The Rich Versus the Upper Class

Paul KrugmanPaul Krugman makes a great point in a blog post today, The Myth of the Deserving Rich. But then he commits an error (which he does all the time) that drives me crazy. But first, let’s talk about the article generally.

His point is that just as we try to justify the poverty of the poor, we try to justify the wealth of the rich. Well, we don’t. But pretty much the entirety of the mainstream press and pretty much any politician with high aspirations. Of course, Krugman doesn’t go into it, but there is a big reason for this: social unrest. I think it is the biggest issue that society will have to face over the next couple hundred years if we manage to keep civilization going that long. If we all admit that our society is hopelessly unjust, how will we deal with this? We want to create a society that encourages people to do good things with their lives. But it isn’t a stupid person’s fault that he is stupid.

Krugman, of course, is more interested in the injustice and social waste of not providing real opportunity to the children of the poor. I’m interested in that too. But I think the problem is much deeper than that and eventually we need to solve it if we are going to make progress as a society. Personally, I believe in guaranteed incomes. But that discussion can wait for another day. What’s more, I’m sure there are other solutions that have not occurred to me.

On the other side of things—apologizing for the wealth of the rich—is at least as absurd. A canard I used to hear a lot is, “If the rich didn’t deserve their money, they would have lost it by now.” No. There are several reasons this is wrong. One is that the children of the rich get educated in how to manage money. Another is that the rich don’t really manage their own money; they pay experts to manage their money. And don’t forget: inheritance in the primary way people get rich. This Forbes article is a good example of what Krugman talks about in his article: using the well off but not rich to make the rich look better. (A half-million in wealth including your home is the definition of rich? Right!)

What Krugman keeps doing that bugs me, however, is saying that only the top 1% is upper class and that the 19% below them are the upper-middle class. Look, if the bottom 20% is the lower class, the middle 20% is the middle class, then the top 20% is the upper class. I admit, someone barely in that class is not rich at all. (My sister would fit into that category, although by the Forbes article, she would be rich just based upon her house.) I’ll even admit that the 19% are not rich. But they are by definition in the upper class.

The reason this bothers me is that it tilts the field against the lower class. By this way of thinking, the bottom 20% somehow balance the upper 1%. But that isn’t what’s really going on. People living on the streets might balance the 1%, but not the bottom 20% generally. They really are the contrast to the management class (and those few people who still have decent unions). I’m in no way against the upper class—I have family and friends in this class. Sadly, however, not one of them will admit to being in the upper class. And seeing reality is a prerequisite for improving it.

0 replies on “The Rich Versus the Upper Class”

  1. JMF says:

    And what else that Forbes writer does is claim that millionaires are "local business owners." Supporting the notion that wealth comes mostly from useful things, like starting a business and employing workers.

    Most small business owners are not that rich. And most businesses that pay people huge exorbitant salaries are not businesses that do useful things. There are exceptions, but the highest salaries go to people who work for giant financial firms that just steal money. Or the law firms handling lawsuits and contracts for those firms. Or the health industry, which just steals money. The energy industry. The defense industry. I could go on.

    I’ve long wondered why more small business owners don’t realize that the destruction of the working class is going to bring them down with it. Those are the customers. If they have no money to spend, they can’t buy things from you. Of course, small business owners don’t like paying taxes; who does? But when things get worse, they will be the ones who suffer first.

  2. admin says:

    @JMF – It’s even worse than that. Conservative policies are not good for small businesses. Neither are "liberal" policies, but at least they are better. It’s very much like with east European immigrants who latch onto the Republican Party. They are right: the Republicans [i]say[/i] the right things. But what they really stand for is the support not of the 1% but of the 0.1% and even the 0.01%. And in order to win elections, they throw in some policy for the social conservatives. It’s as simple as this: most small businesses are sole proprietorships (not by total employees, obviously). What good does lowing the corporate tax rate do for them? Most of them make less than $400,000 per year, so why would they care that the marginal tax rate on income above that went up by 4.6 percentage points? Do they really think that some day they will be doing that much better or be a corporation? I don’t think so. I think it is just the style of pandering.

Leave a Reply

Your email address will not be published. Required fields are marked *