The rich are different from you and me

The title of this post is, of course, from The Great Gatsby.  That is a phenomenally succinct way to sum it up.  Life is not the same as scaling with respect to incomes.  The rich lead lives that are simply way different from yours and mine.

I have no hassles at all that there are rich people.  We need more of them.  But, it does make for interesting conversations and humor and, sometimes, schadenfreude too, like in this Zuckerberg wealth-o-meter from the Wall Street Journal :)




Forbes has always had a running list of big losers and winners--"real time billionaires"  I have often wondered when a typical billionaire loses sleep: is it when they lose 300 million versus losing only 10 million?  Do they simply ignore the daily fluctuations in their wealth?  Or, win or lose, like Scrooge McDuck, do they go into the vault and roll around in their gold coins? :)

But, of course, all rich are not created equal.  Some are more rich than others, and the difference is as significant (or even more, perhaps?) than the difference between the rich and me.

With two wonderfully informative charts, this Atlantic post notes

Forget gold. If Scrooge McDuck were around today, he'd be diving into a big pile of capital gains. Okay, and maybe some dividends too.

They don't seem to work for salaries, as much as how money works for them!

The rich are different from you and me. But, wait, I am rich, too

My air travel to India last year was via Frankfurt, where I had to get a new boarding pass for my onward flight to Chennai.  It was more than two hours to boarding time and the gate was rather empty.  I approached the counter, which was staffed by two young women.  I kidded with them that perhaps it was my lucky day and that they would give me a free upgrade from coach to the first class. 

One of them replied, "from where I am, even a regular economy ticket feels like first class."

Her reply was a powerful reminder that being materially rich is, well, relative.  I felt rather stupid for joking with her about the first class upgrade.  In any case, she directed me to return to the counter after a few minutes because they had just about gotten there to the gate.

I wandered around, and about a half an hour later returned to the gate to find quite a few passengers already lined up at the counter. 

I waited my turn, and presented my passport ... and no jokes this time.

With the stereotypical German efficiency, she handed me my boarding pass and in a formal tone said "welcome to the business class."

How much ever I think that I am a lowly paid university professor, the reality is that even within the United States, and definitely among the nearly seven billion on the planet, I am not one of the hoi polloi.  I belong to a privileged group. I ought to be humbly thankful about it, and the Lufthansa employee reminded me that I have a lot to thank for.

Yesterday, too, was another learning opportunity on this very subject.  On my drive back from Seattle, I stopped to fill gas.  It was also a break for me from the couple of hours of driving in the rain.  (Here in Oregon, only the gas station attendant can legally pump gas.) 

I handed my credit card over to the young woman and when she returned it after starting the pump, I engaged in the casual chit-chat that we often do. 

"How you doin' with the rain and the wind?" I asked her. 

"I have one more hour to go, and I can't wait because even my socks are all wet already" she replied. 

These are not warm rains--it was just about 47 degrees. To be outside in the rain in wet socks at that temperature, versus me in the warmth and comfort of my car ... I reached into my bag, took out a chocolate bar, and gave her that while adding "hey, I hope this will warm you up."

"Thanks so much" she said.  Her facial response itself made it a worthwhile gas station stop.

The larger picture on unemployment and income inequality in the US is not looking good at all.   

No more debutante balls for the rich

The economic divide between the rich and the rest of us is very different from the Great Gatsby of F.Scott Fitzgerald, writes Chrystia Freeland in the Atlantic.  While the inequality numbers might seem to be the same, there are plenty of differences between the two, such as this one:

To grasp the difference between today’s plutocrats and the hereditary elite, who (to use John Stuart Mill’s memorable phrase) “grow rich in their sleep,” one need merely glance at the events that now fill high-end social calendars. The debutante balls and hunts and regattas of yesteryear may not be quite obsolete, but they are headed in that direction. The real community life of the 21st-century plutocracy occurs on the international conference circuit. 

What happens in in the international conference circuit?

it has the intense, earnest atmosphere of a gathering of college summa cum laudes. This is not a group that plays hooky: the conference room is full from 9 a.m. to 6 p.m., and during coffee breaks the lawns are crowded with executives checking their BlackBerrys and iPads. ... Though the china is Sèvres and the paintings are museum quality (Marie-Josée is, after all, president of the Museum of Modern Art’s board), the dinner-table conversation would not be out of place in a graduate seminar.

And then, of course, even the latest gazillionaires like Facebook's Zuckerberg soon becomes a philanthrocapitalist:

What is notable about today’s plutocrats is that they tend to bestow their fortunes in much the same way they made them: entrepreneurially. Rather than merely donate to worthy charities or endow existing institutions (though they of course do this as well), they are using their wealth to test new ways to solve big problems. The journalists Matthew Bishop and Michael Green have dubbed the approach “philanthrocapitalism” in their book of the same name. “There is a connection between their ways of thinking as businesspeople and their ways of giving,” Bishop told me. “They are used to operating on a grand scale, and so they operate on a grand scale in their philanthropy as well. And they are doing it at a much earlier age.”

So, ... ?

America really does need many of its plutocrats. We benefit from the goods they produce and the jobs they create. And even if a growing portion of those jobs are overseas, it is better to be the home of these innovators—native and immigrant alike—than not. In today’s hypercompetitive global environment, we need a creative, dynamic super-elite more than ever.
There is also the simple fact that someone will have to pay for the improved public education and social safety net the American middle class will need in order to navigate the wrenching transformations of the global economy. (That’s not to mention the small matter of the budget deficit.) Inevitably, a lot of that money will have to come from the wealthy—after all, as the bank robbers say, that’s where the money is.
It is not much of a surprise that the plutocrats themselves oppose such analysis and consider themselves singled out, unfairly maligned, or even punished for their success. Self-interest, after all, is the mother of rationalization, and—as we have seen—many of the plutocracy’s rationalizations have more than a bit of truth to them: as a class, they are generally more hardworking and meritocratic than their forebears; their philanthropic efforts are innovative and important; and the recent losses of the American middle class have in many cases entailed gains for the rest of the world.
But if the plutocrats’ opposition to increases in their taxes and tighter regulation of their economic activities is understandable, it is also a mistake. The real threat facing the super-elite, at home and abroad, isn’t modestly higher taxes, but rather the possibility that inchoate public rage could cohere into a more concrete populist agenda