A lot of this check out, I think, though as explanations go it seems a little complicated (and at points ad hoc). I think an alternative explanation for how we've ended up where we're currently at is that people started inheriting money.
This, I think, is the dark matter of the US economy- we know it's everywhere, but nobody can point to it. And I'm not talking about eight figure windfalls coming down from dead shipping scions; I'm talking about the kind of money you'd expect to see run through a family if, since WW II, each generation kept putting away low-mid six figures. You get to the end of the 20th century, and with compounding interest you've suddenly got a lot of people tripping into low seven figure bonanzas when their parents die.
So- imagine you're a reasonably self-aware, college educated Democrat, both you and your spouse have solid-but-not-great jobs, and you're making $180k-$210k a year gross. That's not bad, but that does NOT cover:
1) The mortgage on a $450k house.
2) Payments/insurance on two Infinity crossovers.
3) Club sports fees for the two kids.
4) Annual vacations that require air travel.
5) College expenses when the kids get out of high school...
And so on. Yet there are millions of Americans who are living that life on these kinds of incomes. So where's the money coming from? And, to the point of this book review, how would coming into that money affect your worldview? Again, assuming the beneficiary is reasonably self-aware, we might expect them to carry some vague sense of guilt and shame at having their lifestyles-- in middle age, no less-- subsidized by monies that they did not year. Which, in turn, could lead to......
1) a lot of mumbling about 'privilege' (while doing nothing tangible to mitigate its cultural/economic influence),.
2) the pursuit of class signifiers which aren't 'too' grotesque, but which still relay the appropriate message.
3) a desire to use education and 'intellect', as opposed to wealth, as a primary status signifier (since we have both, but only the former was earned)
4) an insistence of minimizing the importance of personal agency in life outcomes (since you 'can't be blamed' for living a life that you haven't really earned)
And so on. We talk a lot about the basically uninterrupted spell of economic progress that we've seen since the post-war years, but not (it seems to me) much about how that generational accrual of wealth has affected social standings. My feeling is that its probably driven more of our social outcomes than the people who think the most about these kinds of issues would like to admit.
In the 19th century, novels frequently were about the broad topic of inheritances. Dickens novels often end with the plucky hero being rescued from poverty by an unexpected bequest.
These days, few novels or movies are about this topic even though, as you rightly say, it's a big one in real life, especially among the novel-writing and screen-writing classes.
Maybe increased average lifespans among the upper class are partly to blame? If a centenarian dies, their heirs are likely to be middle-aged themselves rather than young people struggling to get by.
Did you leave off a digit or something? If your house is only worth $450K then $180-210K a year gives you plenty left over for all those sorts of other things.
I would think that the sort of person you're talking about lives in much more expensive places/houses than that.
Yeah the example is off. Wife and I have average earnings over the last 10 years per annum right in that range. And we have $450k in real estate paid off (only one CRV, also paid off), put we also took 4 vacations involving air travel this year. And we spend another $10k easy on youth sports and another $10k easy on adult sports/clubs.
And we have inherited exactly zero dollars. In fact I have probably spent another $5k/year subsidizing various family. Family has cost me money in my lifetime not been a source of it. I was working close to full time by 14.
The numbers may be off- I'm just spitballing-- but the larger question is this:
Assuming that a higher percentage of families have accrued significant amounts of generational wealth in the past 80 years than at any prior point in history (and this assumption could be wrong, but for the sake of argument let's go with it), then:
a) What would we expect the effects of that to be on socio-cultural dynamics, and
b) Are those expected effects consistent with what we currently see?
Yeh. And actually there’s no way to reduce the average wealth discrepancy between white and black people without greater inheritance tax, but that’s rarely mentioned. There’s a lot of shouting about white supremacy guaranteeing that the average white person has y net worth while the average black person has x net worth where y is significantly greater than x.
Often this is the mean not the median, and the people doing the shouting are the people doing the inheriting.
> And actually there’s no way to reduce the average wealth discrepancy between white and black people without greater inheritance tax.
I have a dog in this fight, as a Black man; I'm not quite so sure about this. There are things (such as culture) that lead to increased income and wealth attainment; these things, like inheritance, are highly heritable. It may be possible that over generations, cultural changes occur such that Black people are able to acquire more wealth independent of tax structures.
Note that Woke does nothing to change the way the economic pie is sliced.
To give one example - if large companies would stop putting up roadblocks to unionization, this would result in a transfer of concrete material benefits to black, and brown, and yellow, and red and white working class people greater than all the corporate diversity committees ever formed, all the Twitter manifestos ever penned, all the unisex bathroom signs ever to be hung.
A lot of this check out, I think, though as explanations go it seems a little complicated (and at points ad hoc). I think an alternative explanation for how we've ended up where we're currently at is that people started inheriting money.
This, I think, is the dark matter of the US economy- we know it's everywhere, but nobody can point to it. And I'm not talking about eight figure windfalls coming down from dead shipping scions; I'm talking about the kind of money you'd expect to see run through a family if, since WW II, each generation kept putting away low-mid six figures. You get to the end of the 20th century, and with compounding interest you've suddenly got a lot of people tripping into low seven figure bonanzas when their parents die.
