The problem that these people are experiencing is that they are in a very special privileged position (weather through their own work or through inheritance), yet they realize that most people they will interact with will never attain their status.
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.
"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
> 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.
> 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.
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.
>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.
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.
>If you are making {$25M|$250k}/year through a job, and you depend on that money for daily life
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.
What judgy bullshit. How about: Very rich people who have any brains whatsoever realize that they are still human and their kids can be kidnapped for ransom money or they can be robbed or otherwise targeted.
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.
I agree. I don't see the point of the article -- it basically says "we should discuss the rich some more" and nothing much else; I can't find any constructive or productive conclusion in the article.
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.)
>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.
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 yet, everyone knows it's those darn millennials with their avocado toast that are the "problem"
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.
Why would Beatrice in that case? She's not making that much and a recurring thing in that article is it is a mix of high paying work and old money. People are really weird about money (which is kind of the theme of this article). Direct personal employment is a difficult thing, you have to pay someone else within your means and make sure you have enough money to pay them if you yourself have a lapse in employment/money issue.
$250k gross income is not a lot of money to factor in a personal employee. Even with extensive finangling you're probably paying 35% tax on that. So that's 162,500 net. Split that into 12 months. 13,541 a month. Giving a reasonably fiscally sound plan of a third to savings, third to household expenses and a third to day to day cash, that's 4513 a month in the area where you can plan to spend these things. 35,000 a year is roughly 2,916 a month which is more than half of that kind of loose cash area. If you play with the numbers and weasel out 50k that's still roughly 4,166 a month which is almost a third of this take home income.
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.
I feel like the best thing we could do for everyone living in these expensive cities is to improve public transit and remove zoning restrictions.
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.
I think the verdict on housing projects, in the sense of high rises dedicated to housing poor people, is a bit mixed, which is why many low income housing authorities have subsidized housing instead.
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.
>Personally I like the system that Singapore has where most property is owned by the government and then leased to 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.
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.
Another possible approach is taxing the value of land, rather than the land and structure combined. This would incentivize higher density construction since land owners would want to recoup the tax bill.
I've dropped this comment elsewhere here today, already, but:
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.
I've thought for a while now that charities should do something similar and get in on the wealth signalling market. Not so much cars but I think fashion would be a great industry for them to take on. Instead of dropping $200 on a shirt and feeling guilty, the rich person gets to drop $200 on a shirt and feel good about it.
The only problem I see with this is so-called "charities" charging $200 for a shirt and claiming an obscured donation to charity. The person buying the shirt can feel good about it, and the company selling the shirt can donate $1 and still keep their promise that they made a donation.
Maybe I'm just cynical, but I think with the current economy and business practices going on that I have a right to be.
I think this phenomenon perpetuates false beliefs along the entire economic spectrum as well. I grew up middle class, and myself and my friends always considered movie stars as the richest people around!
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 don't think there's a threshhold. Take Bill Gates for example. He's done a lot of good in his life. He built a huge company that transformed personal computing, employed an army of people and then put billions of dollars into poverty mediation programs that the world's governments didn't seem to be able to handle. Along the way, he also payed billions in taxes. Without old Bill, the world is many billions of dollars poorer.
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.
Bill did not build a company alone. He built it off the backs of employees. His earnings are so substantial that it is fundamentally impossible for him to earn it off of his own two hands and intelligence alone. No one man has enough intelligence or physical ability to generate a billion dollars. Can one man create the windows operating system? Can one man construct a boeing 747? If no one man can construct a boeing 747 than how can their exist people who have wealth greater than the worth of a passenger airliner? There is only one explanation. This wealth was earned unfairly.
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.
Bill was able to organize the labor of people into something more productive than the sum of its parts. That is a relatively rare skill. Luck comes into it, and we can debate how much of a factor time, place, family networks, etc played into it. But regardless there were incumbents that were much more likely to succeed than him at the start.
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.
