The Unappreciated Difficulty of Being Rich in America

Here is a bit from an article in Salon magazine:

Pleading Poverty at $500,000 a Year

As Mother Jones has reported, the average American family in the bottom 90 percent of income earners makes just $31,244 a year -- and, to reiterate, that's the average, meaning many make far less. Similarly, the median net worth of American families is a mere $120,000 -- and remember, "net worth" means the sum value of all of a family's assets liquid or otherwise, from income to home to car to furniture to the kids' dirty undies.

So when you see a newspaper article during the recession about how difficult it is to live on far more than the average American's income, you can be forgiven for thinking you are reading either (a) the Onion, (b) the in-house newsletter of 18th-century Versailles or (c) an old clip of NBA guard Latrell Sprewell infamously saying a $7-million-a-year contract was an insult because "I have a family to feed." But in 2009 two such articles appeared in a pair of our nation's supposed journalistic beacons.

The Washington Post's article headlined "Squeaking By on $300,000" was absurd enough, but a Sunday Styles piece in the New York Times took that cheeky, gee-whiz journalism a step further. Daring readers to attempt the supposed hardships of affluence, the piece was titled "You Try to Live on 500K in This Town." (The story naturally fails to mention that the city's median household income is about $38,000 a year, meaning that most New Yorkers take the headline's challenge on a yearly basis.) Instead, it reported on a proposal to limit bailed-out bank salaries to a half million dollars a year, and then proceeded to try to cheekily illustrate how impossible that would be in the Big Apple.

According to the Times' "cold hard math," this is virtually untenable given expenses that include $32,000-a-kid private school bills, $96,000-a-year mortgages, $96,000-a-year co-op maintenance fees, $45,000-a-year nanny tabs and, of course, the undebatable requirement that very rich people take "at least two vacations a year, a winter trip to the sun and a spring trip to the ski slopes." And mind you, the Times was quick to inform us, this doesn't even include other "prerequisites" to living in New York City like "restaurants, dry cleaning... kennels for the dog when the family is away, summer camp, spas and other grooming" and $1,000 suits from Brooks Brothers.

There more. There is a whole slide show of articles on new mantra of the rich in America "Let Them Eat Cake". This series proves beyond any doubt that the rich -- the ones who are happy to trim $4 trillion from government services to the bottom 90% of the population -- who refuse to countenance even a penny more of taxes are beyond redemption. They have become untethered from America and use their bought-and-paid-for-politicians to demand tax cut after tax cut.

Struggling to "Get By" on $174,000 a Year

Can you believe the sheer stupidity of claiming that it is "hard to get by" on a public employee salary that is three times what the median for Wisconsin...



This guy wants you to sympathize with him, but he is from the very political party that is rolling back income for public union employees in Wisconsin in order to give more tax cuts to corporations and fat cats who... how can I put this gently... are earning something north of $170,000/year.

Here's a bit from the blog Talking Points Memo:

The tape caused a stir for Duffy, a first-term conservative best known for his past as a reality TV show star on MTV's The Real World. Democrats flagged the comments about his taxpayer-funded salary (which is nearly three times the median income in Wisconsin) and criticisms began to flow Duffy's way.

In the clip, Duffy is asked whether he'd support cutting his own salary. Duffy says he would, but only as part of a plan where all public employees' salaries would be cut. He then said that the $174,000 in salary (not including benefits) he receives is a squeeze for his family of seven to live on:

I can guarantee you, or most of you, I guarantee that I have more debt than all of you. With 6 kids, I still pay off my student loans. I still pay my mortgage. I drive a used minivan. If you think I'm living high on the hog, I've got one paycheck. So I struggle to meet my bills right now. Would it be easier for me if I get more paychecks? Maybe, but at this point I'm not living high on the hog.
Duffy's office said any Democratic criticism of his response was "a misleading attack." For more on Duffy's finances, see this post.

The county GOP took down the video from its blog after the Washington Post posted a short clip of it yesterday morning.

This isn't quite as bad as the kid who killed his parents and then asked for mercy from the court because he was an orphan, but it is close.

Why do people vote in this bloodsuckers to be their "representatives" when they are so unrepresentative of the people they are supposed to "represent". This guy is so out to lunch he thinks he has an especially hard time because he has to get by on only $174,000 per year. I wonder how that sits with the Walmart employees of his district.

