Rising Wealth Inequality: Should We Care?
Why do Americans seem unperturbed about the growing gap between the rich and the poor?Keeping Envy Local
March 21, 2011
Tyler Cowen, a professor of economics at George Mason University, is the author of a new e-book, "The Great Stagnation." His blog, Marginal Revolution, covers economic affairs.
First, a lot of Americans live very well, even if they don’t enjoy all of the benefits of the lifestyles of the very wealthy. It is quite possible that a person in the upper middle class is happier than a billionaire. Even the middle class has access to penicillin, air travel, good cheap food, the Internet, and cable TV, not to mention a heart bypass operation, if needed. People worry about how well they are doing compared with their neighbors and co-workers, not with Michael Bloomberg.
Bill Gates, of course, has a lot more than that, but a lot of Americans don’t feel they deserve a private jet, a private charitable foundation, or an invitation to Davos and they may not even want it. In terms of income, the gap between rich and middle class is growing, but in terms of happiness it is relatively low by broader historical standards.Second, a lot of envy is local. People worry about how they are doing compared to their neighbors, their friends, their relatives, their co-workers, and the people they went to high school with. They don’t compare themselves to Michael Bloomberg, unless of course they are also billionaires. When the guy down the hall gets a bigger raise, perhaps by courting the boss, that’s what really bothers us. In other words, envy and resentment are not going away and they also do not stem fundamentally from the contrast between ordinary lives and the lives of the very wealthy.
Third, many Americans draw an important distinction between earned wealth and unearned wealth. If someone has become a billionaire, but he worked hard for it and supplied a good or service of real value (say Mark Zuckerberg of Facebook), for the most part Americans will respect and admire that person.
A lot of wealth today hasn’t been earned fairly, but still a lot of it has been the result of hard work and creativity, even if mixed in with good luck. The United States is still a society of business and a lot of businessmen provide great value to our economy. The weight has not swung to the point where there is more unearned wealth than earned wealth and so Americans identify with business and a business ethic, especially compared to attitudes in Europe.
Americans know that they have done well by their pro-business and pro-wealth ethic. Should they trade in those views for a bundle of envy and resentment? The case for that switch has not yet been made and fortunately there is still a lot of common sense out there.
http://www.nytimes.com/roomfordebate/2011/03/21/rising-wealth-inequality-should-we-care/keeping-envy-local-in-income-disparity
This article states a fact that many people don’t seem to take into consideration when judging people with money. How did they receive their money? Many people today that are successful have worked very hard for what they have and I don’t believe they should be judged badly for their accomplishments. I agree with the article when it states we should not be envious or resentful of those individuals that have worked hard for what they have. To think we should all be equal as far as wealth is concerned is crazy and would breed mediocrity. If people knew that no matter how hard they worked, or how little they worked, we would all have the same wealth what would motivate people? Individuals that have inherited their wealth, even if the money has been passed down for generations, came from someone in their family that worked hard or was successful. Who are we to judge them? Should Bill Gates children be resented because they will have an inheritance from their father, I think not. I believe instead of focusing on individuals that have acquired success we should focus on making sure that all families can provide their children with the necessary tools, mainly a good education, to acquire their own success.
ReplyDeleteI agree with the author's statement that "a lot of envy is local" (Cowan). First, most people are in close contact with people who are in their same income class. It does not matter if their friends, neighbors and family have ascribed or achieved statuses, they are all in similiar statuses. They are probably all in the middle 80% of the wealth diamond. Second, the envy stems from the conflict theory. The middle 80% is trying to achieve a spot in the top 10%. This conflict is the "animating force of social change and society in general" (Conley 28). The envy makes people have conflict with those who are in the top point. This envy could also be an example of functionalism. The middle 80% need the envy in order to work harder to get to top of the diamond. Unless you are the wealthiest person in the world, there will always be someone who has more than you.
ReplyDeleteThis was avery interesting and different perspective on why there is an income gap and why people are not acknowledging it. Not having the desire to become a member of a social class on the basis of personal happiness is something rarely discussed but also something very possible. Middle class americans live completely comfortable lives with all the amenities so they are satisfied, especially when owing that private jet could mean hours of stress and work with little family face time. The desire to keep envy local is also very reasonable. If everyone strived to become a billionaire then there would be no competition for the lower tier jobs, the jobs essential to keep huge industries functioning. People would quickly leave these jobs in their pursuit of success and industries would fail. the cooperation they had ambitions to lead would cease to exist.
ReplyDeleteThis article brought up a lot of points that are not discussed as frequently, such as, how happiness fits in with wealth and how not all the rich have had as big of a head start as many may think. The article discussed that it may in fact be the middle classes or upper-middle classes that are happier than billionaires. The reason for this could be contributed to family-life or how the extreme wealthy spend their time. Also, when one looks at the billionaires like Bill Gates or Mark Zuckerberg. Though these individuals have had a better head start than most in the world, they still worked hard to where they are presently and are creative innovative thinkers.
