All Wealth Is Relative Wealth

Grab your violins, Fools, and let me introduce you to Andrew Schiff. His is a sad story of the plight of the 1%.

Schiff, brother of investor Peter Schiff, is the director of marketing at broker-dealer Europe Pacific Capital, and earns $350,000 a year -- about seven times what the average American household earns.

But in Schiff's world, it just doesn't cut it. "I feel stuck," he told Bloomberg earlier this year. "The New York that I wanted to have is still just beyond my reach." Earning over $1,000 per day doesn't cover private school tuition for his children, rent on his three-month summer vacation rental, and the home of his dreams. "All I want is the stuff that I always thought, growing up, that successful parents had," Schiff said.

Alan Dlugash, a financial advisor to the wealthy, summed it up nicely in the Bloomberg article. "People who don't have money don't understand the stress."

No, they don't.

The Bloomberg article rightly set off a firestorm of criticism. Schiff's comments are appallingly out of touch. Arguing that the rest of the nation -- nearly one in six of whom are officially classified as living in poverty -- doesn't understand the financial stress of the 1% is exactly why there's outrage toward the 1%. This is especially true for those working on Wall Street. Americans don't resent success, a point underscored by the absence of outrage directed at productive billionaires like the late Steve Jobs or Mark Zuckerberg. They resent those who, as blogger Josh Brown put it, "found their success as a consequence of the damage their activities have done to our country." Wall Street, in other words.

But is there another way to think about this? While doing damage control for his remarks on Yahoo!'s Daily Ticker, Schiff complained that Bloomberg largely quoted him out of context, but stood by his point and made this comparison:

There's always a point of relativity to make, and I think that gets lost. Yes, it's easy scoff at people like [Wall Street millionaires]. But just as Africans or people who are living off $10 a day can scoff at any American who are complaining about trying to get by on $20,000 a year, there's a comparison.

Poorly worded, but I have to say, part of me agrees here. I made a similar point in an article last year: Even adjusted for purchasing power parity, any American earning over $34,000 a year is in the top 1% of wage earners in the world. As World Bank economist Branko Milanovic wrote in his book The Haves and the Have-Nots, "The poorest [5%] of Americans are better off than more than two-thirds of the world population." Furthermore, "only about 3 percent of the Indian population have incomes higher than the bottom (the very poorest) U.S. percentile." That's not to belittle anyone's hardship. But it is powerful perspective.

The most common pushback I got from readers when citing the statistics was that comparing the well-being of an American to someone living in third-world poverty was apples to oranges. "I'll grant this article an ounce of credit," one reader wrote, "if we can all agree that comparing what was the finest country in the world to standards of 3rd world populations is somehow a smarter perspective. Sure, I earn more than my dog. I'm like, a bazillionaire in her mind. That's not clear thinking."

Fair enough. But people like Schiff use similar logic when comparing their well-being to other Americans. The Wall Street banker thinks it's just as apples-to-oranges to compare his income to a plumber in Detroit as the plumber in Detroit thinks it is to compare his income to a farmer in rural India. Both can look at those earning far less and say, "They have nothing in common with me." Both have a perception of what "adequate" means that seems reasonable to them, but is outlandish to someone else.

Schiff is out of touch and said some stupid things. But I think his later clarification has a gram of truth to it: All wealth, no matter how much, is relative wealth.

Do you agree?

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Follow him on Twitter @TMFHousel. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 03, 2012, at 1:59 PM, rossirina wrote:

    I agree – a million dollars may be a load of money for me but nothing much for the ultra rich. I know that the Cambridge methodology measures wealth in relative terms to income or living expenses. I think this is smart since is a way it normalize the dollar value to my standard of living. If you are interested in learning more you can read some explanation here: http://www.planandact.com/Public/Info_UnderstandingTheTenSte...

  • Report this Comment On April 03, 2012, at 3:11 PM, wolfmansbrother wrote:

    All wealth may be relative, but it's particularly galling to hear Wall Street insiders whine about being broke when many of them have directly profited from laying off American workers.

    Schiff may not be as rich as some of the people he plays golf or goes yachting with, but he's a lot wealthier than unemployed steel workers in the Midwest, fifty-somethings forced into early retirement, or recent grads who can't find work.

    At least he has health care and doesn't have to worry about putting food on the table.

    Sounds like Schiff is the one who needs some perspective.

  • Report this Comment On April 03, 2012, at 3:14 PM, setht23 wrote:

    I really liked your earlier article about American incomes compared to the world. I'm tired of hearing people complain about how broke they are when they have a roof over their heads, have access to fresh water, food, television, internet, cell phones, motorized transportation etc. You may not have what you want but no one ever promised you you'd have what you wanted. In this country you are guaranteed the PURSUIT of happiness. If you want to catch it though you'd better run and not sit in the dirt complaining how it's too fast to catch and you're tired.

  • Report this Comment On April 03, 2012, at 3:18 PM, seattle1115 wrote:

    The comparison suggested here - Andrew Schiff:typical middle-class American::typical middle-class American:Ugandan goatherd - is specious and a little offensive. All of us in this country are paying for the schools, roads, courts, and other infrastructure enjoyed by all of us, including Mr. Schiff. We're part of a shared enterprise in a way that Ugandan goatherd is not. I'm sure there's some sentient mollusk in the Large Magellanic Cloud that owns a couple of star systems, but that ought not be the standard by which I measure my own success.

