What the Rich Won't Tell You
nytimes.com
nytimes.com
It is not about hard work, or "bootstrapping" yourself. Its all about the luck. And they have been lucky. They are reaping the benefits of their luck at a disproportionate rate then the these other people. And they aren't doing anything about it.
It is ridiculous that people who make $250K or more a year (and I don't care where you live) think that they are "middle class". Bullshit. You are wealthy. Most other people are not. The quicker you admit to it - the more the economic disparity becomes obvious and something has to be done about it.
In Inequality for All—a 2013 documentary with Robert Reich in which he argued that income inequality is the defining issue for the United States—Reich states that 95% of economic gains went to the top 1% net worth (HNWI) since 2009 when the recovery allegedly started. (https://en.wikipedia.org/wiki/Inequality_for_All)
By continuing to state that they are 'normal' or 'middle class' or 'frugal' - they are really trying to convince themselves that they are not the on the "taking" part of society.
"The 400 richest Americans now own more wealth than the bottom 150 million combined. "
http://www.investopedia.com/news/how-much-income-puts-you-to...
"According to statistical data from the Internal Revenue Service (IRS), the top 1% had an adjusted gross income of $465,626 or higher for the 2014 tax year. "
People earning about $250K/yr also pay the highest income tax rate and are exempted from means-tested welfare programs.
Yes, the upper middle class do quite well, often after spending a lot of money and opportunity cost on long-term education, as well as working long hours, and they pay (and vote in favor of) substantial taxes, and donate kilobucks to charities.
Meanwhile, the Very High Net Worth cohort collect far more, and more from investment gains not labor, and fool the public into blaming the upper middle class HNWI
I think Thomas Piketty's proposal at the end of "Capital in the Twenty-First Century" for a progressive global tax on wealth, not income, could be a very positive thing.
One of Piketty's points was that even putting in place a wealth tax with a pretty negligible tax rate would require governments to establish the necessary bureaucracy for collecting data on the wealth of their citizens and residents, and a few years afterwards there would be a lot more data for citizens, academics and policy makers to use when discussing and designing taxation policy.
Yet.
If you can save and invest half of that eventually you might be.
If you are making $250k/year through a job, and you depend on that money for daily life, you are not wealthy. You are a high-income earner. You can kind-of put your kids through private school and maybe even get a rent-a-maid more often than lower-earning folks, but if your yearly spend is close to $250k/year, you're not wealthy.
If you are making $25M/year through a job, and you depend on that money for daily life, you are still not wealthy. You'll be classified as an ultra high net worth individual by banks and money managers and qualify for a lot of cool rich people shit. You'll probably trade American or Delta for NetJets or Delta Private Planes (a benchmark a lot of folks in this article used as "elite snobbery," which it really isn't in many cases), or you'll make the mistake of buying your own jet, but if your yearly spend is >$25M/year, you're not wealthy.
Why? If you lose your job in both cases, you are screwed.
Wealthy is never having to work for your money because your money works for you. Having a high-income helps towards getting to wealthy, but you can also just buy more expensive shit with that income and just stay high-income.
The way I see it: you're wealthy when you can do, wear or say nearly whatever the fuck you want and not worry about your money/lifestyle going away.
Here's the thing: the second half of this snippet doesn't make any sense. No one needs that much money to get along with their life. Living frugal is precisely that: requiring much less expenditure than you make. It's entirely possible to live on $40k in expenses per year. Many, many people do that every day with $40k or even lower.
How can one depend on so much expenditure? There's no reason. That amount of money minus absolutely vital expenses calculated according to minimum market rates for healthcare, housing, and food will always be more than enough to retire on very early if saved wisely.
If you set yourself up to be screwed even after making that much money, you're making very poor decisions.
That is not the point I was trying to make. The point is, people in that income bracket have an easy time living a good life AND saving.
If you make $250K a year, you are fully capable of being financially independent very quickly. The average family in the US lives on 50K a year. So lets double that - you use 100K a year. That still leaves $150. Lets say your taxes are 50K (20% which is about right) you still have 100k a year in Savings. That is twice the incoming in savings of the average US family. In 10 years you will have 1 million in savings (not to mention the other assets you ave created over the years).
If you can't bring yourself to live on that budget, you really need to take a good deep look at yourself and your priorities in life.
Putting kids in private schools and getting a rent-a-maid are not requirements to a good life.
Like, you know, basic survival instinct kicks in at some point and you realize downplaying it is the only way you can walk down the street without a big fat target on your forehead.
