"The net worth of that group ranges from about $1.2 million to $20 million per household, Stewarts says. Those assets include cash savings and investments, as well as real estate. Many members of the 9.9% don’t feel enormously wealthy but they are still doing better than the vast majority of the country."
A household with $1.2M in assets does not belong to the same group as a household with $20M in assets.
$20M is retirement money. $1.2M isn't. But $1.2M is FU money, and that's the most important part. You can't stop working indefinitely, but it does give you the power to walk away from any job even if you don't have the next one lined up.
Or at least it should be. Many people with $1.2M cannot go a few months without a pay cheque because it's all locked in a house and a retirement fund -- make sure you're not one of them. An emergency fund is the best way, but I also recommend having an open HELOC. They're a lot easier to get when you have a job, and you don't have to draw on them until you have an emergency.
The article is not about what kind of life style they can afford. It's more about their common belief system. They think they get where they are by hard working and ignore the luck factor. They think people poorer than them because they don't work hard enough.
Someone with $21M doesn't belong in the same group as someone with $1B. Someone with few assets doesn't belong in the same group as someone deep in debt.
All simplifying assumptions necessarily group some unlike elements. But we need to simplify in order to describe complex systems.
The problem really comes down to security. Unless you have 10+ million in the bank, you are probably at a non zero risk of having one of the following occur
- unable to retire/aged out of the workforce
- lose house
- lose job and unable to find replacement.
- unable to afford living in your area.
- broken by medical bill/disaster.
- unable to afford education/childcare for children
My partner and I work in well known tech companies, but don’t come from money - we are well off as long as one of us doesn’t get a bad performance review and there isn’t a crash.
It’ll be decades if ever when I have the financial security to consider myself wealthy.
The average American will make 1.5 million TOTAL during their entire working lifetime from teenager to retirement/death.
If you have that amount or more on hand right now in investable assets, the only thing keeping you from financial freedom is the desire to have a fancier lifestyle than the average American.
It never stops. I met a very, very wealthy guy a while back. All he was concerned with was how to preserve his wealth for the next generation. He did not feel financially secure at all.
So, what will happen once you succeeded bringing those risks down to zero? Is that the time you start pursuing your dreams or will you start trying to get the next set of risks down to zero?
Wealthy is like AI, always the next step, never the current circumstances.
Even with 1 million in the bank, the only risk you may face is a slightly worse lifestyle and the possibility of having to relocate to a cheaper area. In a world where working remote at least partially has become a viable solution unless you work in hardware.
No, with only 5 million in the bank, you are not at risk of losing your house - not unless you mess up spectacularly.
Even a catastrophic medical issue shouldn't make you lose your house, unless you don't bother to have insurance - and if you have 5 million in the bank, you absolutely can afford to have insurance.
And how much would need to feel secure against the threat of asteroid collision? Absolute catastrophe is always possible. Jeff Bezos could die from a heart attach or a murder, even though he spends $1M on security.
Everyone knows they need 2x their current wealth to feel secure.
But these things are relative right 1 million at 6% a year yields 60k per year which plenty of people live on. The median income in the US is only ~70k. I'm not saying you should accept a large reduction in your quality of life or to move, but that is the trade off you're making right?
After reading this, it feels like a piece designed to get working class people to fight amongst themselves vs. the actual billionaires.
Like 20 Million is a HUGE AMOUNT
but that's 5x less than 100M, and 50X less than a billion. 50X
Educated, have good jobs, own a single-family house, pay for their kids' college, save money for retirement – in any other country/culture this category would be known as "middle class".
I fall into this 9.9% as well, so someone please tell me where I can exert this "Aristocratic influence" I have.
Do you contribute to campaigns and attend fundraising events? I realize a corporation or PAC can drop a lot of money in expectation of influence. I am also amazed that I can can meet future senators, representative, etc. and have them listen to me. I can be cynical but sometimes feel my voice is heard.
The point is to demonize you and gain popular support for more wealth redistribution. It isn't about inherited power, just look at how 2nd and 3rd generation communist families tend to have so much power in China.
"The net worth of that group ranges from about $1.2 million to $20 million per household, Stewarts says."
In Australia apparently all you have to do to get into this group would be to actually own a paid off house. :/
I think this says far more about housing then wealth inequality though.
