December 9, 2010

Again: Who is rich?

My impression is that most Americans believe that to be rich you have to have a butler, like on Fresh Prince of Bel-Air.

Worldlier Americans believe that to be rich, you have to have a private jet. For example, I suspect that Bill Clinton and Al Gore don't consider themselves rich, precisely because they are always having to bum rides off billionaires and dictators with private jets. (Or have they cashed in enough by now to buy their own?)

Ergo, almost no Americans see themselves as rich.

65 comments:

Anonymous said...

I can speak only for myself, of course, but the meaning of "rich" to me depends on wealth, not income. Specifically, I will call someone "rich" if he has enough liquid assets to lead a reasonably comfortable lifestyle without working (even if he nevertheless chooses to work).

By way of comparison, I use "well-off" to describe people who are not "rich" but who have decent net worth, a nice house, a good job, etc. "Well-off" therefore encompasses (for me) a much larger group of people than "rich."
- JP98

Anonymous said...

I say if you have a net worth greater than $10,000,000, you are rich.

John said...

Of course not. In America, everyone is in the middle class!

Jay said...

My Swpl Aunt owns a large house in Milpitas (where housing is in the $600k range), and the day before yesterday she told me she was "poor" and got into a nasty fight with me when I just so matter-of-factly mentioned to her that poor people do not live in a house like this.

Cognitive dissonance, anyone?

Jay said...

My Swpl Aunt owns a large house in Milpitas, and the day before yesterday she told me she was "poor" and got into a nasty fight with me when I just so matter-of-factly mentioned to her that poor people do not live in a house like this.

Prismatone said...

It's all relative. My grandfather thought of himself as a very wealthy man despite a net worth of perhaps half a million dollars. He had two pensions coming in-his own and his late first wife's, who was a railroad clerk for thirty years, and no expenses. He raised chickens and grew vegetables, drove old beat up cars and had a gunsmithing business that brought in good money, much of it in cash (he worked for cops, not gangsters).

when he died he owned three small houses two of which he rented out. The neighborhood having turned brown the family sold all of them when he died. About three months after the Mexican family that bought his own moved in, the father bought a brand new Ferrari cash. The rumor was that he found the cash under the floorboards of the house, which would be consistent with the way Grandpa stashed things away. (We did find several guns, some poisonous chemicals he used for plating and a Leica camera along with rolls of silver dimes in the walls, but never pulled up floorboards.) The car lasted about a year after which some idiot torched it, and the family apparently forgot to pay the insurance bill. A few years later the house was torn down, apparently partly to search for hidden loot, and is a vacant lot today-no one would build in that neighborhood.

Dahlia said...

I believe we're seeing the "contrast effect" if we are able to conclude that barely anybody is rich. In the modern world, people have trouble putting things into perspective.

Like with everything quantifiable, it is preferable to designate a certain percentage as rich.

The "contrast effect" is wrecking havoc in the areas of love and relationships since the advent of movies and pictures.

While it makes men more delusional than women, I have a theory that housewives in the 70s to 90s, before the widespread use of home computers, were divorcing their husbands due to watching soap operas three hours daily, five days a week, etc.

The following quote from Satoshi Kanazawa just blows my mind; chalk this one up as another disease of modernity:

"...Because their current girlfriends tend to pale in comparison to the Playboy centerfold models or physically attractive women, men come to view their girlfriends as less attractive and become less satisfied with them when they are faced with much more attractive potential alternatives. Never mind the fact that none of these men will ever get to date the Playboy centerfolds. Their brains cannot comprehend that, because there were no photographs in the ancestral environment. Any woman that our male ancestors "saw" was a potential mate.

In 2000, Kenrick's remarkable findings led Mary C. Still and me to pose two questions. First, if men can become more dissatisfied with their current girlfriends after viewing only 7 or 16 photographs of more attractive women in one brief experimental session...".

http://www.psychologytoday.com/blog/the-scientific-fundamentalist/200909/why-hollywood-marriages-don-t-last

http://www.psychologytoday.com/articles/200107/why-i-hate-beauty

ironrailsironweights said...

It has to be your own private jet. Today many people buy fractional interests in private jets, which don't count as much.

Two other rich-person markers: owning an NFL skybox, and endowing a professorship at a top univerity ("the John Smith Professor of Economics")

Peter

Truth said...

Both Clinton and Gore are worth well over 100 million dollars.

Shawn said...

I'd say that if you are in the top 1-2%, you are rich. For households, this is those making over $250k. Are the households making over $250k more White than say, those making $150-250k a year?

I'm so sick of "conservatives" who say that you are in the middle class if your family makes over $250k a year. By definition, being in the top 1-2% is not middle-class.

Sam said...

Private jets are horrible for the environment.

A trip fron New York to LA on one of those things uses as much fuel as a hummer does for two years.