The entire article has a subtext of "We should talk more about these things so we can take away their extreme privilege." The entire thing is openly hostile to their very existence.
Gee, I wonder why millionaires would go "Why, no, we aren't rich. We are just, you know, comfortable." when talking to someone who openly wants the rich to cease to exist somehow.
Which would be relevant, if tons of rich people like those in the article, and other even richer, didn't do that at all.
And I strongly disagree with the premise that the rich want to BS themselves via euphemisms or hiding their income and thus they'll remove some imaginary stain. I am sure some of them do that, but what the author misses is that many people who worked hard and/or inherited a ton of money aren't scumbags and are actually down-to-earth. And as you pointed out, they also don't want to paint a target on themselves. I don't want people knocking on my door begging for money (relatives I haven't seen in 15+ years already do that, damn it), or having an increased advertisement exposure (gods, please no!), or having people trying to hack my website, invoicing system or whatever. I am much better off living with my loved people and my money and chilling and enjoying life instead of constantly working to tighten security from every direction I am likely to be attacked from. No, thanks!
I have been gradually improving my financial life by working hard and picking my battles and now that I can freely order two copies of the so-called iPhone X (or Pro, we still don't know the moniker) without feeling much pressure... I honestly am much more judgemental on how do I spent money.
The fact that you have money and you worked for them to me automatically means you learn the value of money and don't want to just throw them in a black hole.
(For what it's worth though, I wouldn't feel guilty in front of a house-maid... I'd either raise her wage by 50% or so and in doing so would make sure that person remains loyal to me as long as she wants that kind of career for herself... or I would discuss it once with my wife, we'd conclude we shouldn't increase wages based on vague guilt feelings, and be done with that topic forever.)
Why doesn't Beatrice just pay her housekeeper more? Then instead of shame, she could feel pride in helping bring up the world around her. Her shame is evidence that she can afford it and "knows" she could improve the life of another individual.
Also what benefit does the $6 bread confer? While I'm not sure I agree that $6 is "obscene" for bread (mine costs $3.50 or thereabouts), I don't understand how you can buy something without heavily justifying its cost.
Not making much, compared to what frame of reference?
A personal employee does not make you money, you are only buying time. You are buying this time year after year. 250k is basically the point in time where hiring help starts to make sense at all, which is why I am saying she is not really making a lot of money to give a generous salary increase. If you are making 500k+ you can certainly pay more but 250k is table stakes to pay something OK and not sacrifice your own financial stability/pay for kid's college.
Cheap bread is an issue with the poor. It's increadiably unhealthy.
But it tastes great, is cheap and keeps kids happy but doesn't have the stigmata of lets say ice cream which is as bad.
I think if you are paying $3.50 you probably are having healther bread. $6 as well.
You 'could' produce cheap healther bread in bulk, but we are not. So expensive is healthy can be a good proxy on diet.
Getting all the rich people to give up their nice houses is not going to have a meaningful impact on prices for most of us.
When I think of the alternatives I think of Soviet Russia, where if you weren't born in Moscow good luck moving there because (besides needing a permit) there was a years long waiting list for apartments. Which is essentially what you get when there is limited supply and no way of resolving competition: everyone just gets put on the waiting list. Which is what we see happening with subsidized housing programs in all major US cities, they exist, but there's a years long waiting list.
If you're just talking about the government building houses and then acting as a landlord, then that may have less downsides, but still has all the issues of any government provided service not being very responsive to people's needs.
Personally I like the system that Singapore has where most property is owned by the government and then leased to private entities, often for 99 years. It means that the entity capturing the value of land in the long term is the state, but still lets development get done by private entities.
But in terms of what is realizable, it seems more likely that we could relax zoning than have NYC all of a sudden find the money to build lots of housing and successfully execute on that project and not make it a hideous brutalist disaster where people don't want to live in and continue to maintain that property well. Maybe you are more of an optimist about government than I am, but IME everything where the government actually has to do something, it's done poorly. Not that private development is perfect, but there at least there is some form of feedback from a well regulated market.
>But in terms of what is realizable, it seems more likely that we could relax zoning than have NYC all of a sudden find the money to build lots of housing and successfully execute on that project and not make it a hideous brutalist disaster where people don't want to live in and continue to maintain that property well. Maybe you are more of an optimist about government than I am, but IME everything where the government actually has to do something, it's done poorly.
In Singapore most property is built by the government and it's of a high quality. It can be done well, it simply requires a political imperative.
