Why -- The Rich – The Poor

It seems that everyday we are regaled by some well meaning liberal about the evils of the rich, the unfairness of wealth, the unfairness of poverty, and demands that the government do something to eliminate poverty.  What seems to be lacking is any question regarding the poor and how they got to be poor.  Certainly there are the “haves” and the “have not’s” in America but to classify these as those who have and those who don’t is a mistake.  The proper classifications are those that work and those that don’t, those that do and those that don’t.   We have those who obey the law, who support themselves and their families, and those who don’t.  The discussion shouldn’t be about income inequality but about personal and civic responsibility.

The political left focus on what they see as “income inequality” because some people make a great deal more than others and that isn’t “fair”.  For them the government should act as referee and level the playing field in effect the government should play Robin Hood and take from the rich and give to the poor, even though the poor have done nothing to earn it.  For the political left people should not be held accountable for their decisions if those decisions leave them in poverty, instead the government should redistribute the wealth more equitably. 

There is an irony here because this is a philosophy that is destroying America but the irony is that rather than helping the poor, it is actually locking them into a life of poverty and dependence on the government.  In effect this effort at redistribution of wealth does not benefit the poor but instead benefits the politicians and their power base.  It is a deviation of the basic value system that built America and simple common sense because it promises a level of material success that in not only not earned but cannot realistically be achieved.

The well meaning liberals have not empowered the poor as intended but have enslaved and trapped them into a life of dependence and entitlement, a life as a victim of society without hope of things ever getting better.  The idea that income equality can be achieved by taking from the successful and giving it to the poor is flawed at the outset.  It penalizes the hardworking successful individual who has made good life decisions while rewarding those who have made poor choices and decisions.  The reality is that each of us leads a life built upon choices and decisions.  When we make good decisions and choices these lead to rewards but when we choose poorly the results lead to failure and disappointment.  Of course through hard work and effort the effects of these poor choices and decisions can be reversed, but when the government steps in and attempts to mitigate the consequences of these bad decisions, dependence, disappointment, and poverty are the result.

It only requires a minimum effort to see that success and failure manifest themselves in family income.  Those who choose to drop out of high school, who have children prematurely and out of wedlock, have a greater possibility of living a life marked by failures, low incomes, and disappointment.  But those who finish high school, finish college, and dedicate themselves to work and self improvement have higher incomes and success.  The fact is that our futures are determined by our choices.

There is no doubt but that there is income inequality.  Income is tied directly to effort with those making the most effort having the highest incomes and those with the least having the lowest.  However, it is the effort and sacrifice that is the determinant not the education.  A bus boy at 16 can – through hard work become a waiter, then perhaps a co-owner of the restaurant, and eventually the owner of multiple restaurants and wealthy.  Another boy at 16 might choose to study and aim for a top university and a medical degree leading to a specialty and a high income.  Both boys become wealthy and successful husbands and fathers whose success was determined by their effort and dedication to a goal.  But another boy goofs off in school, doesn’t continue his education, gets a job as a laborer, has a couple of kids by different women, cannot maintain child support payments, and never seems able to get ahead and becomes dependent on the government. The inequality was in effort which led to negative outcomes and inequality of income.

The question then becomes “does the government have the moral right to take the wealth from the successful and distribute it to the unsuccessful in the form of government handouts?  While those who wish to take care of the poor by taking the wealth from one group and giving it to another may make them think they are doing the right thing, the reality is they are taking away the dignity, motivation, and freedom from those they wish to help.  The inequality of income is tied directly to the inequality of effort.  Government programs designed compensate for this inequality of effort fail because they make no demands on those they wish to help.  In effect they offset the lack of effort by making no attempt to motivate those they wish to help by motivating them to make greater efforts to become independent and self-sufficient. 

There is no easy path to success but there is an easy path to failure.  Everyone has the freedom to succeed just as through decisions and choices they have the freedom to fail.  The stark reality is that the harder you work the greater the rewards and government programs intended to thwart that simple fact, do not work and instead lock those they intend to help into a life of poverty.

