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Why Aren’t Most Americans Rich? These Theories May Help Explain It
Isn't being rich a moving relative target? So if most Americans had $2.4 million in personal net worth, wouldn't that amount cease to be the one necessary to be rich? Then being rich would be $62 million. The article also of course--like most financial propaganda pieces--doesn't mention that wages for the poor and shrinking middle class have stagnated when adjusted for inflation for over 35 years, especially for the poor who have seen wages decline when adjusted for inflation. Invariably these pieces blame people for spending too much on avocado toast, lattes and cell phones when the situation is far more complex and also inequitable than that.
Take the reporting in this Markewatch column with a whole lot of grains of salt. First item I checked ...
Marketwatch: " having loving relationships with friends and family was one of the top three most popular personal definitions of wealth, according to the 2018 Modern Wealth Index.
Cited source, Modern Wealth Index (Schwab), p.3:
Define “Wealth” Unaided
Having money/lots of money: 27% Being comfortable/enjoying life: 24% Having material items/being able to afford anything: 22% Peace of mind/living stress free: 19% Relationships/family/friends/love: 12%
Regarding being rich being a moving relative target ... There's certainly some of that, but one has to be careful here. One could then also say that being middle class is a moving relative target. Thus the middle class might not be shrinking; rather the boundaries might simply be moving as well.
For example, one could define middle class as the middle three quintiles of income (or assets); that's a moving relative target. By that definition, the middle class could not be shrinking. By another numerical definition [Pew]: income between 2/3 and 2 times the median income, the middle class is indeed shrinking.
Relative itself is fuzzy (relative to what?). One definition of rich: more money than I have
wtf are you talking about? That hardworking buckeye's wealth is the opposite of obscene, and of course in the grand plutocratic scheme is a mere large drop.
Duh - A silly question deserves a silly answer. That’s not to diminish the very qualitative thoughts on the subject by several respondents. (They’ve shown you really can make lemmonaid out of lemons.)
My own take would be that most Americans are indeed rich when compared to the way we lived during my childhood. (They just don’t realize it.) Even the most affluent back in the 50s likely had only black & white TVs in their homes, telephones anchored to their wall with something known as a “phone cord”, and cars that were a struggle to drive lacking power steering and, for the most part, automatic transmissions. Add to all that: A math problem that today can be quickly solved with a $2-3 calculator that fits in your pocket took hours to calculate by hand back than. (The simplest of these weren't on consumer store shelves until about 1970 and sold for around $200.)
So in one sense Americans today are richer beyond the dreams or hopes of Americans 50 years ago.
I don't think that's what they mean --- more how long are you going to be able to support yourself... .
@Davidmoran: It’s a good topic for discussion as you have phrased it (also one that’s frequently discussed on the board). But please note the summary @Ted posted. Now, you decide if he wishes to direct the discussion in the direction you have just advanced? Doesn’t look that way to me. Here’s how Ted summarized the article:
“FYI Most Americans believe it takes $2.4 million in personal net worth, or nearly 30 times the actual median net worth of U.S. households to be considered wealthy, according to the Modern Wealth Index, a June 2017 study by Charles Schwab and Koski Research, a market research company in San Francisco.”
What strikes me is the phrase “Most Americans believe ... ”. My response (which you apparently chose to dismiss) was to question whether those expectations are unreasonably high based on the way we lived only a half century ago.
Question (for David or anyone): Please explain how it is mathematically possible for all Americans (or all Canadians, all Mexicans, etc.) to be “rich” in relation to their peers? It’s a completely illogical proposition, right out of Alice in Wonderland - unless you believe we’ve reached the point where being truly “rich” in comparison to all others is a necessary requisite for supporting oneself over a lifetime. In that case, we’re all in trouble.
I do wonder about spending habits and personal debt compared to 50-60 years ago. Back then, it wasn't so easy to get loans, mortgages, buy stuff on Amazon and Wal-Mart, purchase the iPhone and Sony Playstation 4. To me, it seems that it's much easier to spend your money than it was in the 1950s. Everyone ready for Amazon Prime Day coming up in July?
I do wonder about spending habits and personal debt compared to 50-60 years ago. Back then, it wasn't so easy to get loans, mortgages, buy stuff on Amazon and Wal-Mart, purchase the iPhone and Sony Playstation 4. To me, it seems that it's much easier to spend your money than it was in the 1950s. Everyone ready for Amazon Prime Day coming up in July?
Used to be we took time to save money. now we spend money to save time. I read that a while back.
Comments
Marketwatch: " having loving relationships with friends and family was one of the top three most popular personal definitions of wealth, according to the 2018 Modern Wealth Index.
Cited source, Modern Wealth Index (Schwab), p.3: At least some of the polling results of the study are suspect as well. "Self description: I have a 401(k) or similar plan available to me at work: 26%". Contrast that with Pew graphic (2017) showing that over 1/2 of private sector employees have access to a defined contribution plan.
https://sc.cnbcfm.com/applications/cnbc.com/resources/files/2018/03/09/RT_Retirement_Plan_Access_and_Participation_Across_Generations_fig2.png
Regarding being rich being a moving relative target ... There's certainly some of that, but one has to be careful here. One could then also say that being middle class is a moving relative target. Thus the middle class might not be shrinking; rather the boundaries might simply be moving as well.
For example, one could define middle class as the middle three quintiles of income (or assets); that's a moving relative target. By that definition, the middle class could not be shrinking. By another numerical definition [Pew]: income between 2/3 and 2 times the median income, the middle class is indeed shrinking.
Relative itself is fuzzy (relative to what?). One definition of rich: more money than I have
https://www.forbes.com/sites/luisakroll/2016/12/12/americas-richest-entrepreneurs-under-40-2016/#457a0c2d67c3
That list is from 18mos ago; note the point where it goes below a billion. Study up.
Duh - A silly question deserves a silly answer. That’s not to diminish the very qualitative thoughts on the subject by several respondents. (They’ve shown you really can make lemmonaid out of lemons.)
My own take would be that most Americans are indeed rich when compared to the way we lived during my childhood. (They just don’t realize it.) Even the most affluent back in the 50s likely had only black & white TVs in their homes, telephones anchored to their wall with something known as a “phone cord”, and cars that were a struggle to drive lacking power steering and, for the most part, automatic transmissions. Add to all that: A math problem that today can be quickly solved with a $2-3 calculator that fits in your pocket took hours to calculate by hand back than. (The simplest of these weren't on consumer store shelves until about 1970 and sold for around $200.)
So in one sense Americans today are richer beyond the dreams or hopes of Americans 50 years ago.
I don't think that's what they mean --- more how long are you going to be able to support yourself....
“FYI Most Americans believe it takes $2.4 million in personal net worth, or nearly 30 times the actual median net worth of U.S. households to be considered wealthy, according to the Modern Wealth Index, a June 2017 study by Charles Schwab and Koski Research, a market research company in San Francisco.”
What strikes me is the phrase “Most Americans believe ... ”. My response (which you apparently chose to dismiss) was to question whether those expectations are unreasonably high based on the way we lived only a half century ago.
Question (for David or anyone): Please explain how it is mathematically possible for all Americans (or all Canadians, all Mexicans, etc.) to be “rich” in relation to their peers? It’s a completely illogical proposition, right out of Alice in Wonderland - unless you believe we’ve reached the point where being truly “rich” in comparison to all others is a necessary requisite for supporting oneself over a lifetime. In that case, we’re all in trouble.
So basic, you would think the richest nation in the world could afford it. What? Vintage Freak, you COMMUNIST!