So- imagine you're a reasonably self-aware, college educated Democrat, both you and your spouse have solid-but-not-great jobs, and you're making $180k-$210k a year gross. That's not bad, but that does NOT cover:
1) The mortgage on a $450k house.
2) Payments/insurance on two Infinity crossovers.
3) Club sports fees for the two kids.
4) Annual vacations that require air travel.
5) College expenses when the kids get out of high school...
And so on. Yet there are millions of Americans who are living that life on these kinds of incomes. So where's the money coming from? And, to the point of this book review, how would coming into that money affect your worldview? Again, assuming the beneficiary is reasonably self-aware, we might expect them to carry some vague sense of guilt and shame at having their lifestyles-- in middle age, no less-- subsidized by monies that they did not year. Which, in turn, could lead to......
1) a lot of mumbling about 'privilege' (while doing nothing tangible to mitigate its cultural/economic influence),.
2) the pursuit of class signifiers which aren't 'too' grotesque, but which still relay the appropriate message.
3) a desire to use education and 'intellect', as opposed to wealth, as a primary status signifier (since we have both, but only the former was earned)
4) an insistence of minimizing the importance of personal agency in life outcomes (since you 'can't be blamed' for living a life that you haven't really earned)
And so on. We talk a lot about the basically uninterrupted spell of economic progress that we've seen since the post-war years, but not (it seems to me) much about how that generational accrual of wealth has affected social standings. My feeling is that its probably driven more of our social outcomes than the people who think the most about these kinds of issues would like to admit.
And so on.
Edit-- 'earn', not 'year'.
This seems like a big part of what’s going on.
In the 19th century, novels frequently were about the broad topic of inheritances. Dickens novels often end with the plucky hero being rescued from poverty by an unexpected bequest.
These days, few novels or movies are about this topic even though, as you rightly say, it's a big one in real life, especially among the novel-writing and screen-writing classes.
Maybe increased average lifespans among the upper class are partly to blame? If a centenarian dies, their heirs are likely to be middle-aged themselves rather than young people struggling to get by.
Right. The lady across the street died at 101 and her 70-something kids inherited the house.
It's more interesting when a younger person inherits.
Did you leave off a digit or something? If your house is only worth $450K then $180-210K a year gives you plenty left over for all those sorts of other things.
I would think that the sort of person you're talking about lives in much more expensive places/houses than that.
Yeah the example is off. Wife and I have average earnings over the last 10 years per annum right in that range. And we have $450k in real estate paid off (only one CRV, also paid off), put we also took 4 vacations involving air travel this year. And we spend another $10k easy on youth sports and another $10k easy on adult sports/clubs.
And we have inherited exactly zero dollars. In fact I have probably spent another $5k/year subsidizing various family. Family has cost me money in my lifetime not been a source of it. I was working close to full time by 14.
The numbers may be off- I'm just spitballing-- but the larger question is this:
Assuming that a higher percentage of families have accrued significant amounts of generational wealth in the past 80 years than at any prior point in history (and this assumption could be wrong, but for the sake of argument let's go with it), then:
a) What would we expect the effects of that to be on socio-cultural dynamics, and
b) Are those expected effects consistent with what we currently see?
I guess, but those numbers are _way_ off for most of the US. Makes the broader point kind of hard to engage with.
Yeh. And actually there’s no way to reduce the average wealth discrepancy between white and black people without greater inheritance tax, but that’s rarely mentioned. There’s a lot of shouting about white supremacy guaranteeing that the average white person has y net worth while the average black person has x net worth where y is significantly greater than x.
Often this is the mean not the median, and the people doing the shouting are the people doing the inheriting.
> And actually there’s no way to reduce the average wealth discrepancy between white and black people without greater inheritance tax.
I have a dog in this fight, as a Black man; I'm not quite so sure about this. There are things (such as culture) that lead to increased income and wealth attainment; these things, like inheritance, are highly heritable. It may be possible that over generations, cultural changes occur such that Black people are able to acquire more wealth independent of tax structures.
I have often wondered about why we don’t hear much about inheritance in modern pop culture and this is a great explanation.
It also explains how people living seemingly middle-class lives can afford to live in very expensive cities.
Those number seem a bit off and seem very NY/SF/DC focused.
In much of the country that lifestyle really is possible even if you “only” make 180-210k a year as long as you are reasonable about things.
Note that Woke does nothing to change the way the economic pie is sliced.
To give one example - if large companies would stop putting up roadblocks to unionization, this would result in a transfer of concrete material benefits to black, and brown, and yellow, and red and white working class people greater than all the corporate diversity committees ever formed, all the Twitter manifestos ever penned, all the unisex bathroom signs ever to be hung.
Running the numbers on that budget:
1. The mortgage on a 450k house: Let's say 45k/year at current 30yr rates, but until recently it would have been like half that.
2. 100k of cars every 10 years: 10k/yr + liability insurance 2k/yr
3. Club sports fees for the two kids: 2k/yr
4. 2 week annual vacation ~6k
5. College for 2 kids amortized over 21 years: 20k/yr
Total: 45+10+2+2+6+20 = 85k/yr
Umm yeah that's totally doable on a 200k combined income