Update 2011apr02: Here is a bit more background from the Talking Points Memo blog:

Duffy is one of the poorest members of Congress. OpenSecrets.org, which tracks the money in Congress, ranks Duffy as near the bottom among House members when it comes to his personal net worth.

Here's a rundown of Duffy's finances, from the 2009 disclosure form he had to file with the government: his family of 7 (wife plus six kids) is carrying between $250,000 and $500,000 in mortgage debt; between $50,000-$100,000 in student loans; between $15,000-$50,000 in credit card debt; and between $100,000-$250,000 in debt related to the family vacation home, a cabin not too far from his primary residence in Wisconsin.

The Duffy family lives in a 5-bedroom house sitting on 5 acres in Ashland, Wisconsin. The home has a market value of $247,000. They also own a 2-bedroom cabin in Iron River. That house is valued at $229,000.

Duffy's household reported a total of $154,500 in income in 2009. That included $94,000 in salary from his job back then as county district attorney and $4,500 in income from his side gig as a competitive lumberjack. Duffy's wife, Rachel Campos-Duffy -- who like her husband starred in MTV's The Real World -- brought in $56,000 in salary.

View the entire 2009 financial disclosure form here.

The $154,000 in income in they reported in 2009 made Duffy's family objectively well-off when it comes to a family from Wisconsin. Median household income there in 2008 was $52,103, according to the Census.

But in Congress, that kind of coin makes Duffy one of the poorest. Check out this chart from OpenSecrets comparing Duffy's finances to the congressional average.

...

Earlier this month, the site did a big report on the freshman House class, which is among the wealthiest ever to be elected. Duffy was among the "several freshmen who, however, have little reportable wealth at all," OpenSecrets wrote.

Duffy's also tried to paint himself as one of the more austere members of the freshman class. He's one of around 20 members who sleep in their Hill offices rather than pay for a residence in Washington.

Go to the TPM blog to get the embedded links.

Living in a World of Change

When you are in the middle of things it is hard to get perspective. Here's something that made me stop and think. This is from an article in The Atlantic by Chrystia Freeland entitled "The Rise of the New Global Elite":

Peter Lindert is an economist at the University of California at Davis and one of the leaders of the “deep history” school of economics, a movement devoted to thinking about the world economy over the long term—that is to say, in the context of the entire sweep of human civilization. Yet he argues that the economic changes we are witnessing today are unprecedented. “Britain’s classic industrial revolution was far less impressive than what has been going on in the past 30 years,” he told me. The current productivity gains are larger, he explained, and the waves of disruptive innovation much, much faster.

From a global perspective, the impact of these developments has been overwhelmingly positive, particularly in the poorer parts of the world. Take India and China, for example: between 1820 and 1950, nearly a century and a half, per capita income in those two countries was basically flat. Between 1950 and 1973, it increased by 68 percent. Then, between 1973 and 2002, it grew by 245 percent, and continues to grow strongly despite the global financial crisis.

For years I've enjoyed thinking about this interesting tidbit from Brad DeLong:

Even the rich were poor. Consider Nathan Meyer Rothschild. He was the richest man in the world in the first half of the nineteenth century. But he died in his fifties of an infected abscess in his back -- an abscess that we oils have cured by lancing and antibiotics without even a hospital admission for day surgery. Nathan Meyer Rothschild did not live to see his grandchildren grow up -- something that the guys working the loading dock at Target expect as a matter of course, as their birthright. Who is richer: Nathan Meyer Rothschild or America's working poor today?

But, as Chrystia Freeland points out, the ultra-rich of today are a different breed from the inheritied wealth of America's Gilded Age:

As with the aristocracies of bygone days, such vast wealth has created a gulf between the plutocrats and other people, one reinforced by their withdrawal into gated estates, exclusive academies, and private planes. We are mesmerized by such extravagances as Microsoft co-founder Paul Allen’s 414-foot yacht, the Octopus, which is home to two helicopters, a submarine, and a swimming pool.

But while their excesses seem familiar, even archaic, today’s plutocrats represent a new phenomenon. The wealthy of F. Scott Fitzgerald’s era were shaped, he wrote, by the fact that they had been “born rich.” They knew what it was to “possess and enjoy early.”

That’s not the case for much of today’s super-elite. “Fat cats who owe it to their grandfathers are not getting all of the gains,” Peter Lindert told me. “A lot of it is going to innovators this time around. There is more meritocracy in Bill Gates being at the top than the Duke of Bedford.” Even Emmanuel Saez, who is deeply worried about the social and political consequences of rising income inequality, concurs that a defining quality of the current crop of plutocrats is that they are the “working rich.” He has found that in 1916, the richest 1 percent of Americans received only one-fifth of their income from paid work; in 2004, that figure had risen threefold, to 60 percent.