    And another thing - no one likes a whiner. Perhaps Mr. Schiff ought to spend less time complaining about his bad luck, and more time accepting responsibility for his future. Given his background, he might want to consider a career singing the blues. I'm sure he'd make millions.

  • Report this Comment On April 03, 2012, at 4:46 PM, BMFPitt wrote:

    I think the key thing that is being overlooked here is that he sought out a public forum to complain about how unfortunate his circumstances are, which were then read by people who are generally not nearly as well off. If you're going to write a woe-is-me article (even if it is a more valid complaint), you have no right to complain about people pointing out how un-woeful your situation is.

    If you want to go to the cancer ward and comlain about your flu, don't be surprised by the reaction.

  • Report this Comment On April 03, 2012, at 6:19 PM, xetn wrote:

    Does anyone really know how rich Schiff is? Or is everyone assuming that he is rich because he makes a $1000. per day? Or, maybe because he is Peter Schiff's brother? I don't know the answer, just thinking out loud. But I will say that it seems to me that Schiff was really musing about the fact that he wants the million dollar income (dreams about it) and is disappointed with his performance. Again, I don't really know.

    Now, if he had been making $1000 per day in 2000, he would need over $475000 per year to equal the loss of purchasing power during the last 11 years. If the dollar were not losing so much of its "value" perhaps he could be living the life he dreams about.

    Also, that amount of income puts him in the higher (much higher) tax brackets, so perhaps his net isn't so great.

  • Report this Comment On April 03, 2012, at 7:59 PM, dennyinusa wrote:

    Xetn

    Don’t make excuses for him, we all have had to deal with the dollar losing value and dealing with the high tax brackets.

    The reason he cannot live the life he dreams of is because he doesn’t have the talent and /or drive to make it happen.

    Maybe if Schiff would work a little harder he would make more money? Typical slacker, whining about not having the life he thinks he deserves. Then when called out, claims he was quoted out of context.

  • Report this Comment On April 03, 2012, at 8:28 PM, glr1 wrote:

    Ah, statistics ...

    "earns $350,000 a year -- about seven times what the average American household earns."

    but, and the bug but(t) ...

    ... (the) New York that I wanted to have is still just beyond my reach.

    $50 k is a lot of money ... in Kansas. In NYC (or LA, or La Jolla) it doesn't cut it. It comes back to a few concepts

    cost of living in your area

    standard of living

    and ... what you are used to making (many do not live below your means, but live at or above - you can't and shouldn't keep up with the Jones) Be Foolish!

    I understand Andrew, living in an expensive (northeast) area. He didn't phrase it well though, with the summer home and private schooling.

    Personally, I do well (not close to Andrew Schiff well), but as I deffered my income for nearly a decade bettering myself on my dime (with many student loans), I expect to do better than average (shorter career, higher pay ... I HOPE).

    This is America ... work hard, plan and your dreams can materialize. Motley Fool is helping us achieve our dreams, Fool on!

  • Report this Comment On April 03, 2012, at 10:23 PM, mrspeabody wrote:

    Mr. Schiff's problem was that he didn't take his audience into consideration. Unless he was so stupid as to believe that only people of his income level would read the article, his comments showed little consideration for the average wage earner. I would hope that a middle class American visiting a third world country would be smart enough to see the poverty around him and not complain to them about his lot in life.

    When I hit 40 I complained to my mother about my age. She said, "If you think that's bad, just wait till you have a kid whose 40." I learned to be more careful about who I complain to.

  • Report this Comment On April 03, 2012, at 11:16 PM, devoish wrote:

    "Even adjusted for purchasing power parity, any American earning over $34,000 a year is in the top 1% of wage earners in the world. As World Bank economist Branko Milanovic wrote in his book The Haves and the Have-Nots, "The poorest [5%] of Americans are better off than more than two-thirds of the world population." "

    So does this speak badly for capitalism in general?

    Best wishes,

    Steven

  • Report this Comment On April 03, 2012, at 11:47 PM, Ravi786 wrote:

    Morgan,

    This is the worst article that I have ever seen coming from you. YOU seem to be out of touch with reality. You cannot compare a wage earner in US to a wage earner in third world country because they do not compete for same resources to satisfy for needs. You can call it a globalized economy but it is not that globalized. The wall street earners and detroit plumbers compete for same things like gasoline, health care, education for their children etc. So if the wealth inequality is huge, then the wall street earner will get everything and the detroit plumber will get nothing.

  • Report this Comment On April 04, 2012, at 1:27 AM, kyleleeh wrote:

    <<You cannot compare a wage earner in US to a wage earner in third world country because they do not compete for same resources to satisfy for needs. You can call it a globalized economy but it is not that globalized. The wall street earners and detroit plumbers compete for same things like gasoline, health care, education for their children etc. So if the wealth inequality is huge, then the wall street earner will get everything and the detroit plumber will get nothing. >>

    What makes you think people in third world countries aren't competing with us for the same resources? People in China, India, and Brazil are picking up modern amenities like gangbusters because they can afford them for the first time in their lives, not because they never wanted them in the past. I think YOU are the one who is out of touch if you think people in the third world don't want things like "gasoline, health care, education for their children etc".

