Saturday, December 17, 2011

Now We Know Who the Rich Are

Forget the 1%. Anyone who expects to retire is guilty

The posting entitled “It’s Easier to Fan Envy than Formulate Policies That Work” noted the tendency for envy to run amuck. It pointed out: “Once taking things in order to give them to the ‘little guy’ is set loose, there’s no telling who will become the ‘big guy’.” That posting used an article targeting teachers as those who should take a hit, but it referenced a previous posting citing a raft of articles identifying various candidates for “big guy” and “little guy” status. It’s such an absurd way for people to divert attention from the failure of their policies.

If one needs confirmation of how unproductive it is and how drastic the policy failure has been, consider this. Liberal commentators criticize of the Bush tax cuts for allowing the rich to keep too much of the income GAINS. Contrast that to now when the issue is who will take the CUTs: taxpayers or government, upper income or users of exemptions (a.k.a., loopholes), “entitlements” or discretionary spending, etc. The total absence of a growth policy is evident.

As some politicians push ahead with the political posturing, pretending that it is the distribution that matters, we clearly should expect them to look for more inclusive definitions of the rich. It’s an inevitable outcome of the failure to develop policies that grow the economy. As pointed out in other postings, absent an inclusive definition of who to target as the rich, the math doesn’t work.

Trying to define the rich is getting increasingly absurd. It’s simple. One can tell whether one feels rich, but that’s more a state of mind than income level or net worth. Most people feel rich when they have what they need and feel secure about being able to continue to have what they need. In “Enough Money for Retirement? Even the Rich Say No,” CNBC illustrates the disasters that spring from trying to judge “rich” for others.

The article quotes the finding that: "Even among those considered 'well off,' many seem to fear a sharp drop in their post-retirement standard of living due to insufficient retirement savings.” The author may not realize the implication. The article is arguing that those considered rich aren’t rich. It shows that whomever is doing the “considering” is wrong. If nothing else, the article makes it clear the author has proven that he or she can’t identify the rich.

But, undeterred by the self-contradiction, instead of pointing out the futility of trying to judge whether other people are rich, the piece forges ahead. That’s when the absurdity really surfaces.
“Other findings of the survey:
• About a quarter of affluent Americans say they are not confident they will have saved enough for retirement, and this is especially true for Americans with assets between $100,000 and $250,000 (33 percent) and women (31 percent).”

Who are the rich in the article? It states: “In the survey, Americans had to have investable assets of $100,000, excluding real estate and other property, to be considered affluent.” Talk about absurd. No reference to employer benefits, ignoring age, no reference to work history and the resulting social security income, and a threshold so low that it includes most people who have planned for retirement (especially those closer to retirement). Certainly, anyone planning to retire and dependent on a 401(k) for retirement should be among their definition of rich. If the value of benefits at retirement is included as investable assets, almost anyone with a defined benefits pension is among the rich. Almost any employer health insurance coverage during retirement would put the person among the rich.

The conclusion one has to reach is that we’ve finally found a definition of rich that is broad enough to make the redistribution math work; include anyone with a pension, anyone with retirement health coverage, and anyone who has planned for retirement.

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