But only the little people conserve

RKU said...

Yes, exactly...

I'd guess that for lots of people being "rich" means being in the top 15% of one's social circle. And since most people tend to have social circles whose economic status is a Gaussian centered upon their own, they're not themselves in that top 15%...

OhioStater said...

There's always someone richer, like the Queen of England.

Anonymous said...

OT.

More on Merkel and Sarrazin.

http://www.standpointmag.co.uk/node/3580/full

Anonymous said...

Stock vs. flow, Steve.

Being rich means possessing a lot of net assets.

You can have a high income, be in the highest income bracket, and not be rich at all.

Simon in London said...

One MILLION dollars!

Anonymous said...

Steve I am rich with the spirit of the Lord Jesus Christ. That and I make about 700 K a year.


Dan in DC

Svigor said...

My definition of rich is living well off 5% returns (or thereabouts, the number's up for debate, but lower is richer).

afasdfasdff said...

Globalism makes the rich richer. GOP is full of it. Clinton raised taxes but the economy did just fine. Thanks to globalist economic dynamics, the rich have lots more opportunities to rake it in big time(even with higher taxes). Besides, it's not as if the tax money is going directly to the people. It's gonna support a lot of craven and connected rich and affluent people who work in government(and then moves into the private sector, or vice versa, like Larry Summers and many others). And government offers contracts to private companies to run many of the programs. It's not business vs government, as GOP tells us. It's business doing business with the government. It's not about 'spreading the wealth around' but spreading the wealth to favored companies who get sweet deals(in food production, construction, military industry,etc)from the government.
Even Ross Perot got rich via government contracts.
And I'll bet farmers and retailers love the food stamp program since food stampers(or snappers as they're called now)buy the stuff they sell. Countless 'private businesses' in towns across this nation actually rely on doing business with the government. Without government contracts, they are out of business.

Bush's biggest mistake was not the Iraq War but tax cuts for the superrich.. most of whom turned out to be liberals who showed Bush no gratitude, just like most Jews showed no gratitude for the Iraq War.. and most Hispanics never showed any gratitude for housing bubble..and most blacks never showed any gratitude for disparate impact policies.

The GOP should change the terminology on class economics/politics.
They should speak of the 'megarich', the billionaires of the world.
Then the 'superrich', the ones with 100s of millions and earning tens of millions per year.
And then the 'successful', who make millions or 100,000s a year.
The 'successful' tend to be professionals or small businessmen, and most Americans aren't hostile toward this group.

We are pissed at the superrich and the megarich. If GOP opposes higher taxes on the 'successful' but supports higher taxes on the 'superrich' and 'megarich'--who are a bunch of wasp and Jewish liberals anyway--, GOP will win over the masses. Otherwise, GOP will piss it all away by 2012. It's hilarious that Democrats are favored by the superrich and megarich but attacks the GOP for being greedy. And GOP supports the very cabalistic people who piss on them.

Lugash said...

I am Lugash.

The private jet benchmark is a good one. I might lower it to anyone who charters a private aircraft, or flies first class for personal travel.

Live in servants(and the houses that go with them) are too much hassle.

I am Lugash.

Truth said...

Barry "the communist muslim" is cutting taxes, have you brilliant geniuses nothing to say?

Anonymous said...

Crassus - the third triumvir - always said that no man was rich who couldn't finance an army from his own means.

When I visited the Pitti Palace I though about Bill Gates and his relative poverty.

Herod was the king of Judea but came quick when Augustus summoned him. He went into the meeting alone with Augustus and one guard. He knew if Augustus didn't like his answers he wouldn't come out. At that time Augustus personally owned Egypt - all the grain, all the land, all the people. Egypt was the richest land on earth.

Leopold II was the King of Belgium. He personally owned the Congo and everyone in it.

There don't seem to be any really rich and powerful people anymore.

Albertosaurus

Anonymous said...

There's a lot of confusion over terms like "wealth," "wealthy," "rich," "the rich," etc.

It seems to encompass vague ideas regarding both absolute and relative material position, social status (which is by definition a relative metric), parasitism, etc.

Under civilization, "wealth" and the "wealthy" have always existed. They've been the ones who basically haven't really had to "work" for a living, i.e. rent-seekers who extract the rent others labor to produce. So in ancient civilization with none of the technological or industrial amenities that we consider basic to a lifestyle of non-poverty today, "wealth" and the "wealthy" existed in the form of some stockpile of a commodity (grain, gold, etc.) under their command and in being able to be idle and live off the labor of others. Focusing solely on the absolute technological level can be misleading.

Today of course many technological amenities far beyond what the "wealthy" of the past could have imagined are widely distributed. But owning a flat-screen or a laptop doesn't make one "wealthy" today. It doesn't really give you great sexual and or marriage prospects, nor does it mean you don't have to work for a living. To be "wealthy" today you have to own assets that entitle you to a portion of the economic activity of others. The more assets of this kind you own the "wealthier" you are.