    But by pointing out that it's not a fair comparison, you only lend support to Andrew Shiff's argument, you can't compare a plumbers income to a New York Bankers, because the plumber doesn't have to wear $500 suits to work or take clients to $100 a plate lunches, so it's an apples to oranges comparison in their case also.

  • Report this Comment On April 04, 2012, at 6:57 AM, realamay40 wrote:

    Perhaps Mr. Shiff should get out of his head and into his heart.Being grateful is a good place to start

    and count the blessings that are his.

    Namaste Mr.Shiff

  • Report this Comment On April 04, 2012, at 7:14 AM, reandorra wrote:

    Wealth is obviously relative, but by definition only one person out of 6,8 billion won't be poor relative to someone else.

    To FEEL wealthy, in NY, Detroit or Bangalore, you have to live below your means.

  • Report this Comment On April 04, 2012, at 8:57 AM, Hux77 wrote:

    I agree. I would rather be a happy person living a simple life who can cover costs earning $20,000/year than a miserable person like Schiff who is under water but earning $350,000. No question about that. There are studies that show that simple living = more hapiness. As they say, mo money, mo problems...

  • Report this Comment On April 04, 2012, at 10:12 AM, BruceHBi wrote:

    I think one of the best measures of the impact of money on your life and your happiness is asking "How much money do you need to really change your life?" $10,000? $100,000? $1,000,000? More? I have asked many people this question and the answers have been all over the map. I think it is a measure of how content you really are.

  • Report this Comment On April 04, 2012, at 11:00 AM, xserver wrote:

    Stress? It's self-imposed. If he doesn't want stress, buy a home for cash in a modest neighborhood. Buy a couple used cars. No debt. Save enough to retire on a modest income. Many wealthy people do this and live stress-free.

  • Report this Comment On April 04, 2012, at 11:21 AM, billjam wrote:

    I feel so sorry for this poor guy. NOT! I feel sorry for the 207 employees of a plant in my town of 7300 who were told last week their jobs will end on May 28. In several cases both spouses work there. Yes, they will get severance but their benefits end May 28. Many still have mortgages to pay, kids to raise. Chances of a new employer coming into town in time to save them from financial ruin are pretty slim. Then there's the fallout affecting the small businesses in town. This guy in this article has no idea what tough times are like. He ought quit whining and be thankful for what he has.

  • Report this Comment On April 04, 2012, at 11:33 AM, wolfman225 wrote:

    I don't know. On it's face, it kinda sounds like the idiots who win the lottery and show up on some cable tv "documentary" 5 years later complaining about how winning "ruined my life."

  • Report this Comment On April 04, 2012, at 11:42 AM, ETFsRule wrote:

    "But by pointing out that it's not a fair comparison, you only lend support to Andrew Shiff's argument, you can't compare a plumbers income to a New York Bankers, because the plumber doesn't have to wear $500 suits to work or take clients to $100 a plate lunches, so it's an apples to oranges comparison in their case also. "

    Oh please. He isn't using his own personal income to buy those $100 a plate lunches - it is all taken care of.

    He might have to buy the suits, but that is hardly more expensive than a plumber's set of tools (which he buys for himself, just like a mechanic has to do).

  • Report this Comment On April 04, 2012, at 12:00 PM, MaxTheTerrible wrote:

    Could it be that Mr. Schiff wasn't seeking empathy, but rather reassurance from others of how well off he really is...

  • Report this Comment On April 04, 2012, at 12:09 PM, Nolte808 wrote:

    Great article. Yes wealth is relative, but there are clearly some absolutes worth noting. Let's see what is at stake for each of these scenarios:

    Developing country poor citizen greatest threat: death from malaria

    Detroit plumber greatest threat: foreclosure of family home

    Schiff greatest threat: having to summer in Montauk instead of Sag Harbor

    so yes wealth is relative, but the stress it causes us does not make it a universal Equalizer. I try to reserve judgment but I really dislike this Mr. Schiff. At least his self-imposed gauge of success makes him his own worst enemy.

  • Report this Comment On April 04, 2012, at 12:20 PM, hbofbyu wrote:

    I can't remember if it was Carlyle of Thoreau who said that there is an infinity dwelling in man's chest and it is best approached by lessening your denominator rather than trying to always increase your numerator.

    We all suffer from our own attitude. None of us really seek to be rich, only richer than those we see around us.

  • Report this Comment On April 04, 2012, at 12:29 PM, CottonHill wrote:

    Isn't this article like a month late? The original Bloomberg article came out 2/29/12.

    Also I think Andrew Schiff explained himself very well in his followup with Yahoo's Daily Ticker:

    "Schiff stresses he never complained to the Bloomberg reporter about his lifestyle, realizes he's one of the lucky ones and 'understands why people feel bad reading about what I'm saying.'"

    "What I thought I could've had at my [salary] level -- the reality is different; it's just not there," Schiff says, while conceding he doesn't have to live in New York. "It's a choice I'm making."

    Is there really something wrong with what he said? I thought earning X dollars I could easily afford Y and Z, but now I realize earning X dollars I can barely afford just Y.

    I don't understand why there's any outrage here. Especially since it's a month late, and there's nothing out of touch with what Schiff said. He can't afford what he thought he could. The same is true for the 99%, what's so out of touch?

