You’re not the 1%
The media is full of pictures and stories of people camping out in parks all across the nation. I love to camp. But if I were going to camp, I probably wouldn’t pick Manhattan, or even a downtown park in my city. But whatever, I guess it’s close to bathrooms and the subway. As a reasonably conservative person, I felt a little bit personally attacked by the protests. I see myself as having one foot on Main Street and one foot on Wall Street. I work on a daily basis side by side with nurses, paramedics, police officers, social workers, and even clerks making little more than minimum wage. I treat people on food stamps, people on Medicaid, homeless folks, and people who have had rotten luck, both economically and medically. I see their pain and I feel my own financial struggles, minimal as they are now compared to those of people I meet. But I have also worked hard, saved my pennies, and invested in 401Ks, IRAs, and brokerage accounts. Through index funds, I own the stocks of the companies the Occupy Wall Street movement and other liberal movements rail against. Bank of America. Exxon-Mobil. Wal-mart. CitiBank. Yup. I’m the owner. When they make money, they send me my share. Those “unholy profits” are MY profits. When Bank of America raises fees, I don’t pay them, I receive them. And now these protesters are going to my employees’ houses and chanting at them. I’m not sure how I feel about that.
I have a pretty good income, in the ballpark of the average physician. The most recent compilation of physician compensation data I could find with a quick google search shows that the average family doc makes $209K, the average general surgeon makes $357K, and the average cardiologist makes $402K. Guess what? None of them are the infamous 1% (unless their spouse is also a doc). The 1% threshold, according to this Washington Post Blog post begins at $516,633. The only doctors in that category work on spines.
Apparently the Democrats in Congress and the White House have recently realized this. Now their discussion of raising taxes on “the rich” seems to use a threshold of an income of $1 Million per year, instead of $250K. Now, like most of you, I rejoice as I feel the crosshairs moving from my occiput to someone else’s, but it reminds me of this quote by Neimuller, a pastor discussing the apathy of German intellectuals during the rise of Nazi Power:
First they came for the communists,
and I didn’t speak out because I wasn’t a communist.Then they came for the trade unionists,
and I didn’t speak out because I wasn’t a trade unionist.Then they came for the Jews,
and I didn’t speak out because I wasn’t a Jew.Then they came for me
and there was no one left to speak out for me.
I find it just a bit terrifying that protesters are going to the houses of individuals that they feel earn too much money. Thus far, the rule of law has triumphed, and nobody’s door has been kicked in, their valuables removed, and the occupants tarred and feathered, but there are a lot of angry people out there, and it is hard to say where something like this could end up. Who’s to say the protesters are going to stop with the 1%? Perhaps when they’re done with that they’ll go for the top 5%, then the top 10%. (Just so you’re aware, most physicians are in the top 5%. The cut-off for 5% is ~$160K in annual household income.)
Now don’t get me wrong, some of the more reasonable protesters make some good points. A wide gap between the richest 10% and the poorest 10% isn’t necessarily good for society, and that gap has been getting wider. Stagnant wages and high unemployment are a real issue. A progressive income tax makes sense. But far too many of the protesters don’t seem to realize that “Wall Street” isn’t a handful of CEOs. It’s most of the American middle class. Those CEOs work for us. I’d like to see some reforms and a bit more government oversight to prevent some of the idiotic lending practices that got us into this mess. I wouldn’t even mind seeing some adjustments made to the tax code. But I think the first one needs to be ensuring every American pay some federal income tax. And this idea that we can make a significant debt in our deficit just by taxing those making over $1 Million is foolhardy. There simply aren’t enough of them. Like a household budget, the solution to this problem is simple, but not easy. We’ve got to spend a lot less, and everyone has to contribute a little more to the pot. Yes, the 1%, and even us 5%ers, might have to pay a bit more. But so should everyone else.