There is also the underclass that gets a "cut" of this rent, but it is less than that of the asset owners. Furthermore, the underclass serves to facilitate the rent-seeking of the asset owners. There is of course the public-sector rent-seeking of the bureaucracy that administers welfare, but there is also the private-sector side. JP Morgan for example is the largest processor of food stamps in the US and food stamps are a profit center for them:

http://www.youtube.com/watch?v=Gl6sPabt9Fw

The sine qua non of being "wealthy" seems to be not having to "work" for a living, that is being in a position of rent-seeking (public, private or both) and being able to extract rent from the activity and lives of others.

??? said...

Steve, what's your opinion on Wikileaks?

Anonymous said...

Americans are not really rich because everything they have is bought on credit. The house, the car, everything. Americans have no real wealth besides their job. Their houses they pay for 30 years before they can call it their own, and they have to take bank loans even to pay for the education of their children. Rich is money that you posses, and not the ability to use money you don't have to have an inflated standard of living. I can go to a car dealership and buy a brand new car with paper money if I want to. That is rich. Also, here is a hint for you Americans: people don't become rich by living on credit. Your individual as well as national financial World are collapsing because you have become so accustomed to, on the individual level, a low inflation society and a strong Dollar allowing to borrow money tha tyou only need to pay in decades, and on the national level the World being willing to pay your bills in exchange for Dollars since the end of World War II. This can't go on. Credit will be the ruin of the U.S. With a public debt of 12 trillion Dollars, or 87% of the GDP, and fiscal deficits of $800 billion a year, every year, year after year, for how much longer do you think this can continue? A gigantic credit crises will collpase the U.S much before anything else. Americans think that their nations is simply too vast in it's power in every way for it to ever collapse, but they are wrong. We live in a finite Universe, and there are certainly limits to everything. Even the Universe has a limited size. I believe that when the U.S public debt reach the size of the GDP the World will refuse to finance the U.S imports and fiscal deficits, and there will be a massive run on the Dollar. The World will refuse to accept Dollars in exchange for their goods and Americans will have to dramatically cut the size of their military spending as well as raise taxes or print Dollars and create massive inflation, and this will result in the U.S experimenting a huge loss in standard of living. The U.S will almost overnight go from the World's richest country in GDP per capita to almost a Third World country. Not as bad but more like a lesser First World country like Spain.

The Anti-Gnostic said...

I agree with the first poster: "rich" means you don't have to deplete principal to maintain your living standards.

My impression is that very few Americans are truly rich. They spend what they make, meaning that they are one paycheck from poverty.

OTOH, not being in rich circles, there may be more of them than I think.

Anonymous said...

A private jet? Don't all those very wealthy Obama Democrats know how that type of vehicle contributes to global warming? I guess not: http://en.wikipedia.org/wiki/Laurie_David

Anonymous said...

"I say if you have a net worth greater than $10,000,000, you are rich."

And I am sure many people who have that much don't see themselves as rich, which was Steve's point.

Let's look at this another way - I bet a lot of people think someone who makes, say, $80,000 a year is rich. No, honestly, they do. So, is that the line now?

David said...

Rich is anyone who makes a dollar more than oneself.

It's an old wheeze, but hey, a pretty good one.

Anonymous said...

"Who is racist"?

It's a loaded question. Answering yes is silly as you self-label as a member of a hated class.

Of course, there was a time when something we now call "racist" was commonsense...and when someone we now call "rich" was a captain of industry.

Anonymous said...

"Who is powerful"?
"Who is important"?

Status and power cannot be quantified as easily as income, so cannot be taxed as directly.

But have no doubt that Brad Delong has more power/status than the millionaire next door with a few McDonald's franchises.

I would ask that we stop accepting the two minutes hate terms of the left ("rich" and "poor") and start recognizing that status, looks, and power are far more important and get 1/1000 the press. Does an NYT reporter have column inches taxed away to give to you? Are Harvard professorships taxed away to give to Republicans?

Of course not. Punish enemies, reward friends...that's their motto.

crawfurdmuir said...

Certainly the claim made by Obama and the Democrats that someone with a household income over $250,000 is rich does not jibe with the commonplace picture of what "the rich" are.

The older stereotype of the rich man living in a stately home with liveried servants at his beck and call, and a chauffeur-driven Rolls Royce, as portrayed in movies from the 1930s, has, as Steve writes, been supplanted among the more sophisticated by that of the private jet set.

But the household with an income of (say) $300 - 400K does not come close to either. It is likely to be one in which the principal earner is a successful professional or a small-business owner. There are unlikely to be household servants, though perhaps a housecleaning service may be engaged for a few hours a week.

