Recent polls show that income disparity is increasingly a concern across all sectors of the population (including Republicans). However, 43 percent of respondents said that the rich became wealthy ”mainly because of their own hard work, ambition or education.” The belief that being rich is transitory by nature is part of the fabric that makes up the American dream. People think if the rich became rich by their own efforts, perhaps they can get rich too.
Unfortunately, although we cling to this romantic belief, it is becoming less true every day. The reason this part of the American dream is becoming a thing of the past is directly linked to the income disparity caused by the concentration of wealth discussed in previous articles. As we become more aristocratic, more or our wealthy are born into wealth, rather then becoming wealthy based on their own efforts. Inheritance tax not withstanding, the trend of more and more of the rich inheriting their wealth as opposed to earning in on their own is an undisputable consequence of the concentration of wealth.
It is perhaps even more unfortunate that many of our political elite come from such a background because in a sense it separates them from the rest of us. They simply have never faced the everyday challenges that the majority of the population experiences. Do you think George H.W. Bush ever had to bus tables at a local diner to pay for his college education? Did he ever need a paper route in order to buy baseball cards for trading? I doubt it. I would suspect that he never would have owned a major league baseball team if not for the high level oil executive job he was able to get right out of college. Were you offered such a position just after graduating from college? These are just some of the privileges enjoyed by the wealthy upper class.
Perhaps today’s most concerning example is presumed Republican presidential nominee Mitt Romney. Recently he tried to connect with voters by saying that there were times he worried about getting a pink slip. He was trying to say that he know what it felt like to be worried about getting fired. I seriously doubt it!
Let’s run some numbers. Romney’s net worth is reported to be $250 million. Let’s assume a safe conservative investment return of 5%. (Note: In 2012 5% is a pretty optimistic expected rate of return for the average non-wealthy individual. However, historically it would be considered a conservative assumption. Also, if you are worth $250 million, you can afford some pretty high end money managers using “absolute return” strategies and almost guarantee a rate of return at least that high.) So on $250 million, Mitt Romney can safely expect to earn $12.5 million dollars per year on his investments alone. That is equal to $34,246 per day. That is over $34,000 per day, every day, without working a day. Now, if you had that kind income derived solely from existing wealth do you think you would worry much about losing your job?
The average American worries about losing a job because that means he might not be able to pay his rent or mortgage! There certainly must be a substantially higher level of fear for that person. I seriously doubt that Mitt Romney has EVER experience this type of fear and uncertainty.
It’s true that Mitt Romney was not always worth $250 million dollars. The manner he earned much of it was by what Newt Gingrich recently called “vulture” rather than “venture” capitalism (most likely the subject of a future article). But he certainly was born into money. My favorite quote about Bush (43) was when Ann Richards said “he was born with a silver foot in his mouth”. Today columnist Reuben Navarrette said of Romney, “it’s one thing to be born with a silver spoon in your mouth, and it’s another to have been saddled with a 20-piece set of sterling flatware.”
So Mitt Romney got rich by being born into the wealthiest segment of our society. If a big part of the American Dream is that anyone can get rich by their own hard work, then Mitt Romney certainly doesn’t have a clue about that.