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.
So in today’s need-based society of the 21st-century, is it all that worth it to be a saver and an owner? During her early and middle working years, Sister A saves $100,000 for her two children’s college educations. Sister B makes less per year, and can save nothing for her two. Will a college be more likely to help the children of A or B — if they earn the same grades and test scores?
While no one would like to reward more success with more money, when the college subsidizes B, but not A, is it doing redistribution at both ends — charging the full amount for those who can pay, and then using the resulting profits (and colleges do profit these days) to help those who can’t? All of which raises an interesting question — why save in the first place and price yourself out of the need-based, subsidized tuition market? My point again is not to object to magnanimity, but to object mightily to those who slander a system that is more egalitarian and generous than any in civilization's history.
Race-based quotas help as well. I was in a local bank the other day. The teller, whom I know and like a great deal, has a gifted child, though one probably without the very top scores to automatically get into Stanford, where she wants her child to enroll. She, at least in part, is of Mexican-American heritage, and so asked me to what degree her surname might help. Other than “a lot,” I tried to answer that question in a serious fashion, listing comparative preferences given to minorities, athletes, brilliant violinists, and, of course, marginally A-students who are the children of very wealthy and very generous Stanford alumni (who perhaps have no better test scores or grades than the bank teller’s daughter). I believe that I answered her honestly with, “I think an Hispanic surname offers about the edge of a Stanford insider whose parents give $100,000 per year.” I have no idea whether that is provable, or whether it is right, wrong, or irrelevant. My only interest, other than in trying to give her good advice to prep her daughter for admission, was reminding her that in our postmodern society there are all sorts of ways of nullifying the traditional advantages of wealth.
In this regard, another of the many Punjabi immigrants I know complained that, in the best north Clovis schools, graduating in the top 4% is hard (e.g., too many Punjabis), which means getting into UC Berkeley can be as well (e.g., too many Asians there in general). He asked me whether moving to nearby Parlier (99% Mexican nationals or Mexican-Americans) was a smart move, since he thought it would be far easier for his son, given the number of non-English speakers in Parlier, to graduate in the very top percentiles, which makes it far more likely to win an ensured and reserved slot at Berkeley. As an observer of one supposed minority calculating relative advantage over supposedly others, all I could offer was, “I would consider the pros and cons of that.”
Call Your Lawyer
There was recently some anger at a local gang banger who has been arrested and released over 24 times in the last seven years (or about every 100 days since he turned 18). He is one of the small reasons why anything not tied down in rural Fresno County is stolen. Forget his thefts, his fencing, his weapons charges, or his profits from stealing. Ask instead, who or what was the brilliant legal team that got him out after 24 arrests for these charged felonies? Is there not the dreaded California Three Strikes to overcome? I have a sneaking suspicion that the miscreant had a public defender, or rather a serial number of them, and that they knew the legal labyrinth here better than would Laurence Tribe — and that what he got for free was worth more than what he otherwise might have had to pay $1 million for.
Sometimes the class blending is more mundane. I went into the Selma Wal-Mart at 7AM and by noon, and after a long drive, walked through Neiman Marcus in the Stanford Shopping Center, 180 miles and a planet away. I was investigating, you see. Was the casual ensemble of pants and shirt at Wal-Mart priced at $25 all that much different from the counterpart priced at over $500 at Neiman Marcus? I saw also children’s outfits that went for $10 in Selma, and not much different ones for $180 in Stanford. Ah, but you connoisseurs object — "Victor, Victor, there are questions here of brand, subtle qualities unnoticed by your bumpkin eye, matters of signature." Yes, of course. But as far as day-to-day durability and the casual look, I don’t think there is over a $170 difference.
My point for the nth time? In today’s globalized world of cheap Chinese imports, money buys you a constructed status tag, but not commensurate value beyond what the lower classes can ever hope to attain.
