Tuesday, February 27, 2007

Wealth In America

I’m not a class warfarrior. I’m always a little bemused by the people who are. Everyone starts with a certain set of circumstances, but what you do with them is usually the deciding factor in whether where you start is where you end up. I didn’t grow up with much money, and most of my friends as a child had nicer houses and better toys, fancier cars and more fashionable clothing. I was never taught to resent the advantages of others, though, nor to compare my lot with the more fortunate. In my parents' world, there was no point in comparisons. They didn't change anything. Things were what they were, and the best remedy for them was hard work and thrift.

My parents did work hard, but even so things were rarely easy. Money was a big source of tension at home, and we watched my mom stretch the dollars wherever possible. She clipped coupons, and shopped sales. She made friends with the guys at the day-old bakery outlet, who would give her the heads up when goodies came into the store for cheap. She recycled glass before it was popular, saving it in barrels in the back yard, one for clear and one for green, to sell when a barrel got full. My sister and I learned to straighten out the nails we pulled from old lumber, to be used later—when my mom would reuse that lumber to build a shed, or a pantry. We gratefully took what people gave us. Most of my clothes were hand-me-downs. (The hand-me-downs were rather unavoidable, money or no. I was the smallest kid in my class for years, and my friends’ parents saw me as the next inevitable phase in wardrobe deployment. I also had an older sister at home who spent all her babysitting money filling her closet. I benefited greatly from the temporary lack of human growth hormone.) My folks made the best of what we had, and we never went hungry. Although, sometimes we’d have to take the free lunches the school sent our way.

We weren’t what I would call poor, though. Poor is not having food to eat, or a place to live. Poor is freezing in winter, or not having shoes. We just had a normal life, with bouts of belt tightening and a few lessons in humility. Plenty of other people had more, but plenty others had less, too, and the best lesson I learned from it all was that no matter what advantages and disadvantages came my way, what I did with them would make all the difference in how things turned out. My parents never stopped working their blue collar jobs, while encouraging us to get an education, and my mom, especially, taught us not to waste what we had, but to use it to the fullest, turn it inside out, reuse it, and then rebuild it if necessary. I resented having to wash plastic bags and tin foil for reuse, rather than just throwing them away like my friends did (and I admit that I am often not so frugal today), but I learned the lesson all the same. Making the most of what you have is the best way to ensure that you still have something later. My mom opened savings accounts to get the free dishes, or whatever the giveaway of the day was. More importantly, she kept her money in those savings accounts. Mom, who really did grow up in abject poverty, who never did have a high-paying job, or a rich husband, nevertheless managed to save for herself a tidy nest egg. She is independent in her retirement, despite the pecuniary disadvantages of her earlier years. She was wise with what life and God handed her.

My sister and I frequently were teased because of my mom's frugal ways, the lack of luxuries that others took for granted, and because she expected us to learn to work as hard as she did. The hardest times for me were the teenage years, because those, of course, were the years that I cared the most what other people thought. In high school I was always embarrassed when other kids would see where I lived, because our house was sturdy and had a roof, but had little else to recommend it, and I tried my best to keep my address a secret. I was very careful about accepting rides. Only people who had proven they wouldn’t make fun of me were allowed to drive me home. Occasionally I misjudged the driver, and went through sufficient amounts of adolescent mortification at their ridicule to make me even more wary the next time. I particularly remember one cruel and insecure boy who kept repeating, “You live here. You live here,” like it was some kind of chant. Many of my home improvement skills were learned as I tried to make that house less of an embarrassment. Those are skills I’m so grateful I learned. At the time, I would have gladly traded places with almost anybody, not realizing that the lessons I was learning about hard work and frugality would serve me in good stead for my entire life. Then, I just wanted not to be embarrassed. Now, I wouldn’t trade what I learned for the world—or all the fun and popularity that money could have bought me in high school. I am far better off financially now, because I learned resourcefulness, fiscal responsibility and independence then.

So where is all this review of childhood history going? It’s my personal illustration of what Peter Cuthbertson writes about at TCS Daily, on class warfare, and the truth about the wealthy in America. There is a fair amount of resentment here in the USA, frequently fostered by politics, between the Haves and the Have-nots, and there is a perception that the Haves have gotten all the breaks, didn't do anything to earn their good fortune, flaunt it in other people's faces, and really should be sharing the undeserved wealth. Is this perception accurate, however, or is there more to wealthy Americans than meets the eye? I'll quote Cuthbertson at length here:

The picture of an actual millionaire is dramatically less glamorous than commonly-held visions of exclusive neighborhoods, expensive clothes and colorful social lives. In his 1996 book The Millionaire Next Door, co-authored with Dr. William Danko, Dr. Stanley revealed that the typical millionaire spent less than $400 on their most expensive suit, and only about 1% spent more than $2,800. Only one in ten millionaires had ever spent more than $300 on a pair of shoes. Most millionaires pay a few hundred dollars or less for their watch, and $30,000 or less for their main motor vehicle. They have been married to the same person most of their adult lives.

The wealthy are conspicuous for their lack of consumption: "What are three words that profile the affluent? FRUGAL FRUGAL FRUGAL". The book is full of startling individual cases: the millionaire who refused the gift of a Rolls Royce because he couldn't imagine driving up in one to eat at the crummy restaurants he prefers, or throw caught fish in the back seat; the wife who, after her husband gave her $8 million in stocks, returned at once to clipping the 25 cent grocery coupons from her newspaper.

This is no coincidence. It is not that most millionaires are in the habit of being frugal despite their wealth: it is that they are so wealthy because they are in the habit of living so frugally. The plentiful residual income goes into savings and investments that are left to grow for decades.

This picture of wealth in America certainly stacks up with what I have seen in my own family. My mom never quite made it to millionaire status, but all that saving and scrimping her way out of poverty have given her a comfortable life in her later years. My husband's father, too, came from real poverty, but he and my mother-in-law changed their own future through hard work and frugality. These are just a couple of examples of where Cuthbertson's premise holds true, but read the TCS article for his further examination of wealth in America. It's an eye-opener if you've had the notion that America's rich are all trust fund babies.

I'm so glad of the lessons I learned from my mom, and those my husband learned from his folks. I hope that we can be as responsible with our choices as they were with theirs as they were building their futures when times were hard, and never make decisions based on what other people will think of us, or what other people have. I hope I never buy into a politics that says that the government needs to redistribute everyone's income so that everyone's lot is exactly the same. If I had grown up with the notion that the perks of life were my right, and that frugality and hard work shouldn't be the cost of comfort, then I would have lost some of life's greatest character-building experiences. I'm glad I was embarrassed as a child. It taught me that I can survive embarrassment. I'm glad I had to work as a child. It taught me that I can not only survive, but thrive, on hard work. I'm glad that others had, and have, more than I do. It's taught me that, if there are comparisons to be made, then what I really need to be looking at is how much more I have than so many others, and to be grateful and generous. I don't ever want to look at what someone else has earned for themselves and say, "Hey, I don't have that, so you should give me some of yours." I want to earn and save, and make the most of everything, so that when my turn comes, I can look at someone else who has less and say, "Here, you don't have this. Let me share some with you."