Bill G used a mixture of cuthroat and illegal activities to crush competition and create a monopoly. In his absence, we may well hve had a thriving ecosystem of compatible adn far more secure technology. Or some other cutthrouat like Steve Jobs would have won. Just because the game is winner-take-all doesn't mean the winner did nearly all the valuable work.
That was true in the 90s with netscape. Less so during the 80s when his position was being cemented. He even sent IBM over to Gary Kildall initially. It was only after that meeting failed that he went out and bought QDOS.
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 was able to organize the labor of people into something more productive than the sum of its parts. That is a relatively rare skill.
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.
Yes it's true there can be only so many. However the skill of BillG is that he made his company the one to dominate. As I said earlier he was not anywhere close to having the strongest hand at the start.
It's skill in the same way someone with a mediocre poker hand bluffs their way to victory.
And everyone was paid. Where is the unfairness in voluntary transactions?
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?
In third world countries people voluntarily get paid 10 cents an hour. Where is the unfairness there?
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.
Is organizing labor a skill as rare as building a boeing 747 with your bare hands and raw intelligence? I would say that the aforementioned skill is so rare, no human being on the face of the earth has the ability to build an airliner by themselves. Yet here we have man named Bill Gates who possesses more wealth then several airliners.
Bill Gates probably deserves to be a millionaire, but no man deservers to be billionaire... it's just obscene to say such a thing.
There are many engineers. Very few of them are building new organizations that make things like 747s possible. How much this "skill" is worth can be debated. But if you go by scarcity its certainly more scarce than engineering talent.
How much skill required to build new organizations is also debatable. Sure there are few people who actually build organizations, but is it because the skill is scarce or is it because the positions accommodating this skill are few and far in-between? If a pauper can replace a prince then it must mean anyone including a pauper can do the job of the prince.
Trust me. Gathering people and telling them what to do is 100 times easier than actually doing it.
> There is only one explanation. This wealth was earned unfairly.
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".
This is hard to define and is subjective. I use a hard metric for my own definition that makes sense.
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.
> 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.
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.
>all the humans in the world put together couldn't make a 747 with their bare hands.
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"
>if it is impossible for a man to build a 747 with his bare hands
&
>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?
This is not true at all. A microwave can be built by the knowledge and skills of a single man.
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.
why? i don't get why there needs to be a limit. people are pretending like wealth is a zero sum game. Someone being wealthy doesn't inherently hurt anyone else. This is the soviet model where the rich are to be hated because the only way to get money is to steal it from the poor. Neglecting that the economy facilitates transactions where both sides are winners. When i buy bread, the bread maker gets money and i get food and we're both happy. Should we punish the bread maker if he sells too much bread and feeds too many people?
Some people don't understand that 250K a year is not rich in or near expensive cities. If you live in the bay area and your mid/end career, 250K/houshold a year is barely middle-class. And if you live in palo alto, 250K for a household, you're almost eligible for low-income housing assistance. Perhaps at 1 to 2 million per year or more, you can call it rich.
+1. The key thing is that this takes a lot of stress off of her shoulders. That 250k annual income is now spending money. She can spend it all and not worry about savings. I make more than that but can't spend most of it because I have to think about the future---buying a house, kids, rainy-day fund, etc.
It's not that there shouldn't be rich people, the question is how many and by how much. Obviously on some level we have finite resources.
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%).
Fiat money is just a concept made up by governments, so no – the resource is not finite, and I think that's the crucial point in lots of these conversations. Innovators create and deliver value to large populations of people and are rewarded for it economically – this is supposed to be fair, and arguably is "the american dream" because the premise is that they are being "fairly" compensated for the overall value they've delivered to society at large.
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.
Perhaps they are uncomfortable because subconsciously they know that they don't deserve their wealth. The discomfort stems from another root emotion... guilt.
I don't think they subconsciously believe they don't deserve their wealth. I think some may subconsciously feel guilty because they don't do more to help with their wealth.
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.