    The point that wealth is relative, is a good point. The article supporting it though, drudging up a month old story taken out of context, is just terrible though.

  • Report this Comment On April 04, 2012, at 12:33 PM, TMFMorgan wrote:

    ^ I don't see how this topic is any less relevant in April than it was in February. Did wealth inequality cease during the month of March?

  • Report this Comment On April 04, 2012, at 12:49 PM, hbofbyu wrote:

    Kailua Kona,

    No more copy and paste, please.

  • Report this Comment On April 04, 2012, at 1:15 PM, esbita wrote:

    Another flaw in the comparison of a low-income American and a Third World resident: zoning laws, building codes, and related issues.

    These minimum standards impose a bit of a "floor" on a low income American's options. You largely don't have the option to live in a cinderblock house with a tin roof. There are building and zoning codes. If your kid has one pair of ratty shoes and two sets of clothing, you will probably get a visit from the social worker.

    Yes there are (severely strained) programs to help the poor here. But the vastly different standards/expectations here puts that much more pressure on a person that makes only $20K a year. That American may be better off than most of the world, but they will still struggle to find housing that the city won't condemn. Many poorer countries are set up to handle bike/pedestrian traffic. Not so here. Add securing reliable transportation to the pressures (since, outside a few cities, public transit is nil here).

  • Report this Comment On April 04, 2012, at 1:20 PM, CottonHill wrote:

    @TMFMorgan, the problem isn't the topic. The topic is fine. It's more about how the article is written, using a poor example (since Schiff was taken out of context, explained himself, and what he said is true for just about everybody:

    "you can't afford what you thought you could").

    Also why are you bashing Schiff a month later? "Schiff's comments are appallingly out of touch",

    "Schiff complained [he was taken out of context]", calling his explanation “poorly worded”, and saying "Schiff is out of touch and said some stupid things."

    These have nothing to do with the topic that wealth is relative, and don't do anything to enhance the point. To mention Schiff as an example is fine (I would also mention the Chicago professor Todd Henderson who "complained" about making $250k a couple of years ago - I actually think he's a better example, because his truly was a rant, and wasn't taken out of context since he authored it himself), but to base the whole article around an old story that was taken out of context, and bash the man while doing so, makes for a poor article in my opinion. If you're going to bash him, at least bash him right away, don't start beating a dead horse a month after the fact.Topic is fine, the supporting article, not so great.

    I look forward to your article bashing either Trayvon Martin or George Zimmerman sometime in May.

  • Report this Comment On April 04, 2012, at 1:46 PM, CluckChicken wrote:

    I am not sure what the lesson is here. Should somebody in the US that wonders if they will be able to buy food today and hope they can scrape enough to pay the rent think "gee I guess it could be worse I could be living like a king if I had this much money in some really poor country"? Should I not think that somebody that has the same cost of living that is complaining that they had to settle for the 35' yacht and not get the 40' because they just dont have the income is a more colorful name for a donkey rectum?

    If the point of this was that the top 1% have pressures of trying to keep up the expectations of others that the 99% just dont understand then I think they are further out of touch with the 99% than the 99% is from the 1%.

    Just because I make more money then somebody elsewhere in the world does not mean that I am wealthier then they are, especially if my costs are far higher than theirs is.

  • Report this Comment On April 04, 2012, at 1:47 PM, tedhunt1 wrote:

    All is relative but we all miss an important point: we all make decisions that ultimately cost us: debt, money, stress and ultimately we all have ourselves to blame. No one else. Not government...etc.

    My family income in rural VA is quite sufficient. I'm divorced, paying out spousal support - my decision to divorce. I send my child to private school - again, my decisison. I am a member of country club - no one made me....vacations, yes, important for soul and relaxing....but if I can't pay the bill, what's the point. For 1 week of R&R you stress for months, maybe years if you pay with credit.

    There are great commments here but frankly the people who are happy and can handle their their own self-created financial responsibilities, whether a millionaire or a goat herder, are the ones that have a better life. Time to slow down people. You can be stress free with less as easy as stress-free and being uber-rich.

  • Report this Comment On April 04, 2012, at 1:57 PM, Llyr222 wrote:

    The comparison between a Wall Street executive and a Detroit worker is fair because that same Wall Street worker can live in Detroit, buy a dream home in Detroit, pay rent on a vacation home in Pinkney, pay for a private school in Detroit.

    There is no culture difference, i.e. caste system, as there is in India. The wall street executive is sacrificing nothing to move to Detroit other than his over inflated ego and possessions he feels he deserves.

    I think you need to compare Americans to Americans, etc. to etc.

  • Report this Comment On April 04, 2012, at 1:58 PM, TMFMorgan wrote:

    <<Just because I make more money then somebody elsewhere in the world does not mean that I am wealthier then they are, especially if my costs are far higher than theirs is.>>

    That perception is exactly the point I'm trying to make. Your "costs" aren't higher than someone in a third-world country (adjusted for purchasing power parity, as the figures in this article are). Your expectations of what is necessarily are. The same is true when people like Schiff compare their wellbeing to others in America.

    Most Americans think their costs are higher than a third-world person because they need health care, a car, heat and air conditioning, and three meals a day. Billions living in the third-world can't even dream of those things. It's all a matter of what your definition of "adequate" is.