As for private jets, many who use them do not own them; owning one is hugely expensive. More common are fractional ownerships, and for those who cannot afford them, purchases of blocs of time. Twenty-five hours on a Lear 60 might run about $125K, and stepping up to a Gulfstream IV will double that. Even this is well above the means of the typical professional with an income in the mid six figures.

When billionaires like Warren Buffett or Bill Gates say that "the wealthy" should pay more in taxes, it is deeply disingenuous to apply such a description to small businessmen and professionals with much more modest fortunes than theirs. Buffett is laughing all the way to Berkshire Hathaway over that. His insurance companies sell a type of life insurance policy that is used by mere millionaires for estate planning purposes. If the estate tax were to vanish, so would the raison-d'etre for this entire type of insurance, and he'd be out a huge revenue stream that dwarfs what he might pay if his personal marginal income tax rate went up by 5%.

Highly taxing the small entrepreneur is, from the Buffett-Gates point of view, akin to cutting the brush before any saplings have the chance to grow too tall. With much of their own wealth safely ensconced in tax-exempt foundations, they can safely tell government that people with fortunes several orders of magnitude smaller should be punitively taxed. It keeps down the competition.

When the banker Cosimo de' Medici effectively consolidated his family's rule of Florence, one of the things he did was to impose a graduated income tax. One of his biographers has written:

"Cosimo abolished the catasto and used the decima scalata (progressive taxation) to ruin all who stood in the way of his absolute power, while favoring the lower classes and his supporters. His attempts to undermine republican institutions were denounced in vain by the great archbishop of Florence, St. Antonius." [N.B. - the catasto was a sort of register of property titles used for the purpose of assessing ad valorem taxation.]

In other words, Cosimo used progressive taxation to ruin and reduce capitalists of lesser wealth than his own to subjection. I don't know whether billionaires of the Buffett, Gates, and Soros type have read enough history to be emulating old Cosimo's technique consciously, or whether they have conceived the same idea independently.

To the point of anonymous #1, Robert Frank, who blogs about the wealthy at blogs.wsj.com, indicates that new research shows that the top 1% of earners now make more than 2/3 their total income from salaries. This is up, he says, from the 1950s and '60s, when about 45% of their income came from paychecks. Like the house with butlers and maids and the chauffeured Rolls, the notional "idle rich" are a concept from the past.

To the point of anonymous #2, Frank had one blog post several years ago on the subject of how much one had to have to be classified as rich, and the consensus of people he asked was considerably higher than $10MM. I can't find the post with a simple search, but if you're curious and willing to spend the time, you probably can.

Luke Lea said...

My operational definition of rich: the 10,000 wealthiest families in America. Sometimes referred to as "the donor class" since they bankroll both political parties with the understanding that NO ONE is to go after their overseas tax shelters.

AllanF said...

Excellent reply Crawfurdmuir. Covered all the bases there.

About the only thing I'd like to add is humans are notoriously bad keeping orders of magnitude conceptualized with large numbers.

I think for most folks, they think the difference between some number of million dollars and some number of billion dollars is like the difference between their poor brother-in-law that has a few hundred and their rich uncle that has a few tens of thousands, maybe even a hundred or two liquid.

The difference between millions and billions is completely a difference in kind. One cannot reasonably spend a billion dollars if one tried, it is multi-generational. That amount of money is basically just score keeping, keeping at it like the Buffet/Mungers of the world is pathologically running up the score. It should be taxed punitively. Similarly their heirs 3 generations removed should not be allowed to be gentry in this country.

Similarly, but less extreme is the difference between the six figure class and the 8 & 9 figure class. Taxing the 8 & 9 figure class while leaving the six figure class and one-off 7 figure folks, alone is not bad for the economy, or unfair to anyone.

Anonymous said...

Well, the Wall Street Journal published a series of articles that argued that "rich" is based upon total net worth, how much do you own? not how much do you make? From $1 Million to $9.999 Million is "Affluent". From $10 Million to $100 Million is "Rich". Over $100 Million is "Super Rich". There is something to this, in that there are investments where you cannot participate if your total net worth is less than $10 Million. In other words, only the rich need apply.

Anonymous said...

"Americans are not really rich because everything they have is bought on credit."

Okay, so we are creditch.

Mr. Anon said...

You are not really rich unless you routinely sport a long-tailed coat, top hat, monocle, and spats - like the portly balding little chap in Monopoly. That's my definition.

Anonymous said...

"It should be taxed punitively."

Yeah, how dare they earn money and try to keep it. Liquidate them and distribute the proceeds to the masses!

Up into the unremitting battle, comrades!

Anonymous said...

Yeah, how dare they earn money and try to keep it. Liquidate them and distribute the proceeds to the masses! Up into the unremitting battle, comrades!

Attempted mockery by a poor useful idiot. Funny how people are so stupid to defend the social strata they will never enter.

