Rising Riches: 1 in 5 US reaches affluence. Hope Yen, AP via Chron.com
Fully 20 percent of U.S. adults become rich for parts of their lives, wielding outsize influence on America's economy and politics. This little-known group may pose the biggest barrier to reducing the nation's income inequality.
The growing numbers of the U.S. poor have been well documented, but survey data provided to The Associated Press detail the flip side of the record income gap — the rise of the "new rich."
By "rich" these news reports seem to focus on people who have the ability to purchase products that create the illusion of luxury instead of luxury itself. Brands such as Louis Vuitton, Coach, and Cartier have long been associated with luxury but are, in fact, hazy reflections of true luxury goods, many of which are not household brand names. In short, we've allowed Madison Ave. and other marketers to sell us on the illusion of luxury through branding. This is disturbing because it skews the discussion of wealth in a negative direction, as do studies based on income alone.
The true measure of "rich" is net worth, not income. Wealth can also be inflated due to (still) relatively easy attainment of credit. By linking wealth with income the media and many analysts are missing the impact of debt on personal balance sheets. For example, a family making a combined $150,000 with a $300,000 mortgage and $30,000 in revolving debt balances is not "rich". Certainly they're not poor, having purchasing power and many opportunities not open to those with lower incomes, but they're not rich either. What they offer up is the illusion of true wealth, an illusion being sold by marketing firms to America as "having it all". In this world Lexus is a luxury brand, as is Mercedes, despite the fact that each offers up many vehicles for less than $50K. Individuals driving these mass-marketed cars to their jobs while wearing Cole Haan, or Tory Burch shoes and clothes from Michael Kors are viewed as "rich" but may not be. Especially when you consider that many "luxury" brands are purchased at deep discounts during sales at either big-box department stores or in outlet malls.
It's important to note that I'm not making the case these people are poor. Certainly not. But they're not rich either. One of the great laments in America today is that the minimum wage (a fallacy that's accepted as fact) is not indexed to inflation. It's just as wrong that our definition of "wealth" is not so indexed as well. If that were the case much of what we are classifying as rich would fall squarely in the middle class. Yes you can trot out the 2% income statistic and other fake metrics but the best determinant of wealth is not income, but net-worth. Unfortunately that's a metric that's all but ignored in the debate.
These facts underscore the biggest problem with income and wealth disparity reporting today. Not only are the media and politicians providing Americans with an inaccurate picture of what is rich and poor, but they're doing so intentionally to drum up support for programs designed to do nothing more than maintain the status quo and save their trough-feeding jobs. A focus on real wealth creation would not only be detrimental to America’s retail-economy but it would also call into question our politician's insistence that we have a right to stuff. If owning cell-phones, shoes and clothes with the correct labels and cars with the correct badge are no longer considered indicators of wealth (which they're not FWIW) then these promises for a better life become meaningless and banal and will be exposed for everything that they are not.
It is very easy to accept the default wisdom that evil big corporations are at the wheel and driving America off a cliff but the reality is that the (also corporate) media and our (corporate backed) politicians have a hand on the till as well. While retailers and marketers have convinced us that we need iPhones and Cartier rings the media and politicians have also pushed for that by glorifying their existence in glossy style sections and by lavishing praise and giving undo credence to their spokespersons. Every time that Barack Obama takes an audience with a Hollywood star the illusion is strengthened. Kal Penn was a member of the Obama Government and Angelina Jolie has been held up as a policy diva. Being star-struck is not just something for the poor, it's increasingly being glamorized by our politicians as well.
And our media, the former watchdogs of waste and corruption now spend more time and resources on side-boob and the goings on of the rich and famous than they do the nuts and bolts hard-news of politics and daily life. In Houston, the citizenry knows, courtesy of Chron.com and CultureMap, more about the price of Louboutins then they do about who is spending their tax money at the City, County or at a variety of local pseudo-governmental taxing authorities. I'm sure that less than 1% of Houstonians understand that Christof Spieler, who is on the Metro Board, is making spending decisions with their tax money despite, seemingly, having no clue about budgeting or accepted business spending practices. However, I'm willing to bet that a larger amount know how designer Michael Aram feels about holiday decorations. Why? Because Houston's former newspaper of record considered the latter to be more newsworthy than the former.
With "reporting" such as this, is it any wonder a J-school graduate would pen a missive so wrong about what it means to be rich? And, given that logic, is it any wonder society is voting for politicians who continue to get it wrong as well? Continuing this line of reason is it any wonder our economy (and country) is in the shape it is in? C'est la vie one would say.
