Wealth, Poverty, and Perspective

So, last week, I read an article claiming essentially that $200,000 per year was really not that much to live on- Enough, but hardly a life of luxury one one figures in a mortgage, car payments, and the kids’ tuition.  Commentors on Gawker were quick to declare class war, with a good number describing the people portrayed in the article as rich one-percenters, while several others defended the article as being accurate, and that a couple hundred thousand a year really wasn’t enough to qualify as “rich”.

In order to really see just how fucked up our perspective is, I think we need to step back and make some definitions that don’t rely on actual dollar amounts.  Here’s roughly how I see it, based on general observations about the quality of life from my great-grandparent’s generation forward.

  • Impoverished:
    You have nothing, or close to nothing. For whatever reason, you are unable to provide for yourself.  If any of your basic needs are met, it is either by charity or the social safety net.  Something others may see as a basic need, such as a vehicle or new clothing, you consider to be a great luxury.

  • Poor:
    Although you have the basic necessities of life, they are a constant struggle to maintain. If you work, it does not provide enough to survive, and you must work multiple jobs or take charity to keep a roof over your head. Your major possessions are likely old or of cheap quality.  The slightest financial setback can literally jeopardize your very survival, and you are unlikely to ever manage a vacation or small luxuries without a great deal of either luck or sacrifice.  Retirement is literally unimaginable.

  • Working Class:
    While luxuries are few and far between, your basic needs are generally well met.  You have stable employment and living conditions, and while you feel the pinch of an unexpected expense, you still have enough money to manage a few creature comforts.  You likely drive a used but well-maintained vehicle, and when it comes to possessions, they tend to be either inexpensive or intended to last for a very long time. You can look forward to a modest retirement.

  • Middle Class:
    Although you are still concerned about money, your basic needs are well met, and you try to put something away for the future.  Your profession or position is one which is considered respectable, and you can move between jobs if necessary without making major sacrifices.  For the most part, essential purchases such as a home or schooling are budgeted for and unlikely to cause hardship. You purchase a new car every few years, and select consumer goods of decent quality  You can plan to retire at more or less your current standard of living.  Given enough time, you are likely to recover from all but the most severe financial setback, and still make an occasional luxury purchase.

  • Rich:
    While it is likely you have a job, it is either as the owner of a company, or in an elite position in a difficult field.  You seldom, if ever, worry about meeting your basic needs, and your standard of living is likely to improve with retirement. You put a substantial portion of your earnings into stocks, bonds, and other investments.  You purchase high quality or luxurious consumer goods and vehicles on a regular basis.  You can take time off frequently, and travel as you wish to foreign destinations.  You employ one or several people such as a housekeeper, gardener, driver, or personal assistant.  You have access to places and social circles unavailable to most people, such as elite country clubs, political fundraisers, and private shopping experiences.

  • Wealthy:
    You do not think about basic needs.  Your income comes from investments- If you work, it is by choice, and in whichever field furthers your own personal goals and desires.  You purchase anything you want, with little thought to anything but the largest or most extravagant items such as a yacht or private island.  At this point, money is no longer about survival, and becomes either about power or a simple game of accumulation.  You can cross international borders at will, and probably have homes and assets on several continents.  You have access to things others can only dream of, such as face to face meetings with celebrities and heads of state.  

Now, these are my own definitions, and you’re certainly welcome to come up with your own, but I think they’re pretty representative of the basic tiers of Western society.

Looking at these definitions, the folks mentioned in that original article aren’t rich, they’re middle class.  Compare them to your typical middle class family of the 50s and 60s:  No, my grandparents didn’t have smart phones or blu-ray players, but they were the first ones on their block with a television and the latest time-saving kitchen gadget.  Maybe they didn’t have a BMW, but in that day and age, their high-end Oldsmobile was pretty equivalent.  As a construction worker and a hairdresser, their two blue-collar incomes put them a level above their working class peers where a single income household was the norm.

Now it is true that to many of us, $200,000 in annual income or $80,000 to spend on a car seems like a lot of money, but again, this is due to the false perspective we get when we think in terms of dollars instead of comparable metrics:  If you are living in a one-room studio with creaky plumbing, working two jobs and can barely afford the laptop you're reading this on, there are over a billion people in Africa and Southeast Asia who consider you to be absurdly, unimaginably rich.

