The Poor, Poor Rich

Today is Blog Action Day, and the theme is poverty. Considering the meltdown of the US financial system, it’s a really timely topic.

Both the New York Times the Wall St. Journal have been hard at work covering how the souring economy is having an effect on the rich.

On Oct. 3, the Times ran “They’re Pinching Hundred-Dollar Bills,” noting that the number of private jets for sale is up 31 percent, that champagne sales have softened (“but sparkling wine has gone up”), and that some of the super-rich are downsizing from three multimillion dollar homes to two.

“The superwealthy in America are in a state of shock,” said Ronald Winston, honorary chairman of Harry Winston, the jeweler. “They are not rushing out to buy expensive diamonds. The psychological mind-set of the nation is keyed to the stock market, and in a downturn everybody is psychologically affected.”

The next day, the Times ran this:

This was further navel-gazing: a yacht broker noted, “The yacht is probably the first thing to go,” the bar and bat mitzvah market is soft, more luxury homes are on the market, etc. etc.

Then, this:

DESPITE these gains in the middle class, though, the truly wealthy have pulled away from the pack. Not since the late 1920s, just before the 1929 market crash, has there been such a concentration of income among individuals and families in very upper reaches of the income spectrum, according to researchers at the University of California, Berkeley, and the Paris School of Economics.

Some say that anger over the yawning wealth divide found traction in the highly charged and polarizing debate in Congress over the bailout bill.

Which is somewhat shocking, since it’s true, but off-topic. Isn’t the point of these articles to let us know about how the rich behave so we can emulate them?

Today in the Wall St. Journal, “The Billion-Dollar Question: Is Bling Over? How Luxury Executives Are Handing the Financial Crisis; Selling the Yacht.”

It’s about as nauseating as you’d expect. Sure, there’s a tinge of schadenfreude in reading that the pampered rich have to cut back, but selling one house is infinitely less painful than being foreclosed out of your only one.

Bad as that is, it’s nothing compared to real poverty. It just so happens that I was researching refugee camps recently, and read an article in the Guardian about the Dadaab settlement, which is the world’s largest refugee camp:

An increasingly violent insurgency in Somalia is fuelling a fresh refugee crisis with nearly 40,000 people arriving at a desert camp in north-eastern Kenya this year despite the border being closed.

The Dadaab settlement now hosts more than 210,000 people, making it the world’s biggest refugee camp. With at least 200 new arrivals every day, aid workers are struggling to cope.

“We are already at bursting point,” said Maeve Murphy, field officer with the UN Refugee Agency in Dadaab, 60 miles south of the border with Somalia. “And more refugees are on their way.”

The temperatures reach 104F (40C). “The newcomers’ shelters are desert igloos; bent branches covered with plastic sheeting and blankets.” Rapes and violence are common. Another story notes that “Life in the refugee camps is harsh. The refugees have no legal status and cannot move beyond the camps without permission.”

Joseph Stalin was reputed to have said, “The death of one man is a tragedy, the death of millions is a statistic.”

It’s not worth thinking about the rich and their millions. It’s a statistic. And it’s too hard to think of 210,000 displaced, suffering people, since that’s a statistic too. But it’s worth thinking of that child in that photo. I was looking at a clothing catalog last night, and realized that boy needs my money more than I need that sweater.

It doesn’t matter that Ralph Lauren upped the ante on its notoriously expensive Ricky bag, that it’s now available in 20 shades of alligator skin, including platinum, “vibrant cherry” or cobalt, that it’s priced from $12,995 to $28,995, or that the company is confident that it’s well-positioned with its customers. No matter what the Wall St. Journal writes, that’s all bullshit.

What matters is stepping away from the American consumer trap (and the American media that perpetuates it), and realizing that you have all you need — in fact, you have more than you need. You were incredibly lucky not to have been born in Somalia, or in about half the world, where people live on less than $2.50 a day. You were lucky not to be one of the 26,500-30,000 children who die each day due to poverty.

Christmas is coming. If you’re going to spend money, here are five places guaranteed to put your money to better use than Ralph Lauren or a yacht broker.

