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On one side of the class war you have the folks who think the rich obtained their wealth by stealing from the rest of the world. Meanwhile, the rich accuse the poor and the middle class of supporting tax policies designed to take from the rich and give to the poor. Is this worldview - the view that others are trying to steal your stuff - an example of paranoia or economics or jealousy?

Obviously some rich people really are thieves, practicing insider trading, bribery, and other unsavory practices. And some poor people really are looking for a free ride. But I think we can agree that the bad apples in every wealth class are the exceptions.

I've met a lot of rich people, and as far as I can tell, they aren't addicted to money, power, or even prestige. I say that for the same reason you don't crave a ham sandwich at the moment you finish eating one. Once the rich become rich, their motives evolve.

My hypothesis is that the rich are often addicted to hard work itself. Once that hard work produces all that a person needs for personal use, the impulse for hard work doesn't go away. What happens instead is that the goal changes from becoming richer - which has a decreasing marginal benefit - to making the world a better place. People who are genetically inclined toward industrious behavior will keep working hard long after their persona needs have been met.  People don't change their basic nature just because their bank accounts expand. But people do routinely change their rationalizations, i.e. their stated goals.

If you travelled back in time and asked the 25-year old me why I worked hard, I would have said something about my dreams of someday becoming rich. If you ask me today why I work hard, I'll say something about making the world a better place.  That explanation might even sound reasonable, given that my comics and my side ventures are all designed to improve the world in small ways. But on some level I know all of my reasons are rationalizations. The core truth is that I'm genetically wired for hard work. It's simply my nature. I'm happier when I'm being productive.

I wonder if instead of dividing the world into poor, middle-class, and rich, we'd be better off sorting the world into people who create more wealth than they consume and people who consume more than they create. There might be a lot of power in that model. Let me explain why.

When we sort the public into wealth classes, we are lured into endless debates on who deserves what and who is stealing from whom. That can't lead to anything good. But imagine instead we focused on dividing people into net creators of wealth versus net consumers. The creators and consumers of wealth would be found in each wealth class. The goal would be to have more creators and fewer net consumers of wealth.

That might sound a lot like today's model, and perhaps it overlaps 90%. Obviously everyone wants a world with more creators of wealth and fewer net consumers of wealth. But I think this small mental change in how we sort people might change behavior.

By analogy, I remember seeing a study that said people use less energy at home when everyone in a neighborhood can see their neighbors' energy bills. As soon as you know you are being compared to your peers, you start turning off lights when you leave the room. Likewise, I think a focus on sorting people into wealth creators versus wealth consumers would change people's behaviors for the better.

Let me give you some examples of how this can make a difference. Suppose you are poor and a net consumer of wealth. Society has taught you to blame rich people for sending jobs overseas, blame the government for not doing enough, and blame your bad luck. That's not a productive view. Now let's say society agrees to define a person who is in school, or in any sort of training course, as automatically part of the creator class. That gives a poor person a clear path to upward mobility. Simply sign up for school or government-sponsored training and instantly become part of the creator class.

If you're a fat cat wealthy person who stopped producing anything of value long ago, how would you feel to be in the category of "Net Consumer of Wealth"? I think it would cause you to start investing your idle cash in something that would improve your social standing and make you a creator of wealth. To make things easier, let's assume we label as a wealth creator anyone who invests in a start-up, even if the start-up does not succeed.

What I'm suggesting might seem like a subtle or even trivial shift in how we look at the world. But that sort of shift can be huge in terms of how it changes behavior. Class warfare strikes me as a dangerous worldview. It encourages a win-lose approach to government policy in order to pursue the elusive unicorn of "fairness." A more productive way to view the world is in terms of net creators and net consumers of wealth, at least so long as society makes it possible for any net consumer to become a net creator by going to school, training for a job, or investing in start-ups. For the middle class, it might simply mean spending less than they earn.  I think this approach gets you to a healthy economy faster than a class war.

