I’m really confused on who to direct my daily Two Minutes Hate on: I thought it was the rich who make unearned money in the stock market … but they’ll get crushed at the beginning of a Great Depression (see, 1929). Now you’re saying they actually get rich from a Great Depression.
There’s a super simple solution to your quandary: give it all away, right now, to those who deserve it more. Don’t talk about, don’t agonize over it, just do it. Now.
Let’s run some numbers.
Suppose a husband and wife in California both work, and they both make median income, which we will round to $35K per year. They have two children, and the oldest is now ready for college. She is very bright, near the top of her class, and gets admitted to UC-Berkeley.
Running the Net Price Calculator for UC-Berkeley, the in-state list price is about $39.2K. But with their $70K income and $100K in assets, they get a $24.3K grant, reducing their total contribution to $14.8K per year, or roughly $60K for 4 years in constant dollars. Of that $60K, they expect the student to cover about $36K through work study and loans. A student can earn about $5K during the summer at the California minimum wage, plus some more during school-year work study, so the loan component should end up being small.
The other $24K is from parental contributions which hopefully the parents were able to save up. If not, they can take that out as a parental loan.
And let’s not forget that there are cheaper options as well. UC-Berkeley’s transfer program gives first priority to students from California community colleges. California’s community colleges charge $46 per credit hour. The student can stay at home, earn 60 credit hours over two years at a total cost of $2760, and then transfer to Berkeley, and graduate two years later. Same quality degree, but about half the cost.
All possible on middle-class incomes, which as I said, are considerably higher in the USA. No plutocrat wealth required.
I interpreted that comment very differently.
People born in the US have won the opportunity lottery. For ambitious people worldwide, it is exactly this opportunity that has made the USA, until recently, an immigration magnet.
But others may prefer the lottery of being born in Europe, where everyone is more equal because they are generally poorer, but as compensation there is a very strong safety net.
I’m not familiar with CA (other than various vacation travel throughout the state), but it seems to me to be a HCOL state, so you really would expect a family of four earning 70K when their oldest goes to college (meaning probably not likely earlier in their lives) to have 100K in assets and have saved up 24K for college? Or would counsel them to take out that much in loans for college for just one of their offspring?
CC would be an option, but other than that, our advice to the parents and expectations from them would differ.
Then too, 50% of the folks there earn less than the median. How do they afford it? CA might be good with college tuition as are some other states. Other states are not. We have kids working in our high school to put food on the table for their families. Some also pay the rent (no asset building up there). They tend not to be our stellar students able to get into tippy top schools, but they can be “good enough” to get state school acceptances. If what they are earning is helping to pay for basics, how can that same money be applied to college expenses? Loans you say?
Most move on to the work force - no shame in that - but when one would prefer a college education and fits the profile of being able to do it, it would be nice if there were decent access across the economic classes. The tippy top academically can often find something affordable, but the “masses” have far more difficulty IRL.
Let me offer a counter example to the thesis of this article: Japan, which is arguably one of the most egalitarian society among advanced nations. But, there, both parents and students face enormous pressure.
Note that in-state public affordability for middle income families can vary considerably by state. CA is one of the better ones for this purpose. PA is an example that someone would use to make the opposite claim.
CA is also one of the better states for starting at a community college and then transferring to a university. PA is a state where the community college equivalent to transfer to the flagship system is the significantly more expensive branch campus system of each flagship system university.
If this were true, we would see rich people agitating for them all the time. Instead, what we see are rich people colluding with government to protect themselves in every downturn. Most real wealth in the US is highly “geared,” very sensitive to asset prices and especially credit availability.
Interesting that this obvious fact hasn’t filtered down into the public consciousness. I know that for most people, history only starts with their birth (or even later), so how about 2008? That’s recent enough I guess. Who was really “saved” then? And how?
Regarding comparisons between the US and other countries, they may not be as relevant to how people feel than what people see in the future for themselves and their kids.
In other words, if they see themselves or their kids getting poorer in the future, they may be quite unhappy about it, even if the future level of income and wealth is still high. For example, suppose a typical forum demographic family that does not get college financial aid (meaning income about four times the US median household income) experiences job loss(es) and ends up with a lower income of “only” twice the US median household income. Such a family is likely to be quite unhappy. In contrast, a family who was previously making the US median household income who experienced an income gain to twice the US median household income is unlikely to be similarly unhappy.
The same happiness/unhappiness may apply to parental views on their kids’ futures. The typical forum demographic family may be unhappy if their kid settles into an adult life earning “only” the US median household income. A poor family may be much more satisfied if their kid ends up in the same place. Of course, for the typical forum demographic family, there is much more room for downward mobility for the kids than there is for upward mobility. That the economy may be turning negative-sum for all but the plutocrat class would be another factor making downward mobility more likely for most people. Local economic conditions may also be an issue, even if the overall economy is doing better.
Then throw in that greater economic inequality and a weaker social safety net means that the stakes are higher in terms of reaching a higher income. So it should not be surprising that such an economic environment would drive parents to try to give their kids as many advantages as possible (starting in early childhood) in a more competitive economic environment.