In America, paid off or not, the location of your house pretty much guarantees a lower bound on your kid's future in the richer neighborhoods and unfortunately an upper bound in many poorer ones.
Maybe it's a regional thing but I feel like there are some pretty big caricaturisations is this piece.
On meritocracy:
"I think a defining feature of the group culturally is this belief in meritocracy, in the sense merit is what makes the economy work. The sum total of our GDP is the sum total of the individuals in it."
Nothing too controversial...
"Everyone earns what their merit is worth."
I feel like this only works in a very technical sense and doesn't translate to what people would mean using natural language. Merit is a morally loaded term which I think makes the whole debate over Meritocracy confusing. A better way to put this would be:
1. Individuals have different amounts of leverage, which is correlated to earnings.
2. Competency is non-trivial and significant source of leverage.
3. A person with competency has more leverage than a person without competency all things being equal.
"That is coupled with a market myth that says that whatever people do that earns money is essentially good for society."
Perhaps there are people that believe this, but they must be a small group of people. Everyone everywhere complains about the knock-on effects of different industries.
It's not clear to me where they are drawing these conclusions from.
I'd say the author of the article doesn't have a very good grasp of this concept.
There is a vast difference between, as she says, "1.2 million" and "20 million."
20 million is "screw you" money. In that someone could quit everything they do, and live their whole life very comfortably on the wealth they have in hand, by paying cash for their house, setting aside a million in rainy day money, and putting the rest into very low risk bonds.
1.2 million is just enough money to get someone in trouble if they make a few mistakes. Buy an expensive house in the wrong place? Not a millionaire anymore. Ill-timed stock returns that turn south around the first of the year? Not a millionaire anymore. Try to start another business that doesn't pan out? Not a millionaire anymore. There's a million ways (pun intended) for someone with 1.2 million dollars to find themselves fast running out of money. Someone with 20 million? Not so much.
Well they are in circles where they feel decidedly poor. Just see the excesses in the Bay area and come out feeling real poor even if you are in the 1% income bracket. Of course everything is relative and you might need 50 years income to buy a place that would be considered awful in Iowa.
The interesting point that this one misses is that the children of this class are often not counted as part of the 9.9%, but are effectively part of it nonetheless because of the backstop an benefits that the 9.9% confer onto them. And their beliefs, etc. are pretty well in line with the 9.9. So really, it's more like the top 20% that's in this category, even though it doesn't look like it on paper.
"Most members of the 9.9% also talk about the amazing virtues of education and go out and build these systems where the educated will succeed. Then we have a system of financing college where a large majority of people have to buy that. They have to buy that behavior or life pattern.
It’s like someone manages to jump across a pit of fire and get to the other side and then convinces everyone else they should do the same thing. Unfortunately, statistically, those following that model are not all going to succeed. It does not make sense to have a society that is either defaulting on student debt or they are so burdened by it they can’t buy houses or take other important steps in life."
The path of getting a good, useful education, making decent life decisions, and slowly building up wealth over time via real estate? Ya, that will work for most people. The jump over that fire pit is pretty short. And while some people can't jump at all, a lot can.
I don't think anybody is saying $1.2 is no big deal, only that it's not remotely the same as $20.
$1.2 isn't an unusual amount of assets for a pair of professionals in the US, once you include house and retirement accounts, neither of which can be easily converted into cash for spending.
"The 9.9 Percent: The New Aristocracy That Is Entrenching Inequality and Warping Our Culture."
No examples of policy, law, or any specifics how this group is "entrenching inequality". This is more reductive single factor race blaming. Nothing regarding how many of the 9.9% inherited this class status, so how is this an Aristocracy?
Demonizing merit seems like a terrible strategy for a society.
>How does the 9.9% vary across racial lines? The numbers are not very precise. White people make up about 90% of the 9.9%, which is not at all representative of the total. It’s not all white but much more white than the rest of the population.
Whites are 72% of the population so 90% falls pretty close to what we would expect to begin with. It seems an awful lot like the author was digging for any "us vs them" that they could find. Seeing as that the author of the book being reviewed and the author of the article are both shameless leftist shills according to their respective Twitter accounts, I feel comfortable sorting this article into the propaganda bin.
Hey, look -- the 0.1% are seeing tax proposals on their radar that might actually land on them for once. Quick, to the propaganda cannons! Deflect those taxes, make sure they land on the upper middle class instead, like the last 10 times this happened!