Addendum:
When discussing wealth, I prefer discussing net worth rather than income. You might be feeling good about your status in society based on your income, being in the top 5% and all. Take a look at this chart and eat some humble pie:
Getting into the top 10% is no small feat, especially if you’re 30 years old and have a net worth of -$300K. This chart does give you some idea of why some on the left are concerned about the gap, not just in income, but in net worth. The bottom 50% isn’t making any progress at all. The political parties, naturally, disagree on the solution (economic growth vs redistribution), but it’s hard to deny there is a problem. There are lots of lazy, stupid people out there, but HALF of Americans? I’m not sure I buy that.
I’ve determined I’m not the 1%. I don’t really feel comfortable with the “99%”. I guess that leaves me with the 53%. I bet that’s where I’ll find most of you too.
I enjoy your blog. Very good substantive information, transparency, and conflict of interest disclosure mentioned where applicable. The OWS overall message is the 99% wanting a fair shot at achieving success. They don’t want financial elites stealing their money through back door bailouts ( through the federal reserve), also TARP, they played games in paying back TARP ( used our own money to pay us back on loan portion of TARP. Taking risky bets with plethora of complex financial instrument then only to socialize the losses through bailouts. As you mentioned, theoretically the investor is the owner of publicly traded corporations. Unfortunately, practically, the investor is often robbed blind and is the butt of jokes by upper management. Goldman Sachs is notorious for ripping off their clients and investors by using their funds for speculative bets, only to funnel out the profits through absurd compensation and socialize the losses. United Health Care CEO is paid approx $1,200 for every $1 his average employe is paid. You think that United Health Care can’t hire a individual for $1M yearly salary or substantially lower( then hundreds of millions) to serve as CEO? answer is of course they can, but the investor is the one getting robbed because they don’t have checks on upper management and board of directors working in collusion. Keep in mind the CEO in other nations gets roughly 50 times the average workers pay, while in corporate America that ratio is 250 times and upwards of 1200 in the most egregious cases. The principle of operating as a lean company with minimal expenses some how does not apply to upper management as it does to every other aspect in corporations. Make no mistake OWS is not coming after hard working MD’s making around 200k-700k a year, the general public understands the sheer amount of time devoted to medical training along with the absurd cost of this education. American public is business friendly and understands the value of intelligence, education, hard work, but what OWS does not understand or tolerate is getting consistently robbed by corporate elite. Al-Jazeera English is the best source of news i have come to realize. Notice the astounding difference between Al-Jazeera and ABC, NBC, and FOX.
Ron Paul 2012.
I agree that reforms that empower shareholders to rein in ridiculous management payouts and incentives would be beneficial.
I’m not sure I agree that all who consider themselves part of OWS are “business friendly” and understand the value of education and hard work. Nor do I believe that there isn’t a large share who thinks $100-300K is “too much.” My experience talking to sympathizers and listening to members of the movement is that they don’t understand the federal income tax system, much less the risk most business owners take. Is there some part of OWS that is a bit more intelligent and enlightened? I’m sure there is, but you don’t hear from them much.
I’m confident that a large percentage of MDs could make more money doing something besides medicine. Intelligent, motivated, and hard-working people who want to make money tend to find ways to do so, no matter what field they’re in.
“Intelligent, motivated, and hard-working people who want to make money tend to find ways to do so, no matter what field they’re in.”
Really? Interesting. You also said this:
“I work on a daily basis side by side with nurses, paramedics, police officers, social workers, and even clerks making little more than minimum wage. I treat people on food stamps, people on Medicaid, homeless folks, and people who have had rotten luck, both economically and medically.”
Are you saying that every single one of those people you work with or treat (the ones who are either barely making it or not making it at all) are either unintelligent, unmotivated, or not hard-working…or don’t want to make money? Because that’s what it sounds like, and that’s what I hear a lot from the 53%: “Well, I’m comfortable, I made it, so everyone else should be able to, too, unless they’re lazy or stupid” That attitude completely disregards the advantages and luck they may have had that a lot of other hard-working, intelligent, motivated people don’t.
The main thrust behind the 99%, that I’ve seen, is that plenty of intelligent, hard-working, motivated people are not even IN “a field” because they can’t get started, or can’t get back into it, for a myriad of reasons. The education they need is out-of-reach expensive, they don’t have family with money to help them out, they haven’t lucked into that scholarship or internship or entry-level job (because people with decades of experience are taking entry-level jobs when they can find them). Or they worked hard for years and did all the right things…then they got sick and their health insurance company convinced their employer to let them go and things spiraled out of control from there.
