Mr. Obama’s 99% — Are We Poor or Just Unequal or Both or Neither?
The 2012 campaign is heating up and we can see the outlines of an impending us/them class war. But in our strange 21st-century world, lots of crazy things blur the president’s 1%/99% divide. We watch the super-rich struggle for ever creative ways of blowing their money to distinguish themselves from the rest of us (cf. Johnny Depp’s [$50 million in income last year] hosting of a creepy, expensive costume Halloween party at the White House, in the style of the idle 18th-century French court).
Meanwhile we see the “poor” near rioting over buying the first few pairs of Michael Jordan $200 sneakers, or mobbing for big screen televisions on holiday shopping sale outings. Are we mad that too many are really poor, or that too many are simply unequal, in the sense of not having what “they” enjoy — a “they," however, that cannot quite figure out how all their money leads to all that much better a life? I am sorry, Mr. Obama, but for all the Vegas-junketeering, no-time-for-profit rhetoric, I simply do not believe the one-seventh on food stamps, or the 48% who pay no income tax, are suffering like the starving 19th-century Norwegian immigrants on the windswept Dakota plains of Ole Rolvaag's epic Giants in the Earth.
Capital for What?
I am not suggesting that poverty or life in the lower middle class is not tough, only that in comparison to past centuries, hardly as tough. Being “poor” is certainly closer and closer to those for whom life is pretty good — and yet this blending of the classes is entirely ignored by our class warriors in Washington. Life in “poor” nearby Selma is far different from Warren Buffett’s. Or maybe it isn't really — again, in the sense that I’m not sure he bathes, eats, dresses, or goes to the doctor in ways we out here cannot.
In the year 2012, would a retiree be living better off the interest of $1 million -- saved over a lifetime of work as a self-employed contractor -- or would the beneficiary of an average public pension? Would you prefer to be working at 62 at the DMV making $50,000, or a near-retired real estate agent, in a down market, at 62 surviving on the "earnings" from the $450,000 in your 401(k)?
Suddenly, the income from stored wealth seems almost nonexistent. I speak to a few affluent groups and often afterwards hear that those who retired in their early sixties, and who are now in their mid- or late-eighties, have no income. You say, tough luck? But most are gradually consuming their capital and selling off assets — a great leveling effect of the ages. (Just wait until the second-term Obama administration decides that non-interest-earning $300,000 in the bank qualifies you as rich, and thus ineligible for need-based Social Security payments: it is not just that you will be punished for playing by the rules, but that the rules themselves do not matter much any more.)
The value of capital not spent is in decline. The interest on it earns seldom over 2-3%. It is lost easily in today’s wild Wall Street. It won’t show much immediate growth invested in a depressed housing market. Saved capital declines faster in value than the interest it earns — given the recent soaring prices of food and fuel. What is so good about saving up for retirement? To try to get a once despised 6% on your savings is to risk it all. If the president had his way, the capital that earned almost no interest would be taxed away at death anyway.
In the car today, I heard the usual con ads on the radio. Got problems with the IRS? No problem, we can renegotiate that away. Too much credit card borrowing? No problem, we can settle it at half what you owe. That mortgage of yours unfair? No problem; we can renegotiate it for you and forgive some of the debt. Often there is a vague reference to some federal program that some of us are eligible for. Lately I heard ads from the Department of Agriculture, reminding me that if I belong to some such minority group, I can sue if I felt I was discriminated against. (Who are the “they” with all the money to forgive all the debt?) Are we back to the Catiline conspiracy and calls to “forgive debt and redistribute property”?
When In Doubt—Sue!
Then there are the law firm ads: have you suffered whiplash injuries, been turned down for a job, worked with asbestos, had a bad drug reaction to brand X, been discriminated against, had a pass made at you, fallen on a banana peel? If so, the local John Edwards-like law firm will sue on your behalf. Fresno has just announced that its latest lawsuit settlement has pretty much exhausted the city’s self-insured fund for the year (but is it not month 1 of 2012, with 11 more to go?), with over a dozen other claims pending. What happens when we all become litigants and we run out of targets? Who is to play Germany to our Greece?
Like in Petronius’s Croton, where there were lots of con artists and far too few wealthy to con, things get ugly.