Yeah, the article references a philosopher (Matthew Stewart) [1] who was previously a management consultant and who seems to write primarily on sociological/economic issues. It's not clear what insight or authority he has in these matters and the claims ("The New Aristocracy") are vague and subjective. As others have said, this has been as the middle class for a long time (the original concept of the middle class, not the American concept of everyone who owns a house). And the middle class has been both insecure and sort-of privileged since forever. But you can call 9.9% "very well off" just because the 90% have been sheared so completely (and the 90% get sheared by 9.9% at the direction of the 0.1%, to go back to your point).
More prosaic explanation: this "philosopher" (AKA dude with philosophy degree who was a management consultant for 20 years) is on a press tour for his new book.
edit: Not that I disagree about the existence of the dynamic you point to.
Might I suggest the formula of guilt tripping (you just got lucky, it's not merit) and a pinch of racial tension so that resistance makes you look like a fascist?
[+] [-] pedrosorio|4 years ago|reply
A household with $1.2M in assets does not belong to the same group as a household with $20M in assets.
[+] [-] bryanlarsen|4 years ago|reply
Or at least it should be. Many people with $1.2M cannot go a few months without a pay cheque because it's all locked in a house and a retirement fund -- make sure you're not one of them. An emergency fund is the best way, but I also recommend having an open HELOC. They're a lot easier to get when you have a job, and you don't have to draw on them until you have an emergency.
[+] [-] yufeng66|4 years ago|reply
[+] [-] YetAnotherNick|4 years ago|reply
[+] [-] wyattpeak|4 years ago|reply
All simplifying assumptions necessarily group some unlike elements. But we need to simplify in order to describe complex systems.
[+] [-] lumost|4 years ago|reply
- unable to retire/aged out of the workforce
- lose house
- lose job and unable to find replacement.
- unable to afford living in your area.
- broken by medical bill/disaster.
- unable to afford education/childcare for children
My partner and I work in well known tech companies, but don’t come from money - we are well off as long as one of us doesn’t get a bad performance review and there isn’t a crash.
It’ll be decades if ever when I have the financial security to consider myself wealthy.
[+] [-] kgin|4 years ago|reply
If you have that amount or more on hand right now in investable assets, the only thing keeping you from financial freedom is the desire to have a fancier lifestyle than the average American.
[+] [-] shoto_io|4 years ago|reply
So, what will happen once you succeeded bringing those risks down to zero? Is that the time you start pursuing your dreams or will you start trying to get the next set of risks down to zero?
[+] [-] rtsil|4 years ago|reply
Even with 1 million in the bank, the only risk you may face is a slightly worse lifestyle and the possibility of having to relocate to a cheaper area. In a world where working remote at least partially has become a viable solution unless you work in hardware.
[+] [-] AnimalMuppet|4 years ago|reply
Even a catastrophic medical issue shouldn't make you lose your house, unless you don't bother to have insurance - and if you have 5 million in the bank, you absolutely can afford to have insurance.
[+] [-] gowld|4 years ago|reply
Everyone knows they need 2x their current wealth to feel secure.
[+] [-] space_fountain|4 years ago|reply
[+] [-] buildbot|4 years ago|reply
[+] [-] paxys|4 years ago|reply
I fall into this 9.9% as well, so someone please tell me where I can exert this "Aristocratic influence" I have.
[+] [-] diskzero|4 years ago|reply
[+] [-] greenail|4 years ago|reply
[+] [-] Tehdasi|4 years ago|reply
In Australia apparently all you have to do to get into this group would be to actually own a paid off house. :/ I think this says far more about housing then wealth inequality though.
[+] [-] sriram_sun|4 years ago|reply
[+] [-] notenoughbeans|4 years ago|reply
On meritocracy:
"I think a defining feature of the group culturally is this belief in meritocracy, in the sense merit is what makes the economy work. The sum total of our GDP is the sum total of the individuals in it."
Nothing too controversial...
"Everyone earns what their merit is worth."
I feel like this only works in a very technical sense and doesn't translate to what people would mean using natural language. Merit is a morally loaded term which I think makes the whole debate over Meritocracy confusing. A better way to put this would be:
1. Individuals have different amounts of leverage, which is correlated to earnings. 2. Competency is non-trivial and significant source of leverage. 3. A person with competency has more leverage than a person without competency all things being equal.