I’m quite comfortable, financially, for now, but I’m fully aware of how easy it would be for that to go away, and I’m FULLY aware of the luck and advantages I have had that helped get me where I am. Yes, I work hard, but I’m not so egotistical as to think that I did it all myself, or that there aren’t a LOT of other people who make less money than me who work harder than I do. And I refuse to tell people with valid complaints about the way things are run that they should shut up because I’m comfortable, and I’m afraid they might come for me next.
I do invest, but I don’t invest in companies that treat their rank-and-file employees like disposable cogs that don’t deserve a living wage or health insurance, so I don’t have to feel attacked when those companies are attacked for their practices. Maybe I make a little less money this way, but I’m totally OK with that. I’d rather contribute as little as possible to the misery of others, you know? Life doesn’t have to be a zero-sum game, and inequality like we have now hurts *everyone*.
Check out these charts, put together over a year before OWS even started: http://www.businessinsider.com/15-charts-about-wealth-and-inequality-in-america-2010-4?op=1
Can we at least agree that a 45+ gini coefficient is just stupid, and really ought to be rectified?
I think you need to be careful reading more into something than is actually written. Your suggestion that I think those I work with and treat are stupid, lazy, and without motivation is without merit, and frankly, insulting.
What Gini coefficient would you like to see? Zero? 0.23 like Sweden?
Absolute equality should not be the goal. The goal should be for everyone to have a constantly improving standard of living. Intelligent people can disagree about the best ways to do that. The best answer likely lies in the middle. Some taxes/transfers are probably necessary. Increasing them to the point that it stifles growth is unproductive however. Moderation in all things. I wish we could see some of that in Washington.
My intention was not to be insulting, and I’m sorry it seemed that way. Both quotes at the beginning of my comment were from you, and I was honestly struck by the juxtaposition – can you explain what you meant by the first quote if you DIDN’T mean that people who aren’t making it are either unintelligent or unmotivated or not hard-working? On the face of it, that’s really what it sounds like.
Back down below .40 would be nice. I never said absolute equality was the goal, just less inequality. It really is at crazy levels right now.
I agree. As a society, we’d be better off with less inequality. I see that as our second biggest economic problem though. And I don’t think you can fix the first one (growing our economy, creating jobs, and increasing the standard of living for all) by just fixing the second one.
I’m not sure I see the problem between the two statements. People who work hard and who desire to make money GENERALLY do so. Yes, there are a few people who have had rotten luck and for whatever reason, cannot do so. They are a minority, and certainly NOT 99% of society. I happen to interact with a large number of these folks due to my particular profession and consider it a privilege to donate (according to ACEP) over $150,000 in FREE MEDICAL CARE each year to these folks.
Unfortunately, I interact with far more who CAN WORK but choose not to. Their sense of entitlement is palpable. They call an ambulance for a stubbed toe, demand percocet (or threaten to complain to administration), and then demand that the hospital pay for a taxi ride home. Are these people “stupid, lazy and without motivation?” Yes. Does that statement apply to people who are simply unlucky? No.
At any rate, like I said, perfectly intelligent, rational people can disagree about how equal a good society ought to be and what means should be taken to achieve it. I think the lack of intelligent, rational discussion coming out of the OWS movement is hampering its efforts to decrease inequality. The President’s “Bash the Rich” speeches probably aren’t helping. Politicizing and polarizing our legitimate issues has been a serious problem these last few years, and it seems to only be getting worse.
[Some of] OWS frightens me, if only because I am concerned that, if they get everything they want, I will have no way to improve myself substantially. Of course, they likely won’t — as, the more I talk to them, the more that sounds like borderline-Communism (they don’t want there to be an upper class, or even an upper middle class) — but their attitude bothers me at various levels.
