On a long car trip some weeks ago, I happened to tune in to a Dave Ramsey radio show. For the uninitiated, Dave is a financial advisor for regular people and untiring advocate of getting out of debt and living below one’s means.
Most of the people who call in to his show are doing the backstroke in their debt and Dave patiently tries to help them out of their messes by suggesting how they can make new choices in how they use money. This day in question, however, several of the callers were guiltily phoning in with their confessions that after years and years of saving and investing, they found themselves thriving even during these troubling financial times. As soon as the first caller received praise and absolution from Dave, more callers kept crawling out of the woodwork. It was like these people needed the affirmation.
Sure, the lack of debt sometimes seems like a strange alternative lifestyle, but is it actually considered a bad thing?
Victor Davis Hanson thinks so. He recently wrote an article entitled “Ten Commandments for Our New Century,” and the last “commandment” chillingly asserts:
Owing in our new millennium shall be less stressful than saving. The man with a little money in the bank is more worried that he thereby will be taxed more, earn no interest, or have his small sum expropriated, than the borrower is worried that he will have to pay back the full amount of quite a lot that he borrowed for his mortgage, credit card, or student loan. The saver is suspect of doing something bad to the borrower; savers are always active-voice beneficiaries, debtors passive-voice victims. An American without debt or a federal program to relieve it is not really an American.
On top of this, the heated rhetoric on the part of many, including at the highest levels of our government, against “the rich” makes the effort to achieve independent wealth through hard work, delayed gratification and sacrifice rather unpalatable.
We’re getting the message. Nearly eight in ten of us live now from paycheck-to-paycheck. One in six of us are so broke, we’re on food stamps (SNAP). The average young adult graduating from college is already about $23K in the hole. Most Americans won’t have enough money saved to retire by age 65, either. Debt is the norm. Savings is the exception.
Building wealth is getting harder, too. Recently, Wyatt Emerich of The Cleveland Current reported his findings that a two-parent household with two kids making $60K/year actually has less disposable income than a single parent with two kids making minimum wage. And if that single parent only works one week in the month, he/she enjoys 92% of the buying power of the other family. This is because the second family qualifies for much more federal aid than the first; in reality the US taxpayers foot most of their living expenses.
Oh, but wait. Only about half of us actually pay federal taxes, and that percentage is dropping like a rock.
Since when did striving to be “rich” become such a bad thing? More than 80% of the millionaires in this country are self-made. Typically, they offer a product or service that isn’t all that interesting, but that everyone needs, and they figured out ways to do it more inexpensively and efficiently than the other guy. We need more people like this!
If our economy fails this time, it won’t be a Great Depression. During the Great Depression, private US citizens held most of the wealth in the country, and were able to lend the funds for us to win World War II. Now we’re borrowing over 40% of our operating costs, and almost half of our debt is held by foreign creditors. (For the consequences of defaulting against sovereign powers, see Greece.)
Don’t think raising taxes on the “rich” will help us not to have to borrow from other nations. Between the rising tax rates on them and the way we’ve been casting them as villians, the “rich” are giving up left and right. Instead, they’re hunkering down and sitting on their piles instead of putting them to use to benefit the rest of us. Tax revenues from businesses and high-income individuals are down.
We need a serious attitude readjustment.
- A wealthy person isn’t a thief by definition. In fact, most of the time, his pile came from much self-sacrifice.
- Wealth is not zero-sum. He can still have his, and you can make yours.
- Wealthy people also go by the moniker “Employers.”
- The government is stealing from us to make their friends rich. But those guys are able to skirt those higher tax rates, too.
- Philanthropy funds worthy causes, and comes from wealthy people, not taxpayers.
- Giving tax breaks to the wealthy is not “government spending,” as it is so often accounted. It’s really letting people keep what they earn.
- Producers tend to give up if they have little or no chance of keeping wealth.
Certainly, the moribund economy can’t be fully blamed on the persecution of the wealthy, but all the railing against the “1%,” promises of higher taxes and other disincentives sure don’t help.
Elise Cooke wants to be filthy, stinking rich some day. Wish her well!