"That is coupled with a market myth that says that whatever people do that earns money is essentially good for society."
Perhaps there are people that believe this, but they must be a small group of people. Everyone everywhere complains about the knock-on effects of different industries.
It's not clear to me where they are drawing these conclusions from.
[+] [-] RNCTX|4 years ago|reply
There is a vast difference between, as she says, "1.2 million" and "20 million."
20 million is "screw you" money. In that someone could quit everything they do, and live their whole life very comfortably on the wealth they have in hand, by paying cash for their house, setting aside a million in rainy day money, and putting the rest into very low risk bonds.
1.2 million is just enough money to get someone in trouble if they make a few mistakes. Buy an expensive house in the wrong place? Not a millionaire anymore. Ill-timed stock returns that turn south around the first of the year? Not a millionaire anymore. Try to start another business that doesn't pan out? Not a millionaire anymore. There's a million ways (pun intended) for someone with 1.2 million dollars to find themselves fast running out of money. Someone with 20 million? Not so much.
[+] [-] 1cvmask|4 years ago|reply
[+] [-] unpolloloco|4 years ago|reply
The interesting point that this one misses is that the children of this class are often not counted as part of the 9.9%, but are effectively part of it nonetheless because of the backstop an benefits that the 9.9% confer onto them. And their beliefs, etc. are pretty well in line with the 9.9. So really, it's more like the top 20% that's in this category, even though it doesn't look like it on paper.
[+] [-] unknown|4 years ago|reply
[deleted]
[+] [-] horns4lyfe|4 years ago|reply
It’s like someone manages to jump across a pit of fire and get to the other side and then convinces everyone else they should do the same thing. Unfortunately, statistically, those following that model are not all going to succeed. It does not make sense to have a society that is either defaulting on student debt or they are so burdened by it they can’t buy houses or take other important steps in life."
The path of getting a good, useful education, making decent life decisions, and slowly building up wealth over time via real estate? Ya, that will work for most people. The jump over that fire pit is pretty short. And while some people can't jump at all, a lot can.
[+] [-] engmgrmgr|4 years ago|reply
2. Shave off the most extreme outliers at the top
3. Give this group a catchy name and attribute values to them
4. Make enough money off of pop-sociology to be included in this group
5. Repeat with n=n/2
[+] [-] inside65|4 years ago|reply
[+] [-] therealdrag0|4 years ago|reply
Being wealthier on paper doesn't always translate to a more wealthy lifestyle.
[+] [-] alistairSH|4 years ago|reply
$1.2 isn't an unusual amount of assets for a pair of professionals in the US, once you include house and retirement accounts, neither of which can be easily converted into cash for spending.
[+] [-] k__|4 years ago|reply
[+] [-] brnt|4 years ago|reply
[+] [-] ctdonath|4 years ago|reply
[+] [-] greenail|4 years ago|reply
"The 9.9 Percent: The New Aristocracy That Is Entrenching Inequality and Warping Our Culture."
No examples of policy, law, or any specifics how this group is "entrenching inequality". This is more reductive single factor race blaming. Nothing regarding how many of the 9.9% inherited this class status, so how is this an Aristocracy?
Demonizing merit seems like a terrible strategy for a society.
[+] [-] jorblumesea|4 years ago|reply
[+] [-] YetAnotherNick|4 years ago|reply
[+] [-] jimbob45|4 years ago|reply
Whites are 72% of the population so 90% falls pretty close to what we would expect to begin with. It seems an awful lot like the author was digging for any "us vs them" that they could find. Seeing as that the author of the book being reviewed and the author of the article are both shameless leftist shills according to their respective Twitter accounts, I feel comfortable sorting this article into the propaganda bin.
[+] [-] gowld|4 years ago|reply
[+] [-] hindsightbias|4 years ago|reply
[+] [-] RhysU|4 years ago|reply
[+] [-] jjoonathan|4 years ago|reply
[+] [-] ChuckMcM|4 years ago|reply
[+] [-] joe_the_user|4 years ago|reply
https://en.wikipedia.org/wiki/Matthew_Stewart_(philosopher)
[+] [-] elefanten|4 years ago|reply
edit: Not that I disagree about the existence of the dynamic you point to.
[+] [-] fleddr|4 years ago|reply
Oh wait, looks to be already done.
[+] [-] buildbot|4 years ago|reply