  • Report this Comment On April 04, 2012, at 2:00 PM, TMFMorgan wrote:

    <<There is no culture difference, i.e. caste system, as there is in India.>>

    Really? You don't think there's a cultural different between Beverly Hills and Flint Michigan?

  • Report this Comment On April 04, 2012, at 2:05 PM, TMFMorgan wrote:

    Also,

    <<Just because I make more money then somebody elsewhere in the world does not mean that I am wealthier then they are, especially if my costs are far higher than theirs is.>>

    That's the EXACT argument Schiff is making when he compares himself to others in America. To him, a vacation home, private school, and a boat are part of his "costs" that he feels are necessary to him but not others in America.

  • Report this Comment On April 04, 2012, at 2:07 PM, TMFMorgan wrote:

    <<I think you need to compare Americans to Americans, etc. to etc.>>

    And Schiff thinks you need to compare Wall Streeters to Wall Streeters.

    I don't think either is the right way to look at the problem.

  • Report this Comment On April 04, 2012, at 2:24 PM, CluckChicken wrote:

    "That's the EXACT argument Schiff is making when he compares himself to others in America. To him, a vacation home, private school, and a boat are part of his "costs" that he feels are necessary to him but not others in America."

    So then the lesson is that the 99% of Americans have expectations that are too low for our average level of income when compared to the world? If this was to point out that the wealthy, especially those that grew up with significant wealth, do not interact with the same world as the 99% do then this was pretty much a pointless activity.

  • Report this Comment On April 04, 2012, at 2:57 PM, RedScourge wrote:

    The most sad part of this story is how much this sort of thing pisses off the less fortunate. It's less than ideal to define yourself based on how much money or things you own, but your stuff is your stuff, nobody else has a right to it but you. Same applies to the rich.

    Think of what is really happening here though; the less fortunate are pissed off because this guy wants more than he has. SO DO THEY OR THEY WOULDNT BE PISSED OFF! Maybe if we weren't all such hypocrites we WOULD have more money?

  • Report this Comment On April 04, 2012, at 3:20 PM, deckdawg wrote:

    It's definitely a good idea to be sure you keep wealth in the proper perspective. I think Jesus does an even better job than Morgan at helping us with that. He talked about all sorts of things that help me think about my love affair with my brokerage account. For example, there's the rich man who walked past the beggar with sores each day. Then, there's the guy who thought he was well prepared for retirement (was even considering moving his assets to larger quarters), and suddenly he discovered he was going to die that very evening (which can put the day's stock market movements into perspective in a hurry). He also pointed out that money stored up on earth is constantly subject to thieves, decay, and all sorts of other forces causing its value to decline. Saint Paul mentioned that we arrive in this world naked, and will be leaving the same way. (This would be a great motto for an estate planning firm ... although Paul meant it as an admonition to generosity.)

  • Report this Comment On April 04, 2012, at 3:26 PM, Chancing wrote:

    Agree. Everything can only make sense in relativity.

  • Report this Comment On April 04, 2012, at 3:52 PM, hecticelectron wrote:

    I have to agree with kyleleeh that all of us on this planet are competing for the same resources. Further, we have been doing so since at least the 19th century, when America and Europe planted flags all over the world.

    Africa -- larger than the United States, Europe and China put together and at least as rich in natural resources -- was thoroughly strip-mined of its people and minerals in order to enrich Britain, France and Holland. Aztec and Haitian gold line the throne rooms and churches of Spain and France, and India was the jewel in Britain's opulent crown.

    And yes, there is a limited amount of clean drinking water in the world; Haiti (a stone's throw from Florida) would love to have some of it. Preventable diseases are mowing down these countries' wealth-creators because, among other reasons, they are competing for the same drugs that pharmaceutical companies want to sell for higher prices stateside.

    This all causes me to understand Schiff less, not more: as Nolte808 pointed out, the worries of a poor person abroad are vastly more dire than ours ... not to mention than Schiff's.

    Great article! The comments thread alone shows how relevant its topic still is.

  • Report this Comment On April 04, 2012, at 3:55 PM, racchole wrote:

    This is purely a psychological issue. My father has made a six-digit salary for longer than I have been a live (I am 28 years old now), and he taught me that regardless of how much money you make, you can control how you use it.

    Because of how I was raised, I know perfectly well how to live comfortably with a $40,000 salary (what I make now) and how to live comfortable with a $xxx,xxx salary, which was what I was used to sharing a piece of that pie up until a few years ago.

    You want to know the real truth? There is not much difference living on a 5-digit salary than there is on a 6-digit salary. It is all about psychological expectations, and I feel very sorry for people who don't know how to live with a $350,000 salary. It is very, very sad.

  • Report this Comment On April 04, 2012, at 4:09 PM, CluckChicken wrote:

    "Think of what is really happening here though; the less fortunate are pissed off because this guy wants more than he has. SO DO THEY OR THEY WOULDNT BE PISSED OFF! Maybe if we weren't all such hypocrites we WOULD have more money?"

    I think what really pisses people off is that people feel that they are in the same situation because they are having a little difficulty paying for the vacation home they use 3 months of the year as somebody that has been living within their means who is now struggling to keep a roof over their head.

