group which claims that the only “people” who deserve welfare are corporations, while simultaneously claiming that the invisible hand of the market should decide for the average Joe. If Joes can’t compete with a factory worker in China, then the market has decided that he should starve (an exaggeration, of course.) When GM and Chrysler can’t keep themselves afloat in a global economy, we bail them out.
We either have to commit to welfare or we have to commit to letting the market decide. If we’re going to bail out a business, then we need to close tax loopholes, and even increase taxes, etc., to ensure there’s both money for that, and for feeding people who lose their jobs to companies overseas. If we commit to letting the market decide, then these poorly managed companies go under and then more sustainably managed companies can take their place.
I’m not saying we should choose one method or the other, but we should at least be consistent across the board.
loading....
OWS was founded by the Canadian anti-ad firm Adbusters. Apparently they believe that marketing products and services for the sake of profit is an evil that must be abolished. If it is done to advance non-profit, collective or Marxist idealogies it is okay and must be supported. I have spent the last few months trying to find out who is financing Adbusters and OWS but the trail is murky. For OWS there is usparliament.org, the new ACORN, Nazis, and several teacher and governmental unions including SCEIU who are helping to publicize and finance this ‘grassroots movement’. Norm Chamskey is held up as an esteemed leader in quite a few committee and blog posts.
During the snowstorm when they were pleading for mittens they admitted that they had about $500k in their coffers. I also discovered that someone had filed for non-profit status. That is when I understood OWS was not an adhoc people’s movement as they claimed and I began to question their motives.
The business owners in Manhatten are staging their own protest today because business in the area is down 20 percent. Trying to force businesses to redistribute their wealth in Manhatten has resulted in laid off workers in restaurants and stores.
Their talking point about representing the 99 percent is not true for me. I made under $20k this year and their vision of life is not one I want for my future.
loading....
‘Norm Chamsky’??
You gotta be kidding me. If you’re going to start throwing accusations and theories around, you could at least try and make sure you know ( and be able to spell) who and what you’re talking about. Sheesh.
It’s ‘Noam Chomsky’.
loading....
A little research can be almost worse than no research at all!
(And that’s not to say anything about the value or effectiveness of OWS.)
loading....
Congrats, you godwinned the thread in 6 posts.
The wiki page on OWS seems like a good place to start. From one of the listed sources, “$485,000 was donated by roughly 8,000 individual, anonymous donors, who gave through the Occupy Wall Street website and in donation boxes around the park”.
If you do the math, on average people are giving $60 each. I don’t doubt their financial situation seems murky when you’re looking for one (or a few) big financial backers who fit your pre-conceived mold of America-haters, because they’re not there.
loading....
Got any links for any of that info?
loading....
Rhetoric. That’s all your comment is…
loading....
http://en.wikipedia.org/wiki/Rhetoric
Just sayin’
loading....
Whoops. My comment got cut off. We associate the word “rhetoric” with empty or meaningless speech, but that’s not what it actually means. Backing up arguments with proof (logos) is a big part of it.
Why do i even bother to mention this? I’m not trying to nitpick — rather, I think people need to return to some of this ancient learning to help navigate the information age.
loading....
Wikipedia is not considered a credible resource. (just sayin’!)
loading....
Wikipedia is a perfectly fine source. Its no more or less definitive than any other. Its certainly more credible than any media outlet.
loading....
Actually, Wikipedia is not a credible source as any one can go in an alter its information. It is in no way, shape or form providing authoritative information. It is a good starting place for further research, but it is not the end place for your research or argument.
loading....
Actually, Wikipedia is an authoritative source BECAUSE anyone can change the information at any time. That means errors get corrected and confusing or misleading information is clarified.
Like any source, it is only a starting point. You can’t take any source as gospel, except maybe the Gospel.
loading....
@Ross, please read over what you have written. Credibility is not lent when something can be altered at any time by any one. Erroneous information can be put into place at any time by any person who chooses to do so. A thinking public should never put their trust on any type of supposed authoritative or scholarly information which can be edited by some yahoo sitting in his parents’ basement. You may nit-pick this all you wish; however, you are brilliantly illustrating why we always teach our students to conduct online research with great care and to always “consider the source” – credibility is everything when making your case (and Wikipedia is never for use when citing in scholarly papers).
loading....
@Chris -
Any changes made to Wikipedia by “yahoos” are recorded and available to users. You can actually see what changes have been made.
There are plenty of “yahoos” out there who publish information on the internet and elsewhere. Who is vetting their information? Usually no one or someone with the same vested interests as the author. If you want to consider information in the New York Times more reliable than Wikipedia go ahead. But it isn’t and the NYT’s errors and omissions usually go uncorrected.
My favorite recent NYT article demonstrating this was a story about market volatility. It suggested that if someone had been away the last three months they would think nothing had happened in the market since it had been essentially flat. A quick look at the S&P that day showed it was up almost 12% the previous three months. There was never a correction and if you didn’t look it up you could have easily accepted the analysis that followed based on that faulty premise.
loading....
@Ross, when did I mention the NYT? Never. Stay on topic! Wikipedia…sketchy…not for use when citations are required…not a credible resource.
Keep your argument tight and focused.
loading....
@chris -
Try to stay focused is right, you apparently lost track of it mid-paragraph. The point was that there are no authoritative sources. The New York Times was just an example of what some believe is an authoritative source. And, unlike Wikipedia, it does not provide the opportunity for real time corrections to mistakes or misrepresentations.
Its fairly obvious you have an irrational distrust of Wikipedia. It certainly needs to be treated, like any other source, with some skepticism. But it actually has far fewer reliability problems than most other sources.
loading....
I think the technical phrase you are looking for is actually “trolling”. And I was going to link to the absolute arbiter of things on the internet, encyclopedia dramatica, but the actual “troll” page on that site was a bit too obscenity laden for me to be comfortable with.
loading....
Moveon.org members and more specifically good ol’ George Soros have contributed much more money than any of the grass-roots influx. Over-the-top, wealthy talking heads/movie stars give this movement thumbs up, President Obama has also praised OWS… yet it was the financing OF Wall Street fat cats that gave then-Senator Obama the financial support to get him elected… so it seems that his conflict of interest goes uncalled out.
And if I’m not mistaken, wealthy movie stars typically only become wealthy from the 99% of us who ‘contribute’ money to their film careers?
loading....
Hm. I think I’m just gonna sit this one out.
loading....
I enjoyed this post too
I admit I have an uneasy relationship with wealth because I grew up with people who were wealthy and people who weren’t.
Two of the attitudes I found the most hard to deal with on the wealthy side were that they were better than blue collar workers and people “from the wrong side of town” and the attitude that you aren’t really “living” if you aren’t enjoying all the finer things in life — gourmet food, frequent travel, expense cars, a big home. You weren’t a success if you weren’t earning big dollars.
I’m not saying that all wealthy people are like that, but I wonder if that’s where some of society’s negative attitude towards the rich comes from — not so much in what they have, but how they treat people beneath them.
On the other hand, if people are envious of the rich, that’s their problem. I think we should all try to be content with what we have and not judge others. (Though it sure is hard sometimes!)
loading....
I think you’re absolutely correct about attitude. There’s a reason that there’s outrage directed at Goldman Sachs CEOs for their incomes but people find Warren Buffet to be a big cuddly teddy bear. It’s because Buffet is very open about his perception of class dynamics between “the super rich” and the “middle class” while other CEOs don’t make that kind of social commentary.
loading....
I don’t hate most of the wealthy but do seem to think that corporations are evil. I do feel that some of the people that run these evil machines are in themselves evil. The people at the top of a corporation will make more in a few years than I will make in a lifetime and they seem to not have any regard to all the lives that they impact with a bad decisions. All that these huge corporation care about is money. Money is not evil but the pursuit of it above all else can be evil.
loading....
Evil? Talk about hyperbolic.
Do you have a cell phone? A watch? A car? A TV? Have you watched a movie? Do you visit websites on the Internet?
All of these are products or by-products of corporations. Try having an Internet without Cisco devices. Try making a phone call from your cell without AT&T or Sprint. Build your own car without Honda or GM or Nissan.
Bashing all corporations as “evil” is obtuse.
loading....
Yes my logic of all corporations being evil is flawed and hyperbolic. This being said the idea of the pursuit of money above all else can not be a good thing. This appears to be the actions I see from a number of CEOs.
I think that your logic of a corporations is good because we use it’s products is sort of like saying we agree with the action of the Saudi royal family every time we go to the gas pump.
loading....
I never wrote that all corporation are good. Whereas you did write that they are all evil.
loading....
If “greed is the root of all evil” and publicly traded corporations are valued only based on their return on investment in the short-run, then there could be some truth in the matter. To me, this doesn’t mean to avoid corp, but shows why government and laws are so necessary. It is the government that prevented and stopped companies from throwing their toxic waste into the ground and polluting lakes and streams; government that requires inspections of food-processing plants and regulates drugs; government that requires certain safety standards. And this is why in the judicial system, consumers have more rights than 100 years ago.
loading....
Corporations, of course, have neither consciences to be tweaked or buttocks to be kicked. Theoretically they are morally neutral– and socially neutral. But in particular, once they are ‘publicly held,’ they can easily become sociopathic, in that they exist only to provide money to their shareholders and those who trade in their shares, without regard for any societal norms. Corporations — as well as individual companies — that refuse to spend money on, say, necessary maintenance, or perform exciting maneuvers with assets and orders in order to achieve 10-15% ROI have fallen into this trap. Individuals who commit sociopathic corporate acts could be jailed, but the shareholders who support a publicly held corporation in, say, letting miners be killed will have traded their stocks away for cash to buy the next big stock long before there are consequences.
I think I can personally say that I dislike what I can call the “wealth industry” — that area of finance and economy that exists to expand and exploit wealth by playing values-neutral games with money. (Both financial services sectors and the high end consumer product sector fall into that in my view.)
loading....
I agree that “evil” might be hyperbolic. However, I think the point is that individuals in groups, that are part of some sort of organization often stop using the moral sense they might espouse or try to teach their children and insert some vague “good of the group” in there.
And when that becomes your driving motive (the good or gain of your group) decisions become detached from personal morality. I think that initially people think that they are making the choices for the good of others in the group (and thus still feel morally correct). Then the group think takes over…
Witness Enron, Penn State, etc.
loading....
