I try to keep up on financial matters not because I enjoy them but because they inevitably affect my life; they are a necessary evil. So in the course of reading I came across this article in Fortune magazine.
It argues that hard-working, successful, two-income families, making over 250k/year, but who aren't "rich", will be paying for the housing-bust bailout. Its a valid point since that group will likely have a small tax increase. It also plays to Fortune magazine's demographic. It is also completely wrong in its interpretation of the data.
The main complaint in the article is that those profiled are plenty rich, but they don't get to live the lifestyle of the rich because of one simple fact: they all have more than two children. The complaints are all along the lines of "I don't consider myself rich because all my money goes to little Timmy's private school and little Mary's private tutors" and "I have to buy the gas-guzzler and nice house, because I need to cart those kids around and need to live in a good neighborhood for them."
Won't someone think of the children?
So they are plenty rich, they just spend it all on their kids.
Besides the fact that I have (by choice) no children, I find this disturbing on a whole different level: this is how aristocracies are born. Every decent parent out there wants their own children to be great, its a natural emotional urge. After all, the parents give up their own ambitions and lives, those kids had better damn well succeed. So they pile investment after investment on their kids, the best schools, the summer "vacations" at learning-camps, the tutors, because they want to make sure their own seed beat out all the other seed.
But greatness doesn't come this way.
Every civilization has aristocracies. Even kings/tyrants/dictators only have their position at the agreement of either the military or the aristocracy. America is no exception: until Obama, all of our presidents came from either local or national families that can trace their power back many generations. Its part of what makes his election so emotionally satisfying: America is supposed to stand for opportunity, where you don't have to be part of the ruling families in order to rise to the top.
And to be fair, this ideal works better here than anywhere else. But there is a strong emotional pull back to the old world ruling class that our founding fathers cast off (only to create their own ruling class, if a more porous one).
But re-distribution of wealth is one of the cornerstones of why this ideal works better here.
If the only people who get a good education, decent healthcare, or a chance at success, are the offspring of the already educated, healthy, successful, then we all suffer. Have you ever met the children of privilege? All those fantasies parents put onto their children are destroyed by the lazy, consumerist, decadent, and cruel teenagers and adults those children become.
But ask yourself how the parents got far enough to spoil their children in the first place: the parents benefitted from decent public schools, affordable healthcare, and opportunities for success.
So yes: we are being asked to pay back to society. Its because we benefited so much from it. And all that investment in just your own children runs contrary to wise investment advice: don't get emotionally attached to your investments and don't put all your investment in one stock.
"Spreading the wealth" is another way of saying "invest in index funds."
So, though I'm not happy at the prospect of less take-home pay, I'm also willing to pay that price so that the truly brilliant can emerge from the chaos of the next generation. Some will abuse the money, squander the opportunities, become welfare-moms, but the ones that rise above and succeed will offset those losses and we will take a step forward.