Clean, drinkable water comes right out of a tap in your own home- As much as you want, whenever you want it!  You have no need to walk over a mile with an empty jug, hoping that the summer heat will not have dried the stream up completely.  If you need medical care, you don’t need to wait for the Red Cross van to come by on it’s twice-a-year visit: You can go to an actual clinic, filled with doctors, clean bandages, and fresh medicines less than a day’s travel away. You can eat Taco Bell, Pizza Hut, and Panda Express all in one week instead of rice meal every day.  You likely attended a dozen years of free schooling, indoors, near home, and own a computer, while a billion people have never even been able to own a book.  You are unimaginably, decadently rich by their standards.

I know- It’s really hard to hear that when you’re being paid minimum wage to pump gas and wipe the windows of a Range Rover.

What you should be worried about isn’t that someone making $200,000 a year doesn’t think they’re rich- It’s that you now need a six figure income to be in the middle class, and the jobs which used to make you solidly working class, will now keep you poor.   We’re going to get back to this in a minute, because the fact of the matter is that it’s not about the money, it’s about the standard of living.  

Some people are going to have better paying jobs or bigger houses than other people.  That’s really all well and good.  The problem is when we get so fixated on the fact that his car cost fifty times what our junker cost, that we lose track of where the actual discrepancy is:  And it’s not between rich and middle class, it’s between the wealthy and everyone else- Yes, even the rich.

Here’s the thing about rich people:  They generally work for their money.  If someone has a great idea and works hard and makes good decisions and turns their garage business into a $3million a year operation, then I think it’s hard to argue that they don’t deserve it.  If someone wants to take out $170,000 in loans so they can spend 15 years between school and internships to become a doctor and go save lives, then I’m pretty happy to see him driving around in that Range Rover, even when I have to check his oil for him.

But it’s hard to worry when we can’t even begin to understand how big the problem is- And this is why we fixate on the middle class instead of the wealthy.  We consider someone to be rich not based on real effects, but on how much more they have than us- And this is where we get down to the real, scary shit.

We talk about the rich because we literally can’t imagine the wealthy.

Humans have trouble with large numbers like “billion” and “trillion”.  We can barely wrap our head around a million.  We see this when we talk about geological time scales or the number of stars in the universe- There’s a point where the brain simply has no frame of reference as to how big a number we are actually talking about, and everything above that point becomes “a lot”.

Think about how many is a hundred.  How many is a thousand.  A million.  A billion.  You can probably picture a hundred cans of beer or a hundred popsicle sticks.  You might even be able picture twenty thousand people in a football stadium.  But a million? A billion? What does that look like?

Well, there are 60 seconds in a minute, 60 minutes in an hour, 24 hours in a day, 365.25 days in a year.  We should all be able to agree on this.  Strap in, because I’m going to lay some math on you.  

One thousand seconds is equal to about 16¾ minutes.
One million seconds is a little over 11½ days.
One billion seconds is almost 32 years.
And one trillion seconds?  31,688 years.

Take a minute to let that sink in.

Our average poor-to-working-class bloke has a used car, some furniture, housewares, some electronics.  Let’s say that all adds up to around $7,000 net worth.
Our middle-class-we-think-of-as-rich couple is halfway through paying off a $350k mortgage, owns one of their two luxury cars outright, and has a nice retirement account.  All in all, their net worth is around $500,000
Hans Rausing of Sweden owns a company that makes packing materials.  He’s at the very bottom of Forbes’ list of 100 richest people in the world, with a net worth of 12 billion dollars.

Go back and look at how many seconds are in 11 days or 32 years.  I’ll wait.

Now we’re going to pretend that each dollar is one second, and see what kind of lifespan that equals.

Our working class fellow will be dead within two hours.
Our middle class couple has a little under 6 days.
Hans will still be alive in 380 years.  

Now, remember that Hans is at the bottom of the Forbes list- There are 99 people out there even richer than he is- Some of them by quite a lot:  Larry Ellison of Oracle gets to live over 1,600 years in our example, and he’s only number 5.  The 25 people at the top of that list are worth nearly a trillion dollars between them- Thirty-one thousand years worth of dollar-seconds.

To someone with two hours to live, a week seems like a long time, but it’s nothing compared to 1,620 years. That’s more time than separates the Roman Empire from humans reaching Mars.  31,000 years is more or less the entirety of human civilization.

Those are the kind of numbers we’re talking about.  Minutes versus millenia.  

$200,000 doesn’t seem like that much any more.