I am not fond of megacorporations ruling our lives, but what I really detest is the simplistic moral thinking that divides the world into “good” and “evil”. Especially the world “evil”– what the hell does it mean, exactly?
America has enemies? Well, they aren’t just enemies, they are evil enemies, so let’s not even consider their demands and nuke’em. Someone commits a horrible crime? They aren’t mentally ill and the product of abusive environments, they are evil and should be fried at the electric chair. The police got violent with the protesters? Well they aren’t scared people running on adrenaline, they are evil fascists. We don’t like something– anything–? Let’s just brand it evil and watch the public outcry. I don’t like broccoli, therefore broccoli is evil!
Life is of course a lot more complicated, and all kinds of factors go into the making of things and situations. The “evil” label smacks of adolescent black-and-white thinking, and yet it’s a touchstone of moral discourse in America. It’s like most people didn’t grow past the superhero vs. supervillain mentality and now they are making decisions about the world.
These simplistic judgments don’t help us fix any problems because they keep us from really understanding them. Simplistic judgments just make it easy to finger-point.
If we want to curb the antisocial behavior of people or corporations, we really need to understand what are the incentives and environment that foster this antisocial behavior, and work to change them. Right now, I’d argue that society rewards sociopaths, which is why we find them at the helm of many a damaging enterprise.
I wish people didn’t fall so much into this primitive Manichaean thinking that splits everything into good vs. evil: it’s unrealistic, unscientific, inaccurate, and really unproductive (it’s evil! its evil! ha ha ha).
loading....
It´s kind of e realization when you just discover the way things work. Do you remember the “East Australian Current” in “Finding Nemo”? Well, it´s exactly the same. You have to go with the current. You discover wealth is a game and you better start playing the game. But you don´t hate anyone in a game, because they are just another players. You admire their playing. Of course, here I am talking about legal ways of obtaining wealth.
loading....
OWS is not really about individuals who are wealthy, however. It’s about corporations who do not pay much in taxes, and who nonetheless benefit from low (or no) taxes and from things like the bank bailout.
loading....
Nancy, I get that OWS is more about corporations than individuals, and I think that many of the movement’s complaints are valid. I didn’t mean for this to be a discussion only about OWS. I just used that as a lead-in to get to America’s complex love-hate relationship with wealth. That is what I find interesting, and what I’m curious to have a discussion about…
loading....
And yet, Nancy — the wealthiest 1 percent of the population earn 19 percent of the income but pay 37 percent of the income tax. The top 10 percent pay 68 percent of the tab. Meanwhile, the bottom 50 percent—those below the median income level—now earn 13 percent of the income but pay just 3 percent of the taxes.
How’s that for *fair*? Don’t get me wrong though, I count myself as very low income, less than $6,000 per year. This is my own choice; when I worked harder I earned much more… and paid MUCH more in taxes. I did not like how much of my money was taxed and wasted on programs with which I didn’t agree, so I legally stopped needing to support them. Luckily for me, those bad rich people who pay all that Federal tax for me still let me drive on the roads they pay for and benefit from the schools they pay for, etc.
So even as an Atheist, I say God bless those wealthy people for the hard work and effort they put into their income. If it weren’t for them, I wouldn’t be able to enjoy all that the Government has them pay for.
loading....
If you hadn’t included Nancy’s name in there I would have thought you intended to make a new post or replied to someone else (Nancy was talking about corporations, not individuals).
But on the topic of individuals…
“…the wealthiest 1 percent of the population earn 19 percent of the income but pay 37 percent of the income tax…the bottom 50 percent—those below the median income level—now earn 13 percent of the income but pay just 3 percent of the taxes. How’s that for *fair*?”
To give you a greater historical perspective on taxation, this chart: http://www.datapointed.net/2011/03/relative-us-income-taxes-1913-2011/
The chart shows that we are actually enjoying a time of historically low taxes (its slightly elevated around the 50-100k earners, but not terrible. The poor have slightly lower rates than historically, and today’s modern rich (in this case anyone making more than a million dollars) are enjoying all this “unfairness” in the form of more after-tax income.
If the poor are going to suffer as programs that benefit them are cut to balance the budget, then why shouldn’t the rich “suffer” (its not like they’re going to starve, or go without medical care, so I put that in quotes) as well? Except since they don’t benefit from government spending their form of suffering will have to come in raising their historically low taxes. I’d like to see them at least as pink as the 50-100k earners.
loading....
I don’t think the recent events can be understood outside of the context of the financial crisis that began in 2007 and that continues to this day. Specific individuals committed crimes, and specific policies created an environment that allowed them to get away with these crimes. The guilty individuals have not been published, and there has been relatively little public reflection about what went wrong. A specific judicial procedure or process would be much more helpful that general comments about class, socialism, and wealth, or psychologizing about Puritanism and guilty feelings about wealth. I don’t know if the Occupy Wall Street movement will lead us in the directino of public accountability and truth telling, but this at least seems a possibility.
Tom
loading....
Great topic for discussion, and some really insightful observations, JD. I did have one complaint, however, when you wrote:
“The median household income in the U.S. was just under $50,000 in 2010. That means half the population earned less than that and half the population earned more. I’d argue that if your family brings in more than $75,000 per year, you’re rich.”
You make a crucial logical mistake here. You seem to be assuming that since the median income is $50,000, then that represents a comfortable, middle-class lifestyle. However, in reality, the median income has been slipping (factoring inflation) for decades, to the point where a “median income” is no longer enough to raise a family debt-free, and build a comfortable retirement. This is one of the (many) things the Occupy movement is complaining about. Thus, I would argue that if you’re a 5-person household, earning the “median” income or less, then you’re actually losing traction. The slow, relentless hollowing-out of the middle class has magnified the income polarization in our culture, to the point where you must make an “above average” income, just to live a comfortable life without relying on debt or charity.
loading....
Is that $50K net or gross?
In Canada, $50K gross puts you in the top 26%: (http://www2.macleans.ca/2011/10/25/rank-your-income-where-do-you-stand-compared-to-the-rest-of-canada/)
But I think that’s for individuals, not households. I find it funny that a lot of stats (like from the Pew Research Center) are based on households of three members.
loading....
This is a classic example of an important and over dramatized statement.
1st a family of 5 implies 3 children. That is a choice. 2nd – you can live in most places, except the coasts where salaries are higher, on $50,000. At $50k with 3 kids, your federal tax bill will be almost zero after standard deduction ($800 according to the IRS) and your state taxes will be close to zero as well.
I struggle to think that you cannot live on $3.5k/month even after FICA. You should be able to save at that level.
You may not be flying first class or driving a new car every three years, but to say you are slipping is too dramatic.
loading....
Just to be clear: I’m using the Occupy Wall Street movement as a launching point for discussion. I hadn’t necessarily intended this post to be specifically about OWS. I had intended for it to be about our complex feelings toward money and wealth and the rich.
I’ve actually been thinking about this subject for a long time. In fact, most of this post was written in July 2010. When I came home to OWS, I started thinking about the subject again, and used OWS as the starting point for this discussion.
For the record, here’s a bit that got edited from the post in order to save space:
“Just to be transparent: I’m neither liberal nor conservative. Nor am I a moderate. My political beliefs fall all over the map, which is why I don’t write about them here at GRS. They’re sure to make everybody angry. That said, I’m a proud proponent of small business. Although I’ve mentioned it only in passing, many readers have deduced (correctly) that I’m not a fan of megacorporations. I try not to give my dollars to the Wal-Marts and McDonald’s and Bank of Americas of the world.”
Anyhow, I don’t mind if we discuss OWS, but I’m really less interested in that than I am about American’s mixed feelings toward wealth…
loading....
Ok, moving on from the OWS parts, although I think it’s relevant in regards to your definition of being rich and attitudes towards rich people.
I’m still wondering about if the worsening social mobility and lowering real income for almost all Americans is contributing to the attitudes you describe. People who are actually getting better of are getting rarer and rarer which makes the rest of the population out of practice in relating to them!
loading....
I feel the same way JD. My views in politics and finances make me a “traitor” in all camps. But isn’t that one of the problems today? That guys like us used to valued as people that could build a consensus through compromise on certain issues, and now people on both sides of the aisle wouldn’t blink at the idea of calling us traitors?
I thought it was a great article that explores the USAs awkward and interesting relationship with money. I always found the American dream to be an unbelievable incentive to innovate and create new ideas. The new dream for the whole Western World is to pay next-to-no taxes, and get as many handouts from the government as possible in order to facilitate a certain lifestyle.
To put your 75K number in perspective, I would almost certainly agree that it is considered wealthy on a world scale when you look at the average income from a world view. I won the lottery just by being born in Canada (as would anyone who had been born in the USA) for crying out loud!
loading....
Thanks, JD, for the article, which, to me, is about what is stated in the header/name of it. Why does it have to be taken all the way about OWS and become a political debate? The question seemed to be: “Why do we strive to become rich-er and may appreciate best friend/family member making money, yet hate a random person who is rich (er than me)?”. No matter how much we may claim the religious/moral “don’t envy”, as human, we do. Hopefully, some of us try to stop and think about it once in a while. And may be judge a little less (another one of 10 commandments?). And many justifying the “hate” due to cases about “bad rich”, which media in general loves to report – bad cases that is, about anything at all. Simply because it draws attention. Who was that said “We want bread, blood and show”? (most likely the meaning is lost in translation).
Anyhow, great question to dwell on for own personal clarification, thanks again. In my life, it could also be compared to a freakishly fast runners – we strive to be faster, when our friends run well, we are happy for them, but sometimes we feel rather jealous for a random name who won a race…
loading....
The more general response is that the behaviour you mention is an example of a known bias most people have: http://en.wikipedia.org/wiki/Fundamental_attribution_error
In essence: if you succeed, you attribute that success to your skills/efforts. If someone else succeeds, it is attributed to luck/friends/etc. Vice versa: if you fail, you had bad luck whereas another persons’s failure usually is attribute to that person.
loading....
J.D. & all
For me, the best skewering of the relationship of Americans and money (and social class) was written by Kurt Vonnegut.