  • Mercy Corps -works with countries recovering from disaster, conflict, or economic collapse
  • UNICEF -The UN Children’s Fund provides long-term humanitarian and developmental assistance to children and mothers in developing countries
  • -created by the UN refugee agency to give children better access to education, sport and technology
  • Right to Play -uses sport and play to improve children’s health, life skills, and foster peace in disadvantaged countries
  • Kiva – the world’s first person-to-person micro-lending website

Just Don’t Call Us “Rich”

Reuters Life! recently ran a story (perversely enough, I saw it on Yahoo! … can we stop with the exclamation points now?!!) titled, “More U.S. millionaires are middle-class.”

Interesting title eh? More interesting was a sentence in the first paragraph: “New research has found that more and more Americans worth at least $1 million want luxury goods such as yachts but otherwise lead family-focused, work-oriented lives.”

The Reuters story is regurgitating the results of research by “private wealth specialists” Lewis Schiff and Russ Alan Prince, for their upcoming book, “The Middle Class Millionaire: The Rise of the New Rich and How they are Changing America.”

After trotting out some statistics about the rich getting richer (and that’s what millionaires are, not middle-class), they add this: “But instead of entering the echelons of the elite, these new millionaires adhere to middle-class values, earning their money rather than inheriting it, working 70 hours a week, and choosing neighborhoods based on the quality of schools.”

Let’s pick apart what’s going on in this story, shall we?

1) The concept of “middle-class” is miraculously fungible, somehow applying to people worth over $1 million, and those households—not individuals—earning $48,000 a year (the US median).

However, nearly everyone in the U.S. is deluded into thinking they’re part of the middle-class, either middle-class, upper-middle-class, and lower-middle-class (if you don’t believe me, find someone to tell you they grew up working-class or grew up rich). Barbara Ehrenreich argues, persuasively I think, that there’s an all-pervasive set up assumptions in the U.S. that are middle-class assumptions, many of which are cemented during college (which is essentially the middle-class guild). Her book “Fear of Falling: The Inner Life of the Middle Class” is particularly good on this.

2) The Reuters story completely ignores what’s going on in the story, even when one of the authors identifies himself as a “private wealth specialist”—he’s studying the wealthy!

3) Instead, the story uncritically adopts the authors’ catch-phrase: “They found that 89 percent of middle-class millionaires believed anyone could attain wealth through hard work.” Note that tiresome repetition of the American myth, that wealth (oops, there’s that word again!) is attainable through hard work.

4) But the story isn’t even consistent about this. After some more “middle-class millionaires are better than you and me” factoids

“They are much more outgoing and involved in the community than the very affluent who tend to be more insular and react with fewer people,” Schiff said.

He said the four main characteristics of a millionaire were that they were hard working, networked, persistent even in the face of failure, and put themselves in the flow of money.

The paragraph argues:

“The authors argue this new group has a strong influence on spending, shaping the habits of their middle class counterparts and impacting certain product sectors ranging from yachting to jewelery to handbags.” (Anything wrong with that? Yep.)

Hold the handbag. Are they middle-class, or are they rich? If they’re rich, they buy yachts. If they’re middle-class, they don’t.

The story then quotes the president and CEO of marine lender KeyBank Luxury Yacht Lending, who says demand for 80-foot and up yachts is way up. “The new buyers really value leisure time as they have so little time,” he told Reuters. Um … WTF does lack of leisure time have to do with it?

The end of the story (thank God):

“When you’re very wealthy you look for exclusive expressions of affluence and when these are more available to a larger number of people they lose their exclusivity so they want something new and innovative,” said Schiff.

“This means the top one percent has to find a new way to express their affluence and we are seeing this most commonly through technology.”

Decoded, that means the rich have to keep finding ways to prove they’re NOT just like you and me. So yachting has nothing to do with leisure time. It’s an expression of affluence. In other words, as a concept (and probably as a book), “middle-class millionaire” is bullshit.


Join the middle class, and this too could be yours.