First, if you don’t mind, an introduction: I’m an undergraduate college student who hopes to gain admittance to medical school sometime in the near future. I have also been raised by a poor single mother (who works 4+ jobs to make ends meet) and have benefited from various forms of government aid. To go to college, I have depended on loans, grants, jobs at school, etc. Though my mother does attempt to help financially, she suffers from various physical and psychiatric illnesses that make this difficult and strain our relationship. I did, at one point, have a college savings account — we had to take all of it out to pay for food, rent, etc. Due to my own health conditions, I won’t/can’t qualify for a military scholarship once/if it comes time to pay for medical school — I did check. Due to the long-term career goals (ie, academics and research) I have developed recently, however, I am highly considering applying MD/PhD and hoping to gain acceptance into a funded program. If not, I will depend on loans.
Now, why am I writing this? It isn’t to gain sympathy — I want none — but to give some context and disclosure for this statement: Many OWSers (not all) seem to have this idea that, if you make money, it was because it was handed to you/you had many advantages and that, once born into poverty, the Big Bad 1% will make sure you stay there.
No. Though many have certainly found worse lucky than I, I also wouldn’t call myself advantaged and, if I do make it (breaking decades of poverty and lack of education in my family), it will be because I worked for it. I have no problem paying higher taxes (as you said, something needs to occur); but I do have a problem with a group of people deciding that, because I worked for it and was successful, I am somehow a plague to society (and many OWSers do not just care about the 1% — they care about anybody who is doing well, >100k) and deserve to have my income stripped from me.
And also, this idea that one can’t move up in life: I find it insulting. Disadvantage or no, I am not a helpless victim to my circumstances.*
Once again, some change needs to occur and the gap needs to close somewhat; however, I disagree with many OWSers who feel the solution (even if they don’t say it, they often imply it) is to eliminate the upper class and upper middle class. I disagree the solution is to make everyone the middle class; to be angry and hateful towards everyone who “made it”. Of course, as history has taught us, not only does this not work, it hurts the middle and lower middle class. As, not only are there still wealthy people at top (reality check: there always will be), they have made it impossible for them to move up. Yes, everyone is equal in such a situation: equally poor.
That isn’t what we want. The solution will lie in more taxes (for many, not just the upper class. Though, to be fair, my Mum can’t afford to pay income tax…that needs to be acknowledged), regulation and other such means. I just hope everyone can wake up and see that.
Yikes. That was longer than I wanted. Sorry for the tangent. Great blog, by thew ay.
*This is not to say that we shouldn’t help those from poor circumstance. We need to. Support and guidance go a long way. I encourage anyone with free time to volunteer at something like Big Brother/Big Sister. It goes a long way.
Actually, Sandy’s comment is highly relevant. In quote you state that intelligent hardworking people will find a way to make money no matter what field they are in. In the second quote, you talk about how little your coworkers make. Obviously you didn’t string those two quotes directly behind each other yourself, but the context is similar enough that a conclusion can be clearly implied. I’ve read enough of your blog to know that you don’t seem like you think your coworkers are stupid or unmotivated. But I disagree with your statement that highly motivated intelligent people will find a way to make money irregardless of their profession. My wife is a lawyer. She made 6 figures at a corporate law office but left it to pursue her goal of practicing in employment law (employee side) for a >50% pay cut. Currently I make 4 times her salary but in no way do I see myself more intelligent, hard-working, or motivated than her. How much money you earn is highly dependent on what society has determined to be the fair price for your work, which may not represent the true value of your contribution, as PMDs know very well.
I don’t believe I ever said that the smarter you are the more you make. Your wife figured out a way to make $100K+. She chooses not to. That’s fine. It doesn’t mean she isn’t intelligent. In fact, I think she proves my point, that a hard-working, intelligent person can make a lot of money if she so desires.
@ whitecoat invester: I enjoy your posts and the material on this blog. However I disagree about your interpretation of OWS’s message. OWS want a fair playing field where the rules and regulations are applied across the board and not just on the 99%. for example:
1. The doctors are required to disclose any conflict of interest if they give a talk about a drug or device: a Wall Street Investor is not required to disclose if he is working for a financial institution in an advisory or other capacities while containing his job as a professor in Finance teaching at institutions like Harvard and Yale.
