Millionaires are rich

I'm glad to see that John Steele Gordon's perfectly execrable "Five Myths About Millionaires" post is receiving well deserved scorn from the likes of Steven Greene and Andrew Gelman. It would be all too easy to join in the piling on. So let's get started.

First of all, I just can't leave Gordon's claim that millionaires aren't rich alone. If you're making a million annually, I totally get that you probably don't feel rich. You probably work pretty damned hard for your money. And you can easily amass a million in annual expenses through a mortgage and tuition and clothes and transportation and a bunch of other things. And you probably work with other people who make at least as much as you do, making this sort of life seem like the norm.

You are making more than everyone in the above graph.

But you know what? It really isn't the norm. You're pulling down more than what 99% of the rest of the nation pulls down, and you're living in one of the richest nations in the history of the planet. You know what else? You could sell your nice house and buy a much less expensive one somewhere else, you could take the bus or the subway to work or buy a Hyundai, you could send your kids to public schools, you could shop at Macy's or Marshall's, etc. Yes, there might be some social costs to doing this, but the point is that you could reduce your expenses by roughly 90% and still live a very nice life with a higher standard of living than the vast majority of Americans. People making $50,000 a year really can't do that without starving.

And this comment by Gordon is really rich:

Today, a well-invested $1 million might generate $50,000 in a combination of investment returns and interest income. That isn’t chump change, but it’s roughly equal to the 2010 median household income.

Okay, if you can earn the median household income without actually working, you just might be rich.

Oh, and I can't let this one pass, either:

Income can’t be used to predict political opinion. In 2008, for example, Obama won the votes of 60 percent of those with a family income under $50,000 and 52 percent of those earning more than than $200,000. McCain carried the middle class.

I challenge anyone to look at the exit polls from 2010 and conclude that income doesn't predict political opinion. I also challenge Gordon to explain what he means by "middle class."

Update: Income distribution graph added above. Data from the U.S. Census Bureau.

The culture of poverty

The film "Trading Places" (1983) presents us with the amusing and comforting notion that street smarts can be an asset in the business world.  Eddie Murphy's character, a panhandler from a broken home, when given a modicum of training and a chance to lead an investment firm, thrives.  His understanding of the concerns of common people gives him insights that blue blood investors miss.

Of course, the real world doesn't work that way, and few have better explained why this is so than Ta-Nehisi Coates (h/t Yglesias).  As Coates explains, the skills you need for surviving poverty are frequently at odds with the skills you need to succeed in the professional world:

It defies logic to think that any group, in a generationaly entrenched position, would not develop codes and mores for how to survive in that position. African-Americans, themselves, from poor to bourgeois, are the harshest critics of the street mentality. Of course, most white people only pay attention when Bill Cosby or Barack Obama are making that criticism. The problem is that rarely do such critiques ask why anyone would embrace such values. Moreover, they tend to assume that there's something uniquely "black" about those values, and their the embrace.

If you are a young person living in an environment where violence is frequent and random, the willingness to meet any hint of violence with yet more violence is a shield. Some people take to this lesson easier than others. As a kid, I hated fighting--not simply the incurring of pain, but the actual dishing it out. (If you follow my style of argument, you can actually see that that's still true.) But once I learned the lesson, once I was acculturated to the notion that often the quickest way to forestall more fighting, is to fight, I was a believer. And maybe it's wrong to say this, but it made my the rest of my time in Baltimore a lot easier, because the willingness to fight isn't just about yourself, it's a signal to your peer group.

And yet a willingness to use violence is obviously shunned in the professional world and can easily lead to one losing one's job.  So to leave the street and get a real job involves an ability to change languages and demeanor in a very stark way.  But it's more than that.  To succeed, one must abandon the language, demeanor, and sometimes the friends of one's youth -- an act that is often defined in terms associated either with prostitution or treason.  In a real sense, succeeding in one realm almost requires failing in the other.

Please read the whole thing.

Over-representation in the electorate

Ezra Klein put together some Census and exit poll data yesterday to produce a table showing which income groups are over- or under-represented in the electorate and how those groups voted in 2008.  But why do a table when you can make a graphic?  In the chart below, higher red bars indicate more Democratic income groups, and higher blue bars indicate over-representation of particular income groups in the electorate.

The chart nicely shows that the most under-represented segments of the population are, in fact, the most Democratic.  (Ezra calculates this cost Obama 2.3 percent of the vote.)  Interestingly, the most over-represented groups are not the wealthiest, but those making between $50,000 and $100,000 a year.