ReplyDeleteI agree with Holly, people do not really talk about how happiness plays in. Somebody in the middle class can be just as happy as somebody like Bill Gates. Desire plays a very big role in this. Like the article stated, Bill Gates has his own charity, but that does not mean that people who do not have a charity necessarily want one. It is rarely brought up that many people are happy with the lifestyles that they are living, whether rich or poor. Also, definitions of what people consider to be happiness changes depending on the individual, meaning that people can be happy with their lifestyle, even though others may not be.
ReplyDeleteThis article brings up a very good point: Not everyone wants the rich and famous lifestyle. Even though not many people are millionares in the United States, to some people, that doesn't matter. As long as they have the basic necessities to living, they don't need the private jets and large houses that Bill Gates has. In American society, there is a stigma about being in the lower class: that the people in it are unhappy and unlucky. Many times no one looks to see the people's opinions who actually live in that class. Sometimes, they are happy just where they are, and have no desire to move up.
ReplyDeleteThis article is very true in my opinion. I agree that people do not compare their incomes with those of celebrities like Bill Gates or even Kim Kardashian. It is harder to watch your neighbor come home with a brand new car or put in an expensive built in pool than to watch Bill Gates travel in his private jet. People do not want to be the richest person in the world; money does not buy happiness. Members of the lower class can be some of the happiest members of society. With friends and family, people can live a happy life without earning millions of dollars. Millionares are deffinitely admired but people are not always envious of them. They respect their hard work on earning their lavish lifesyles.
ReplyDeletePeyton Bromley said...
ReplyDeleteWealth isn't everything. People can lead perfectly normal lives without living the "big life". A lot of people just want to be able to be comfortable while being able to support their family. While often times we see the rich and millionaires in magazines and on TV, not everyone desires this lifestyle. People in the lower to middle classes can be just as happy as someone like Bill Gates. The real problem comes from the fact that others have this perception that everyone wants the rich lifestyle. It's supposed to be the American Dream. In reality for a lot of people the "Dream" is a down to earth family oriented lifestyle. The rich assume they aren't happy because they lead different lives than them. Just because the middle and lower classes lead different lifestyles doesn't mean they aren't happy. Without the needed money in the way they are able to create their own happiness.
I agree with Shannan, this article does bring up the very unheard of fact that some people just don't want to be millionares--they're happy with the life they lead. Though the middle class doesn't have fancy jets or donation organizations in their name they're still very content with where they are. It's also true that the opinions and happiness of people who don't own mansions are unheard.
ReplyDeleteThe idea that Americans are obsessed with "keeping up with the Joneses" is sadly a reality in much of the country. People want to become financially better than all of their friends and neighbors but sometimes looks can be deceiving. The article talked about how people try to ascertain the wealth of others by an assessment of their material possessions. As Chinni described in the first article, many people feel comfortable living beyond their means. That could skew the wealth judgement system in many people's eyes. Is someone who racks up serious debt trying to make payments on a fancy house or car any richer than the person who lives within their means but doesn't have the same showy items? The principal of judging people based on the appearance of wealth is common but factually unbased.
ReplyDeleteThis article was very interesting. People do not always need money to be happy. People always think that the middle and lower class envy the upper class. The upper class has the luxury of being able to buy almost anything in society. However those in the middle class are still able to afford some of the same benefits as the upper class. Some of these middle class people are happier then those in the upper class. People have socially constructed the idea money equals happiness. This perception is incorrect, people with less money can actually be happier than those in the upper class. The author also brought up the idea that envy is local. People who work under the same company tend to be more competitive with each other. When the person down the hall gets the big promotion everyone has been fighting for the other co-workers become envious. People like to compare their money, houses, etc to their neighbors. There is a growing gap between the wealthy and the poor but there is not a gap between happiness of these people.
ReplyDeleteI think it’s interesting to note that a lot of the envy is within the same groups. People focus on how they are doing as compared with their neighbors, friends, and co-workers, as opposed to comparing themselves with the insanely rich (such as Bill Gates). Usually if someone becomes a billionaire, yet it is apparent that he worked hard for it, other Americans will have a high opinion of and respect that person. A lot of wealth today has been the result of hard work and creativity, even if mixed in with good luck. A key element of American values is the work ethic – and Americans know that their pro-business and pro-wealth ethic has done well for them. It is understandable that many would be hesitant to resent the people who make that possible.
ReplyDeleteMany of the people driving around the suburbs in their giant SUVs while talking on their new cell phones are deeply in debt. If you ask them how they are doing, they will tell you that they are just barely getting by. Many Americans are guilty of spending beyond their means just to keep up appearances. Just think of Real Housewife of New Jersey; Teresa. She has a gaudy new mansion, pricey breast implants and spends thousands of dollars on shopping sprees for her 4 daughters -- but a New Jersey reality star owe $11 million according to court records. Teresa and her husband Joe admitted that they spent lavish amounts of money they did not have while being filmed on the BRAVO reality show to “keep up appearances”.