There has been a lot of data thrown around. And all very illuminating. But it only tells part of the story.
Let’s look at it s different way. With more, dare I say on CC, holistic manner.
Japan is nearly as homogeneous society as one could look at compared to the US. There has been no mass migration and immigration. There are vast pools of stored wealth in the hands of a few families as well
The US has spent billions in aid and defense spending for the Japanese. Our aircraft carriers and bombers have safeguarded much of their country since WWII.
Their aging population has an advantage in the mathematics involved relating to savings and assets. Smaller area to navigate and mass transit partially paid for by USA.
The list could go on and on. Poor equity markets driving cash savings, low to zero interest rates and cost of carry on long term tangible assets, transportation costs. Etc.
Western European nations have centuries of wealth accumulation and landed gentry. Vast wars decimated it twice in a century and huge American largesse to help them get back on their feet again. Lots of debt they didn’t have to be concerned with over the years. And national defense care of the USA saves a lot over time. The poorest of those citizens removed themselves and got out, many to the USA. It takes some time for this all to work it’s way though.
The current migration into Europe is having massive ramifications. And the VAT is applied evenly and raises significant revenue.
Eastern Europe has a whole different set of issues. Take a look at Russian income equality. And they’ve been impoverished under socialist and communist regimes. Replaced by staggering poverty and a newly minted oligarchy. In a span of 30 years?
Skandanavian countries often heralded as the model. Tiny countries. Large areas. Consistent culture and demographics. High taxation across the board. Not just the moneyed elites. Everyone pays up and down the economic spectrum.
The USA isn’t perfect. And there’s work to be done. But nearly half the citizens to not pay a net federal income tax. Half. We have 2 million plus people a year coming here to live. Many are just starting and it takes a bit of time.
We provide more foreign aid than any country in history.
And I know tech billionaires and super rich are easy to bash. But if you look back a generation or two they weren’t living in a castle. Many have names represent the great Anerican opportunity. Luck, smarts or hard work and you can have a chance. Warren Buffet grew up in Nebraska. Heck Steve Jobs was adopted. Elon Musk. Twitter Jack. The Indian gentleman from Wayfair. Ever see the picture of Jeff Bezos first office selling books online? No ritz Carlton to be found. Google ? They were smart. Plain and simple. The list is endless and many stories you’ve never heard about just as compelling.
The economic moat can be navigated by some. But it’s no shame to be a hard working whatever from wherever. When did that view emerge.
There are three areas of major concern.
The river is still widest in politics where the real power exists.
It is still far too wide for women. Period.
And Black America has been left by the side for far, far too long.
These are the areas everyone should be working on in a unified manner But the class warfare and anti exceptionalism camp, I believe will move the narrative away from these important topics.
And I really believe if we asked everyone to help or come up with ideas versus the “villain-ization” of everything — we have a fighting chance.
There is a huge income gap in China now. But the Chinese people will not go back to the Mao area.
I am done with socialism. It’s a noble goal but it’s not achievable.
^ Socialism, as in the authoritarian communism that we saw in the US and China (and still see in N Korea), isn’t terribly noble and leads to massive inequality and awful consequences.
Social democratic capitalism (which is really just the same welfare state capitalism of the US but more so) that we see in the Nordic countries has led to them being close to the top in the world in virtually all human welfare indicies.
It is easier for European countries to be generous with social programs when the USA is providing their defense umbrella. If they had to defend themselves, most would have to spend several percent of GDP to have their defenses be more resilient than a box of tissue paper. With the US defense umbrella, they instead get to spend this on their social programs. It is in effect a transfer from US taxpayers to European social program recipients.
And before anyone says it, I realize that Sweden and Finland are not NATO partners, but they have separate agreements with the USA as well.
The article made sense, but is disturbing. I hate that we feel so pressured these days and are, in turn, pressuring our children to the point of physical and mental health problems.
@hebegebe, I understand the point you’re making, but the US also has a disproportionate share of the worldwide defense industry market as well. And nobody actually forced us in to spending trillions on pointless wars in the Middle East (in fact, most of the world was against it).
It’s actually far from clear that a social democratic welfare state isn’t possible with heavy defense spending.
Robin Hood isn’t a new movie. Income disparity isn’t new or American. Lots of political set ups over the millennia and it still persists.
And just taking frommonr pocket to satisfy the other doesn’t work. Russia. China etc are examples.of course.
There’s education disparity too. I dont See anyone from Harvard giving iobtheir seat for me.
Oh, but they earned it. And I agree.
Just like some others have earned their incomes. And wealth.
Some are legacies in wealth and in college. Most aren’t.
It’s not that simple.
^ Sure, you can argue that many billionaires are self-made. But that wouldn’t be an argument against a high estate tax.
Absolutely not. I’m for an estate tax. As long as it doesn’t require massive stock liquidations thst cause regular joes to suffer or company fire sales that only hurt employees. Many small businesses are valued higher by govt than really worth and spouses/kids have no other resources to pay tax. Farmers too. Thr buyers know you are in trouble and it’s a bad result.
There are some techniques available. But you have to be careful to not kill an unintended target.