Captain Jack Aubrey said...

Sorry, but why are we as Republicans fighting for lower taxes for the rich? They sure as hell haven't been fighting for them themselves. Huge numbers of millionaire and billionaire businessmen made large contributions to Democrats. NO ONE who supports Democrats wants a smaller government, and therefore does not think lower taxes are necessary for staying in business.

And of the millionaires and billionaires who supported Republicans, the vast majority supported only incumbent Republicans, to buy favors: RINOs like Lisa Murkowski, John McCain, Bob Bennett, etc. had no problem raising money from business interests. It was their more conservative, small government opponents who did.

Simply put, business has not sent the message that they want or need lower taxes because they have not supported politicians who would actually give us smaller government, and I won't get into the fact that millions of more Democrat-leaning immigrants - whose presence is supported by business - will also lead to bigger government.

So forgive me if I fail to see the need for lower taxes. If wealthy businessmen think low taxes are important they need to support policies that will lead to smaller government, and clearly the vast majority of them don't.

"With much of their own wealth safely ensconced in tax-exempt foundations, they can safely tell government that people with fortunes several orders of magnitude smaller should be punitively taxed."

That would be the economic version of destroying a village to save it. They're giving away their fortunes. So you're saying somehow they're hypocrites?

I can believe they're hypocrites in other ways, and for other reasons. And I can believe they're going to leave their children far more than they're willing to admit. But still the money they give to their foundations is effectively taxed at 100% because it's no longer theirs.

Anonymous said...

Well, Captain Jack Aubrey, somehow you missed the point that the attack is on the top 2% (or 3%) of wage earners (or is it tax payers?), and although this includes the rich, the overwhelming majority of this group are NOT RICH.

europeasant said...

You are rich if you can afford to invest in "Madoff investments".

Captain Jack Aubrey said...

"somehow you missed the point that the attack is on the top 2% (or 3%) of wage earners (or is it tax payers?), and although this includes the rich, the overwhelming majority of this group are NOT RICH..."

I'm referring to the 15% cap gains tax and the elimination of the estate tax. Truly rich people earn a lot of their wealth via capital gains, not income. The top marginal rate on income (35%) is over twice as high as the top rate on cap gains (15%). I'm sorry for "soaking the rich" by taxing their cap gains at a marginal rate (20%) lower than people earning all of $35,000 pay (25%).

But to focus on your "non-rich," even they gave hugely and disproportionately to Democrats and RINOs.

Look at it this way:

Bigger Government = Higher Taxes
Smaller Government = Lower Taxes

If you do not support smaller government, then you do not support lower taxes, period. Eventually, the budget gap has to be closed.

Lower taxes do not lead to higher revenues. We had higher cap gains taxes in the 90s, yet had balanced budgets and added over 20 million jobs. Since Bush lowered taxes in 2001 we have not had a single balanced budget and have lost over a million jobs.

Anonymous said...

"Attempted mockery by a poor useful idiot. Funny how people are so stupid to defend the social strata they will never enter"

Argumentum ad hominem is the best argumentum

Anonymous said...

Missionaries and other observers gave accounts of atrocities in Leopold's Congo (Heart of Darkness--a lot of atrocities were perpetrated by blacks on blacks) so grave that even a race realist cynic would approve that: "They gave birth to the twentieth century's first international human rights movement. The movement, in fact, eventually forced Leopold to relinquish his private ownership of the Congo to the Belgian state in 1908. By that point he had made a huge profit from the territory, conservatively estimated as the equivalent of more than $1.1 billion in early twenty-first century terms."

well-maybe not glad he came out so plush; but I am glad they took the Congo away from him, even if it was partly motivated by competing economic interests. Absolute power corrupting absolutely and all that. That's why it's so scary that most of what people consider valid, mainstream media is owned by very few, and ever fewer people.

adsfasdfasf said...

According to political correctness, WHITES are rich, BLACKS are poor, and JEWS are weak and helpless, which is why rich blacks and superrich Jews are favored over poor whites in affirmative action game.

Anonymous said...

I am rich.

The total value of physical possessions that I own is rougly $1000.

I have never earned more than $250K in a year and have never recieved an inheritance. But I consistently earn over $100K. Anyone who makes money like me and says he ain't rich just ain't speaking english.

You should go and track down the planet's median human being and make the comparison to yourself. As long as you think rich should be defined in relative terms, this comparison is much more appropriate than all those other ones you are making.

And if you define rich in absolute terms and think you're not rich, you need to come up with an explanation for how the word started appearing in dictionaries long before the first rich person in history was born.

ben tillman said...

"It should be taxed punitively."

Yeah, how dare they earn money and try to keep it. Liquidate them and distribute the proceeds to the masses!


Whence the supposition that their money was earned?

none of the above said...