I know some of you will reject this idea because there's no clean way to know who is a net consumer of wealth and who is a net creator. But I think common sense gets you close enough.

 
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+8 Rank Up Rank Down
Nov 26, 2012
I'm shocked that so many people seem to have no idea how hard the person running the company worked to get where he is and how hard he/she continues to work to keep things prosperous. I grew up in poverty but with the special talent of being trust worthy. That's led to being trusted and very close to a dozen "rich" people over the decades and every single one of them deserved the big rewards they reaped by taking the big risks they did, with monumental effort and admirable intelligence.
 
 
Nov 26, 2012
I can't tell you how many times I got marked-down in an English composition class for writing an essay that included the phrase, "I think we can all agree..."

Actually, I can. I only did it once, then took the correction to heart. I hope you'll do the same. I hope you'll also stop hypothesizing about what other people think and who they blame. I don't think it's appropriate for you put words in their collective mouths. Maybe stop using words like "blame," "deserve," and "stealing" which I think we can all agree are needlessly inflammatory. D'OH!
 
 
Nov 26, 2012
http://www.straightdope.com/columns/read/1070/how-do-you-get-listed-in-the-em-social-register-em

Apparently you don't know anyone who's listed in the social register, Scott.
 
 
Nov 26, 2012
I guess I don't really understand your definitions. For example, say a rich kid inherits 10 million dollars - so far they've consumed 10 million. They give it to an investment banker, who invests it for them - is the full $10 million now wealth generating, putting them at a break even point? Now say the investment provides a 15% return, or $1.5 million the first year, and the kid spends $1 million - is that another half mill of net generation? In other words, can he live off his investment indefinitely and be considered wealth generating? Because that's the kind of thing that annoys working folk.

Similarly, would all retirees be considered net consumers?

 
 
+4 Rank Up Rank Down
Nov 26, 2012
I don't agree with your logic in two ways:

- First, I don't buy the argument that rich people once they are rich generally move their goals to improving the world. Knowing that the majority of all wealth on this planet is in the hands of a tiny rich minority, that would make this world an awesome place. In many ways it is not. I believe most rich people do strive for becoming even more rich. Not neccessarily because they want to add even more luxury, but simply because they are addicted to the success and status of it.

- Second, your idea of wealth consumers/producers is ambiguous. They don't happen in isolation. Imagine a rich successful man that heads a coffee company. He builds the business himself, but in day to day practice he coordinates his company from the comforts of his office, whilst a low cost labor force of thousands work long days for scraps to produce the actual product. Are you now telling me that this rich man is a wealth producer whilst the workers are wealth consumers? It's more like you picked a metric that favors the rich. We could also use the metric "labor", and turn the table completely on who is a producer and who is a consumer. Please don't say that any of these workers could very well become a CEO themselves. It would be naive and statistically wrong.
 
 
+11 Rank Up Rank Down
Nov 26, 2012
[I've met a lot of rich people, and as far as I can tell, they aren't addicted to money, power, or even prestige.]

I, on the other hand, have family members who are both rich and highly addicted to power and prestige. Sometimes you have to be closer to people to see beyond the well-tended veneer. I think you also get a different perspective as a peer, rather than as someone who has the potential to be a (highly-undesirable) "shirt-tail" relative. Not all my rich relatives fall into this category - but a couple do.

One benefit of wealth (if you see it that way) is that people become attentive to your every word and stray thought as though every breath were a breath of fresh genius - when the reality is often far different. They certainly are bright, hardworking and capable - or they would not have succeeded as they did. However, they also managed to leverage some advantages that many equally capable people never received.

The danger is that when you are already inclined to think well of yourself and you then surround yourself with fawning admirers - it is easy to develop a warped view of the world. That is the true danger of the growing gap between rich and poor. Aristocracy is an ugly, self-reinforcing system that creates systems for separating "the quality" from that which is merely "common".