 

 

 

 

 

 

 

 

 

 

 

 

Surprisingly Rich

Imagine my astonishment today when I found out precisely who the politicians mean when they say we need to tax the rich. I have always wondered precisely who these rich people are they need to be more heavily taxed. Well I nearly fainted when I found out that virtually everyone I know is “rich” in the eyes of the government. It seems the Federal Reserve Board is very diligent in tracking the financial wealth of Americans – apparently excluding all of the illegal immigrants. According to the Federal Government 40% of Americans are poverty stricken (family income of $25,000) with another 30% falling into the middle class with a median family income of $65,000. What is astonishing is that the remaining 20% are “rich” with the top 10% showing a family median income of $170,000. This means a husband and wife each earning $85,000 are rich, which I’m sure would come as a total shock to them. Looking at this from another perspective if you take average salaries a husband and wife team of a teacher and a policeman their combined incomes would place them in the top 75% or upper middleclass. In fact any family whose median income is in six figures, they are in the top income bracket targeted by the politicians who are always trolling for votes on the basis that the “rich need to pay their fair share”.

Income Level Percentile Median Family Income
Rich 90% - 100% $170,000
Upper Middle Class 80% -- 89.9% $99,000
Middle Class 60% -- 79.9% $65,000
Lower Middle Class 40% -- 59.9% $40,000
Poverty 20% -- 39.9% $24,000
Level II Poverty Less than 20% $10,000

So after looking at these numbers it is easy to see why the politicians are so vague about precisely whom they mean when they are on their annual electoral crusade to “tax the rich”.

But as we all know what you bring in goes out pretty much as fast as it comes in and the real test is how much can you keep after the government takes as much as they can because after all the rich should pay more because they make more – I think this is the precise position of the American Democratic Party and the Socialist Parties of various European countries. So does making over $100,000 a year make you rich? The reality is that very few people in these upper income levels feel rich or even consider themselves rich.

Of course income really doesn’t mean much in defining where you stand overall. The better measure would be net worth, that is the total sum of a family’s assets minus all outstanding liabilities. When viewed from this perspective it seems that the national median net worth of the average American Family is $86,000 and this includes all assets like home equity, jewelry, savings, autos, collections, furnishings, etc.


Income Level Percentile Median Family Income
Rich 90% - 100% $833,000
Upper Middle Class 80% -- 89.9% $263,000
Middle Class 60% -- 79.9% $141,500
Lower Middle Class 40% -- 59.9% $62,500
Poverty 20% -- 39.9% $37,200
Level II Poverty Less than 20% $7900

At first glance it would appear that the top 10% (approximately 30 million people) have more substantially more money than the remaining 70% of the population. But included in that top ten percent are Bill Gates, Donald Trump, Warren Buffet, all of those professional athletes, and most assuredly all of those actors in Hollywood who command multi-million dollar salaries while crusading for the poor and demanding that the rich should pay their fair share. Of course at these multi-million dollar income levels, taxes are for the “little people” because batteries of accountants and lawyers insure that little to no tax is paid. These tax loopholes are carefully protected by judicious political contributions (to both parties) while the recipients beat the drum for higher taxes on the rich.

If you would believe what you see on television there is a whole segment of society living the high life in retirement communities. You see them every night as they dance the night away on their Caribbean vacations, where they jog, they fish, they bike, and in general live a great life in retirement because they are rich. Well I think if you would talk to most seniors you would quickly discover that few – very few – can live like these advertisements. In fact even those people in these median income brackets can not afford to live lavishly. Suppose the entire income tax structure were abolished and instead a flat tax was installed with no deductions whatsoever. Everyone and all businesses would simply pay a flat tax on their gross incomes. Do you think the people in the very top brackets, those who support the various politicians would ever allow this to happen? Can you imagine a George Soros, or George Clooney, or MicorSoft paying a flat percentage of their gross incomes to the government? Not a chance! These people want to tax the rich – not themselves. It is important that all of us rich people keep this in perspective when we go to vote for those candidates who think the rich should pay their fair share – that my friend is YOU and you clearly aren’t paying your way. Think about that!!

