Educating the Rich

Via Atrios and Paul Krugman, this piece by Brad DeLong responding to the complaints of a lawyer making $450,000 a year and considering himself woefully working class is a must-read. It’s actually a story that rings fairly true to me as someone who works in the professional political class and knows a lot of fairly young people with no families or new families who make very good money (approaching or just above $100,000). There are lots of ways to make a lot of money and not feel rich. But just because one doesn’t feel rich – or, even worse, one has found a way to live paycheck to paycheck while making a six figure salary – doesn’t mean that you aren’t actually among the richest Americans.

DeLong writes:

Today a household at the bottom of the 1% rich households in America has an income of nearly $400,000 a year–the income of that slot in the labor market has more than doubled, while the incomes of those at the slot at the bottom of the 10% wealthy has grown by only 20% in two decades. The 900 people he knows in the 90%-99% slots have incomes that start at $110,000 a year. Compared to Henderson’s $455,000, they are barely middle class–“How can they afford cell phones?” Henderson sometimes wonders.

But he wonders rarely. He doesn’t say: “Wow! My real income is more than twice the income of somebody in this slot a generation ago! Wow! A generation ago the income of my slot was only twice that of somebody at the bottom of the 10% wealthy, and now it is 3 1/2 times as much!” For he doesn’t look down at the 99% of American households who have less income than he does. And he looks up. And when he looks up today he sees as wide a gap yawning above him as the gap between Dives and Lazarus. Mr. Henderson doesn’t look down.

Instead, Mr. Henderson looks up. Of the 100 people richer than he is, fully ten have more than four times his income. And he knows of one person with 20 times his income. He knows who the really rich are, and they have ten times his income: They have not $450,000 a year. They have $4.5 million a year. And, to him, they are in a different world.

And so he is sad. He and his wife deserve to be successful. And he knows people who are successful. But he is not one of them–widening income inequality over the past generation has excluded him from the rich who truly have money.

And this makes him sad. And angry. But, curiously enough, not angry at the senior law firm partners who extract surplus value from their associates and their clients, or angry at the financiers, but angry at… Barack Obama, who dares to suggest that the U.S. government’s funding gap should be closed partly by taxing him, and angry at the great hordes of the unwashed who will receive the Medicare, Medicaid, and Social Security payments that the government will make over the next several generations.

Do I wish that Professor Henderson had a little more self-knowledge? Yes. Is it pathetic that somebody with nine times the median household income thinks of himself as just another average Joe, just another “working American”? Yes. Do I find it embarrassing that somebody whose income is in the top 1% of American households thinks that he is not rich? Yes.

Do I hope to educate him so that he has a better grasp on reality and better understanding of America and of public policy? Yes.

As I said above, I’m not talking about people who make as much as this “embarrassing” lawyer. But that’s the point – even people who make 25% of what this person makes are still making twice as much money as the median income in the United States…which is a lot of money!

At the same time, DeLong’s diagnosis of Henderson is apt. He sees people above him with even more money, living even easier and as a result feels not only less rich (based on a lack of monthly disposable income above all expenditures which are discretionary for about 99% of Americans) but also less wealthy (based on the noticeable lack of personal butlers and in-house chefs, or something, which deprive him of the eudaemonia which he so thoroughly thinks he deserves). What Henderson never seems to ask (nor do many other people, wealthy or otherwise) is how they can change their lives to make themselves happier. I’ve been reading a lot lately about how different people find ways to do this – from owning fewer things to prioritizing spending on travel over spending on stuff to simplifying your wardrobe to having a smaller living space. How we live is a choice we make and continuing to live how we live is likewise a choice we make. If Henderson doesn’t like how he feels with only a few hundred dollars in his pocket for eating out and travel every month, then as DeLong suggests, he can stop putting significant chunks of money into his 401k, send his kids to public school and rent instead of own his home.

What’s particularly problematic with Henderson’s outrage at not considering himself rich is that he’s trying to legislate it. As DeLong points out, he identifies the President as the source of his problems. In so doing, he becomes an advocate for federal policies which will result in life likely becoming worse for the other 99% which he is not a part of — he feels a part of it because he denies being rich, but has no kinship with actual working class Americans. This is dangerous.  Like Atrios jokes, but no doubt there will be some insane conversation on CNBC or a Sunday talk show wherein the $250+ income earners will be defended by a pundit who, while a member of that class, doesn’t have a butler. Only, like Henderson, this won’t be a joke but a truly misguided attempt to set policy by those who wish they were Gordon Gecko, see themselves as a working class hero on The Deadliest Catch but are likely to be sharing a country club membership with John Boehner.

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