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Sunday, February 12, 2012

No, not everyone can be rich.
Posted by Jill | 6:38 AM
When I was a kid, we always lived in what I remember my mother calling "the $25,000 house." The $25,000 house had three bedrooms and a bath and a half. Her dream was to be able to live in "the $30,000 house" that was the next level up. That house would have two full baths and a family room with sliding glass doors to a patio. The $35,000 house would maybe have a pool. That was about as far as I remember the aspirations going. It wasn't that my parents didn't work hard and didn't want more for their children. My mother worked part-time as a legal secretary at a time when it was scandalous for women to work outside the home. My father's ambition was to find the cure for cancer -- that's hardly thinking small.

While in college, I dated a guy whose father was a doctor. Their house wasn't all that much bigger than ours was. Yes, the furnishings were more expensive, and his father drove a Cadillac (which was the prestige vehicle nameplate for the nouveau-riche at that time). But they didn't live in a mansion with a bridal staircase and palladian windows and tray ceilings in the bedroom and a home theatre. The guy I was dating may have had top-of-the-line audio equipment in his room, but it was still a 10 x 10 bedroom in a suburban house. And he didn't have his own bathroom.

I don't know when this business about being rich started. Perhaps it was when cash-strapped states in the 1970's started legalizing lotteries, where all you needed was "a dollar and a dream." Or perhaps it was 1984, when a shaggy-haired guy named Steve Jobs emerged out of a middle-class neighborhood in California to unveil the Macintosh; and Lifestyles of the Rich and Famous began to air, bringing "champagne wishes and caviar dreams" into living rooms of the middle class seemingly every single night. It was important that the middle class start seeing these lifestyles every night, and regarding them as something to which they should aspire, despite the fact that most of the people profiled on the show made their money in the ferociously competitive maw of the entertainment industry, where luck plays as much of a role, if not more, than talent:

What's interesting about these two clips from the show is how ordinary these "lifestyles" look today. Micky Dolenz' English mansion resembles from the front about half the McMansions built in Bergen County during the last decade. A kitchen like that shown in the 1980s as being part and parcel of the life of the toffs was regarded on real estate programs on HGTV during the last decade as mandatory in even the most modest POS cape cod if you wanted to be able to sell your house. Places like Bobbie Brown's "luxury vacation spot in Arizona" are now all-inclusive resorts like the Sandals/Beaches chain, visited by the kind of people you surely know who take their kids out of school for a family vacation at a posh resort.

It isn't that there wasn't interest in celebrities before Lifestyles of the Rich and Famous. Photoplay and Motion Picture Story were founded in 1911, and People had been around since 1974. But the effect of Lifestyles was to start people thinking "I could live like that," especially with the kind of money Wall Streeters were making at the time.

Somewhere along the line, just living "a good life" wasn't enough anymore, and it seems to have coincided with the ramping up of income inequality right around the heyday of Lifestyles, when Ronald Reagan first cut taxes on investment income -- a practice continued with enthusiasm under Presidents George H.W. Bush and, yes, even Bill Clinton. A great deal of money was made by a few during the Reagan era, and even more made by a few during the dot-com bubble. But for average workers -- people like my parents for whom sliding doors to a patio was a big deal -- the pie was growing ever-smaller. So if the entertainment industry that had spawned Ronald Reagan could dangle enough shiny in front of ordinary Americans and get them longing for stone mansions with French country kitchens, they might not notice how the lifestyle they were actually living was in danger.

And so we came to the 1990's, when guys in blue jeans and T-shirts became multimillionaires and even those who weren't wanted to live like them. So the POS capes and ranches started coming down, and huge ersatz country houses with bridal staircases and designer French country kitchens and crown molding in every room and teensy-tiny windows on three vinyl-sided sides of the house allowed people who were not celebrities to "live the good life", even if only on a 75 x 100 lot instead of seven rolling acres in the English countryside. Car leases allowed entry-level programmers to drive BMWs. A middle-class family could go to a "posh" resort like Beaches ("Luxury included® Resorts for Everyone").

And then it all came crashing down in 2008.

It gets harder to dangle the shiny of fancy cars and luxury homes to a guy whose job ws sent overseas and now finds that his entire industry has. It's hard to sell "If You Just Work Hard Enough" to a guy who hasn't worked in two years and can't even get a job at Wendys because as a skilled machinist, or PC tech, he's "overqualified." It's hard to sell champagne wishes and caviar dreams to a couple who really did try to look at the numbers the mortgage broker was showing them to "prove" they could afford their house with the French Country kitchen and tray ceilings , but now they find the house is worth half of what they owe on it and they're both out of work and scrambling to find a rental that will take two unemployed people, their kids, and their dog.