All that said, however: I do think that if there were a way to focus the social approbation and prestige on hard work and job-creating activity - that is all positive. In a sense that was the whole northern boot-strap, protestant ethic that went to war with aristocratic South in the civil war. (Slavery was a deeply warped attempt to recreate the lifestyle of the "Country Gentleman" on US soil - in the absence of a white underclass to provide labor.)

The Northern ethic won - for now.

However, the risk of an increasingly stratified society is that those at the top - especially future generations who will inherit rather than earn their privileged lifestyles - increasingly come to believe that they come from superior genetic stock - and that class division and extreme wealth disparity (in their favor) is simply the natural order of things - and should be maintained at all costs... This is a story that has played out repeatedly in many different cultures in many different times.
 
 
+18 Rank Up Rank Down
Nov 26, 2012
The 80/20 - Wealth Producers and Consumers - Corruption and Motivation:

I think it was in Freakonomics, a guy did a study and demonstrated that in the gangster hierarchy, it was best for the "wealth producer?" when there wasn’t fighting or violence. Business was good, and he was the one that made the 80%, while the majority of his organization lived in their parents basements (making 20% of the money).

When it was peaceful, business was best.

But for the grunt/soldier "wealth consumer?" in the organization, the 20%, their best chance of moving up happened when there was fighting and turf wars. Since this was in their best interest, it was the solider/grunt who would stir up trouble and start conflict. It was bad for business (80%) but great for his chance to move up in the pyramid, and out of mom’s basement.

For the grunt, things were best when there was chaos.

I think the same can be said for many of the protestors and rebels of the world. Revolutions and violence happen when we don’t create an environment where the grunt can peacefully climb to greatness. Actually, the environment doesn’t need to exist, but the perception or promise of that environment needs to exist. When this happens, people will have less reason to rebel and break rules.

This is why I think the "American Dream" is so powerful, and corruption isn’t as rampant as in other countries… (google Corruption Perceptions Index). The US isn't perfect, but it's pretty good!

Why?

My theory: If people don’t see a "fair" path to what they want, they will be enticed to travel the darker paths. It’s makes breaking the rules in their own interest. But if there’s a fair way to do it, people will take it.

So how do we use this?

I think it means the best way to entice a country’s population to work hard and have a high GDP is all about making sure we’re putting the right incentives for people to do the right things.

Don’t give them free hand-outs: People don’t need motivation to stay home, eat Cheetos, and watch TV. These really are "wealth consumers".

Do treat high performers "special". If you’re smart in school, you should get more perks and attention. If you’re not, you get less.

I think the reason America is broken is because people took the ideal, "Treat Everyone Fairly", and twisted it to be "Treat Everyone Equally." Not bad, right?

But it doesn’t mean treat everyone the same. It means reward their accomplishments, regardless of who accomplished them, equitably. If a minority girl cures cancer, she should get the same compensation that a non-minority boy who cures cancer would get. It does *NOT* mean that everyone, regardless of what they did, should be entitled to the same "cured cancer" special treatment.

Ugh. It’s almost like someone misunderstood what it means to treat everyone equally, and now we’re suffering at a macro-scale because of it.

So if I had my way, I'd ditch the labels of the wealth producer and consumer, and ditch the pervasive environment of entitlement taught in schools. Instead, I'd argue for a fair compensation system that rewards those that achieve, and come up with new labels: Achievers and failures.

I know it's not politically correct, but I think these labels, and special treatment, will help drive the right behaviors, and as a result the majority of people will benefit from it - both directly and indirectly.
 
 
Nov 26, 2012
@Paddington

[You also have the issue that stockbrokers and traders, as well as those whose income derives from buying and selling stock don't actually generate wealth.]

I can see how you made this mistake but you're wrong. Anyone who does something that someone is willing to pay their own money for is a producer. Note the wording of that sentence; if your boss is paying you with someone's money other than his own then you may or may not be a producer.
 
 
Nov 26, 2012
Hi Scott - here's a bold thought for you to work with - the country is full of "retired" hard-workers who want to make more of a contribution, and really are capable of doing so, but for some reason they can't. Maybe they can't justify doing it for no personal benefit at all, maybe people don't want their help (they're too old, or too rich, or too something). How do we tap that energy?