There's a big distortion in straight income/wealth statistics that has to do with local costs of living and real-estate costs. That skews some of the numbers.

That said, I can only see a couple ways to talk meaningfully about who is and isn't rich:

a. Directly in terms of the distribution--the top 1% of incomes or wealth or whatever is rich.

b. In comparison with the median income--anyone who makes more than 3X or 10X (or whatever) of the median income is rich.

Both those could be adjusted for regional cost-of-living differences, though it would add to the messiness of an already complicated tax system.

Kylie said...

I suspect I live far more modestly than most here but I feel rich. I have all I need, much of what I want and I live better in every sense than most of the rest of the world.

So my answer would be anyone who feels rich is rich.

Captain Jack Aubrey said...

Obviously rich is primarily a relative measure, because what matters is being able to outbid most of the people around you for products, real estate, and labor.

The requirement that you be able to afford a private jet seems a bit high. Wasn't that the definition of real wealth according to Gordon Gekko? I've known plenty of people who were rich enough to live a privileged life but weren't able to afford a jet. Few would say such people weren't rich.

A rich person can afford to never have to work again, ever - even if he chooses to do so.

A rich person can afford to live in any major city without worrying about the cost of living. Jupiter Island, the Hamptons, and other playgrounds of the extremely rich don't count.

A rich person can afford to keep at least one person in his employ, full-time, to do all of his house work - cooking, cleaning, gardening, etc.

A rich person can afford a fair amount of leisure travel for himself and his family.

I would argue that a rich person can afford two or more "normal-sized" homes and can purchase them both without taking out a mortgage.

A rich person can afford a certain number of nice toys (boats, etc.), new cars, and can meet certain other expenses (tuition, charitable contributions, etc.) without much trouble.

Having to worry about your budget doesn't mean you aren't rich. Plenty of actors and athletes who were certainly rich have gone broke by not doing so.

What figure would enable all of this? Enough assets to produce an annual income of $400-500k, at least; probably a bit more, depending on how you define all of the above terms. $10 million in assets seems like the bare minimum for being classified as "rich." $25 million is certainly more than enough.

catperson said...

I would define rich as a net worth of at least a billion dollars. I think that's the minimum you need to enjoy a high quality of life, especially in today's world, where luxuries like a private jet are essential to avoiding the inconvenience and humiliation of airport security, long lines, uncomfortable seating etc.

Anyone who thinks a billion dollars is too much for one person to be able to spend simply has no imagination, no interests, and no passion. Anyone with even the smallest interest in scientific research, philanthropy, or political influence, could easily spend a billion dollars quite intelligently in less than a year.

Anonymous said...

It's hard to tell the difference between ben tillman, aubrey, and liberals. Wealth isnt't earned, "we" "need" to close the budget gap by increasing taxes, etc.

Look guys, there are people who are smarter and harder working than you and me. It's true!

The HBD sphere is right-wing, unlike other intellectual spheres. But *like* other intellectual spheres it greatly overstates the importance of ideas relative to execution. You may be smart, but if you are reading this blog (let alone posting) you are probably not getting things done. The CEO type is smart, for sure, but more than anything else they have a day-in, day-out work ethic that would exhaust your average blogger/intellectual. It's that work ethic that converts an idea into actual wealth...all the grimy details and flights to Poughkeepsie, done with as much zeal as the development of the initial concept/business plan/invention itself.

Again, hard, consistent work. Foreign and exhausting to most people who post on the web. But the rich ain't like you and me, they just *work harder*.

This is just as true on the macro level as the micro, and is one of the key reasons why China will pass the US in our lifetimes.

You won't be able to tax them when they move there, though. Nelson laugh, ha ha, the look on the tax'n'spender's face...after going to great lengths to attack business in the press, to tacitly charge software and engineering with the crimes of finance, to create burdensome new rules and to impose colossal new taxes...after all this toiling what does he find? That it was all for naught and that they've escaped his clutches and gotten the hell out.

America will watch China go up while it goes down and will further embrace PC/leftism/socialism without ever realizing that the rejection of the same is what is causing the Chinese boom.

catperson said...

Again, hard, consistent work. Foreign and exhausting to most people who post on the web. But the rich ain't like you and me, they just *work harder*.

Hard work has little to do with wealth. Some of the hardest working people in the world are the poorest particularly in manual labour occupations. There are people who work hard posting comments on the internet all day that don't make a dime. There's a limit to how hard you can work without burning out & millions of Americans are already at that limit. You don't get rich by working harder, you get rich by working smarter.

Anonymous said...

> Hard work has little to do with wealth.

This is the crux of the matter.

The leftist thinks wealth grows on trees and that economic outcomes are *random*, while the rightist understands that it's about (a) ability and (b) hard work.

You need both.

Who works harder? The software engineer working days, nights, and weekends on his startup or the 9-5 shift worker at McDonalds?