    Schiff at no point seems to grasp how out of touch he is with the rest of America or the world. He uses the term "I feel stuck" and then he has a list of things that are beyond the reach of much of the country and what else he needs, then as an clairfying point he compares people that are actually struggling as to what he ment. For this to go from 'feel sorry for me because I need more than all this great stuff I have' to a story about how even having wealth doesnt make one feel wealthy was for him to have said "Though I have a vacation home on the beach, a sail boat and get paid all this money the mark of me being successful that I saw as a child is still beyond my reach."

  • Report this Comment On April 04, 2012, at 4:17 PM, Mary953 wrote:

    Oddly, I am a bit concerned for Mr Schiff and others in the same boat. He is earning a great deal of money and it sounds as though it is going out as fast as it comes in. He needs to be saving, investing, and preparing for his retirement as completely as he can right now. This is the one shot he gets for this preparation and he does not seem to be aware of it.

    I watched my parents travel and enjoy luxuries in their last decades knowing that they had scrimped and saved through most of their lives to reach that point. While they were traveling, I was living on a very tight budget - spending each dime twice before I let go of it. Now I am looking at retirement knowing the savings that stayed "untouchable" for years will allow us to enjoy the travel, etc. Our kids are doing the same scrimping and saving that we did at their age. (I would actually trade places with them if I could have the whole package, including the energy and health of a young adult.) Any savings that we have available to rely on come from decades of slow accumulation. Is Mr. Schiff even considering that the money will eventually stop flowing in at this rate? Put another way, is he controlling his money or is his money controlling him?

    The sort of life style that Mr. Schiff seems to expect as a matter of course is one that I would not put up with. Money for me represents my time and effort and there are prices that I will not pay. Some things are not worth the prices asked. It sounds as though Mr. Schiff's filter on value is sadly skewed.

  • Report this Comment On April 04, 2012, at 4:41 PM, Mary953 wrote:

    Just drop me into the "happy with less money because I have friends, family, and the good things that you cannot buy" group. I am grateful to be there.

    As Bruce noted above, it doesn't take a $350K salary to live well. It takes knowing what you want from life. My priorities just are not on "stuff."

  • Report this Comment On April 04, 2012, at 6:38 PM, Zombie111 wrote:

    this article reminds me of the Spanish Mondragon experiment last century, where a community was set up, and the designers limited the amount of money that could be earned by different trades and professions, relative to the lowest earners. This was done in the interests of social cohesion, as the research indicated that countries with smaller differentials in income had lower rates of crime and better health, among other things.

    It would certainly stop the kind of complaining that raises other's ire.

    Although, personally I have found that comparing my situation to that of others in foreign countries has been helpful, especially after an earthquake took our half our city (and my house and suburb). At least we do not live in Haiti or Japan.

  • Report this Comment On April 06, 2012, at 11:14 AM, nasgas1 wrote:

    I always say to my wife..."there is rich and then there is RICH and we're not RICH. Wealth IS relative!!

  • Report this Comment On April 06, 2012, at 12:33 PM, beechtree1 wrote:

    No, actually, I don't agree. You are wealthy if you can manage to live within your means. This is what an individual should strive for. For one to reach a state in their finances that they can afford to do and buy everything that they wish for and a little more.

    And as they are capable of spending more and more

    take pride in living below their means. It feels good

    to know that you can afford and yet you hold back.

    In my experience the road to riches does not only come by from a desire to consure more at some point in the future, increase in consumption happens gradually, creating the whatever altimately brings in the riches, is the overriding driving force.

  • Report this Comment On April 06, 2012, at 2:16 PM, Shark52 wrote:

    I find it interesting the number of responders that equate "rich" with possessions. I am blessed to have more than my share of toys; that being said, the words of Thoreau still ring true for me.

    Goodness is the only investment that never fails. A man is rich in proportion to what he can do without. Sell your goods and keep your thoughts.

    Henry David Thoreau

    Long live quality thoughts!

  • Report this Comment On April 06, 2012, at 3:08 PM, top100percent wrote:

    Some recommended reading: Vince Packard's "The Status Seekers" and Thorstein Veblen's "The Theory of the Leisure Class".

    They talk about status and the need to display wealth to demonstrate that one belongs in a certain class. In Schiff's case his business cronies might expect him to have a certain standard of living and if he doesn't, would begin to wonder if he really merits his position in their social class or even in the firm for which he works. The dissolution of that belief could mean a quick fall from his position (job and class) and once the fall begins, he might have no idea where he would end up. For someone that's a high earner but not wealthy (without tens of millions stuck in a bank account) this could be terrifying, just as a plumber's loss of the use of his hands or an African farmer's loss of rainfall could be terrifying.

    In that downward spiral there may be nothing to catch them and no hope of providing for their family in the way they hoped. What most people hope for is to have their family as well or better of than they were, often,sadly, in a strictly material way. And as often as not, the family, and not the wage earner can be the force behind the desire to stay in a high caste.

    I know several people who have had high-paying, fancy white collar jobs that were expected, even instructed, to buy fancier cars when they got these jobs. They chafed at these demands and ultimately left their professions. They chose not to demonstrate wealth and created their own path out. Andrew Schiff, conciously or not, is choosing to stay in his social and work stratum by, among other things, attempting to exhibit the trappings that he believes validate his position in that world. What we might perceive as whining is probably closer to fear.

