The Rich should be worried

The Rich is this country are doing well, unlike many of the rest of us. Many of us in the middle class suffer from lack of jobs, insecurity of future decent-paying jobs, and diminished prospects for us or our children. The working class has their prospects diminished too.

But it's the Rich who are moaning the loudest on some days. Perkins infamously wrote in the Wall Street Journal that he feared a Kristallnacht against the wealthy. To me, this seems like an overreaction and bitching about taxes going up on the wealthy, but those taxes still aren't terribly high. Romney paid only 14%, so a rise to 20% (the new capital gains rate) hardly seems like a major hardship.

I wish the Rich had more to worry about. The kings of financial firms should be sweating in non-country-club cells while federally appointed special masters hunt down and liquidate their assets. People are rightly pissed at the execs at Wall Street firms, GE and other huge companies that play the tax code like squash, energy giants like the Koch brothers, hedge fund managers and clients, and the foolish, spoiled rich like Sheldon Adelson who think they can buy elections.

People like Jeff Bezos, Bill Gates, Apple execs, Oprah Winfrey, and George Lucas don't have anything to worry about. They created great things that we all enjoy, and got rich in an honest way. That's not true for the others. The GOP may have labeled them "job creators" but that's proved disgustingly hollow.

Americans aren't mobs, rebels, or robbers, yet some Rich are stupidly worried. The U.S. has never had a French Revolution-style uprising, much less one like the Russian Revolution. Even in the midst of the Great Depression, the poor continued to let the Rich be rich. Little Orphan Annie adored Daddy Warbucks instead of wanting to whack his head off, and that reflected the general population.

So why are the Rich so worried? I don't care. They have a lot more resources to slow or soften their fall than I do (as I have much more than the average American). If need be, I'll live on much less and I won't bellyache like these Rich.

We are all facing living with less. Why do the Rich think they have the brunt of it? Nothing could be further from the truth. So why the angst? In this column (and an earlier one) a leftish pundit tried to figure it out. This is what rang true to me:

It is that mix of insecurity, a sense of the brittleness of one's hold on wealth, power, privileges, combined with the reality of great wealth and power, that breeds a mix of aggressiveness and perceived embattlement. . .

But over the last few years (since 2008), I think there's been a pretty dramatic growth in what we'd call Tea Party politics in that set - extreme conservatism . . . the kind of feverish mindset in which you could write with a straight face that progressives might be building toward some sort of mass wealth confiscation or internment or even extermination.. . .

Image: bradblog.com

Extra. Wealth concentration is normal. No surprise that the powerful try to maintain their power.

Stuffing your money into the mattress

Probably I'm telling you something you already know, but if you put money into the stock market during most of the last 12 years, it hasn't done well. It's even worse if you bought a larger house thinking it would be a good investment and you could get some money out when you needed it.

I'm not sure how people saved for big expenses or retirement prior to the 1970's. I've heard stories of people putting money in jars and storing them in the basement.

When I started saving in the 80's, that approach seemed so antiquated. The inflation in the 70's would have cut the value of those basement dollars to less than half. In the modern, swinging 80's, you'd take your savings and buy a newfangled Certificate of Deposit (CD) or open a money market account.

Also in the 80's, it became clear that you were missing a huge opportunity if you didn't get into the stock market. The same in the 90's. The Dow soared 230% in the 80's and another 320% in the 90's.

 

Two decades is long enough to erase the old patterns of savings and entrench new ones. So everyone with some extra cash was buying stocks or mutual funds, either directly or as IRAs or 401Ks.

As the markets became less reliable after 2000, investment advisers talked about "dollar averaging," which meant that you kept investing in stocks even when you were leery, because the ups and downs would average out and the overall trend was still up. I  and many others listened to this advice. However, by dollar averaging, I probably would have done better putting my money in a mattress or in jars in the basement.

The point isn't that my money didn't grow. It's that we lost the idea of putting away enough money to tide us through. Instead, we were supposed to invest, and let our investments keep paying us back many times over.

With this mindset, we didn't need to save as much. We could spend more, we could borrow, we could buy a more expensive home and enjoy more expensive hobbies. Thrift was passe. Well, we were wrong. Now we have to relearn those old lessons of savings and thrift, as individuals, as families, and as a country. I hope we can do it.