2. Are you fine with the payors calling the shots about payments to doctors because they have big, well financed lobbies and doctors don’t even have time in their days to do anything but try to be complaint with various rules and regulations?
3. Are you fine with the fact that the doctors are more regulated than the nuclear material in the USA?
4. I am an anesthesiologist. If I put a patient to sleep and can’t wake him up, I will lose my license. So the heads of financial institutions “did not see the economic collapse coming” and got away with making like bandits with our money whereas You and I or any doctor stands to his/her our license if he/she displays half as much incompetence.
5. Can you plead first amendment right to free speech if you make a bad medical decision or misdiagnose a patient? Let us see someone pays you as a specialist and you misdiagnose and the person is harmed and you plead first amendment and get away with it but that is exactly what the financial institutions did.
OWS want an equal and rational playing field. It is not rational to send a person to jail for drug possession while those who outright swindled the stockholders can bargain for their freedom.
I may be misinterpreting the Occupy Wall Street message. I’m surely not the only one. Perhaps if the movement were able to articulate one single clear message it would be easier to interpret.
@ White Coat Investor:
OWS single most important message is something like having a Stark’s law regarding campaign finances.
You mean get rid of the quid pro quo in politics? There are few Americans that would object to that. But I don’t get the impression that most of the OWS movement shares your view of its main focus.
Wikipedia in fact (which anyone can edit) suggests otherwise:
“Some protesters say they want, in part, more and better jobs, more equal distribution of income, bank reform, and a reduction of the influence of corporations on politics….a “transaction tax” on international financial speculation, the reinstatement of the Glass-Stegall Act and the revocation of corporate personhood….get the money out of politics; reinstate the Glass–Steagall Act; and draft laws against the little-known loophole that currently allows members of Congress to pass legislation affecting Delaware corporations in which they themselves are investors….”
My impression from those I’ve spoken with and what I’ve read is that the focus seems to be more on the first two items, rather than getting rid of corporate influence on politics…i.e. “more and better jobs” (where ever those are supposed to come from once we get rid of corporations) and “more equal distribution of income.” If the movement morphs more into decreasing corporate influence on politics, it’ll have a much larger backing because the first two items are what turns most Americans off from the movement.
But initially, no one in the movement seemed to know what they were for. People espoused everything from communism to anti-war sentiment to pro-drug policies to pro-environmental policies. Combine that with the comparison of the Tea Party Movement (where working people applied for a permit, showed up, marched, said their bit, paid for their own security, and then went home to their families and their jobs) to the OWS movement (where mostly non-working people sat around without permits, camping, urinating and defecating, preventing others from using their public parks, doing drugs, closing down businesses, busting up cop cars, assaulting each other, having to be forcibly removed in multiple cities etc) and the movement has sewn its own demise.
But you’ve got to give the movement one thing, and that is that people are talking about income inequality far more than they would be otherwise. In that respect, the movement was a success. It might even be enough to reelect Obama if he can successfully paint Romney as a 1%er (even though they both are.) We’ll see this Fall.
Funny how everyone wants equality, but only with those above us.
Equality does not make a better society but fairness does. “What’s sauce for the goose (is sauce for the gander).”
It is statistically impossible for everyone to be in the top 1 % and neither is it an attainable goal for the majority.
I just don’t understand when people call for raising taxes on the rich instead of asking for no taxes on poor and stopping the charade of paying taxes and then getting them refunded.
“Intelligent, motivated, and hard-working people who want to make money tend to find ways to do so, no matter what field they’re in.” No, it pretty much depends on their field. A primary care doc won’t make more than a spine surgeon, a labor lawyer won’t make more than a corporate lawyer, an ed nurse wont make more than an ed doc, even if intelligence, motivation, and hard work are equal.
There are lots of ways to make money, no matter what your job pays you. Is it easier in some fields than others? Yes. But there is a huge range of income among primary physicians. Why do some make $30K and some make $300K? Do you think it’s because of luck?