In his novel “Mother Night,” Howard Campbell is an American agent in WW2 Germany posing as a propagandist for the Nazi government (at least that’s what he claims in his memoirs).
In the novel, Campbell writes a speech for the radio where he criticizes the behavior of American POWs vs. the British POWs. The British, the story goes, get quickly organized into a civilized collective, while the Americans let their camp be ruled by the law of the jungle.
Campbell (or Vonnegut behind this mask) attributes the American’s lack of social organization to self-loathing due to unrecognized class issues. He argues that the British are somehow content with their social class and quickly fall into a social order with the officers at the top and everyone subordinated.
The Americans, on the other hand, Campbell claims, feel terrible about themselves because they believe that becoming a millionaire is easy, and if you are not a millionaire you are a loser. So they hate themselves for being simple corporals, they hate their social class, and they hate each other, so they refuse to participate in any kind of social organization in the camp. (It’s the concept of the “temporarily embarrassed millionaire” taken a little further).
I am paraphrasing from memory a book I read over 15 years ago (I don’t have a copy with me to quote from). So I apologize for any inaccuracies or misrepresentations. But it is a hilarious read, and I love the way Vonnegut puts those ideas in the mouth of a Nazi propagandist that’s really working for America–he has license to say whatever he wants. But it rings really true, at some level. Anyway, it’s satire not science so please take with a grain of salt.
I’d post a link to the book in Amazon if I had an affiliate ID… hm… maybe I should review books online, get rich with affiliate links, and stop being temporarily embarrassed.
loading....
Didn’t megacorporations start as small businesses? People always rag on Starbucks for being a big corporation and yet it started with one small store in one area of Seattle. Isn’t what happened with Starbucks “The American Dream” with regard to business? Once a company gets to a certain size, should it stop growing? With that said, I’m not a fan of Starbucks anymore because the quality isn’t up to my standards, but I like the way the company treats its employees (unlike WalMart, where I’ve never shopped). I don’t know anything about how Starbucks deals with growers or anything like that, but then again, I don’t know where my favorite local coffee shop gets its coffee either. Maybe the way we feel when a company starts getting big is the way we feel when an individual starts getting wealthy? I did, by the way, march with my local Occupy group and will continue to do so.
loading....
Ah, but if you choose where to shop based on how they treat their employees (as do I, btw), shouldn’t you also choose based on how they treat their suppliers?
It’s pretty easy to find out where your favourite coffee shop gets their coffee. Just ask them.
The only problem is, once you start shopping with your conscience, it gets a lot harder to be one of those millionaires-next-door who got there by saving money in discount stores.
loading....
I don’t think anyone resents someones good fortune in winning the lottery.
People do resent wealth that was accumulated, not by being productive, but by manipulating others into making bad decisions. Or is made by ruthlessly exploiting other people’s weaknesses. And there is a suspicion, based on a lot of personal experiences people have, that extreme wealth is often accumulated that way.
As for who is “rich”, I think that is a term which is used for a variety of purposes. Someone who wins $10,000 in the lottery may say they are “rich”, but they don’t mean it the way they mean Bill Gates is rich.
I think when people refer to the “rich”, they are talking about people who are comfortable for life. People for whom money is now more a scorecard than about what it will buy. There was a time when millionaire and rich were synonymous, but that really is not the case any more. People with a million dollars still need to budget their money.
loading....
By stating that people who have a lot of wealth work hard you are implying that those who do not have a lot of wealth don’t work hard. People are not judging the rich for being rich, rather they are judging a system where people who come from affluent families are much more likely to be rich. Gates and Buffett are often cited as men who made it on their own, but both came from very well off families. Gates went to an elite high school and Buffett’s father was a Congressman. So yes, I have every right to judge a system that rewards the wealthy. Equally I will judge the wealthy who behave as though they did it all by themselves (in a way that’s reminiscent of toddlers learning a new skill while their parent is actually doing the work) rather than acknowledge the incredibly amount of opportunity that they have based on where they were born in our society.
loading....
I don’t think that by saying that some people who have earned wealth worked hard to get it, means that non-wealthy people don’t work hard.
Why do you judge people who have worked hard and earned their money. What about Steve Jobs? He dropped out of college and didn’t go to an elite high school and his parents didn’t have much money…didn’t he work hard, and wasn’t he successful?
I think its interesting that you will judge those who have done well, and only cite Gates and Buffet and leave out other very successful people…What about brilliant kids who go to Harvard or MIT on full scholarships because couldn’t afford to go, but applied anyway? Didn’t they work hard to get there and would you consider them to have special advantages financially?
There are too many generalizations, going on here…
loading....
“There are too many generalizations, going on here…”
THAT’s the problem! There are many different types of rich and poor people who arrived at their financial status in different ways – through hard work, inheritance, laziness, bad luck, selflessness, whatever.
loading....
This series of charts has the best explanation for what the OWS movement is protesting:
http://www.businessinsider.com/what-wall-street-protesters-are-so-angry-about-2011-10?op=1
It is not anger that some people are wealthier than others, but that the wealthiest here in the US have been manipulating the economy for some time now to widen that divide, at a much greater level than most other nations and at exponentially higher levels than historically we’ve experienced here. I doubt that any rational person begrudges the head of a company for making a higher salary than other employees. But if the leaders of a company take an increasingly disproportionate share of the profits and achieves that by massively reducing the salary, security and benefits of the majority of their workforce, it’s no wonder that the workforce is starting to get frustrated and angry.
loading....
I’ve come down to this way of breaking down Republicans and Democrats: Republicans trust in the power of ndividuals and corporations to take care of the needs of the people and they don’t trust the government to do that.
Democrats trust in the power of the government to take care of the needs of the people, and they don’t trust other individuals and corporations to do that.
(I’m independent so no real bias there).
BUT the conflict of interest in the Republican approach naturally arises when the profit motive surpasses altruistic motives. If you work for a corporation, your JOB is to make money. Period. You get fired if you do not perform on that goal.
And how do corporations make money? By spending billions of dollars convincing people they need stuff they don’t; and by creating a culture of “keep up with the Jones” and planned obsolescence. And to top it off, by being more than happy to put people into the slavery of debt so that the people get the debt and they get the money.
Can’t blame them–that’s in the corporate DNA, which has driven culture and legislation in this country especially as corporate power snowballs and gets bigger and bigger. It’s who we are.
I used to get mad looking at ads in the New York Times for purses that cost as much as it would take to feed a third world country for a year. I’d think: Don’t people realize how frivolous it all is–all of this luxury stuff? Have the people buying these purses spent their tenth to help others?
I’ve mellowed a bit. I realize that it’s in the hands of us as individuals to make personal choices that reflect the values that wealth should stand for. Grassroots efforts like OW–well, it remains to be seen what their legacy will be. Without a strong leader, not sure what will happen to it. Because the corporations are more organized, more focused on their goals to get us to buy, it feels like we’re David vs. their Goliath.
In answer to your question, wealth is not a bad thing… as long as it’s not tied up in your ego and your identity. As long as it’s a means to an end and not the end in itself, and if Jesus ran into you at the mall and asked you to sell all you have and give it to the poor, you wouldn’t turn away sad.
loading....
Good Article!
Growing up on the fringe of a wealthy neighborhood but not being wealthy gave me an ‘interesting’ perspective. You nailed it on the head, it is the ‘better than you’ attitude that sets me off. By all definitions my wife and I have done well, our son goes to private school, his college is funded, our cars are paid off, 5 years left on our house, etc, all on our own, no trust funds, and our parents are still with us! The one thing that we make sure we do is treat EVERYONE equally, the wait-staff up through the CEO of the companies we work for. Everyone deserves a ‘please’ and ‘thank you’. We firmly believe that we are no better than anyone else. This isn’t to say that all of the wealthy are rude and all of the rude are wealthy but the correlation is really shocking! There seems to be a ‘better than you’ attitude that comes with moving up the economic ladder. I think this is a primary driver for the resentment that is fueling the OWS protests. The best thumbnail example is the BofA president saying, with a straight face that the $5 debit card fee is necessary because BofA ‘deserves a profit’, even after the bailout. The idea that the ‘little people’ just need to suck it up and not question the people in charge is the attitude that is quite offensive. I assume he was quite offended when large numbers of those ‘little people’ closed their accounts and moved to credit unions. One thing is for sure, I have never had better service at a BofA than in the last 2 months.
The highest complement my wife an I have ever received is ‘you guys sure don’t act rich!’.
I guess we are part of the ‘stealthy wealthy’ and we intend to keep it that way.
loading....
I wonder how that tracks over time? I assume what people hate is inequality, not wealth. And that tracks geographically, at least – my brother lives in a highly-unequal country where rich people are routinely kidnapped and often killed, which even the folks claiming Occupy is dangerous to the country aren’t worried about one little bit here.
loading....
Good post. I especially like your point about how being rich magnifies what you already are. I think that can be said of many extreme situations and also of the aging process. The gloves seem to come off as you get older.
Perhaps being poor also can bring out or illuminate your weak points in a different way. If you tend towards self-pity, you might have a tendency to get stuck and not think outside the box. I’m not pointing fingers here, because I certainly fall in this category. I don’t think adverse situations necessarily make me look good, because my anger and tendency to blame do rise to the surface.
Conversely, I think being rich could magnify one’s pride and arrogance.
Very interesting idea that I think has traction. I still think external circumstances and systemic societal problems probably have more of a say on whether one is rich or poor than one’s attitude, but still, I agree with this point.
loading....
“suspicion” and “underlying distrust” – it just means the have-nots are jealous of the haves.
loading....
People who point out flaws in the system or society, are then said to be jealous, and that is a shoot the messenger reaction. Otherwise you should say Warren Buffet is what – jealous of himself?
loading....
I don’t think it’s that simple. The Occupy movements in Canada aren’t protesting the Royal Family, nor are they against celebrities or big names like J.K. Rowling.
If it was just about “haves” versus “have nots”, you’d expect to see more people in the cross hairs.
loading....
I saw a great TED talk on this very topic the other day. The speaker was Richard Wilkinson, and one of the points that he made was that people feel a clinically significant level of stress when they feel that they are being looked down upon. While listening to him I began to think that’s probably the key issue for many people: not how much they (or others) have or don’t have, but how they feel that they are being treated by those who have more. I really don’t think people hate wealth, they just hate how they feel when they don’t have “enough” of it… and good luck getting most people to define “enough” or admitting that this is about their feelings instead of other people’s bank accounts.
loading....