The private sector reacts to this by building higher quality housing because the government sets a floor on quality. Maybe you are more of an optimist about the private sector than I am but I've lived in shitty private apartments in Europe and decent government housing in Singapore. If the private sector doesn't have discipline imposed upon it, you get slumlords.
Anyway, plenty of the government housing projects in NYC are nice.
All the more reason to enable people to signal their wealth (sexual fitness) and raise taxes at the same time - by repurposing "Sumptuary Laws." For example: If you want a car that's white, yellow or blue, no extra tax. If you want a red car that's a significant tax. If you want a purple car, that's a really big tax. Note that, with Sumptuary Taxes, you don’t have to be wasteful or conspicuously consume, or pour a large amount of carbon into the atmosphere in order to signal your wealth - the red paint and purple paint don’t cost much more than blue or grey. So this is also a very green proposal.
With Sumptuary Taxes you can show people you're rich and they're not and help the commonweal at the same time: showing that you're one of the responsible, caring rich.
(Sumptuary – related to the word sumptuous, of course.)
Sumtuary Laws were tried in England in the Fourteenth Century, but for almost the reverse purpose – merely to prevent poor people from wearing clothes that resembled the clothes rich people wore. This didn’t raise any revenue and was intended to save rich people money while increasing social barriers. The laws weren’t very successful and they didn’t last long.
Maybe I'm just cynical, but I think with the current economy and business practices going on that I have a right to be.
When in reality, movie stars have nickels compared to executives, and old-money families. Many folks just can't comprehend the difference between 5 million dollars in assets, to 500 million dollars.
Which begs the question: at what dollar amount does wealth become obscene and unnecessary? It's a moving target, but if I had to throw a dart I would probably pick 100 million as being the upper limit for wealth for an individual. There is just no reason to have more than that.
I think there's a lot of value in letting people that are 10,000x better than the average person at creating wealth do so. Maybe there should be something to limit the excesses of luxurious consumption (I for one, favor a progressive VAT), but I think trying to impose punitively high tax rates on very successful people makes society worse off in most cases.
What Bill and all other billionaires do is utilize the labor of other people. Microsoft, Amazon, Facebook, and Apple are all group efforts where humanity pools their collective power together to construct something greater than one man can produce. The issue here is that, the leaders of these groups get rewards that are disproportionate. There is no way one human can contribute labor worth 50 billion dollars to the world. It it physically impossible. The taxes that Bill paid is wealth generated by the employees, not Bill.
Define "unfairly".
If by "unfairly", you mean "earned by owning a company that paid its employees well, gave them stock options that made millionaires out of many of them, and still made the owner insanely rich", well, that's kind of an odd definition of "unfairly".
Find a physical product that is fundamentally impossible to be built by one man. Say a boeing 747. Find a man who has more wealth then the cost of a boeing 747. By common sense: if it is impossible for a man to build a 747 with his bare hands then it is impossible for a man to own more wealth then the cost of a 747 without going through trades and transactions that are unfair. If such a man exists then he attained his wealth through unfair transactions.
This is my definition of unfair. You may have another definition and I respect that. IMO in the ideal world Bill Gates probably deserves to be a millionaire and billionaires would represent a perversion of wealth that is insanely obscene.
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>without going through trades and transactions that are unfair
It's fundamentally impossible for one man to build even the microwave that preheats the meals inside a 747, but that's no reasonable threshold. The entirety of modern life is built on transacting goods and services that are fundamentally impossible to create alone -- are you trying to say that all transactions are unfair? Or just Bill Gates'? Or just transactions that are too skillfully done?
Additionally you are not thinking holistically. Take your computer: a device that needs the manpower of thousands to create. Such a device is only as cheap as it is because of mass production on an automated factory line. The true value thus cannot be measured by an individual computer but by the intrinsic value of the technology as a whole. This is hard to measure. I chose a 747 because 747s are not produced on a robotic factory line. They are built by machinists, so each plane is a more accurate measure of a products' true value.
I am saying that in a capitalist economy. The majority of transactions are unfair. The lower class gets screwed perpetually. This is a fact of life.
I don't consider that to be common sense at all. If nothing else, all the humans in the world put together couldn't make a 747 with their bare hands. And yet all the people in the world together have far more wealth than the cost of a 747. So I think there's something faulty in your logic.
More to the point: Who was Gates unfair to? His own workers? He paid them well, in fact above market rates. His customers? They wanted his products more than they wanted their own money.