Who works harder? The pharmaceutical executive responsible for a plant of 5000 people or the public school teacher who gets 6 hour days, summers off, and predigested lesson plans?

If you have ever gone about systematically trying to build wealth, it is a lot harder than you might think. What is a job, after all? Someone smarter and harder working than you figured out how to build a scalable operation that takes in labor at price X to produce profit Y, with Y greater than X.

You go ahead and try doing that someday, and you will find that it's a lot harder than it looks.

Or you can go ahead and keep denying that hard work is indeed a strong predictor of income, on both the micro level (look at BLS/Census statistics on earnings vs. hours worked) and the macro level (which is why sedulous China is going to eat the lunch of sedentary America).

Captain Jack Aubrey said...

The effective tax rate in China - taxes, plus graft, etc. - is probably higher than it is in the US. China has been catching up with us more in this last decade than ever it has - a decade of low taxes on capital gains and where the estate tax was being fazed out (temporarily, at least).

So no, you lose.

I work very hard. 14-15 hour days quite frequently. But thanks for trying on that one. If I like checking in on iSteve from time to time, that does not make me lazy. I would argue in fact that blog readers are smarter and harder working than the vast majority of people - Jews and Asians seem to comment more than whites, and whites more than blacks and Hispanics.

I never, once, ever suggested that rich people haven't earned their money. Certainly some of them haven't. Those who got rich through bribery didn't earn it, and don't deserve it. But most of them have earned it.

We have a budget deficit. You explain to me how we're supposed to close that trillion dollar gap. Tax cuts? Didn't work for Bush or Reagan. Major spending cuts? Name the last House or Senate leader who actually tried.

We're going broke, and China is about to own our ass. Lower taxes have accelerated that process, not slowed it down.

The debate over tax rates is about how to fairly divide the bill for the cost of government. Why should a hard-working, well-educated professional, like a doctor, pay a 35% marginal rate while someone who earns his money through investments pays only a 15% rate?

As I've said before, the vast majority of the people who would benefit from keeping cap gains taxes low and eliminating the estate tax sure as hell haven't acted like they want lower taxes, because they've consistently supported politicians who want bigger government. Look at any politician's list of donors, or look at any PAC filing, and you'll see they donate plenty to big government Democrats and RINOs. If you're contributing to politicians like Arlen Specter, Nancy Pelosi, Chuck Schumer, Lisa Murkowski, or Harry Reid - and those folks have no problem raising money from the wealthy - then turn around and saying low taxes are important, you are completely full of shit. Forgive me if I don't take you seriously. They want a big government that throws lots of goodies their way, but they want someone else to pick up the tab.

If small government conservatives had an easier time raising money from wealthy contributors I might believe them. But small government conservatives, perhaps more than any other group, raise most of their money from folks in the middle class.

Conservatism used to be an honest ideology until the Cult of Laffer came along and led half its believers astray. I am a small government, low tax conservative, but I won't be joining the Cult of Stupid anytime soon.

Captain Jack Aubrey said...

As I've said before, the vast majority of the people who would benefit from keeping cap gains taxes low and eliminating the estate tax sure as hell haven't acted like they want lower taxes, because they've consistently supported politicians who want bigger government. Look at any politician's list of donors, or look at any PAC filing, and you'll see they donate plenty to big government Democrats and RINOs. If you're contributing to politicians like Arlen Specter, Nancy Pelosi, Chuck Schumer, Lisa Murkowski, or Harry Reid - and those folks have no problem raising money from the wealthy - then turn around and saying low taxes are important for growth, you are completely full of shit. Forgive me if I don't take you seriously. What they want is a big government that throws lots of goodies their way, but someone else to pick up the tab.

If small government conservatives had an easier time raising money from wealthy contributors I might believe them. But small government conservatives, perhaps more than any other group, raise most of their money from folks in the middle class.

Conservatism used to be an honest ideology until the Cult of Laffer came along and led half its believers astray. I am a small government, low tax conservative, but I won't be joining the Cult of Stupid anytime soon.

Captain Jack Aubrey said...

I would define rich as a net worth of at least a billion dollars."

Oy. This is what modifiers are for. Rich, "very" rich, "extremely" rich, "filthy" rich, "master-of-the-universe" rich. What has this world come to when someone worth only half a billion isn't considered rich?

As per above, define a lifestyle that you associate with one who is rich, then calculate the amount of assets you'd need in an average year to finance that lifestyle without working. Definitions will vary, but I'd suggest that someone who can afford to live the life of a very well-paid doctor, lawyer, or mid- to high-level executive without working, without touching his principal (in an average year), while his remaining investments appreciate at least at the rate of inflation, is rich.

AmericanGoy said...

Rich = you don't have to work for a living.

Captain Jack Aubrey said...