Here’s the TED talk in question: How economic inequality harms societies by Richard Wilkinson…
loading....
I think the more informative statistic to track should be “income per adult”, not “income per household”.
Over the past 2 decades there as been a huge increase in the number of households with children that do **not** include a married couple. There are currently more women living alone today than in marriages!
Yet this fact is typically ignored by the statistics that cite just “household income” and assume that’s typically a “family of 4″.
The expenses of 1 adult vs 2 adult households are very different. For example, a 2-parent household will need to save much more for retirement than a 1-parent household would, to cover their expenses during retirement which may include 2X the medical and nursing home costs compared to 1 person.
Yet I never see this relected in the statistics–it is assumed that by forming a 2 adult household (getting married etc), suddenly one person gains all of the other person’s income & net worth without there being any added expense. Sure they save on mortgage/rent, but most other expenses are going to be additive. And if both the man & his wife have medical plans through work, they often get LESS total medical benefits when they get married because they are forced to use 1 family medical plan from one person’s employment. For example, usually the total amount 2 individuals can put into a health savings account is more than the amount a married couple can put into a HSA associated with one family plan. And so on.
loading....
I agree with the writer Cary Tennis, who said one time that his personal finances were always a mess until he learned to “respect” his money.
He didn’t want to be a rich money-grubber or to be considered an outsider to the working class he grew up in. So when he got paid he wouldn’t pay much attention to his money–he would just throw the money on his dresser, buy rounds for everyone in the bar, not pay attention to how he spent it. He ended up in debt, not able to pay bills, going bankrupt and so on etc etc.
Finally, he said he learned to respect that he needed money & he needed to pay attention to it. He describes carefully folding money now and putting it carefully into his wallet when he gets some, carefully giving some to his wife to put in a savings account, etc.
I do think a lot of people have problems “respecting” money, because they think it will make them into a bad person. And this helps them end up in a financial hole.
loading....
I wouldn’t say that anyone who earns over $100,000/ year is rich. I would say they are a high earner. Personally, I don’t consider someone rich if they make 100,000 but spend most of those earnings whether it be on monthly expenses or debt. Rather, I feel like someone is rich if they accumulate wealth (which I agree is usually possible on a $100,000 salary).
loading....
Very interesting article. Trust me, I’ve lived in several different countries and it’s not just in America where this love-hate relationship happens. From my observations, people who hate those who are wealthy tend to have a hard time getting making money or becoming wealthy themselves because (my opinion) they subconsciously don’t want to become the very people they “hate.”
loading....
I’m not sure about the underlying theory of this one. I don’t know many people who mistrust the wealthy as a whole simply because they are wealthy.
To me, the problem and the mistrust comes from concerns that the very wealthy may try to influence the political laws in ways that benefit them to the detriment of others. And the gap between the wealthy and the poor is increasing even more than back in the days of the “oil barons”. People like Buffet himself proclaim that he pays less, percentage-wise, in taxes and asserts that our current taxation system is unfair. Some corporations pay little to no taxes because they spend tremendous money on lobbyists who help them get tax breaks on certain expenditures. Wealthy individuals who contribute a lot to the political powers coincidentally wind up with government contracts for building planes, parts, roads, etc.
I just want a fair playing field where people can’t use their money in the political arena to accrue such personal benefits, or to be able to avoid certain taxation by paying tax accountants and tax attorneys to restructure and modify their assets in such a way that they can take advantage of certain tax loopholes that the average citizen cannot. On the other hand, how can one blame a person for taking advantage of legal avenues of paying less? There simply needs to be less loopholes and less tax code and exemptions.
loading....
I usually comment under my real name, but this question hit home hard. It’s something my family is struggling with now.
My husband and I were poor for years (par for the course when you get married and have kids as teenagers)and then clawed our way up into the working class. We live in a poverty-stricken part of the country. Our friends struggle, and worry about whether there will be enough to eat. But there’s a strong sense of community and that helps everyone get by.
And then my parents died, and to our surprise left us a significant amount of money.
We haven’t told anyone. Spent very little. I hide my shiny new financial statements under the bed. Who around here can help with this?
Believe me, my husband and I know how lucky we are. We’re being extremely careful, spending no more than we did before, and keep expecting to see the money vanish, sort of the way it arrived.
But we’re working our way out of the shock part, and have started to make a list. A soup kitchen. Or at least a food pantry. Or at least a good start towards one. Only shop locally. A few anonymous donations. It’s a start. How much of this is guilt? Probably a lot. It’s also that community thing. We were helped when we needed it; now it’s our turn.
And we’re still keeping it a secret. We’re afraid of losing friends. Not to mention ourselves.
loading....
Going slow & not publicizing is super smart, good for you.
Inside my group of friends, and even among our siblings/cousins, there’s a little cabal of folks with financial security. We’re a minority, and we’re all pretty quiet about it, but we know who we can talk to about money and celebrate our little milestones – paying off mortgages, hitting investment/donation goals, etc.
The folks who don’t have as much, for whatever reason (bad luck, starting out with fewer resources, spendthrift habits) mostly don’t even notice, they assume everyone else is living paycheck to paycheck or drowning in debt.
loading....
I have mixed feelings about the wealthy, and I enjoyed reading your post. I know several wealthy people who have gotten where they are through honest, hard work. They are humble, grateful people who give back to the community. I’d love to be like them. The 2 richest people in our community though, have obtained their wealth through illegal and unethical means. That creates the resentment and the dichotomy in my thinking.
loading....
I don’t think it’s odd at all that we distrust large banks and transnational corporations.
Back in the day, most companies returned their profits to their employees through benefits like housing and pensions. Today they are more focused on what the investors want; they’ve decided to let unions oversee an important partner in their business.
What I still don’t understand is why the media has not picked up on how the mortgage industry profited on the housing market crash. The owners of the loans had insurance and received that when the homeowners defaulted and they also have the properties to resell again. So, yes, I don’t trust big banks, or corporations, and am in the process of moving my accounts to a local bank.
loading....
We have actually noticed that when people have money, people tend to be artificially nice towards them or even “like” them because they have money. We wouldn’t want people to like us because we have money at all. So even when we are having a good year, we don’t dress different or “act rich” because we want people to be real around us. We aren’t rich by any means but we do alright with our current jobs. Recently we were laughing because a group of people actually thought we were POOR. Because of our circumstances they figured that I was unemployed and my husband didn’t make any money. We weren’t trying to misrepresent ourselves; we really are just being ourselves.
As far as other people’s money. I really feel that it isn’t any of our business how much others make. It’s easy to wish we had what they had but it’s just as nice to think about the great things in our own lives.
loading....
I think many people talk badly about wealthy people because of good old fashioned jealousy. “They have it and I want it” is how they think, whether consciously or unconsciously.
People who think in that way are people who will probably never reach a wealthy status because the right attitude eludes them.
One of the first things you have to do to begin achieving wealth is to develop the right attitude about money and take responsibility for your own situation.
I’m currently writing a post on my Celebrating Financial Freedom blog about a conversation I had with an Occupy Wall Street participant that was very interesting and deals with this very thing. It will be up tomorrow Tues. 11/15 at http://www.CFinancialFreedom.com
loading....
JD…I know you are comparing income to the median but I disagree that if you make $75000 a year you are ‘rich’…especially if you live in CA or NY. After state and federal tax, rent,(or IF your house is paid off, property tax, if not, mortgage and property tax) sales tax and vehicle fees, there’s not a lot left. ‘Rich’ is relative. In the crappy gang infested part of the ghettos of Santa Ana CA you pay $1600 a month for a 3 bedroom dump with no yard. When $19000 of your income goes to shelter, you are not rich.
loading....
As someone who used to live in SoCal, I have to totally agree with your comment. Years ago, I made around $35,000 (gross, before taxes) and lived in SoCal. Because of those high rents, I was forced to live in crappy gang and drug infested areas around Santa Ana. Rents for a 1 bedroom with no yard in a horrible part of town were around $900 a month. Suffice to say, I had barely enough to pay basic rent and utilities.
loading....
I think the issue I have – and many of the OWS protesters have – is when rich people take for granted the contributions of society as a whole (and taxpayers in particular). This is particularly evident on Wall Street etc. right now (hence “Occupy Wall Street”) – American taxpayers funded huge bank bailouts, and it seems that mostly those bailouts have “rescued” rich people from becoming less rich, not poor people from becoming poorer. We can argue about whether or not those bailouts saved our financial system from a larger crash – since it didn’t happen it’s hard to say – but what people DO see is those who helped lead companies to failure still receiving huge salaries and bonuses. That causes a lot of angst!
I think the biggest difference between “hero” and “goat” (as you put it!) is whether we see a person:
A – providing something of value to society
B – giving back to society
In the cases of both Gates and Buffett, they have both (arguably depending on who you talk to!) met A, and both definitely meet B.
loading....
A is definitely in question there.
However, while I think it’s great that the Gates and Buffett are pledging so much of their personal wealth to charity, I also struggle with it. I think everyone should donate however they can to charity – everyone. BUT, I do not think it’s an obligation and I would never try to guilt someone else into donating anything at all. When I hear about their pledge of 50% donation, I just wonder – why now? Did they really have to accumulate 1 billion dollars before they felt comfortable giving half of it away? What other choices could they have made along the way to have just as significant an impact that they passed up so they could reach this goal of donating 500 million dollars? While I think they’re doing a good thing, I do not think it’s particularly laudable.
I suppose if they did studies that said X amount of impact can only happen when X amount of money is applied at once, then maybe I would feel differently. I can see if you’re trying to change an entire, worldwide paradigm and realized that very few people could amass that amount of cash and you were one of them … maybe. IF that is what they’re doing.
loading....
I don’t think the issues is “envy” or anything silly like that.
I think it is that the middle class keeps getting hit from both sides. They aren’t rich enough for the tax breaks or to benefit from the “privatizing” of success. They aren’t poor enough to benefit from any programs. Their buying power keeps getting lower. Their raises don’t keep up with inflation.
