“The real source of wealth and capital in this new era is not material things.. it is the human mind, the human spirit, the human imagination, and our faith in the future.”
Read that quote again. Fairly profound, you’d think this was said by a leader, a philosopher or some other humanist of our time. No. Steve Forbes said this. I have no idea of context but for some reason, I think what came right after this was the quote “Pppppppfffffffftttttt… If you believe that crap, I have a bridge to sell you…”
Noel Whittaker a financial author and investment advisor said it better: “Becoming wealthy is like playing Monopoly.. the person who can accumulate the most assets wins the game.”
What constitutes as Wealthy or Rich today in Noel’s terms? Is there a bar that you can mark that says, as soon as I have accumulated this percentage of assets, or XYZ capital, or own some number of high profile items with a steady cash flow, that’s a mark for rich. Is an income of $400,000 a year rich?
This presidential political season and subsequent recession has created a climate of concern for many middle class to wealthy Americans that feel their choice for conspicuous consumption is being limited by new tax laws (Obama’s tax plan) and possibly as the Washington Post puts it “social proof”.
The Journal has an article today called Wealth-Less Effect: Earning Well, Feeling Otherwise; where those just over $250,000 income levels are feeling pinched to cut back and even “forced” to curb living habits they feel they deserve at their income levels. As the Journal puts it:
It is a tricky situation in which some Americans find themselves after a long boom: They are by no means struggling, compared with the 98% of Americans who make far less, but depending on where they live and the lifestyle choices they have made, they don’t necessarily feel rich, either. Worse, in their view, they are facing the same tax rates as those making millions. Some of the expenses are self-inflicted — like private-school costs and conspicuous consumption. Others, though, are unavoidable, like child-care costs, larger health-care deductibles and education expenses, especially college.
The reality is that the median income earner in America is just over $50,000:
2.245 Million households in American, had income greater than $250,000 in 2007 which is actually 1.9% of the total household earners in America. These articles try to convey these rich people are saddled with:
- Education costs, which are far outstripping wages and income – 62% of high school graduates who don’t go on to four-year institutions which has become an institution of the rich and middle class in America
- Changes to the tax code don’t generally make adjustments for high costs of living in particular areas of the country – It’s expensive in cities, however, the median income inside cities is lower than the national average at $43,800
- Health- care expenses have gone up 4.16% annually, while wages and income have risen only 3.7% over the same time span. – Median household health care expenses in 2006 were $1,185, or .4% of $250,000.
Our capitalistic society has created an environment of spenders regardless if those purchases are necessary or warranted. The majority of expenses, our flat screen TVs, luxury cars, designer clothes, immaculate multi-room houses all emulate a personal choice and even social entitlement within the circles of friends and community these people reside.
As Daniel Gross writes in Slate, those that earn $250,000 in Greenwich, CT would certainly look to be poor based on their neighbor’s affluence (median income levels of $231,138, however, income at that level in Mississippi would represent top earners of most towns (median income of $35,971).
I find it interesting that either by choice or social proof, these earners must finally now evaluate their spending habits and re-align them to reality. All Americans have fallen into this trap of spending beyond our means, and we’ve all checked our spending to accommodate an uncertain future. It’s, however, comical to me for those that make a considerable income more than my family must now whine that they no longer can consume as they so desire.
This mentality of entitlement permeates all classes and whether you’re poor or rich, what ever level of income you do have, never seems to be enough. I hope that Steve Forbes is right, and more people take stock in the human mind, spirit, and imagination for our future.