Are The Poor Undeserving?

The common political mantra is “tax the rich” because as everyone knows the ‘rich” are the “lucky” ones --- the “fortunate” few, but no one ever seems to look below these statements to determine how the poor got to be poor and how the rich got to be rich. Yes, it’s true some people inherit their wealth but in reality they are truly a minority and the great majority of the “rich” are not truly rich and have gotten their wealth the hard way – they earned it. Well how about the poor? How did they get to be poor – did they inherit it or did they get it the old fashioned way – they earned it? I submit that the people who are poor --- in general – got to be poor by earning their status through personal decisions just as the rich got to be that way through personal decisions.

The undeserving rich – those lucky and fortunate few – seem to have several things in common. For example – they went to school – all 12 grades and frequently on to college although not always. They paid attention in school and learned to read and write and to speak proper English. They obeyed the rules and did not join a gang, steal a car, skip school, or get arrested multiple times. Of course there are those who see that criteria on how to become poor as racist (as if all poor people were minorities), insensitive, uncaring, greedy, or simply reflecting the inherent evils of capitalism. After all capitalism allows some people to get rich while allowing others to become poor, and this is seen as unfair and the greedy capitalists should be forced to give their ill-gotten gains to the poor, so everyone will be equal. What goes unsaid is that when this wealth redistribution is put into practice the result is making everyone equally poor.

But the real issue is how people get to be poor in the richest country in the world. Well if you examine those unfortunate poor you will discover that it isn’t a question of losing life’s lottery or being unlucky, but rather the result of a whole series of poor decisions. There is a failure to learn a trade or get an education, so they have no work skills and are left with only unskilled or lightly skilled jobs. In fact these people, if they are working at all – tend to just have a series of jobs rather than any kind of career or consistent form of employment. These are the people who when the do work spend what they make so they are never able to dig themselves out of the financial hole. These are the people who spend money on alcohol or drugs without seeing that the money spent on these things could be translated into a savings plan and thus eventually lead them into financial stability.

These are the people who fail to get married but instead elect to live together, which may not be morally acceptable but certainly common enough. The problem is that these informal liaisons yield children, many times multiple children by multiple father’s who may or may not be known or contributing to the welfare of the children. But the real problem is that this is simply another series of decisions that leads inexorably to a life of poverty. Children are expensive to have and each year the cost increases, so the decision to have children that you cannot afford is simply another decision that distinguishes the rich from the poor.

Then of course there is the work ethic. Employers expect their employees to be reliable, punctual, and willing to work. A close examination of these poor people shows that these are not common characteristics in the perpetually poor. Instead these people frequently have many excuses as to why they cannot work. They can’t get to work because of transportation issues, they don’t view punctuality as important, and when they do get to work they do not show a great deal of initiative, loyalty, or interest in the job, which leads to a lack of interest on the part of the employer, who drops the poor employee at the first opportunity. This contributes the cycle of poverty experienced by the individual just as it contributes to the idea that employers are greedy, insensitive, rich people who are exploiting their employees.

Of course the reality is that the employer is simply trying to maintain his business and to generate enough profit to pay himself, his creditors, and his employees. Marginal employees become a burden and drag the entire enterprise down, so it is the benefit of all for the employer to terminate these marginal employees. But it is important to realize that the employer – the undeserving rich person – is not lucky but the product of good decisions and a great deal of hard work. The undeserving poor person is not unlucky but the product of a whole series of bad decisions in association with a lack of motivation and a sense of entitlement. They feel the government or someone should help them and ironically many people – plagued by the guilt of success – agree with them.

There are many people who think that these poor people should share the wealth of the rich and if the rich are not willing to share it voluntarily then it is up to the government to seize their wealth through taxes and to give it to the poor. The reality is that there is no such thing as the undeserving rich just as there is no such thing as the undeserving poor. Both groups are the direct result of their decisions over their lifetime.