I think in general people don’t dislike capitalism, but dislike the “corporatalism” that has taken such a large hold. Take the banks for example, they are getting much of the heat as is, Through deregulation over many years they were able to stop investing in treasuries, etc. and were allowed to behave like hedge funds. Making lots of money using derivatives and other complicated things that produced money by quickly moving other money. They provided no product. They stacked away money and when the bottom fell out they went to the government for help and got it. Now when the government tries to put restraints on them “Dodd-Frank Act” they cry foul and start buying politicians and political action committee commercials trying to make the american people believe that regulations such as forcing them to have money to back up their margin calls is somehow socialism.
They have grown wealthy by using society as collateral and then use that wealthy to change society through the political system as they see fit.
PS if you really think 75K a year is rich, there are lots of people laughing really hard at you. They made 5x that on their last stock trade.
loading....
Great post this morning JD. As usual you nailed it on the head. If I’m honest – I am wealthy, maybe even rich, but I don’t *feel* like I’m rich. There is a certain amount of discomfort with the idea of ‘being rich’. Oaccasionally when I am confronted with the reality of what other people live on, how much money they make and how they get by, I have to cop to the fact that in reality I don’t worry about money. But the majority of the time I feel average/slightly above average in my world. All of my coworkers make similar salaries to me – so I feel common there. We purchased a home in a less expensive neighborhood than we could afford, so that we could buy a vacation home elsewhere – so we defintly feel rich on that count. My husband doesn’t have as much trouble with the idea of being rich, maybe it’s Catholic guilt?
loading....
My husband and I are kind of struggling with this now too. We know we’re doing well particularly in comparison with our struggling times as students (and we’re proud of being debt free other than the mortgage we just took on) but we’re realizing that wealth is relative.
We recently bought a house in a less expensive area than we were looking in originally. Through the entire house hunting process, we felt poor because we were looking in a market where anything listed for a price we were comfortable with tended to have serious problems. We felt like we couldn’t afford anything, like we couldn’t afford to be homeowners.
It’s only now that we’ve bought that we’ve realized that our “cheaper” house is still in an area with a cachet and that it marks us as wealthy people to many of the people we grew up with. We’re both kind of uncomfortable with that notion, my husband in particular because he grew up being told he was poor.
I remember hearing a bit on the radio recently that suggested that people are, perhaps, happiest with their relative wealth when they are around people with the same level of wealth. That way they feel like they have “enough” rather than feeling like they should have more.
I doubt this is universally true but I think there’s something to it. If you’re constantly exposed to a certain level of wealth, you may begin to see it as normal and if it does not match your level of wealth, you feel abnormal – and people don’t like feeling abnormal. It breeds resentment.
loading....
Reading the post, it feels like some things got conflated. Namely, high salary vs wealth.
I don’t feel the least bit of disdain/envy/whatever towards people who live life “getting rich slowly”. Take Warren Buffett, who is still living in the house he bought in 1957 for $31,500.
And then compare to the people who pitched a fit when their bailed out companies were going to be restricted from paying them bonuses. I saw articles coming out about how these people wouldn’t be able to maintain their lifestyles without thoses bonuses. It galls me to think people would make bets with our financial markets and then be desperate for an undeserved bonus because they’re basically living paycheck to paycheck, millionaire style.
Using the cutoff you mentioned, my salary qualifies me for rich. My BF and I have argued about this. I try to tell him we’re rich, because he makes even more than me, and he insists he’s not wealthy because (to him) the definition of wealthy is that he could quit his job tomorrow and continue living in his accustomed lifestyle.
So I’ve seen what you said about no one identifying themselves as rich at home.
loading....
It does make me want to scream when a relative who makes absurd money for his skills just because he works in finance freaks out when anyone criticizes banks, suggests regulation, or otherwise says anything negative about his industry. “Good people are losing their jobs over this!” he shouts, and runs away to blubber in a corner.
Well, I’ve worked in a lot of industries. Good people lost their jobs when the dotcom bubble burst; good people lost their jobs when the newspaper industry shrank; lots of our neighbors worked in construction and first lost their jobs and then their homes, and then the local restaurants started going under one by one. Finance people are supposed to know about investing, saving, and risk – and they made inflated salaries compared to the rest of us – so they should be the most prepared for hard times instead of acting like the gravy train should keep running just for them.
loading....
Well, I have to say that my husband and I have long felt we didn’t deserve our wealth. We feel guilty having it. Too many chips have fallen our way for us not to feel lucky, and that doesn’t mean that we haven’t worked hard because we have.
I will say it’s only been in the last couple of years where we’ve experienced the sensation of feeling some relatives who were asking us to help them out didn’t deserve our money as much as we did. It’s a new feeling for us – but we know we got through much more difficult times than they without asking for help and then to see them spending money freely in areas we still don’t feel we can and then have them turn around and ask us for money, it’s become very offputting to us.
loading....
My thoughts on Occupy Wallstreet: Get the money out of politics. Period. The rest is just the “trickle down” of that problem.
loading....
The people I know who hate the wealthy are jealous or spitefully judgmental. I find that attitude corrosive. Of course, these same people would LOVE to have a lot of money :/
The people I know who have money but view the poor as being lazy also frustrate me. Personally, I think they don’t want to acknowledge that a good part of their wealth is from dumb luck – being born into a middle class family, having the right mix of talents to get a high-paying job, having good health, etc.
As for inherited wealth, I went to school with people who now benefit from trust funds. All of those people work. Some would have to work anyway because their trust funds are modest and cannot make someone independentaly wealthy. But, that’s immaterial as everyone I am friends with who has a trust fund was also instilled with a strong work ethic by their families. And they are not like the wealthy who hate thei poor – maybe because they go to work every day! Also, I think having a trust fund enables them to choose jobs based on what they love instead of what can pay the bills, so that may bring them into contact with more of the 99% than if they went into investment banking.
loading....
I should note that I realize I’ve oversimplified things by equating income with wealth. I’m well aware that there are regional differences in cost of living, and that income does not always equal wealth. But for the purposes of this article, I didn’t want to get bogged down in caveats and comparisons. It didn’t seem necessary.
loading....
The income inequality present in this country dwarfs regional differences in cost of living. It is possible to love the frugal millionaire next door and hate the 1% and the politicians that have allowed the continued rise of the 1%. These are two entirely different classes of people.
loading....
Why not?
Most of the OWS arguments that I see make similar logical errors (which bug me like you wouldn’t believe). I personally think that equating income and wealth is one of the things hurting the OWS cause, and I’d be really interested in hearing your take on it.
loading....
Companies, like royalty in the old days, didn’t and often don’t do well by their people. In olden times you were a serf working for a lord. Later owing your soul to the company store wasn’t some joke. They owned you like a serf. Large corporations polluted rivers, lied about products and health, about side effects, about activities, etc. and still do as we hear about it every day. The profit line is the main line. You can be good, you can do good, but if you don’t make a good profit, you’re done and time and time again businesses prove themselves sacrificing people’s well being and health to scratch out record profits.
Add to that historical background that we are told that many large businesses aren’t paying taxes because of loopholes, the wealthy are hundreds of percent wealthier now than they were twenty years ago where the average working is losing buying power, that CEOs get bonuses for failure, and that while most companies are denying employee raises, cutting benefits, cutting hours, demanding fees, they are also sitting on large cash reserves they just don’t feel like spending right now in a “risky” economy is it any wonder we don’t trust the “rich” we don’t personally know?
We’ve been given plenty of reason to not trust people who are “rich” IMHO.
loading....
Every time I use our local library built with Carnegie funds or visit any of the art museums in New York or any other number of places/resources available to the public, I am appreciative of the power of wealth to improve the community. I aspire to be wealthy enough to preserve my independence and take care of my family when I need to retire.
Bernie Madoff, the bank bailouts and media darlings like the Kardashians flaunt the inequality of the haves/have nots in the most egregious of ways and with little good to show for it. This is the problem I have with wealth: the potential for greed and corruption and a lack of civility and compassion for the greater community.
When MTV started showing programs like “Teen Cribs” and “Sweet Sixteen”, I was both horrified and transfixed. It’s one thing to know there are people out there with excess everything, it’s another to see it displayed by teens who have it given to them. Many of them not nice.
I’m a firm believer that with wealth comes responsibility and respect for what it can do both positive and negative.
loading....
What’s really hard in the U.S., I think is that we have a large and widening gap between who is “rich” and who is “poor.” I say, it is those who are trying very hard and struggling to pay for basic necessities of life (food, shelter, healthcare), vs. those who may be trying hard or may not be trying hard, but are able to pay for basic necessities easily plus an ever increasing amount of luxuries (dinners out at fancy restaurants, fashionable clothing, vacations, more than one home, tickets to concerts and sporting events, air travel whenever/wherever… etc.).
And then, too, in this country without the heavier taxation of the more socialist nanny state countries (or however you want to put it — kindly or not — there is a difference). The difference is… here we do not build in so much to our taxation system how we will take care of each other — especially those at the low end of struggling for survival or meeting basic needs. In this country, we expect it more as a voluntary thing, as a faith-based thing, as a generous philanthropy thing, “out of the goodness of our hearts” and then — when we perceive that the wealthy (however we define that) as NOT stepping up to the plate, or not stepping up sufficiently… that’s when the slow burn begins. Because it is entirely voluntary.
I’m not putting down philanthropy (the philosophy or the donors) — many do give generously.
But how do we resolve in our hearts and minds, living in a country where many people are truly struggling for their most basic needs, while others do not have such struggles or anxieties. I am not talking about the voluntary, doable struggles of those of us who choose to do without Cable TV in order to balance our budgets and get rich slowly. I am talking about people who are already working very hard, or are disabled and cannot work, or who cannot find work but want to work, and cannot get basic needs met.
How can any of us go out to eat at that fancy restaurant or drive that expensive car, and still sleep easily at night, knowing that there are many others of us (yes — US — not them) who don’t have food, or shelter, or electricity, or — medical care, etc.
It is SUCH a wide disparity — that is the problem.
The only way the wealthy among us can sleep well at night, I’m thinking, is by somehow dehumanizing the poor and struggling among us. Calling us, “the poor” or “welfare queens” or something that is very judgmental. You can say, “well, the poor deserve it. I worked hard for what I have and now I will enjoy it!”