Freeland spots the problem with the new ultra-rich:

You might say that the American plutocracy is experiencing its John Galt moment. Libertarians (and run-of-the-mill high-school nerds) will recall that Galt is the plutocratic hero of Ayn Rand’s 1957 novel, Atlas Shrugged. Tired of being dragged down by the parasitic, envious, and less talented lower classes, Galt and his fellow capitalists revolted, retreating to “Galt’s Gulch,” a refuge in the Rocky Mountains. There, they passed their days in secluded natural splendor, while the rest of the world, bereft of their genius and hard work, collapsed. (G. K. Chesterton suggested a similar idea, though more gently, in his novel The Man Who Was Thursday: “The poor man really has a stake in the country. The rich man hasn’t; he can go away to New Guinea in a yacht.”)

This plutocratic fantasy is, of course, just that: no matter how smart and innovative and industrious the super-elite may be, they can’t exist without the wider community. Even setting aside the financial bailouts recently supplied by the governments of the world, the rich need the rest of us as workers, clients, and consumers. Yet, as a metaphor, Galt’s Gulch has an ominous ring at a time when the business elite view themselves increasingly as a global community, distinguished by their unique talents and above such parochial concerns as national identity, or devoting “their” taxes to paying down “our” budget deficit. They may not be isolating themselves geographically, as Rand fantasized. But they appear to be isolating themselves ideologically, which in the end may be of greater consequence.

Freeland sees a change in the tone of society, and I hope this is a real change because it is long overdue that the ultra-rich milk the rest of society for their outrageous wealth:

The cultural ties that bind the super-rich to everyone else are fraying from both ends at once. Since World War II, the United States in particular has had an ethos of aspirational capitalism. As Soros told me, “It is easier to be rich in America than in Europe, because Europeans envy the billionaire, but Americans hope to emulate him.” But as the wealth gap has grown wider, and the rich have appeared to benefit disproportionately from government bailouts, that admiration has begun to sour.

One measure of the pricklier mood is how risky it has become for politicians to champion Big Business publicly. Defending Big Oil and railing against government interference used to be part of the job description of Texas Republicans. But when Congressman Joe Barton tried to take the White House to task for its post-spill “shakedown” of BP, he was immediately silenced by party elders. New York’s Charles Schumer is sometimes described as “the senator from Wall Street.” Yet when the financial-reform bill came to the Senate last spring—a political tussle in which each side furiously accused the other of carrying water for the banks—on Wall Street, Schumer was called the “invisible man” for his uncharacteristic silence on the issue.

I've got nothing against rewarding hard work or genius, but it has to be within reasonable bounds. The last 30 years has seen the ultra-rich go beserk in piling their wealth higher and deeper and retreating from the rest of society. This is completely unacceptable. A day of accounting is at hand (at least I hope). Hopefully the accounting will go peacefully with the ultra-wealthy accepting that their greed has passed beyond the bounds of decorum. They need to rejoin the rest of us and form a harmonious society in which everybody gets a chance to succeed. Instead, the last 30 years have seen the bottom 80% see their tenuous hold on life slipping away as their wages have slipped and their standard of life slowly sink. This is crazy in an era of rising productivity. We all should share in the benefits of a bigger, wealthier economy.

Chrystia Freeland ends her article noting that the writing is on the wall for the ultra-rich:

The lesson of history is that, in the long run, super-elites have two ways to survive: by suppressing dissent or by sharing their wealth. It is obvious which of these would be the better outcome for America, and the world. Let us hope the plutocrats aren’t already too isolated to recognize this. Because, in the end, there can never be a place like Galt’s Gulch.