ReplyDeleteThis article provided a different perspective on why Americans do not seem threatened by the growing economic inequality. As the article mentioned, most people do not compare themselves and their economic situations to billionaires, but rather to the people they know and associate with. When one is comparing their self to a neighbor or co-worker, obviously they are not going to notice a large difference, because people who work together or live in the same neighborhood are in similar economic situations. Inequality isn't as noticeable because people are happy with their lives - most middle-class Americans have enough to provide them with the basics and some extra things, so they do not view themselves as inferior or disadvantaged in any way.
ReplyDeleteI agree with the point that Morgan made about the struggle that some people face in order to keep up with their peers. The only way one's wealth is visible to the public is through their possessions- their car, house, or clothes. People do not feel the need to "keep up" with Bill Gates, but they do strive to keep up with their friends and family.
ReplyDeleteI found this so interesting and so true, what an interesting perspective on people. Competition and envy amongst peers has the potential to make a bureaucracy or any organization flourish and rise. However, envy of those whose wealth is simply unattainable to the average person creates an uprising. Since America does not want to repeat the French Revolution, with this time Michael Bloomburg starring as Marie Antoinette, competition amongst peers is a good thing.
ReplyDeleteI did not necessarily agree with all of the statements made in this article. While envy is most obvious concerning individuals who immediately interact with us, there is still much envy between individuals between classes. Why do we follow and obsess over celebrities so much? Why is the royal wedding of such concern to average individuals in America? Why should middle class citizens bother reading and learning about Tom Hank's mansion? Envy absolutely happens between classes and individuals who are not in our immediate families or friend groups; it is not always local.
ReplyDeleteThis article was very entertaining in many ways. For starters it discussed the issue of happiness and money. In my belief happiness and money are not parallel. Of course money can buy very nice things that in return can make a person smile but it doesnt make you smile or happy every single day. In order to get a lot of money one needs to work hard, once that money is there than the person needs to work even harder to keep their money. Therefore, by always working to keep money means they may loose a lot of family time. Family time creates internal happiness, money nor material things can compete with family. Which is why i agree that middle class to upper middle class people tend to be more happy because they are not loaded with money that they need to protect but they live comfortably enough for the family to be happy with some material things; but also they do not have to over work to protect their money and have more time for family. Of course people always want more money because they believe money heals all problems. Wrong money only heals bills not love.
ReplyDeleteThis article really got me thinking, do I really diserve to live a life filled with extranigant things? The answer is no. I am very content living my life as a middle class citizen. I am sure that everyone would love to live a life of luxuary but really how long would we like to live this way. The only way I would want to live like this is if I earned it all on my own, no free givaways or anything. I think that that is how many middle class families feel. They want to live the life they have earned for themseleves through hard work and dedication.
ReplyDeletePlease ignore my last comment, the spell check was off.
ReplyDeleteThis article really got me thinking, do I really disserve to live a life filled with extravagant things? The answer is no. I am very content living my life as a middle class citizen. I am sure that everyone would love to live a life of luxury but really how long would we like to live this way. The only way I would want to live like this is if I earned it all on my own, no free giveaways or anything. I think that that is how many middle class families feel. They want to live the life they have earned for themselves through hard work and dedication.
This article brought up a point that I found very true and something that needed to be said. Americans as a whole live very well. "the middle class has access to penicillin, air travel, good cheap food, the Internet, and cable TV..." This is leaps and bounds better than conditions in most countries. Also, one reason that people are blind to the actual distribution of wealth is that people do not compare themselves to the very wealthy, unless they are very wealthy. "People worry about how they are doing compared to their neighbors." This way, people are not envious and bitter because they do not have a private jet or a butler. If the "keep up with the Jones's" then they are doing just fine.
ReplyDeleteMadison Jones : I agree with everything this article says and I think it rings true to the attitude Americans have towards wealth. I think that there are most definitely some people that like to live the American Dream and go to work, raise a family, live in a neighborhood, and make a living day to day-happy without living a flashy, high-class, millionaire lifestyle. I also agree with the "keeping up with the jones'" mentality Americans have. Families will live beyond their means just to impress and keep up with their family members and neighbors. Most Americans work hard for their money (considering the middle / working class is so large) so they envy those that make a large sum of money without doing so.
ReplyDeleteThe problem with Americans is that we want what we can not have. Yes, there is and always will be envy between classes and within classes. People are always looking for material things to label one another. People obsess over celebrities because of the things or talents that they do not have. Americans are always striving for more and not helping those out who have nothing. The envy keeps this vicious cycle going but it truly starts with the wealth imbalance.
ReplyDeletei think in todays society everyone is trying to compete with one another and get so caught up in the money that they dont know how to relax and enjoy their life with the money they have. The old saying "money doesnt bring happiness" is definitely used in this article. As long as you are happy with your income and are providing with your family than i think thats all that should matter.
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