I so agree with "some people are wired for hard work". I've met many of these. Interestingly, the wealthier they are, the unhappier they often are, as their reason-for-being has sort of been jerked out from under them. (Sitting on boards or traveling the world doesn't match the excitement of starting a new company, but now that they're been there, people don't think they're "hungry" enough to pull it off again - or they just can't figure out how to get it started).

BTW - "the millionaire next door" divided society in a manner similar to yours - worth a read
/j
 
 
Nov 26, 2012
>we'd be better off sorting the world into people who create more wealth than they consume and people who consume more than they create

I'm confused. How is that any different than money? If I produce more than I consume now, my bank account increases. I don't think we can keep track of "net production" in a way that is meaningfully different from money.

Or are you proposing a purely rhetorical change ("producers" instead of "rich")?
 
 
+7 Rank Up Rank Down
Nov 26, 2012
I've mentally divided people up into producers and consumers for a while...the difference between me and you though is that I don't use wealth as an indicator. Someone who takes the time to build a snowman is a producer. Someone who kicks it down is a consumer.
Someone who volunteers just about anywhere is a producer. Using this definition, people of any age can be a producer. Generally, I'd rather socialize with a group of producers than a group of people who's investments paid off this year (which by your definition is a producer as well).
 
 
Nov 26, 2012
You would have to model this by how much someone had created to this point in their life, wouldn't you? After all, someone on Social Security has, quite likely, contributed much during their working life.

You also have the issue that stockbrokers and traders, as well as those whose income derives from buying and selling stock don't actually generate wealth.
 
 
Nov 26, 2012
[I've met a lot of rich people, and as far as I can tell, they aren't addicted to money, power, or even prestige.]

Are you telling me that you would be okay losing everything and going back to a cubicle job? What abut the other rich folks you know?

[When we sort the public into wealth classes, we are lured into endless debates on who deserves what and who is stealing from whom. That can't lead to anything good. But imagine instead we focused on dividing people into net creators of wealth versus net consumers. The creators and consumers of wealth would be found in each wealth class. The goal would be to have more creators and fewer net consumers of wealth.]

This would lead to the same sort of debate as before; who deserves what and who is stealing from who. Might be an improvement but still the same kind of debate.

[I know some of you will reject this idea because there's no clean way to know who is a net consumer of wealth and who is a net creator. But I think common sense gets you close enough. ]

Look around you and tell me that society is good at common sense.
 
 
Nov 26, 2012
Sure it sounds cool to be wealth creator, but it's just a label, and I can't cook it and eat it. And someone pouring champagne on hookers might be a wealth consumer, but it wouldn't hurt him very much. So, I don't think your new idea to be a game-breaker, sorry.
 
 
+7 Rank Up Rank Down
Nov 26, 2012
Here is a very brief TED talk by Nick Hanauer where he addresses the issue of the "job creator" argument and why it's flawed.

http://www.youtube.com/watch?v=CKCvf8E7V1g
 
 
Nov 26, 2012
I would welcome anything that would take the bite out of the class warfare argument of the political left. The real crux of the matter is that money flow from the rich to the poor is much better performed in the form of employment and purchase of goods than in government redistribution.
 
 
+8 Rank Up Rank Down
Nov 26, 2012
I'm curious what impact parenting would have on one's consumer/producer status.

Obviously, children are not going to be net producers of wealth, unless one considers primary education to be an "investment." Stay at home parents would be consumers unless one considered their parenting efforts to be investments in their future.

Of course, that's good parenting. Bad parenting would produce offspring destined for the consumer category. It seems like we'd want to create an incentive for good parenting; which by this model would mean parenting children who end up as producers.

On another note, we are obviously disincentivizing people sticking their surplus money in a mattress. The article proposes adding points for investing in small businesses, failed or successful. I'm not sure that's better than patronizing businesses that employ people, i.e. voluntarily spreading the wealth around.
 
 
 
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