I think wealthy people do have a great responsibility towards the poor. To make sure that all people do have at least a minimal standard of living. We all need good nutrition in order to be able to function well at a job. We need healthcare to be able to be healthy enough to work. We need to be able to afford transportation to our jobs. We need to be able to earn enough money to buy whatever minimal wardrobe is required by our employer, to have whatever minimal appearance and hygiene level is expected. I also think we all need enough education to be able to get good jobs. And we need the jobs to be available — of a sufficient variety to fit the abilities and talents of a diverse workforce and population.
And a way to take care of those of us who would work, but can’t — children, the elderly, the disabled.
There will always be slackers (rich and poor) — but there are not so many. Most people want to work and are quite willing to work hard, to make their contribution to society.
Until we can get the poorest among us taken care of, how can we in good conscience keep so much of the wealth to and for ourselves.
Honestly, having been both wealthy AND poor myself, I find it very difficult to find joy in the “finer things in life” anymore. Not while I see my friends and strangers struggling to buy gasoline to get to work, to be able to eat anything other than peanut butter for days on end… come on, people.
That is what the Occupy movement is about.
loading....
OWS is going about it all in a horrible way.
I am super-poor. I am among the poorest of the poor. I make only $5,000 a year (and have been in that general income bracket for the last 6 or 7 years) I’ve been struggling to change that. My entire life, I’ve worked for small mom-and-pop companies and have been screwed because of it. (You wouldn’t believe the things some mom-and-pop companies can get away with, since they’re accountable to no one).
I WANT to work for a corporation, where I’ll actually have a shot at getting raises and promotions. I want to be able to earn a living wage. I want to get out of poverty. I’m tired of being near-homeless and having to rely on the charity of family to get me through life. I want to be independent.
But OWS is ruining it for me. They’re trying to destroy jobs by bringing down big corporations. They may *say* they’re just about protesting the evils in corporations, but by choosing to “Occupy Wall Street” and demonizing all corporations and disrupting the business world with their unrest, they’re really only ruining it for people like me. By rioting in the streets (yes, I consider them near-rioting with the amount of drugs, killings, crapping-on-police-cars, attacking hot dog vendors and the like that they’re doing), they’re only creating an uneasy unrest in the business community, which makes businesses less likely to hire.
Thanks a lot OWS, for kicking down the poor even more.
loading....
I absolutely do not feel this way. I am not rich, but I’m making my bills, eating and clothing myself fine and saving money. I donate when and where I can and then I move on. I cannot solve the ills of the world and I refuse to apologize for the accident of birth that means I live in the US with all of its advantages and with great parents who weren’t rich either but always took great care of us kids. I absolutely feel that people should do what they can to help, but beyond that it is counter-productive to feel guilty because you’re doing better financially than someone else – unless you got to that point through illegal or immoral means, then guilt away.
If you use that feeling of guilt or inadequacy to step up your game – lobbying for better/more services, setting up a non-profit of your own to fill a gap, holding fundraising activities, etc – then maybe it has a purpose. Perhaps because I’m not an ascetic, I find no guilt in living a good life for myself while doing what I can to help others. To feel guilt, with no additiional action behind it, just feels so counter-productive and can even be perceived as patronizing. I guess I look at it like during the lecture on takeoff when you fly – secure your own oxygen mask before helping others.
loading....
The thing that people resent about the super-rich (which is in line with the occupy wall street “1%” moniker) is that there is no possible way that someone could earn that much money in a way that seems fair.
Say the average guy earns $50k/year. Someone who’s twice as productive earns $100k/year. Nobody’s complaining about that. Guy #2 gets a lot of work done and earns his $100k. But how much more than average is it really possible to earn? There are only so many hours in the day, and you can only work so much more efficiently than the average person. Maybe if you’re really good, you can do 5 or 10 times the amount of the work of the average guy?
So if that was the case, the richest people would be making $250k to $500k/year, but that’s not the case. CEOs aren’t making 10 times the average worker’s salary, they’re making 400 times the average worker’s salary. Since it seems unlikely that they’re actually accomplishing 400 times as much, it seems the only other way to make that much money is to manipulate the system, which is to say: under-pay your workers and pocket the difference. Maybe each of your workers shouldn’t be making $50k, but should be making $100k and instead of you making $20million a year, you only make $1 million.
Now, I’m not sure that I agree with that reasoning 100%, but I do think there’s at least something to it. And it’s what you’ve failed to address in the post — you only talk about the hard working people that are making 3 or 5 or 10 times as much has average and saving it. You don’t begrudge those people their wealth, but neither does anyone else. It’s the people making $20 million annual salaries and getting $60 million stock bonuses who employ vast swaths of the American population at wages too low for them to pay their mortgages. These are the super rich that people are looking at and saying, “what did you do to deserve that money?”
loading....
I was just about to post this exact same thing. Middle class wages have stagnated while executive pay has skyrocketed. Thats the core belief of the Occupy movement(or at the least the only belief they have that isnt total nonsense).
I dont begrudge anyone their wealth up to a certain point. People like Gates, Paul Allen, Buffett, or Prokhorov, they have multiple billions of dollars. No one could ever possible need that much money to live a good life and be finacially secure. Once you pass the point of being able to live lavishly for the rest of your life without ever making a dime, there isnt any reason to continue accumulating wealthy.
Yet these people do it. People starve around the world, yet there are thousands of people around the globe who have more money than they could ever possible spend. Its somewhat sickening, and its these people that we resent.
loading....
Yes, I agree. Why are we even talking about people who make $100,000 and the Occupy Wall Street Movement in the same article? Like Tyler said, this movement is targeting the super-rich. I doubt many people (or any for that matter) reading this blog make anywhere close to enough to put them in the 1%.
loading....
1% isnt that far off. 1% in terms of income is ~$300K. Its more the 0.1%, where you make $1.5 million a year or more.
loading....
Tyler, why does anyone have to justify how much money they “deserve” to earn in a capitalist society? A person “deserves” exactly what the market will pay him/her.
Does Peyton Manning “deserve” $90 million for playing a game? If 60,000 people are willing to buy expensive tickets all season long to watch him play, and advertisers are willing to pay big bucks to have their ads air while he’s playing, then yes he does! Does Bill Gates “deserve” $50 billion? Well, if he was behind software that improved business’ efficiency and generated trillions of dollars in improved productivity for them, then yes, he does!
You mention those poor workers making $50k, and ask maybe they should be making $100k. Well again, this is capitalism at work. If they think they’re being underpaid, then they should quit. If the big, bad CEO can’t find people to do the job for $50k, then he’ll be forced to pay more. But since there are people showing up and clocking in at 9:00 AM every morning to collect that meagre $50k, then that’s exactly what the market says they “deserve.”
Finally, you bemoan the poor souls who can’t afford their mortgage. Well, housing prices aren’t handed down from a mountain top by a mysterious, omnipotent being. They’re the direct result of market forces. If people are willing to sign up for enormous piles of debt, then of course housing prices will climb. Is it the boss’s fault that you bought a $600,000 home in Arizona when you’re only making $50k/year? Is it his responsibility to drastically increase your pay, to help you ensure you can cover that note? Puh-leaze.
loading....
1) I said “Now, I’m not sure that I agree with that reasoning 100%”, so please don’t get all indignant towards me as if I’m some sort of internet voice of socialism.
2) If you define “fair” such that everything that happens is fair, which is what a purely market-based approach means, well then there’s no point in talking about “fair” or “deserved” because they’re implicit. A cat that can’t catch mice deserves to starve, a cat that catches lots of mice deserves to be fat and happy. To hell with that other cat, tough shit for him. As for the mice? If they are too slow to avoid cats then they deserve to be eaten. In this model, whatever happens is implicitly fair and earned by all involved parties, regardless of the outcome, so why even bring it up? Everything’s fair.
But, and you might find this surprising, some people actually think that civilization should try to be, well, a little more civil than simply duplicating the literal survival-of-the-fittest sort of economics that you see in nature.
loading....
With the Peyton Manning example, I’d like to point out that football players have negotiated what percentage of revenues goes into player salaries vs how much the owners get.
So does Peyton Manning deserve his salary? Maybe he deserves more, because the fans are buying tickets to see him play, not to see his owner play. Maybe he deserves less (I don’t follow football). Apparently he had neck surgery and I don’t think he won the superbowl last year.
Bill Gates didn’t/doesn’t have to negotiate his share of the revenue with his “players”. If professional sports is the correct model for worker/CEO salaries, maybe Bill Gates deserves less.
loading....
As Tyler implied above, your comment means that we should accept capitalism unfettered, unregulated, exactly as it is.
Most people don’t accept that. Most of us, whether we’re aware of it or not, believe that capitalism is not a perfect system. This is why we have charities. This is why we have Social Security, and Medicare, and scholarships, minimum wage and child labor laws, etc etc.
You can say “that’s not how capitalism works”, but that in and of itself is not a justification. Capitalism needs limits, and checks and balances, and that’s exactly what we’re talking about here.
Just because someone *can* change a company’s bylaws so that, as CEO, he can rob his employees’ pensions to fund his own bonuses, doesn’t mean we *should* let him.
loading....
+1 Also, for capitalism to be “fair” it needs a level playing field where competitors are competing on merit. That is seldom the case, companies are competing with undercut prices, bundling, lock-in practices, price fixing cartels, legal intimidation, threats to suppliers or distributors, etc.
A small company has can’t break into a market dominated by one or more large companies just with a better product and business. A worker doesn’t have a level playing field with the employer so there is no real capitalistic competition.
loading....
Agreed. We have capitalism, but we have regulated capitalism. As per the way of the world, people with more money, power and influence levy great influence with the people making the regulations. So, even though some regulations rein in actions, many do not go far enough (my own opinion there) and many are specifically structured to favor one business or industry over another.
So, in order for theoretical economics to work perfectly – the whole, the market pays what the market can bear and over/under will be corrected by the market – then the market can’t be regulated in the way it is now. It just doesn’t work, because there are too many non-market influences at work.
Let’s just de-regulate everything you say? Well, I don’t see how that would work. Even if all regulation went away and “pure” capitalism somehow was instituted it still wouldn’t be “fair” because we’re starting from this point in time and not from point 0. Even if we could somehow reset all rules and regulations such that we had a totally real, theoretical concept of unfettered capitalism in place it still wouldn’t operate like you think b/c the playing field is not even.
loading....