Mitt Romney is out there talking about his father's humble beginnings, moving ever-closer to declaring himself as having been born a poor black child. When confronted about his net worth, he tosses off comments that he wants EVERONE to be rich. This is red meat to guys like Gene Marks, who thinks every small business owner wakes up every day dreaming of the day he too can be like Mitt Romney. I used to work for one of those small business owners. He's about as Republican as they come. His wife and co-owner had an autographed photo of George W. Bush and Dick Cheney on the wall in her office the way tween girls have Justin Bieber posters. He's an unrepentant supply-sider. But I know that most days, he's not dreaming of being able to expand a fancy house in La Jolla. He'd be just as happy to be able to keep his business going. I think he works pretty hard, trying to drum up business, but he's not Mitt Romney. And I have to wonder just how hard Romney had to work. I mean, how difficult is it, really, to buy up companies and wreck them?

The bottom line is that not everyone is going to be rich. If a company employs 100,000 people, only one is going to be be the CEO. Most people are going to make less, and that's OK, as long as they can actually find work and earn a living. I think people are starting to realize that not everyone needs a 6000 square foot house with a French country kitchen, tray ceilings, and a bridal staircase. They're scaling back their aspiration, not because they want to be lazy (though I do think people are getting sick of working 80-hour weeks and foregoing vacations to "prove their dedication to the company", then finding themselves shitcanned anyway in favor of someone overseas who'll work for a dollar a day), but because the cost of pretending to be one of the toffs is just too high.

For Mitt Romney to get up there and say that further tax cuts for the already rich are a step towards everyone being rich is ridiculous on its face. Not everyone is going to be rich, and I think most people know this. All most people want is just a fighting chance.

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Blogger Blotz said...
My Mom still lives in the $25,000 house we grew up in. My Father in Law still lives in the slightly larger house that he had built for his family. These modest decisions really informed us when we chose our home, a 120 year old victorian, rather than a mcmansion in the burbs.

I don't think there's necessarily anything wrong with "house porn" on TV, I eat that stuff up. But you are exactly right that a large percentage of the population are scaling back on their dream houses a bit in the face of reality. And thats a good thing. Those mcmasions in the burbs are awful houses!

Blogger dianedp said...
I lived in that sort of house growing up. My mom stayed at home and raised my sister and myself.
My dad traveled and had just been made VP of his company. On Sunday we had looked at a luxury home and my parents had picked out the house they wanted to buy.
The next day he was killed in a plane crash. I was almost 10.

I remember growing up, thinking that we were almost rich and knowing that because of good financial planning that my father had done, that we didn't end up poor. I worried about that a lot while growing up. My mother was able to live in that house and we sold it 6 years ago when she died.
My husband and I live in a house that is bigger then my childhood home and it was built in the early 60's. We gave our children a middle to upper middle class life.

My husband and I were in the education/health care fields. My daughter and her husband, through through different education and entering a different occupations,have already making more money and were able to purchase a larger home then we have now.

I'm wondering if my grand children can continue this trend.

Blogger Patricia said...
@Dianedp,If your Mom was widowed before Ronnie Raygun took the Social Security benefits from widows, then that probably helped quite a bit. (remember the Star Wars program? That's where that went) My husband died in an accident and my daughter lost her dad at the same age as you. So I received S.S.for 6 years and 2 years later my daughters was taken away. (It used to be that was in place until your kids were out of college) I am living in a world my father can barely comprehend. As far as lifestyle goes I guess a lot of people want to be rich, but not me. Lucky, because I am not.My hours were cut at my shitty job last year. So it's welfare time soon due to the lack of planning that my 39 year old husband didn't do. I did laugh hilariously @ the "poor black child" reference to Mitt. Thanks for that! I grew up middle class in a house my dad bought for $60,000 and sold for 350,000, before the bubble burst. So many of us were not so lucky. And it's crazy that a middle class house could ever cost so much.

Blogger Batocchio said...
Good piece. This argument has been around a long time, although its popularity ebbs and flows: "Shut up, because when you're rich, you'll benefit." It's really just a variation on the old Dark Ages lie: "Mind your place, peasants, and you'll get rewarded in heaven." The obvious solution is to share prosperity, invest in the middle class and poor (education, infrastructure, the Commons), and curb excess at the top, including taxing the rich much more progressively, so that no one lives in abject poverty, and wealth and power don't become too concentrated. That approach happens to help the overall economy, too, and the rich wind up with a smaller slice of a bigger pie, which is still an improvement for them. However, the ruling class as a whole is rarely into the self-enlightened interest thing. A significant portion are Randians, economic Calvinists, Neo-Feudalists, and basically, greedy, selfish assholes who will burn it all down and screw over the fellow humans to maintain and increase their privileges. Their version of the American Dream is to be born on third base, and then go through life thinking you hit a triple – and sneering at the lower orders who aren't as talented as you.

Anonymous Barry Brenesal said...
Are you sure the feelthy rich lifestyle simply wasn't well-publicized before the 1980s? That Reagan's celebration of wealth didn't simply encourage them all to come out of the closet? Because we know from various mansions hidden out of view at one time but now open to visitors in select states that the really rich have always existed alongside us; they just didn't want to draw attention to themselves.

Anonymous CC said...
Barry, Jill did mention that Photoplay, Motion Picture Story, and People Magazine were around before the 1980s.

But you're probably right that the really rich didn't tend to want the spotlight before the 1980s (for a few decades, at least), when the wealth gap was narrower than it is now.