Of course you can always go outside your field to make money, and if that’s what you mean, I agree. One of my favorite TV shows is about a high school teacher who becomes a drug dealer to make extra money. But in the reality of most people, income is going to rely almost completely on their field. Hard work, intelligence, and motivation are important, but are only a part of the picture. Value of service to the payer is probably the most important factor in what a field pays. For example, the pay of a cosmetic surgeon providing service to his Hollywood patients is higher than the services provided by a PMD to his Medicaid patients. A corporate lawyer arguing of that the placement of a comma infringes on his client’s trademark gets paid more than a employment layer arguing for a employee who was terminated for reporting sexual harassment. This has to do solely with the payer’s ability to pay, not value of service, and certainly not hard work, intelligence, or motivation.
Oops, in the above statement, I meant to say “Value of service to the payer is probably NOT the most important factor in what a field pays.”
BTW, I’m not sure how much a role luck has to do with it. But I also “…treat people on food stamps, people on Medicaid, homeless folks, and people who have had rotten luck, both economically and medically.”
There seems to be an underlying, almost unspoken argument being made here. Let me see if I can get it out in the open where it is easily refuted.
Some commenters seem to be saying, for example, that my ER clerk is hard working, motivated, and smart and therefore only makes less money than I do because “his field is lower-paying.” While that may be true compared to the average person, it isn’t when compared to say, a medical resident. The medical resident is, as a general rule, more motivated, more intelligent, and harder working. Thus we see why he’ll soon be making $100 an hour and the clerk will still be making $10 an hour. Does luck play a part? I suppose in some vague way. Perhaps the resident was more likely to be born to smart parents who lived in a better school district and emphasized education more. Beyond that, it’s all about the choices, work, and natural ability of the individual.
Who is more motivated to make money? The guy who gets an MBA and starts his own business or the guy who stays in his low-end job checking people out at the grocery store.
Does luck play a part? Sure. But I think it’s a much smaller part than most people think. If you’re motivated to make money, you’ll choose a field in which you are more likely to do so. Business, finance, law, medicine, accounting, engineering, whatever. You’re not going to major in art appreciation and then be surprised when no one is looking to hire you. That’s part of being smart, and part of being motivated to make money (which perhaps I should have been more clear about in the original post. I’m not talking about being motivated to help people or contribute to society when I talk about motivation and perhaps that’s what people are disagreeing with.) It’s okay to be motivated by something besides making money (in fact, it’s probably a good thing.) But to then complain that you don’t make any money doing what you’re motivated to do just doesn’t seem right.
So I’ll address a few of the small, minor points first…
I have no opinion as to whether your ER clerk, or nurse, or the policemen you work with are as hard working, intelligent, or motivated as you.
I don’t think luck plays much of a role in success at all. I threw it in that quote to remind you that you seem to think that luck plays a role in poor socioeconomic status. Am I interpreting your statement correctly? You said, “I treat people on food stamps, people on Medicaid, homeless folks, and people who have had rotten luck, both economically and medically.”
Both you and I had the opportunity to become cosmetic surgeons and were motivated by other factors to do something less well paying. I don’t resent them making more money than me, not in the slightest. My wife left corporate law to go into labor law where she, in her own words, works twice as hard and uses twice as much brain power. Does she complain about making less money? No. I used her as an example to show you that intelligence, hard work, and motivation are not determining factors in how much you make. No one is complaining about her income.
OK, to address the main point now…
The argument you’re refuting is unspoken because it isn’t what I’m saying. It seems as if you think I’m saying “People who are are hardworking, motivated, and intelligent do not deserve more money than people who are not hard working, motivated, or intelligent,” which, BTW, I agree is an easily refuted statement. But that’s not what I believe. What I’m saying is that the statement, “Intelligent, motivated, and hard-working people who want to make money tend to find ways to do so, no matter what field they’re in,” fails to capture the complexity of multiple factors that determines how much money a person makes, including, as you point out, the opportunities available to a person as soon as they are born, and, as I point out, the ability of the person you’re serving to pay you.
Hard to argue with that. It is more complex than my original statement.
The irony is that a sizable chunk of the 99% are firmly in the global 1%.