I agree with Kevin. The notions of working hard v/s smart, and how valuable one’s work is to one’s employers, are absent from your points.
Here’s an example: software development. It is totally possible for a programmer to write an app that automates and radically speeds up a process that takes people hundreds of hours more per month to do by hand or on paper.
Is the programmer “working harder” than the people doing things by hand? Technically, no. Each person is probably exerting himself for a similar number of hours per day. Is he providing more value to the business by what he’s doing? YES. In a demonstrable way.
loading....
The issue with that example is, software writers (I live with one) aren’t paid on productivity gains in the end user the way salespeople are paid commission on revenue earned. The time lapse between work and end result is too broad.
So the software engineers who made the amazing backend database that lets me search customers by any piece of relevant data and find them quickly so I can spend my time with the customer aren’t making any more money than the software engineers who write bad, slow, inaccurate data gathering software that leads managers to bad business decisions or the ridiculously bell-and-whistled publishing software that slows ad sellers & copy enterers down to half their previous speed.
loading....
Great points.
I would add that, traditionally, the argument in favor of high executive pay is that those people take on greater responsibility, and therefore higher risk, and should be compensated for that additional risk.
As we’ve seen, the bailouts and platinum parachutes have made a joke of that argument.
loading....
Just wanted to reply to this. I’ve thought about this as well for two reasons. I work at a job where people assist me. I have 6 years of education and assume responsibility over the workflow and product. I make around 125K a year, they make around 40k a year. Really we all do the (kind’ve)same job, but I get paid more since I offer more cognitive services (information, advice, recommendations, etc) as well as put my license on the line by assume responsibility of the product. Does this make me worth 3 times as much as them? I think it does.
However, When corporate CEOs make 400 times as much as their lowest paid workers, are they really adding that much value? That is a lot of exponents. I don’t think they are adding that much value over a replacement. (Wins over a replacement is a baseball term, but I think it has relevance here). If that CEO was replaced by a VP within that company who is makes 1 million dollars compared to the CEOs 10 million dollars – is the company 10 times worse off? or it is about the same? I would bet it is about the same.
The other thing that makes me think about this (as silly as it is) is the TV show Mad Men. The main character is pretty high up in the corporate structure of a advertising company that works with some big name clients. Today someone at that level likely makes millions of dollars. However, our character lives in a reasonable house (maybe 3 bedrooms) takes the train into work. But times have changed. In the 1950′s the top tax rate was nearly 90%, that is how we paid for infrastructure, etc. Now it is 35% and only fools without tax professionals pay anywhere near that. Things have changed.
loading....
I have been completely surprised by how much momentum the OWS movement has gained. I’ve been following it from the beginning and try to keep up on what’s going on with the movement all over the country. I have not seen anybody in the movement expressing any jealousy towards those that are wealthy. What I have seen is a great deal of concern with the system as a whole. Not just the financial system, but the political system, and our unsustainable, wasteful, destructive, anthropocentric way of life.
loading....
While I agree that America has a love-hate relationship with wealth (as it does with celebrities), I don’t think that’s what the Occupy Wall Street movement is about. I think OWS is about instituting a more level-playing field where we all have a chance. As David Brooks once said, “Economic fundamentalism is just as bad as religious fundamentalism.”
Capitalism needs to balanced out with socialist principles that protect vulnerable members of society and give promising members without the right connections a chance. Also, stringent capitalism is a bit misogynisitc–it rewards individualistic achievement (when most women–and men–who have families know that if you’re just out for yourself, the family won’t survive). It also creates a GDP that increases when human beings do things that are not good for humanity–like go to war or cause oil spills, which create jobs. The jobs that care for humanity, like teaching and medicine, are considered costs instead of preventitive measures that increase our GDP in the long run.
Of course, teachers can pinch and save enough to be millionnaires, and I think you’d be hard-pressed to find someone who hated a person who made their millions through honest work. OWS is about calling out the people who feel entitled to money through dishonest means.
Gurcharan Das (the Indian economist who has seen the effects of both socialisma nd capitalism on India) once wrote “If the sin of capitalism is greed, then the sin of socialism is envy.” Neither is a perfect system, but a balance between the two would allow us to have a more functional society, in my opinion.
loading....
I don’t resent the rich but I would like to see a more equitable society and more freedom of opportunity. I’d like to see equally good schools for all, access to quality healthcare for those who cant afford it and a fair minimum wage. I’d also like to see workers have adequate rights.
loading....
“I don’t resent the rich but I would like to see a more equitable society and more freedom of opportunity.”
What obstacles do you perceive to be preventing you from doing so right now? What additional “freedom” do you feel you would need in order to become rich?
What’s stopping you from sitting down, turning off the TV, and coming up with the next Twitter or iTunes or Groupon? What’s stopping you from knocking on doors and selling your idea today?
I guess I just don’t see this oft-referenced “inequality” that people sometimes refer to. It’s a free country. Just because you’re not smart enough to come up with Facebook doesn’t mean you didn’t have an “opportunity” equal to Mark Zuckerberg’s. He thought of it first, he got rich, and he deserves it. Go think up PayPal or eBay or an electric car. Make it better than everyone else and you’ll be rich too.
I just don’t see it having to do with any “inequality” or invisible “barriers.” Those just sound like excuses and whining to me. If you want to be rich, go be rich. If you’re happy where you are, then go back to watching Glee and stop complaining about rich people who actually worked their butts off and sacrificed time with their families to be successful.
loading....
Wow, this post is the apex of ridiculousness. I don’t even know where to begin pointing out its many absurdities.
I’m going to stop right here and go be rich now. Maybe I’ll post a followup when I’m done thinking up the next Twitter.
loading....
Not being as smart as Steve Jobs is not an “inequality” that the government can fix with regulation.
I ask again: What additional “freedoms” do you think society is lacking that is preventing the little man from succeeding a la Mark Zuckerberg? Is this really a problem about insufficient “freedom of opportunity,” or is it just a laziness/envy/jealousy/no-fair-he’s-smarter-than-me problem?
loading....
Big thumbs up there, El Nerdo!
The former teacher in me is cringing. Some people don’t have the skills, talent, intelligence, motivation and risk tolerance to go invent something and become rich. Trust me. I’ve seen it in classrooms. Different kids have different abilities and talents. That’s all there is to it.
I couldn’t have invented Facebook or Twitter — my brain just doesn’t work that way. And no amount of good connections or opportunities is going to turn me into the next J-Lo!
loading....
@Beth:
“The former teacher in me is cringing. Some people don’t have the skills, talent, intelligence, motivation and risk tolerance to go invent something and become rich.”
Beth, I agree 100%, I’m not denying that at all. Not everyone can be in the 1% (a mathematical tautology). But what are you saying? That since not everyone can be rich, then no one should be allowed to be rich?
One doesn’t have to be a tech genius to be rich. One could have a passion for real estate, stocks, media, sports, fashion, or any number of other fields. Someone with true drive and passion can succeed in virtually any field. However, you’re right, and not everyone is cut out for that. They may lack the social skills, or the street smarts, or whatever. They may be most comfortable as a “worker bee,” for lack of a better word.
But I vehemently disagree that that means they should be paid the same as those who do have the abilities and talents to succeed spectacularly. I believe skill and risk needs to be rewarded, or else a society is doomed to collapse on itself.
loading....
Kevin, do you enjoy arguing against strawmen?
#1
“I vehemently disagree that that means they should be paid the same as those who do have the abilities and talents to succeed spectacularly”
No one argued that. People have argued that at some point a widening gap between CEO and worker salaries makes no sense.
#2
“Not being as smart as Steve Jobs is not an “inequality” that the government can fix with regulation.”
No one argued that.
Someone said, “I’d like to see equally good schools for all, access to quality healthcare for those who cant afford it…”
#3
“Beth…But what are you saying? That since not everyone can be rich, then no one should be allowed to be rich?”
No one argued that either.
loading....
Your implication that the person who made it big was the first one to invent it is on its face absurd. Your own example of Facebook proves that you have no idea what you’re talking about.
loading....
Add Steve Jobs to that list too. There’s no denying his success, but he didn’t invent everything from scratch!
loading....
Or the Winkelvoss thought of it first.
But they didn’t have programming skills and they hired Zuckerberg to build their site for them.
Besides, the person you are replying to isn’t decrying the lack of opportunity and freedom for himself, but for others.
I can’t even imagine what it must be like not to have food. A friend of mine says he was close when he was younger, and he knew kids like himself who sometimes didn’t eat.
Maybe those kids should quit whining and go make another Facebook?
Software isn’t an easy field. It is hard to create value without stepping on someone’s patent. Then the patent trolls come for you and bleed you dry.
Only the big corporations can buy/litigate enough of their own patents. Its mutually assured destruction, with the new guys getting destroyed before they have a chance.
loading....
As I see it, the inequality in our system is aimed at the HENRY’s (High Earners, Not Rich Yet). I remember back to the first year we broke $100k in incomes. At that time we had one child and 100k + in student loans, neither of which was deductible. If we tried to save some money, the interest was taxed at the same rate as our salaries.
Now look at the Kennedys and Bushes. Their savings is investment income – it’s taxed at the much cheaper capital gains rate. They have no student loans.
The system has been set up by the ultra rich (Dems and Repubs) to keep hard working, high aspiration people down as long as they can. It’s only been in these last couple of years that we’ve felt comfortable putting any non-retirement savings into non FDIC insured accounts – many many years after we’d been making more than $100k.
loading....
I don’t doubt there are those trying to keep people in your situation from advancing, but I don’t find it credible that you are the only or even the primary targets of income inequality. I suspect, for example, that the ultra-rich would be at least as likely to send their children to your children’s school as you would be to send your children to an impoverished inner city school unless you are a great exception to the norm.
loading....
Not everybody cares or wants to be rich. But in this country, we have a lot of people who don’t mind working hard in order to simply pay for the basics–and can’t do it because costs are too high. My own mother worked hard for 25 years and was “let go” in the recession because her salary was too high. They eventually hired re-posted the position without asking for a college degree and hired a person at min. wage. My mom took a job at “regular wages.” Her job did not offer health insurance and she could not afford health insurance even if she put every penny she earned toward it.