We are Not the Cratchits
Try another example. Go to Sizzler and Ruth's Chris as I did recently. You can easily spend $20 at the former, and $100 at the latter per person. And, yes I know, food at the latter tastes far better, but not $80 per plate better, The thick steak at Chris is not necessarily safer (and may be more unhealthy) than the thin chuck cut at Sizzler. I don’t think the atmosphere at Chris is $80 a plate better than at a boisterous Sizzler. We are not in Dickensian London when the pot-bellied rich ate fat geese and the poor were left picking their bones.
I went into Save Mart this weekend and purchased $70 worth of groceries. In my state and federal tax bracket, that meant I had to earn about $140 for the tab. The person next to me bought $200 with an EBD card. I don’t think she had much of an income (I’ll spare you the details). Was one really in the food-sense rich, the other really poor? Today’s destitute, as in my youth, are not buying huge thirty-pound bags of rice, beans, and flour.
Suddenly Free Health Care?
There is currently a great local controversy over an unfortunate illegal alien who had a tragic intestinal disease and so was treated without cost in the intensive care unit of the Fresno Community Regional Medical Center for over a year. While the exact bill was not released, readers could only imagine the public hit, as ICU is astronomically expensive, as were his over a dozen surgeries. Some commentators cited our society’s shocking lack of universal health care that forced the worker into the free ICU and onto the public dole. Others sighed that such kindness is also unfortunately the road to bankruptcy and suggested that offering 370 days of such care for too many more illegal aliens will break the hospital. But what was lost in the discussion (other than the slightest admission that we are a caring and magnanimous society unlike any in the world) is that the most impoverished among us -- someone without education, English, or legality -- really did receive millions of dollars of free health care, which was supposed to be impossible before the implementation of Obamacare. And here is another point: I know that when Bill Gates goes into ICU he will get far better care, but not that much far better care, despite his $50 billion advantage.
I recently went through all sorts of delays for a referral to a specialist, and have been waiting 10 days for a prescription medication since the insurance company is waiting for the specialist who has not yet renewed the prescription. Those ahead of me in line at Rite Aid had Medi-Cal/Medicaid cards. They certainly seemed to have far less problems than I did with my private insurance authorization, in the mundane sense that they walked out with their prescriptions, and I did not. Of course, I realize that should I fall over, I would be treated immediately -- but would the hospital not in return want my ancestral barn to cover the cost if I could not pay the tab? And if so, what is the value of my ancestral barn anyway?
I drove down to Los Angeles in my Accord again not long ago. And once more I was amazed at what people pay for comparable rides in imported luxury cars. For some reason, I got stuck on the 99 behind a new BMW for 50 miles. My car is probably now worth $20,000, the other driver’s probably $75,000. We went the same speed. I had heating; so apparently did he. My windshield wipers worked as well. My exhaust was as clean as his.
When I flew last month in the economy, middle seat across country on a 757, on landing I saw lots of “corporate jet owners” taxiing into LAX. Their ride was far superior to mine — but was it $20 million cleaner, safer, and faster? Were their pilots $20 million better than mine?
For 20 years I taught classics to mostly minority students at CSU Fresno. Given the job market, over the years I hired seven or eight new professors. All had blue-chip degrees and, despite no longer cocooning at Stanford, Berkeley, or Yale, they were delighted that they had a steady job in Fresno, rather than a part-time scramble somewhere else. We modeled our undergraduate language program after what used to be common in the 1960s — Greek and Latin language, literature, and even composition; full auxiliary courses in history, literature in translation, art, and humanities; dozens of yearly independent tutorials in syntax, grammar, and advanced prose composition; insistence on a reading knowledge of German and French. The result was that our graduates got about as good an education in classics or ancient history as did the undergraduate in the tony private liberal arts school or even in the Ivy League, and surely far more attention (I don’t think first-year students at Harvard often borrowed their professor’s pick-up to move). Given that there is an overproduction of PhDs, and given that many of them are unemployed, good, and willing to teach at places like Fresno, and given that minority status is an enormous advantage in getting into the top graduate schools, over the years we placed some 40 students in places like Yale, Brown, Princeton, Stanford, Berkeley, or UCLA. All of which raises the question, would it have been all that much better for any potential classics or ancient history graduate students to pay $50,000 a year at Brown or Swarthmore rather than to attend for free at CSU — at least as far as winning admission to a competitive PhD program?