It sounds like you're just looking at his wealth and saying "that's unfair" without having any idea of what he actually did that's unfair. That's... rather weak.
How does this make sense. How do 747s exist if they are not created by our hands? Maybe it's my mistake, I am not precluding hands from using tools, as long as the tools are eventually made by hands somewhere along the supply chain. Lets not complicate the matter with deliberate nitpicking. This is not faulty logic, the fault is with you.
>More to the point: Who was Gates unfair to? His own workers? He paid them well, in fact above market rates. His customers? They wanted his products more than they wanted their own money.
I'm talking about his own workers. Market rate in India is 5 cents an hour. Market rate is rarely fair. If you think market rate is fair then you are highly highly mistaken.
>It sounds like you're just looking at his wealth and saying "that's unfair" without having any idea of what he actually did that's unfair. That's... rather weak.
Sounds like you made a claim about something I'm doing when I already told you my reasoning. Sounds like you didn't read what I wrote. I'll repeat the logic. He is being unfair because his wealth is to obscenely high for one man to own. What does that mean? It means what he "did" is underpay people working for him.
Do I really need to spell out the logic? I am describing a dead body and I am calling the man with a bloody knife standing next the dead body the murderer and you are asking me to point out what he actually "did"
IBM had the biggest advantage here. Snatching defeat from the jaws of certain victory is one of the largest blunders in modern business.
Gary Kildall failed to land a suitable deal with IBM, and would have been the next in line to be Bill Gates. Even if he did make the deal his personality made it unlikely he'd structure the deal as BillG did which enabled the clone market.
Or Seattle Computer Products that owned the actual DOS BillG used.
Ultimately it was BillG that executed the vision and did so relentlessly for multiple decades. Not many other executives were sleeping under their desks at the time. This was particularly what impressed IBM enough to take a chance on them. Their work ethic as a company was well noted in the industry. BillG set that example from the top.
The point is that Microsoft wasn't always a monopoly. It took skill to get there, and there were opponents that started with much better hands.
Bill Gates probably deserves to be a millionaire, but no man deservers to be billionaire... it's just obscene to say such a thing.
Trust me. Gathering people and telling them what to do is 100 times easier than actually doing it.
If you're trying to argue that, "it would have just happened anyway", all you're asserting is that the profits would have gone to someone else, but at a lag of several months to several years. Why is slowing down technological advancement an improvement?
A contract between an employer and an employee can establish a salary that is only agreed upon. Both parties can agree to either a salary that is fair, or is unfair. It is totally possible in this reality to voluntarily agree to unfair policies.
>If you're trying to argue that, "it would have just happened anyway", all you're asserting is that the profits would have gone to someone else, but at a lag of several months to several years. Why is slowing down technological advancement an improvement?
When did I say slowing down technological advancement an improvement? You're making a lot of random stuff up here. I've never claimed to have stated nor do I understand any of your statements here.
Citation needed. Why it's a rare skill? How about it's a rare opportunity offered to too few people?
I think that a market only can support/bear a number of successful companies (and thus CEOs etc) which is smaller than the number of otherwise competent potential CEOs.
Instead of seeing someone like Gate as an ubermench with natural CEO-talent, I believe that tons of people are never offered the chance -- through lack of luck, lack of educational opportunities, bad background, etc to be able to start a company.
It's skill in the same way someone with a mediocre poker hand bluffs their way to victory.
Chris Pratt is American actor who has a net worth of $30 million dollars
McDonalds CEO Don Thompson's cumulative net worth is $20,000,000.
It's this part that definitely makes her rich.
This is silly? The staff already knows you're wealthy. How? You're paying their paychecks.
EDIT: I kept reading. "Instead, such moves help wealthy people manage their discomfort with inequality".
I'm interested in seeing how windfalls change people.
Maybe it's crazy, but I had this idea that perhaps some reasonable limit could be determined mathematically, say, the income of a given top ratio should not exceed the income of the same bottom ratio by the square root of said ratio (e.g. the top 10% should not make more than 3.16 times more than the bottom 10%).
The closer you get to individual transactions as examples, the easier it is to ignore that it's not a zero-sum game. I think we all agree we're probably paying too much for an individual iPhone X or whatever, but few disagree that the creators of these devices deserve at least the amount of wealth that their creations "gave back" to society through value, convenience, efficiency, and so forth on a society-level scale.
Here's a guy that consciously believes he doesn't deserve his wealth.