The TNT Column

In this column, the TNT columnists tackle the topic of wealth in America – who has it, how they get, why they have it, the opportunities to achieve it, and whether or not the distribution of it is fair.

Can You Really Make It In America?

During this recession we’re frequently lectured about helping the unfortunate, the misdistribution of wealth, and people who are victims of a capitalistic system that only benefits the rich. What’s really unfortunate is that you don’t hear the truth, which is that despite capitalism’s faults everybody living in America still has the very same freedom to create as much wealth as he chooses. To quote Milton Friedman:

“A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.”

Having grown up in a lower-middle class, blue-collar family, I can testify that being poor is not an excuse for continued choices which result in lower economic returns.

The American dream is that you will raise children to be more successful than yourself. Individuals are responsible for the choices they make in life that determines the result of their economic standing. At frequent points in my childhood my parents were on temporary assistance when my dad was unemployed. However, due to working since age 13 and a persistent focus on my education, I now earn more than both my parents. The income I started out of graduate school at was more than what my mom was earning at her job. This wasn’t because of some evil capitalistic conspiracy to keep her down, but an attribute to the results of choices – choices in career, choices in education, choices in risk to build wealth. I could continue to have more wealth when I‘m my parents‘ age, but I could also choose to go on a spending bender like I’m Chicago’s Lindsay Lohan. I’m not hear to say that building wealth is easy for anyone – it wasn‘t for me. And your wealth can be flushed down the drain quicker then you earned it.

But the argument that the rich remain rich because they were born into an environment of more opportunities is an egregious fallacy. The reality is that 80% of millionaires in this country are first generation millionaires and nearly 85% went to public schools. In fact, most of “the rich” in America are not corrupt executives, but are small business owners who earn an average of less than $250,000. One of the biggest characteristics of the wealthy is that they follow the behavioral cycle you’ll hear on any financial advisor show – earn, save, reinvest, then repeat. Millionaires on average work around 60 hours a week. After they’ve spent the majority of their life either working or sleeping, they then save at least 15% of their income. They also reinvest another 20% of their remaining income. 97% own their homes, half of which have lived an average of 20 years in their homes, which provides time for the values of their homes to appreciate greatly.

The common denominator among the wealthy is not the amount of income they earn, but the choices they make once the paycheck hits their bank account.

Free market principles enable us all to obtain long-term wealth. But when has a government bureaucratic program or redistribution of income made anyone wealthy?

Let’s talk facts about the myths of income inequality. According to the Census Bureau, income gaps grew more under President Clinton’s final seven years than all of President (GW) Bush’s first seven. To be specific about it, income inequality was 8 times greater under Clinton as compared to Bush, after factoring for inflation. Yet, in the media all you hear is how great the economy was under Clinton and how under Bush only the rich benefited. I don’t know about you, but I think I’d prefer an economic environment where the poor are making 8x closer to the income of the rich – wouldn’t you want the same?

The problem we have in America is that when it comes to the myth of income disparity and stagnation, we have silver-tongued politicians who base their RichHunt pitchforks, I mean arguments, on a skewed statistical category rather than actual human beings earning their own income. If you look at the last 30 years, household income only rose by 6% but income per capita (or individual) rose by 51%. It’s clear that people are actually earning more than previous generations. So why is this truth not mentioned when tossing the income gap political football? Because using the 6% income by household figure is better for a pseudo-crusader politician to mentally manipulate voters into electing him.

The larger crime against the poor is that people are more apt to hear out a conniving politician tell them what they don’t have than listening to their inner self tell them what they could have. I look at someone’s wealth and am not jealous or think it’s unfair. I think about how can I get to that point. I strategize about what I can do to get there. I’m tired of the materialistic nature that plays into our political process – using our government system as a piggy bank to buy votes for those who can get the biggest score out of the Treasury. It is shameful when a lady is screaming that a presidential candidate’s biggest asset is in his ability to take care of her mortgage and gas bills. That’s a huge red flag not only with our political process but also to the underlying definition of individual responsibility in this country.

Distribution of Wealth?

Question: if the, “American Way” really works… why aren’t we all rich? Traditionally, the Distribution of Wealth is the United States single biggest problem. Maybe there really is only 2% of us that are really working hard, and the 98% of the rest of us are just slackers. Hmmm… that is incredibly hard to believe when you look at those odds. Or, maybe there are some basic reasons that contribute significantly to just why we all aren’t rich, yet….

The Good Old boy System…
From birth we’re taught that if we work hard, we can do anything and go anywhere. But what they don’t teach you is that you really have to know somebody to get anywhere. Sure, there are a few success stories. But the truth by far is that doesn’t happen every day, and definitely not to everybody. Too often in the United States, after years of hard work, the working class stays the working class with little to no opportunities for real upward mobility. Executives pass around and refer their friends and family from company to company and the corporate ladder has several glass ceilings.

I honestly feel that I can truly say that I have worked as hard as I can to ‘be the best I can be’ and as you can see I’m a bit frustrated and approaching bitter. The same bitterness that struck the country as we watched AIG and other corporations on Wall Street use the bailout money to take vacations and give out MORE undeserved bonuses.

The American Fallacy
And that is the reality of it all. In fact, the economic devastation that we are currently in properly aired out why not only we are in the worst recession since the Great Depression, but also why the, ‘the greatest country on earth’ has such disparagement in distribution of wealth. The credit and financial industries had run unbridled and were allowed to increase their rates and apply predatory fees and lending at their leisure. To add, as incomes have stayed relatively flat over years, health insurance and medical costs have risen in double digits exponentially. Clearly, whenever corporations need or want extra money, they simply raise their rates to maximize their profits, when a blue collar worker doesn’t have the ability to just as simply raise their salary, let alone accumulate any type of wealth. The problem with Capitalism is that it encourages greed, and the hole in the ‘trickle down’ theory is that none of that profit ever trickles down to benefit the working class. Big business and corporate executives maximize profit to take care of themselves and do not pass the accumulated wealth on to their employees, or to their customers. Therefore the so called, ‘American Dream’ is a big lie and hard work doesn’t pay off, and indeed, the rich get richer and poor get poorer. While it really is the little people that truly make the world go around… as employees, none of them make any real money.

So how will we get rich?
Looking at the current situation it seems clear that working hard and standing for something doesn’t get you much of anywhere these days. Hopefully there is potential for the next generation. If they pay attention, with a bit of luck they will learn earlier than I did the truth about the ‘American Dream’ and will not buy that bag of false goods that they are sold so young. Hopefully they will look at the today’s current economic situation and see that the rich get richer and the poor get poorer and it really is as simple as that. That free markets do not mean fair play, and that school and education does not mean real money. That would at least be a start, if nothing else, as citizens they at least deserve to know the truth.

Other than that, keep working your head off if you want to, but if things continue the way they were over the past eight years, you’d probably be better off playing the lottery and hope to ‘make it’ one day on American Idol or something. So, when you’re in the shower make sure to get your practice in, don’t forget to get your ticket. Good luck!