There are all sorts of insidious leveling effects that we simply do not tally up in our discussion of rich and poor.
The Insidious “Corporate Jet Owner”?
So what is the vast advantage of having more than someone else that so obsesses this administration, as if inequality translates into poverty? A $300 tag on your jeans that a few insiders will think is cool? The ability to have a cheap metal insignia on your car hood and a slightly better feel and drive to it? Granite in your bathroom that makes the water seem nicer than when gushing out of a plastic vanity? A ride in a Gulfstream rather than a Canadian regional jet?
I used to be impressed by some doctors who had cell phones in the late 1980s -- or rather, suitcase phones. They had them, I didn’t, because they made $200,000 and I made $23,000. Now, I see farm workers talking on iPhones and ear-jacks while pruning. Are their iPhones that much worse than those of the children of the late Steve Jobs?
The Great Equalization
For all John Edwards’ talk of “two nations,” of Barack Obama’s lifelong effort to demonize “corporate jet owners” and “millionaires and billionaires” (the latter 1000 times wealthier than the former), for all the sociologists and economists who get tenure by writing obscure, clever little essays that few read on insidious class differences, the classes have never been closer. Globalization, rapidly advancing technology, the Chinese exporters, and a huge redistributive government, printing money to service $16 trillion in debt, have all accomplished what bureaucrats and politicos could not: the simulacra of equality. Add with a vast expansion of the money supply, near-zero interest, massive deficits and aggregate debt, huge expansions in entitlements and the federal work force, and fewer and fewer paying income taxes, things can certainly be spread around.
I also say simulacra because few in Selma vacation in Tuscany. But sitting in front of a big-screen TV, with some Italian music on, while watching Rick Steves (with TV sound off) touring Florence seems not all that different from the 28-hour hassle of flying to rural Italy. The former is free; the latter “rich” people alone afford.
Oh, you object: poverty is better gauged by lack of opportunity, of exposure, of the cultivation of the mind. Well, in 1959, it was true only the wealthy in the Bay Area had access to opera, symphony, and good libraries. Out here in rural Selma there were no book stores, a sole tiny library in town, and no cultural enrichment to speak of.
Now? A Google search in about five seconds can give you information about anything. All sorts of sites offer free downloads of the classics. Videos offer any symphonic performance you wish. Computers are cheaper than many video games and big-screen TVs, whose sales after Thanksgiving cause near riots.
In short,we live in an unacknowledged age in which a poor man with a laptop who taps into a free signal at Starbucks has more information at his fingertips than did the Regius Professor of Greek at Oxford just forty years ago.
The dangers of the underclass here in the poorest quadrant of the poorest county in poor California are obesity rather than malnutrition. The local state dialysis clinic is tragically full of far more heavy than lean poor. (Yes, I grant that arugula costs more than Hostess CupCakes). More suffer from an expensive ingestion of an unlawful drug than the unavailability of a cheap ingestible prescription drug. The parking lots are full of Tahoes and Yukons; the public trolley for the indigent goes by empty.
Keep all that in mind as we enter the most divisive, class-warfare campaign in recent memory. We are living in the upside-down world Orwell wrote about. A president who likes upscale golf a lot, and Martha’s Vineyard even more, who has hired three “fat cat” bankers as his chiefs of staff (how odd that Emanuel and Lew probably both made a lot out of the Freddie/Fannie bubble), and who is the largest recipient of Wall Street cash in history now argues that half of America suffers from the hands of “them.”
Being unequal is not poor. And not having what the “rich” have hardly means having it bad. Sorry, that's just the way it is.
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