Three billionaire CEOs sit on the board of the Cato Institute, a libertarian group you can safely assume supports lower cap gains taxes: David Koch of Koch Industries, Fred Smith of Fedex, and John Malone of Liberty Media. The links are to their corporate PAC contributions. Note that all 3 of their corporation's PACs contributed to Democrats. Koch gave 86% to Republicans, 13% to Democrats. At Fedex it was 47% Dems, 50% Reps. At Liberty it was 36% Dems, 64% Reps.

Even the PAC of arch-conservative Tea Party supporter David Koch gave some money to Democrats, like Charles Schumer, Harry Reid, and Byron Dorgan. And on the Republican side when it came to choosing between RINOs Lisa Murkowski and Jane Norton, or their more conservative opponents Joe Miller and Ken Buck, Koch went with the big government RINOs. Liberty gave money to arch-liberals Diana DeGette and Harry Reid; and to Joe Sestak but not Pat Toomey. Fedex supported Harry Reid, Bob Bennett, Michael Bennet, Barbara Boxer, and Lisa Murkowski over Angle, Lee, Buck, Fiorina, and Miller. I'll forgive them for supporting Michael Castle over Christine O'Donnell.

Again, if your corporate PAC contributions look like this, and you're arguing for the need for lower taxes, you are completely full of it. And, more often than not, this is what most corporate PACs look like. And, fwiw, these CEOs' personal political contributions look much the same.

Anonymous said...

Both Clinton and Gore are worth well over 100 million dollars."

So what does this say about Clinton's motives for supporting the tax cut deal?

Clinton, more than any other politician, was about himself more than he was about ideology. There are plenty of rich liberals who support higher taxes, but Bill Clinton supports Bill Clinton.

Anonymous said...

> Major spending cuts? Name the last House or Senate leader who actually tried.

Paul Ryan is moving in the right direction.

Only by holding the line on taxes and pushing for radical cuts in spending (completely ending Medicare, Medicaid, and SS for starters) do we have a snowball's chance of at least crash landing the plane rather than blowing up in mid air.

Realistically, though, the US is doomed. The most important thing now is to build a case -- preferably with a movie -- that PC killed the USA. We need to put a return address on the problem such that the post-American world does not repeat our mistakes.

Anonymous said...

Aubrey, you usually post good stuff so help me understand you here

Are you saying that though your instincts are low tax, that *empirically* the disproportionately Scots-Irish ultra wealthy like Soros are actually using their wealth to increase the size of government (via spending on the left, via war on the neocon right, and via immigration on all sides)?

Thus your idea is to tax the heck out of them to reduce the size of govt, by cutting off its funders?

Strikes me as a bit of a double bankshot as these guys run govt and will always write in a loophole for themselves. They too are calling for higher taxes, like Buffett, out of a mix of predatory malice and conspicuous compassion. So they probably have that angle covered -- and a Cosimo
style progressive income tax will just increase their relative power.

Captain Jack Aubrey said...

"...and a Cosimo style progressive income tax will just increase their relative power."

Yes, that's why the top 1%'s share of the income has increased threefold since Reagan began slashing taxes on the wealthy.

Thus your idea is to tax the heck out of them to reduce the size of govt, by cutting off its funders?

My idea is to make them pay for their share of big government's costs, especially since they want big government themselves.

Perhaps what Soros and other "Scots-Irish" really know is that ultimately the Democrats will cave on extending the cuts for the rich. That is in fact what they have done. This "deal" benefits Democratic constituencies the most, by lowering taxes on the rich and extending welfare benefits for the poor; and it's adding $1 trillion to the deficit over the next two years.

I want lower taxes. What I don't want are deficits and insolvency. Find $1 trillion in spending cuts with a reasonable chance of gaining the support of the voters. It ain't gunna happen.

The supposed idea is to "starve the beast" - pass tax cuts in order to keep government from growing any larger. Well, that sure as hell didn't happen during the Bush years. I'd argue that the better way is to feed the beast by forcing the townsfolk to sacrifice a few virgins whenever they want the beast to grow.

Consider that the rich have moved to the left and have supported bigger government as their tax rates have dropped over the years. In 2008 the three richest counties in Wyoming, Idaho, and Utah - Teton County (Jackson Hole), Blaine County (Sun Valley), and Summit County (Park City) - were about the only counties in those otherwise deep red states to vote for Obama.

If Americans saw their taxes go up everytime the government increased spending, they might actually be opposed to government growth. That applies to George Soros, as well.

Captain Jack Aubrey said...

"Only by holding the line on taxes and pushing for radical cuts in spending (completely ending Medicare, Medicaid, and SS for starters) do we have a snowball's chance.."

$1 trillion in larger deficits, including hundres of billions more in government spending. That is the grand "bargain" Republicans have struck. Where are the spending cuts?