  • Report this Comment On April 06, 2012, at 3:48 PM, atpeace wrote:

    Happiness is being content with what you have.

  • Report this Comment On April 06, 2012, at 6:18 PM, drborst wrote:

    Isn't America great, you are successful, make it big, land the good job through hard work (or, in Mr Schiff's case, connections), and just when you think you would be happy to work a few percent fewer hours instead of get a few percent more money, you get to see the prices in New York (or suburban Detroit for the plumber) and you think, no, I need that too, and you work that much harder to get it.

    In economic theory, that makes us all better off, In practice, I'm sorry, I can't write more, I've got to get back to work...

    DRB

  • Report this Comment On April 07, 2012, at 5:38 PM, Sunny7039 wrote:

    Look, this is ridiculous. We all know how much money is necessary to create a reasonably comfortable life in the context of a given society. No, really, we do -- this is the essence of retirement planning.

    When someone has many times that minimum and is so distraught that they complain publicly, they have something wrong with them. That anyone can manage to have anything but contempt for such a remarkable lack of self-control and self-mastery, on the part of someone who makes money by virtue of his superior "judgment", is what I consider appalling. His complaint itself is really indefensible, and I also suspect he isn't all that great at his job. And if I am right about the latter, there are some even more serious questions that we have to ask ourselves -- such as, how many of his ilk can any economy support before it starts to implode? You have got to doubt that someone like this is really earning his keep.

  • Report this Comment On April 07, 2012, at 5:45 PM, Sunny7039 wrote:

    A shill writes:

    "Think of what is really happening here though; the less fortunate are pissed off because this guy wants more than he has. SO DO THEY OR THEY WOULDNT BE PISSED OFF!"

    I'm afraid the term "pissed off" is a little too imprecise in this context.

    Am I contemptuous of this man because I want more money than I have? Or could there be some other reason I'm contemptuous . . . since, as a matter of fact, I don't "want more money"?

    But then again, contempt and being pissed off are two different things.

  • Report this Comment On April 08, 2012, at 1:52 AM, kyleleeh wrote:

    <<Look, this is ridiculous. We all know how much money is necessary to create a reasonably comfortable life in the context of a given society. No, really, we do >>

    The point he's making is that he doesn't live in YOUR society, he lives in an upper east side, vacation home in the Hamptons society, in which 350k a year is not that much. Just like you don't live in a society were a 70 hour factory work week and two bowls of rice a day is considered middle class...it's no different.

    What this thread has clearly demonstrated to me is that very few people are capable of stepping out of their own shoes, and seeing things from the perspective of anyone other then themselves...regardless of weather the other person is more, or less fortunate then they are.

  • Report this Comment On April 09, 2012, at 6:43 AM, Sunny7039 wrote:

    It's "no different?" Then you don't understand basic economics. You know, that world where demand curves aren't infinitely elastic, and economies of scale do exist. Where the marginal value of $1 is not the same for someone who lives on $10 a day, as compared with someone who lives on $10,000 a day.

    Or maybe you don't understand the difference between necessity and luxury. Everyone needs proper nutrition, clean water, a safe dwelling, time to spend with loved ones, and time to sleep. No one needs the Hamptons.

    You know, New York City is full of teachers, and firefighters, and police officers, and nurses, and sales clerks, and all kinds of other people who somehow manage to live on less than $1000 a day. In New York. So this guy, who is paid what he's paid because his judgment is supposedly a cut above the rest, has a salary of $1000 a day and still can't live within his means -- and he tells the world about it.

    I don't respect people who have no self-control. Blowing through money like that is a sign of extremely low self-esteem.

    I wonder how many people of his ilk would end up in bankruptcy in no time if they were to lose their jobs. Rather than focusing on this one case, and his ridiculous lament, I would like to know the answer to that question. I would like to know just how many very wealthy people are a few paychecks away from insolvency. That would be a much more useful statistic to ponder.

  • Report this Comment On April 09, 2012, at 7:00 AM, Sunny7039 wrote:

    "As World Bank economist Branko Milanovic wrote in his book The Haves and the Have-Nots, 'The poorest [5%] of Americans are better off than more than two-thirds of the world population.'"

    How interesting. The poorest people in my city live in neighborhoods where children playing in their yards or in their own bedrooms are shot and killed due to random gunfire every single week.

    Is this a threat that fully 2/3 of mankind faces? Maybe it is. I don't mean this as a rhetorical question, nor am I being facitious. If this is what is happening everywhere in the world, I would like to know about it. Another question comes to mind -- when this World Bank economist stated that the "poorest 5%" here are "better off," did he take into consideration their degree of insecurity? Or is he merely using dollar-for-dollar comparisons, as though $1 buys the very same things everywhere -- and quality of life is measured in dollars?

    Just what is "better off?" How do you measure it? No one whose child was shot to death is better off than anyone who was able to watch all of their children grow up and have families of their own.

  • Report this Comment On April 10, 2012, at 11:57 AM, DJDynamicNC wrote:

    Wealth is relative. Survival is not.

    There is a certain baseline minimum that a human being needs and that is, as Sunny points out above, entirely reasonable to calculate and plan for.

    It is difficult to understand why a society as wealthy as ours does not embrace that baseline as a floor below which no citizen should be asked to live.