Everybody deserves to have health care–not just the “rich”. Everybody deserves to have food. Everybody deserves have heat in the winter. People who work 40 hours a week should be able to afford such a minimum.
Saying that people don’t “deserve” such things because they have failed to invent e-bay is a bogus argument. From one who grew up in the heartland, being poor there is not for a lack of effort or hard work. And their goal is not to be like Bill Gates–they want to be paid a “living” wage where working hard means that you earn enough for what you NEED: shelter, food, education, health care. This is a life worthy of respect–not your disdain because they are not “ambitious” enough for you.
loading....
This is SO well put, Phoenix1920.
There are too many people in our country who are struggling to get basic needs met and cannot. I know many of them — I have been one of them from time to time myself — and not one of the people I know desires to be rich.
In fact, many of us who have been rich at some point and then found ourselves suddenly struggling/poor, due to circumstances (medical bankruptcy, losing a job, etc.)– this experience has changed our lives, probably forever.
I know for myself, I have no desire to be rich again — I appreciate absolutely everything I have now, that I once took for granted, and I’m grateful for the lesson.
Having said that — I also believe I have a responsibility to take care of myself financially (being smart and responsible with my money) and a duty towards others not so fortunate.
loading....
It’s tiring to see people continually point out the exceptions in our society as examples of what everyone should aspire for. Bill Gates, Warren Buffet, Mark Zuckerberg. These are the exceptions, not the rule. It’s called the American Dream because you have to be asleep to believe it. Instead of focusing on the exceptions, why not try to take a look at the harsh reality of what America (a great country that I love dearly) has become? It’s not very pretty…
loading....
@ Kevin — funny, I don’t recall saying that I think people should all be paid the same. (I don’t think that, by the way — it would be impractical.)
loading....
Well then Beth, I apologize, but I’m at a complete loss for what you were trying to say then. I’ve re-read your post a couple of times, and still can’t find your point, which is why I was left to clumsily fill in the blank myself.
Of course some kids are smarter than others. Of course people have different talents.
I don’t see how those points, on their own, are relevant to the discussion at hand. In context, the discussion was about whether or not a lack of “freedom of opportunity” is a real barrier to people becoming successful. So even if we agree that not being as smart as other kids represents a lack of “freedom of opportunity” (and I don’t agree at all that it does), what is the government supposed to do to address it?
loading....
Yes, some kids are smarter than others. Some kids are healthier than others. Some kids have a stronger work ethic. I pointed that out in response to your comment that everyone had equal opportunities to go home and invent Facebook or some new product to get rich. You asked “What’s stopping you….?” so I answered.
A government can’t provide talent or intelligence. It can, however, provide the means to foster that talent and intelligence with equal access to good education, health care and a living wage. That’s what I think Ash was getting at.
I’m interested in debating these ideas, but I think your response demonstrates that this discussion is getting too personal. I’m out.
loading....
Buddy, you have a lot of ignorance that needs some tending to. No one here can take care of that for you.
I’ll just point out that you are ignoring what is really the central argument at hand: everyone CAN’T be a millionaire. We all agree on that.
So… then what? The poor (and shrinking middle class) should be doomed to lives of misery and scrambling? Or should we try to create a system where as many people as possible have a decent standard of living? Not rich – just decent.
Someone has to stock the shelves at Wal-Mart, Kevin. Someone has to deliver the mail, and teach our kids, and work the checkout lines. Shouldn’t these people have a living wage and health care and support when they’re too old to work?
(PS: your last name isn’t O’Neil, is it? You sound a little like my brother, and that has me worried…)
loading....
I do not hate the rich. I do question the ridiculous loop that has been created in this country: our retirements are tied to stocks, so there is a demand to keep shareholders happy. CEOs are under pressure to keep earnings increasing at an incredible level, so they cut employees, don’t give them raises that even keep up with inflation–basically everything within their power to keep earnings on the rise. And yet, in a consumer-driven economy, keeping those people in jobs and leveling the pay a bit would be the best thing in the world for confidence.
But analysts would then look at the fundamentals and say “you are paying your employees too much,” and down goes the stock price.
Meanwhile, corporations are sitting on huge stockpiles of cash, which they don’t want to spend, because of “consumer uncertainty.” They don’t want to spend until people start to buy, but no one can buy anything because their salaries haven’t kept up with inflation!
This cycle is crazy.
loading....
Jen, your comment belies a fundamental lack of understanding regarding business and economics.
Firstly, CEOs are under pressure to increase earnings because that’s their job. That’s what businesses do. A business that is content with decreasing earnings is a business that is losing to its competitors, and will soon be extinct (putting EVERYONE out of a job).
Secondly, CEOs don’t “cut employees” in order to increase earnings. That’s ridiculous. In many cases, one of the best ways to increase earnings is to hire employees. If Ford wants to build and sell more cars, it needs more people, not less. A growing business adds to its payroll.
Thirdly, there is competition in the marketplace. If a company is stingy with its pay, then its employees will quit and go to its competitors, taking their knowledge, experience, and innovative spark with them. Their competitors will prosper, and the company will meet its demise. Companies understand that they need to retain talent in order to create new products, but at the same time, there is no reason to pay them more than the market demands. The market sets the rate, and companies that refuse to acknowledge that suffer the consequences of the immutable laws of supply and demand.
Finally, you seem to believe that companies fixate on the “stock price.” In fact, after the Initial Public Offering (IPO), the stock price is largely irrelevant. A company’s stock price has absolutely no bearing whatsoever on its cash flow. It doesn’t show up as revenue, it’s merely the price that private individuals are paying to exchange shares amongst themselves. It’s completely irrelevant to the day-to-day business of the company itself, and has absolutely no direct correlation with a company’s profitability, revenue, or expenses. It is nothing more than an emotional indicator of the market’s shared opinion on the company’s eventual future. That’s all.
loading....
I’d attribute it more to trying to get a quick comment off without getting into too much detail rather than a fundamental lack of understanding.
I get what you are saying, and to an extent agree. But there is no denying that many of the biggest businesses in this country are sitting on a boatload of cash. They also DO fixate on the next quarter’s earnings rather than taking a long view. (A example off the top of my head is Costco. The company is under rather constant pressure to pay its workers “more in line with other retailers”–in other words less–to make the business stats look better.)
“A growing business adds to its payroll”–yes, but only if the demand is perceived to be there. Most companies won’t do the hiring until the demand comes back up–if you are asserting that businesses hire in anticipation of demand, I’d say that belies a fundamental lack of understanding. Companies hardly staff up because they hope demand is there.
The assertion that stock price is largely irrelevant is a bit of nonsense, isn’t it? How much time is spent breathlessly reporting what stocks went up and down? These things do matter, and largely because reporting on them leads people to reach conclusions about a company’s long term viability, no matter how silly that is.
loading....
“The assertion that stock price is largely irrelevant is a bit of nonsense, isn’t it?”
Not at all.
“How much time is spent breathlessly reporting what stocks went up and down?”
By the media? Plenty. By the companies themselves? None. When’s the last time Coca-Cola issue a press release about its stock price?
You’re confusing the media’s need to generate content with issues relevant to a company’s day-to-day operations. The fact that Jim Cramer is on MSNBC acting like a clown and pumping stocks doesn’t mean anything to IBM.
“reporting on them leads people to reach conclusions about a company’s long term viability, no matter how silly that is.”
Again, I disagree. People pay attention to the quarterly earnings reports, not the stock price. Indeed, investors’ sentiment about the quarterly earnings reports is in large part what drives the stock price. I think you’re confusing the cause and effect here.
There is a small class of speculators called “technical analysts” who buy and sell stocks based on charts and graphs. It’s true that such folks base their decisions entirely on the movements of the stock price, rather than the underlying fundamentals. However, those people are not well respected in the investing field, and it’s widely understood that such techniques are hogwash. The pension funds, the hedge funds, and the vast majority of investors pay attention to the business fundamentals, then decide whether to buy or sell their stock.
loading....
The reason the stock price matters is that CEOs (who are picked by the stockholders board) are given pay packages that consist of a high percentage of either stock or options. Therin lies the problem. They are personally motivated to keep the stock price high till they can execute their options, then to hell with the company they ran into the ground – they’ll go find some other shareholder board who needs their stock price to go up. Taking their golden parachute with them. For reference see the past several CEOs of Hewlett Packard, starting with Carly Fiorina!
loading....
Kevin,
Its too bad the real world isn’t so cut and dry as your Company A vs Company B example.
As a programmer, if you write software that saves 6 months off of the product’s ship time (and all subsequent similar products) you will continue making a programmer’s wages. You will never make management wages unless you become management. You will never make CEO wages unless you become a CEO. No matter how awesome you are at being a worker, you can not make more than a programmer makes, even if nothing management ever did saved 6 months off a product’s development (I’m using roughly a real world example of a friend of mine). They’ll ask why you disobeyed their order to do it the manual way and then pocket the bonus for getting it out early.
Sure, you can leave at this point, but they already got what they wanted out of you and they know everywhere else is going to give you the same treatment they gave you so they’ll undercut the salary offer of the next place by saying the living expenses are lower where you already are.
Here’s a wage-fixing lawsuit that was settled:
http://www.lawyersandsettlements.com/case/high-tech-companies-antitrust-wage-fixing-class.html
Companies are generally smarter than that when they are wage-fixing. Its better not to put it out in writing for the lawyers to pick up.
And they can convince you to pay $1,800 for gold when its only worth $1,200 because it’ll probably go higher. So people will bank on getting out when it peaks, instead of being one of the suckers left behind when it tanks.
loading....
Exactly. (This is in reply to Bella at 113, for some reason it is showing up on another comment.)
http://www.epi.org/publication/ceo-ratio-average-worker/
loading....
“Markets demand this, markets demand that.”
Markets can be manipulated.
loading....
Markets can be manipulated.
How do the Powers That Be convince people to stay in a job at Company A that pays $50,000 when they’ve got an offer from Company B to do the same job for $75,000?
Or, applying it to the financial markets, how do these mysterious manipulators convince me to pay $1,800/oz. for gold if I think it’s only worth $1,200?
Praytell.
loading....
Ack! I accidentally responded to 113 instead of 118.
loading....