Waste & Corruption

There was some media coverage for the cost overruns building the embassy in Baghdad, but there is no continuing focus on the waste and corruption in US "plans" for the Middle East. Here's a bit from the TomDispatch blog site:

In 2003, when the Bush administration invaded Iraq, the Pentagon already had on its drawing boards plans for building a series of permanent mega-bases in that country. (They were charmingly called “enduring camps.”) Once Baghdad fell and it turned out that, Saddam Hussein or no, the U.S. was going to have to fight rather than settle in and let the good times roll, hundreds of micro-bases were added to the mega ones -- 106 of them by 2005, more than 300 in all. Then, in 2005, Washington decided to trade in its embassy in one of Saddam’s old palaces for something a little spiffier. In its place, on a 104-acre plot by the Tigris River in the middle of Baghdad, for at least three-quarters of a billion dollars after cost overruns, it built the largest, most expensive embassy on the planet. It was planned for a staff of 1,000 “diplomats” with all the accoutrements of the good life and plenty of hired help. (Even now, despite much discussion about “ending” the American role in Iraq, further plans are reportedly being made for the embassy’s staff to double.) This was clearly to be U.S. mission control for the Greater Middle East.

Go read the whole posting for a lot more dismal numbers... wasted dollars... that the politicians don't bother explaining.

And here's a bit from another posting on the site looking at this year's Pentagon budget:

The good citizens of Massachusetts may be against free rides and bailouts for many types, but not for everybody. I’m speaking, of course, about the Pentagon, for which Congress has just passed a record new budget of $708 billion (with an Afghan war-fighting supplemental request of $33 billion, essentially a bail-out payment, still pending but sure to pass). This happened without real debate, much public notice, or even a touch of anger in Washington or Massachusetts. And keep in mind that the Pentagon’s real budget is undoubtedly close to a trillion dollars, without even including the full panoply of our national security state.

The tea-party crews don’t rail against Pentagon giveaways, nor do Massachusetts voters grumble about them.

...

In this way, no institution is more deeply embedded in American life or less accountable for its acts; Pentagon time exists enswathed in an almost religious glow of praise and veneration -- what might once have been known as “idolatry.” Until the Pentagon is forced into our financial universe, the angry, impatient one where most Americans now live, we’re in trouble. Until candidates begin losing because angry Americans reject our perpetual wars, and the perpetual war-planning that goes with them, this sort of thinking will simply continue, no matter who the “commander-in-chief” is or what he thinks he’s commanding.

It’s time for Americans to stop saluting and end the Pentagon’s free ride before America’s wars kill us.

Here is an interesting video of Kary Mullis. I like the guy. But I stumbled across this on P. Z. Myer's blog Pharyngula. Myer's entitles it "Kook". Then proceeds to say:

I'm sorry to inflict this on you, and it's OK if you decide not to torture your brain watching it. This is Kary Mullis, Nobel prize winner for the discovery of PCR, giving a talk. It's long and rambling, and at various points he endorses global warming denialism and HIV denialism, but somehow thinks maybe there is something to astrology. It's a terrible, awful, embarrassingly bad talk from a prestigious kook. Mullis has one point of pride with me: when anyone asks me to name a book by a legitimate, successful scientist that demonstrates that even smart people can be awesomely stupid, Mullis's Dancing in the Mind Field beats out even Collins' Language of God.

I disagree with Myers. I find it interesting to watch Mullis. I've read his book. I enjoy his odd personality. He comes across as a California "surfer dude" who manages to be a scientist. I think Myers dislikes Mullis because he comes across as "flaky". But I think one reason why Mullis is more creative than Myers is that Mullis is open to oddball ideas. I can appreciate his personality without agreeing with everything he says. Myers, on the other hand, comes across as a fanatic who is quick to judge and eager to squelch. I find Myers the odd duck that I wouldn't want to spend a lot of time with. Give me a loopy guy open to new ideas over a guy who claims to have "the truth" and wants to enforce it by running down anybody with a different idea. Science works because it is democratic. Democracy is messy. Democracy needs to be messy to allow new and unpopular ideas to emerge.

David Cutler on US Health Care

Here's David Cutler, a professor of applied economics at Harvard University, being interviewed by James Surowiecki at the New Yorker web site. You will notice that Cutler gives some devastating comments on the inefficiencies in the US health case industry. I love the example of Duke University Hospital that has 900 beds but 1300 billing clerks, or roughly 1.5 clerks to make sure you pay for every possible patient! That is crazy. And he also goes into the abysmal record of doctors in actually achieving a healthy outcome. This video is well worth your time:

Billionaires Island

When you buy a $23 million dollar house, what is your first thought? Tear it down!

Yep... why spend that money if you mean to keep it as is. It will be so much better if you take it and bulldoze it and rebuild it as your on Xanadu...



I like the nice touch of a "gated island". Yes... when you hit the billions it is important to keep the riffraff at bay and live behind a gate. You let poor folk in only when you need some help. Otherwise they are supposed to stay outside your nicely manicured "gated community".