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?