  • Report this Comment On April 11, 2012, at 10:53 AM, RMartel wrote:

    Wealth is always relative. All wealth is always relative. All poverty is always relative. Wealth and poverty are inextricably connected. That is the entire point of the concept of money (regardless of what we use to represent money, be it gold, paper, or big rocks with holes in them).

    It is not possible to have wealthy people without having poor people, and vice versa. For every wealthy person it appears that there must be at least 3 or 4 - to as many as 2,000,000 - poor people, depending upon how we wish to define both the structure and the physical extent of any given socio-economic macro-unit (society). The only really pertinent question regarding the relationship between wealth and poverty is how great the difference should be between what we consider wealth and what we consider to be poverty in society.

    When viewing just those of us in the U.S., we have increased the relative distance between wealth and poverty over the last 30 years to the point at which, for example, the top 1% now take about 22.5% of all annual income while the bottom 50% receive a little more than half of that (about 12.5%), meaning that those in the 1% group take, on an individual basis, about 100 times the income of those in the bottom 50%. 32 years ago, those in the top 1% took, on an individual basis, about 25 times as much as those in the bottom 50%. Aside from all of the catastrophic damage that has done to the economy already, and how much it will produce in the future (even if the chasm between the top and the bottom does not widen further), there are innumerable small modifications which have resulted in the daily lives as well as the social interactions of all Americans.

    In my personal opinion, having been an intelligent and rational adult 30 years ago and still being alive today in the same society, is that American society has gone completely off the rails as a direct result of that dramatic increase in income inequality, and that the most likely end result of what we have done in that respect already is a relatively near term (within 10-20 years) catastrophic collapse which will be social as well as economic.

    So, of course an individual who has barely achieved his status as a one-percenter would feel somehow left out of the party. The increased social stratification which goes hand-in-hand with increasing income inequality tends to function as blinders on a horse. He can only see how much more those in the top 1/10th of 1% have, and how little he has in comparison, how miserable it makes his own life...and the more he earns, the more clear his misery will become until he has reached the wildest wealth fantasies of his childhood. That's how greed works. It's funny, hilarious, actually, when you think about it.

    At any rate, it will almost never occur to him that there are people who live their entire lives, raise families, care for their elderly parents and grandparents, earning 1/10th of his income. It will only rarely occur to him because he is already wealthy in a society becoming ever more greatly stratified, so that he doesn't have to see or feel anything but his own tiny personal reality unless he really makes an effort to do otherwise.

  • Report this Comment On April 11, 2012, at 1:01 PM, mur4inc wrote:

    Very interesting article. Lets break his 350k down.

    100m fed tax, 30m cal income tax, probably 75m private school where people making 100m or less would get a full ride,mtg est 40m, utilities 10m, prop tax 10m,donations 10m,auto expense 10m.

    That leaves 65m for food, vacations,recreation, savings, and oh sales tax of 7.75% on almost everything he buys,and a myriad of other stuff.

    This guy probably works his butt off, probably a college grad, I assure you he may be the 1%, but he is only getting by and sure pays his fair share.

  • Report this Comment On April 11, 2012, at 2:12 PM, RMartel wrote:

    @mur4inc,

    California tax: ($96,058 and over) $4,229.24 Plus 9.30% of the amount over $96,058. TOTAL (if we ignore any and all allowed deductions): $27,845.85

    Federal tax on $322154.15 (after only the state tax deduction): $48,665 plus 33% of the amount over $217,450. TOTAL (ignoring all allowed deductions except state tax): $83217.37

    Federal plus California tax total: $111,063.22

    The poor man will have only $238,936.78 after he pays all of his income taxes, if he or his tax preparer are incompetent enough to ignore all of his allowable deductions except for the state income tax. That is more than twice as much as the before-tax income of 90% of all Americans, more than 3 1/2 times the before-tax income of 75% of all Americans, and more than 7.3 times as much as the before-tax income of 50% of all Americans.

    My heart bleeds for him...before I snicker at his utterly clueless hubris.

  • Report this Comment On April 12, 2012, at 2:16 AM, kyleleeh wrote:

    <<There is a certain baseline minimum that a human being needs and that is, as Sunny points out above, entirely reasonable to calculate and plan for.>>

    That baseline varies from location to location. Things like electricity and plumbing are not necessities. We got along fine before we had them and billions get along today without it. Even here in America $50 will buy you enough rice and beans to eat for a month. But I doubt that many Americans would be willing to accept that as an adequate "baseline" even though for much of the world that is middle class, and for all but a small recent sliver of human history that's all anyone had...what's changed is our expectations not our necessities.

  • Report this Comment On April 12, 2012, at 12:06 PM, DJDynamicNC wrote:

    ^^^ That's a fair point.

    Ultimately, of course, I'd be interested a global framework for ensuring that such inequalities are levelled off to a certain extent, but in the interim I think pushing for a smoother distribution of resources on a local level is equally valuable. American wealth as a whole has drastically increased, as has the productivity of the American worker, without commensurate gains in quality of life for many (if not most) American labourers. There is something fundamentally wrong about that situation which deserves rectification, and I have no qualms about using government to address such market failures.

  • Report this Comment On May 01, 2012, at 5:12 AM, thidmark wrote:

    "I'd be interested a global framework"

    "I have no qualms about using government to address such market failures."

    Yikes

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